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The Greek Rorschach test

BERLIN — There will be no parade, no teary farewells, not even a kiss from Jean-Claude Juncker.

Instead, Greeces time as a de facto European Union colony will end on Monday as it began in 2010, with the stroke of an anonymous eurocrats pen.

Greece emerges from its eight-year, some €300 billion “rescue” regimen with a debt load many economists, including those at the International Monetary Fund, deem unsustainable. Its also a vastly poorer country than it was when the EU stepped in, with its economy declining nearly 25 percent over the course of the bailouts (a performance that puts Greece in league with the likes of Venezuela, Libya and Yemen).

Despite Greeces continued difficulties, many of Europes powerful regard the rescue effort not just as a success, but as a model.

“We have experienced that the misbehavior of one country can put us all in danger” — Angela Merkel

“This program was an unbelievable challenge for us, as were the other rescue programs for euro states,” German Chancellor Angela Merkel, one of the architects of the bailout strategy, said recently. “But altogether we can say the euro is stable, the programs have been completed and the countries are more competitive.”

Greece has become something of a Rorschach test for how to govern the eurozone, one with profound implications at a time when Europes leaders are debating how to improve the eurozones architecture.

“We have experienced that the misbehavior of one country can put us all in danger,” Merkel said in a speech to the Bundestag, the German parliament, in March.

For those who see Greece through the German prism, the harsh austerity forced on Athens, coupled with a refusal to grant it substantial debt relief, offers a powerful prescription. “Accountability and control go hand in hand,” Merkel said.

In other words, though Greece may be diminished, its catastrophe has offered the rest of the currency bloc a frightening example of what can happen when governments skirt the rules. If sacrificing Greece is the price for preserving the euro, so be it.

The alternate view, articulated in dramatic terms by French President Emmanuel Macron last September in front of the Acropolis, is that Europes “sovereignty, democracy and trust are in danger” as a result of the crisis. Europes treatment of Greece has eroded the very foundation the European Union was built on, according to this argument.

Ultimately, the debate comes down to ones definition of “solidarity.”

Most Germans, for example, are convinced they showed Greece the utmost solidarity by providing billions in low-interest loans. While forgiving Greeces debt might put the country on more solid financial footing, it would open the door to “moral hazard,” the rewarding of bad behavior.

What that reasoning ignores is that Germany was the biggest winner of Europes bailout policies. No country has benefited more than Germany from the introduction of the euro, which has been a boon to its industry, fueling exports across the region. So if “saving” Greece was really about preserving the euro, Germany was primarily acting in its own interest.

Its easy to see why: The loans provided to Greece by the European rescue funds have put little German treasure at risk. In fact, so far theyve generated a tidy profit.

“For Greece to be stable in the long term, the people, companies and investors have to regain trust in the countrys future prospects” — Guntram Wolff

Europe, to quote a Teutonic saying, has left Greece with too much to die and too little to live. The small businesses that account for more than 90 percent of the economy continue to struggle amid a dearth of bank credit and high taxes mandated by the bailouts. Investment in the country is tepid; hundreds of thousands of young Greeks have left; and more and more of the economy is going underground.

“For Greece to be stable in the long term, the people, companies and investors have to regain trust in the countrys future prospects,” said Guntram Wolff, the director of Bruegel, a Brussels-based think tank. That future is unlikely as long as Greeces debt, now totaling about 180 percent of its GDP, remains unsustainable, Wolff argued.

Europe, to quote a Teutonic saying, has left Greece with too much to die and too little to live | Oli Scarff/Getty Images

Instead of giving Greece that breathing room, Europe, at Berlins insistence, only agreed to give Athens more time to pay back its rescue loans, effectively delaying the day of reckoning.

Convinced of this uncompromising approach, Berlin has resisted pressure from Macron to embrace closer integration of the eurozone, a course that would require Germany to acquiesce to the kind of solidarity it has denied Greece.

Though the strategy has worked well for Germany so far, the longer-term ramifications for the cohesion of the currency area are less bright. For while Greece might serve as a cautionary tale to the rest of the eurozone, its crisis has also cemented Germanys reputation as an uncompromising financial scold.

Most German politicians are sanguine about such criticism, arguing that playing to Europes tune would be even worse. But as Merkel has learned during the refugee crisis, solidarity is a two-way street.

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