Undoing destiny: Greece and the future of the European Union

Thursday, May 17, 2012

In 490 and again in 480 B.C., the warring Greek city-states, who had for centuries proven unable to unite, rallied together against a hated aggressor, the mighty Persian Empire. Spartans, Athenians and other Greeks rallied on land and at sea and achieved stunning victories against vast Persian forces.

After this triumph, however, the Greeks returned to fighting each other, unable to cooperate for common defense or economic benefit. Despite their cultural and military achievements, the Greeks would eventually be conquered, first by Macedonians, then by Romans, serving as auxiliaries, junior partners and slaves to these -- and other -- more powerful states.

In the midst of constant warfare against the Persians and each other, the ancient Greeks nonetheless advanced civilization with new forms of literature, philosophy, art and politics, in unprecedented -- and in some ways unsurpassed -- directions. In large part because of Europe's acknowledged intellectual debt to the ancient Greeks, the modern Greeks were, in 1981, allowed to enter the European Union and in 2001, to adopt the euro currency.

Despite concerns by some economists that the Greek economy was not ready for integration, and that its accession might weaken the EU, the cultural importance of the Greeks outweighed these warnings. The Greeks had created Europe, so it was said; it was their destiny to be a part of the project for European unity.

Greece today is in the midst of a dramatic economic and political crisis that has the potential to force it away from Europe. High levels of domestic consumption, an economy unable to compete and generous benefits for state employees and retirees have weighed for years on Greek finances.

Under tremendous international pressure from the European Union and Greece's creditors, who threatened to shut off loans to Athens, the Greek government imposed austerity measures, cutting spending, raising taxes and devoting a higher percentage of the budget toward paying off debt. These measures resulted in a collapse of consumer spending, a shrinking economy and unrest as government employees, retirees and students protested, often violently, against these policies. It also led to the