And The Weak Suffer What They Must? Europe’s Crisis and America’s Economic Future. by Yanis Varoufakis (April 2016)
“The strong do what they will, and the weak suffer what they must”–Thucydides
This book, just out, is a must read for anybody in any way interested in the history, the cultural identity, the present crisis, and the future destiny of the European Union. It is almost prophetic, a sort of Cassandra warning, predicting, but always rigorously logically and rationally, how the ongoing drama of the EU, of which he was a participant for a short while, will eventually end, and not only for Greece or the EU, but the whole economic global apparatus as presently constituted, unless urgent reforms and measures are adopted to remedy a deficit of Democracy and a lack of transparency.
The author is well known. For five short months he was the flamboyant Finance Minister of Greece as the country attempted to negotiate its economic crisis. Contrary to general perceptions, he is not a Communist, nor a wild-eyed zealot radical, not even a Marxist. He is merely a rational economist, a European social democrat. The Anglo Saxon world would dub him a post-Keynesian.
Before discussing the most interesting features of this extraordinary book, perhaps a short note on its title is in order. Its inspiration seems to have come from Thucydides’ famous statement as quoted above on the relation of power to truth and justice. The very nature of war, as far as Thucydides is concerned, is dictated by the nature of power and how it determines who has the ultimate word. That is to say, might is right; the strong or the winner dictate the conditions of surrender, even the narration of events, and the weak accept what the strong impose. That’s the way things have been, are now and will forever be. Necessity dictates it. Notice however that Varoufakis has placed a question mark after the statement “And the weak accept what they must.” Without that question mark the title would have been a mere quote from the ancient Greek historian. With it, it becomes a powerful challenge to the misguided premise that the weak have no choice but to suffer in silence the abuses and the injustices of the powerful. In fact without that little question mark one may tend to misinterpret the whole spirit of the book.
With that well in mind, let’s proceed to examine the narration and analysis exhibited in this book. It reads almost as a narration with the eyes and ears of a novelist but at the same time it exhibits the competency of an experienced economist, who actually teaches the subject internationally. There are no fanciful or even slanderous inventions here; the facts are narrated objectively in the search for the truth, in the best tradition of ancient Greek philosophy. He manages this tone because he himself has been intimately involved in the events that led to what he calls the “defeat of the Greek people by the EU bankers.”
The general framework and assumption of the book is that the crisis in Europe is not over – if anything, it’s getting worse and we are doing precious little to fix it, except advocate more austerity coupled with less democracy and transparency. In this dramatic narrative which begins with Europe’s spectacular economic rise and ends with Greece’s spectacular fall which Varoufakis calls “the canary in the mine” being utilized by the EU bureaucrats, it is brilliantly demonstrated that the origins of the recent collapse go far deeper than our present leaders are prepared to admit; in fact they are complicit in the crisis. In 2008, the universe of Western finance outgrew planet Earth. When Wall Street imploded, a death embrace between insolvent banks and bankrupt states consumed Europe. Half a dozen national economies imploded and several more came close.
But the storm, the author writes, is far from over. From the aftermath of the Second World War to the present, Varoufakis recounts how the Eurozone emerged not as route to shared prosperity but as a pyramid scheme of debt with countries such as Greece, Ireland, Portugal and Spain at its bottom. Its woeful design ensured that collapse would be inevitable and catastrophic.
But since the hurricane landed Europe’s leaders have chosen a cocktail of more debt and harsh austerity rather than reform, ensuring that the weakest citizens of the weakest nations pay the price for the bankers’ mistakes, while doing nothing to prevent the next collapse. Instead, the principle of the greatest austerity for those suffering the greatest recessions has led to a resurgence of racist extremism. Enter the likes of Trump and La Pen, as Varoufakis mentioned at a recent lecture in Washington State: Fascism always follows in the wings of economic corruption. And so, once more, Europe is a potent threat to global stability. Drawing on the personal experience of his own negotiations with the Eurozone’s financiers and offering concrete policies and alternatives, Varoufakis shows how we concocted this mess and how it may not be too late to save capitalism from itself.
Varoufakis points out that in a true democratic federalism political unity would be in tandem with monetary unity. Not only there is presently no economic and banking unity, never mind social solidarity, but there is no federalism and little democracy and transparency, which were the hallmark of the EU at its origins as envisioned by its founding fathers and sadly it is now in deficit. The EU institutions in Brussels so cherished by Germany’s interior minister and seen as the targets of terrorists and non-democratic regimes such as Putin’s, are not themselves models of democracy. Most of them in fact are not in Brussels but in Frankfurt, the banking capital of Germany and the de facto capital of the EU.
But the solutions to those deficits, which are fundamentally cultural and rational requiring a genuine knowledge of the European identity and its ideals, cannot be activated or even considered as policy because those making major economic decisions in Europe are not elected, often hold secret meetings, and automatically side with policies that favor Europe’s banking community.
The book has essentially one message: The Europe we have today is only a currency union, but what’s needed to address a crisis like the one that hit Greece and Portugal and Spain is a European Union that’s democratically accountable, the Europe as envisioned at the outset by the EU founding fathers whose visions went beyond the merely economic. Varoufakis masterfully describes the institutions of global capitalism, how they were formed, how they were gradually deformed, why they were deformed, the names and faces of those who played a role, why we have the European Union, arriving at the conclusion that the central problem in Europe at this moment in history is a democratic deficit underpinned by the banks totally running things and devaluing the true cultural values and the very identity of Europe.
For the ECB (The European Central Bank) it’s all about the money. So when Varoufakis, as finance minister, argued with the representatives of Greece’s creditors about how his country could not grow economically if all it’s doing is killing jobs to pay its debts, he discovered that the they, the ECB and Frankfurt, did not care a fig about all of that rational stuff. They just wanted their money. And the fact that he was making too many rational arguments cost him his job. The founding fathers of the EU must be turning in their graves.
In an interview with the American journalist and expert in foreign policy Farid Zakaria on Sunday’s CNN on the 9th of May, Veroufakis was asked if he thought that Europe was on the verge of falling apart. His answer was “no doubt about it unless urgent measures and democratic reforms are implemented.” Then he added that it is a great blunder to emphasize the break-up of the EU market and nationalism in the name of love of country (the “not in my backyard” phenomenon when it comes to the issue of refugees and solidarity) at the expense of the union as a whole, implying that in a true federalism people hang together or end up hanging separately, to use Franklyn’s metaphor in the revolution against the English. He also utilized the quip of another man who fought the English: Gandhi, who when asked if he saw anything good in the union of the British Empire replied that “it could have been a good idea.”
So Veroufakis, despite it all, remains optimistic about the EU and the global economy where we will all hang together or hang separately. Well he should, for the alternative may be to contemplate the abyss, and not just for his own people, the Greeks. But his Cassandra like warning has been sounded and sounded loudly. Let’s hope it has not been sounded to the wind. Let those who have ears, let them hear, for time is fast running out.
EU dying silently as it plays in Trump’s court
While the US is explicitly undermining the EU regionalism for an upper hand in the global economic dynamics, the Europe is falling in a trap with secret negotiations.
The paradoxical approaches taken by the European authorities is definitely one of its kind. Over the past months, Angela Merkel, the German Chancellor, has repeatedly emphasized that the EU can no longer rely on the United States to secure its interests.
However, the German Chancellor held secret and hidden negotiations with the US government and Trump to resolve Europe’s economic and security problems and crises.
In other words, there is a significant difference between the speeches and actions of the European authorities regarding the EU’s independence from Washington. Here are some points that need to be taken into consideration:
Firstly, US President Donald Trump is one of the main opponents of the existing structure in Europe. He has come to this conclusion that the collapse of the United Europe will provide the United States with great economic growth among its allies. The White House therefore monitors the simultaneous destruction of the Eurozone and the European Union as essential goals. This is the main reason for Trump’s support for nationalist and anti-EU movements in Europe. Recently, Donald Trump has officially urged French President Emmanuel Macron to pull his country out of the EU to benefit from more US-France ties. Also, the US president has asked Theresa May, the British Prime Minister, to sue the European Union for making barriers in Brexit talks. Trump has gone even further, and warned Theresa May that she should choose between integrating in the European economic structure and having economic relations with the United States. Together, these statements and stances show that Trump is working hard to achieve his main goal in Europe; which is the collapse of the European Union.
Secondly, although some may think that confronting the United Europe is the secret target of the US President, Trump’s behavior suggest that he has no reluctance to declare his opposition to the EU and the Eurozone. Trump believes that the collapse of the European Union will lead to an increase in his power and would intensify his dominance on the European players. Hence, the President of the United States is trying to manage the EU’s collapse from an economic and commercial perspective. It should not be forgotten that during the 2016 presidential campaigns, nationalist and anti-EU movements were Trump’s only supporters in Europe, and other politicians affiliated with the Social Democratic or Conservative movements in Europe (which currently hold the power) wished that the Democrats and Hillary Clinton could win the election.
Europe is now facing a phenomenon called “Trump”. In spite of this, the way European authorities try to deal with the White House is still based on a kind of deterrent idealism. Unlike countries such as China and Canada, which have given a strong response to imposing tariffs on imported steel and aluminum, European authorities have not yet taken a determined decision against the United States and the Trump government. On the other hand, European leaders continue to resolve the differences between themselves and the Trump government on the through negotiation. It is as if the European leaders have not yet realized the deep opposition of Trump with the EU and the Eurozone. They are still trying to reduce the US president’s “conflicts” with the EU to some sort of “superficial disagreement”, which is exactly what the president of the United States and his entourage want.
Undoubtedly, the current retreat of the EU authorities before Trump and their failure to enter the phase of “confrontation with the White House” should be interpreted as “EU’s quiet suicide”. The continuation of this process will lead to further pressures on the European Union, and subsequently, the position of nationalist and anti-EU groups within Europe will be strengthened. Besides, we should take this fact into account that with the advent of more than one hundred far-right representatives to the European Parliament during the 2014 parliamentary elections, the process of “collapse of the United Europe” has actually begun. Right now in countries such as Austria, Italy, Sweden, and even France and Germany, nationalist groups have been able to politically strengthen their position, and even find way to the top of political equations of some of these countries. The most important factor that can save Europe from current crises is to strengthen the Europe’s independence in the international system. The symbol and objective example of the strengthening of such an independence is “standing against the United States”. But that’s exactly what the European authorities have forgotten.
It seems as if European officials hesitate to consider the significant presumption of “Trump’s opposition to the United Europe” in their behavioral and verbal calculations. They are still thinking and deciding in the phase of “interacting with the White House”, and they are even willing to give their NATO Ally some advantages. But if the EU doesn’t enter the phase of “confronting the US” and merely try to control Trump’s decisions and policies, its destiny will be nothing but collapse and destruction. This confrontation calls for putting an end to the Europeans’ play on the US ground; a precondition that has not yet been fulfilled by EU member states. Eventually, the Green Continent is at one of the most critical periods of its political, economic and security life. Indeed, how can we imagine that Europe, by continuing its current submission to the United States, can get out of the existing crises?
First published in our partner MNA
The meeting between Prime Minister Conte and President Trump
At least apparently, the meeting between US President Trump and Italy’s Prime Minister Conte – already widely planned and publicized – went well.
With some common and evident pride, they mutually defined each other as the initiators of what, nowadays, is usually called “populism”, consisting in the fight against traditional elites in favour of the “people” that, however, actually appears rather as a fight between two different components of the global elite: the old one that still focuses on globalization and the other that instead gathers around the evident crisis of globalism and wants to build a new multipolar world. Ultimately the opening to the world market has proved to be less effective than expected: the cost for destroying “domestic” jobs has turned out to be greater than the gains resulting from the globalized market.
President Trump, who has clear in mind what is still happening on the US-Mexican border, said that the Italian government’s work on the migrant issue “is formidable”.
Italy’s government work that, however, would be “formidable” both for illegal migrants and for the very few legal ones.
Nevertheless President Trump was particularly sensitive to an issue which is high on prime Minister Conte’s agenda, namely Libya.
Trump and Conte have established a new “strategic dialogue” between the USA and Italy on Libya, while the US President currently recognizes Italy’s hegemony over the Mediterranean and the stabilization of Libya and, later, of Northern Africa.
In more specific terms, President Trump said it would further diminish the American presence in the Mediterranean and would delegate Italy to manage and reduce tensions in the region. Hence the need for the Italian government to increase defense spending, as we will see later on.
In August 2018 Italy will already send some military ships to Libyan waters, while the United States still has many ships operating in the Mediterranean, which they do not intend to relinquish completely.
The new US-Italian “control room” will operate within the framework between this residual US presence and the increase of Italian operations in the Mediterranean.
Prime Minister Conte’s real project, however, is a great International Conference on Libya, to be held in Rome next autumn, which will see the United States play the role of hegemonic power and will enable the Italian government to definitively position itself as the leader of the whole Libyan political process.
In fact, Prime Minister Conte is thinking about a joint “control room” between Italy and the United States, especially for Libya and for security in the Mediterranean region.
Nevertheless there is a problem: the difference between the US and Italian war potentials.
There is also the different assessment of the Mediterranean region by the United States, which sees the Mediterranean in connection with the Persian Gulf and Central Asia (hence in contrast with Russian interests), and finally the contact with China’s maritime control area.
Conversely, probably due to a still narrow-minded vision, for Italy the Mediterranean is the region in which the migrants’ market must be controlled and finally be put to an end, by avoiding the interference of France – which is interested in encouraging the flow of migrants towards Europe and hence towards Italy – and the jihad, which is spread also through large-scale migration.
All French – and sometimes British – interests are far from Italy’s and often totally diverging with its goals.
Furthermore, Italy has long played all its cards on Fayez al-Sarraj’s government, the “legitimate” one according to the United Nations and hence – according to our experience – the weakest and most unstable and irrelevant government.
There are currently signs of a new relationship with General Haftar, but none of the two Libyan governments fully trusts Italy. Probably it would be a smart strategy for Italy to play all its cards on Fayez al-Sarraj, so as to remain his sole sponsor and later play from a vantage point with General Haftar himself, that now no longer goes beyond the old border with Tripolitania.
How will Italy be in a position to get in touch with the region in the West controlled by General Khalifa Haftar, a leader who reports respectively to Egypt, Russia and France, which has always pretended to support Fayez al-Sarraj but, from the beginning, has made the Service Action of its intelligence services side with the military of the East, of General Haftar’s Cyrenaica?
Clearly the de facto union between the United States and Italy for Libya serves to get France and most of the EU out of play- and, indeed, the EU has scarcely taken care of the issue. The French-EU system is now a structural opponent of Prime Minister Conte’s government, but is also a German ally. Germany is now an enemy of President Trump’s United States and he wants it to reduce its export surplus, which is greater in real terms than China’s.
The “distant friend”, namely America, to be called against the “near enemy”, namely the EU, which is an old and excellent Israeli strategy, but never replaces the direct operations against the opponent that is only a few steps away.
The Italian struggle is against the “Rhenish” Europe, which still wants to split up the “Libyan region” and is not interested in the migration issue, which does not affect France and Germany at all.
Germany has mostly migrants from the Middle East, not so much from the Maghreb region.
In fact, migration in Italy is an operation of “indirect strategy”: the costs for the State increase; the mass of skilled workers decreases; also the innovation potential of companies decreases since they are de facto forced to hire low-skilled migrants when they need manpower; finally the invisible costs of large-scale migration increase, such as health, prison system, security and initial support to the migrants themselves.
The aforementioned Italian-US “control room”, however, puts the EU in a difficult position: it is true that President Trump said that,in the future,Italy would play the role of “facilitator” between the USA and the EU, but Italy is as weak within the European Union as it is strong in the bilateral link with Trump’s “populist” United States.
The Trans Adriatic Pipeline (TAP), the gas pipeline that the USA favours against the gas lines controlled in Northern Europe by Russia and its “friendly” countries, is the “wedding gift” that President Trump asks to Italy.
This pipeline falls within a markedly anti-Russian policy line, but it also affects an Apulian region, namely Salento, that is already very sensitive for the current Italian government from the electoral viewpoint. In fact the Italian government won many votes from the anti-TAP movements, which are very strong in Salento, and are ready to fight to the death.
Will the Five Star Movement decide to lose its face and Apulia’s voters with a view to strengthening its friendship with the United States, while President Trump asks for government support to the TAP as Italian government’s “proof of love”?
Furthermore will the Italian government’s support for the TAP be useful in relation to the Russian Federation, which should become a supporter of the new “sovereinist” Italy?
I am afraid that if the current government does not choose from the beginning with which of the two powers it wants to side, it will find itself in the same unpleasant and uncomfortable situation as Arlecchino in Goldoni’s play The Servant of Two Masters.
Moreover, in spite of everything, the Russian issue is at the core of the new “contract” between Prime Minister Conte and President Trump.
The EU sanctions against Russia are strongly penalizing for the Italian economy, which has decreased its exports to Russia by 70%, with a loss of over 200,000 jobs and a 25% fall of Russian tourists in Italy.
Prime Minister Conte wants reassurances, and possibly support, to reduce sanctions against the Russian Federation, but Italy may decide to support the TAP – which was designed to counter the North Stream between Russia and Germany – in exchange for a decrease in US sanctions against Russia.
Hence, if Italy is linked to the anti-Russian front as a result of the Conte-Trump agreement, how will President Putin behave at international level? Certainly his behaviour will not be favourable and, anyway, capable of doing much selective damage to Italy.
Reverting to Libya, the US-Italian pact to get the Maghreb country out of the political and military chaos envisages ongoing consultations between Italian and US Defence and Foreign Ministers.
Hence is Prime Minister Conte absolutely certain of being able to favour the US trade on the whole European continent? We rather fear that Italy’s EU partners will not look favourably upon Italy’s brokerage and intermediation onto US markets, while possibly Italy’s trade deficit with the United States remains intact and the EU’s one with the USA is under attack.
As President Trump said, “the Italian companies’ interests will not be hit” – which, inter alia, now seems to be quite credible.
In Trump’s era, the Italian exports to the United States are worth 40.5 billion euros per year.
The total amount of trade between the two countries is worth 55 billion euros, but the Italian imports from the United States currently amount to 15 billion euros.
From 2009 to 2017, the Italian exports to the United States rose by 139%, as against a 58% increase in US exports to Italy over the same period.
The Italian exports to the United States often consist of cars, as well as “luxury and high-end goods”.
If President Trump taxes foreign cars, FCA – which imports about 50% of the cars it later sells to the USA – could be hit by a 20-25% tax, as the one thought by Trump’s Administration, which would reduce Fiat- Chrysler’s profits within a range from 616 up to 866 million euros.
This applies only to cars. But the US President wants to hit – along with the others -Italy’s trade surplus with the United States, which is approximately 36 billion US dollars.
It is an implicit, but probably involuntary attack on the strategy by Minister Savona, who is collecting the surpluses of Italy’s balance of payments to turn them into assets vis-à-vis the EU.
Moreover, there is also the issue of military spending that the US President wants to increase up to a yearly 2% level for all NATO European States.
However, if we spend the expected 2%, it is more than likely that Italy will ipso facto exceed the deficit / GDP ratio set by the EU that former Prime Minister Prodi once dismissed as “stupid”.
Hence how could Italy be the sole and effective broker and mediator between the EU and North America?
Therefore there are many lights and shadows on the new preferential relationship between the United States and Italy. We hope that everything will go well.
Mesut Ozil’s retirement and the dark face of identity politics in Germany
Distinguished commentators are pondering upon a particular question in common. What was Ozil supposed to do when Recep Tayyip Erdogan-the President of Turkey had invited him for a compassionate meeting in a hotel room? The answer is obvious. He could not have ignored. Except for breakouts inside the Christian Democratic Party (CDP) and the anti-immigration AfD (Alternative for Germany), Mesut Ozil has substantial approval from all corners. More than football, the issue is deeply rooted in the Christian roots of political parties in Germany.
Rienhard Grindel-a former politician hailing from CDP, manufactured a fuss about how Ozil should not have met with Erdogan in front of a packed press before flying to Russia for the World Cup. Former footballer and Germany’s team manager, Olivier Bierhoff struck a controversial statement too. He regretted not leaving Manchester City’s prolific Ilkay Gundogan and Ozil out of the aeroplane to Russia. When the animosity became public, Germany was out in the Russian summer, preparing for a doomed destiny of failing to qualify from the group stages. Ozil kept quiet until it was over but for outsiders and in Turkey, there was a serious accusation to tackle. Erdogan was advertised as a leader practicing anti-democratic values and arguments like Ozil’s meeting with the Turkish president was against the values of Germany baffled all neutrals. How could a country’s democracy diminish by a footballer’s honourable act? Slowly and subsequently, Rienhard was reminded of his statement in 2004. “Multiculturalism is a myth”, he had declared. Renowned journalist, Matt Pearson pierced him in public and questioned his ability to lead a team full of second and third generation Germans. Read Ozil’s statement carefully. He has cultivated feelings of justifying his citizenship every time he is on the pitch. “When we lose, I’m not German”, Ozil wrote in his long address. The problem is about identity. It is a fight of political values, lost in transition.
Germany’s chancellor-Angela Merkel is with Ozil. Her colleague Grindel was a former CDP man until elected as the association’s president in 2016. Defectors from CDP formed the Alternative for Germany. Ozil’s retirement has underlined the problem of clashing political franchises in Germany. Merkel has often been accused of straying away from the values of CDP, which in its inception, was assembled by World War survivors to protect the Christian character of the German nation. The AfD was born in the same light to correct the frailties of the existing CDP. Ozil’s case of mistreatment is only the result of the clashing politics, deeply rooted with the values of religious identity. Unlike modern societies, it is not the case of Islam being politicised. Instead, it is a contest of Christian quality. An attempt to correct the founding values of German political structure. The AfD are making dangerous strides and to put it in their own words, they are seeking to become the true guardian of Christian identity in Europe. Influential pastors and bishops are supporting the AfD agendas to incorporate Christian values in schools. Ozil is right about the nature of his German society. It is in a skirmish. In a civil war of values tied with Christianity.
France is a good comparison to make. Officials from the French National team were angered by social media statements of how Africa had won the world cup; not France. A fellow French footballer of an African descent replied with twenty-three French flags; the total number of his teammates who won the cup in Russia. Ozil expressed the same emotion; unlike in Germany, he would have still been a French-when he lost matches. Rightly, the 2010 Bambi award winner has questioned his treatment by the German Football Association (DFB). However, recurring racial attacks in the past have often disparaged the good impression of a German society. Be it rejections of Indian students by a professor in Leipzig (2015) or the murder of an Egyptian national in 2009; it is a society expanding in turmoil.
Turkey, his ancestral land has commended his courage to speak up against the system. Erdogan reportedly telephoned him in sympathy and support. For many, it has come as a political agenda in the midst of elections but Mesut Ozil’s cause deserves widespread endorsement. When Rienhard Grindel was just a treasurer for the DFB, Ozil won the world cup for Germany in 2014.
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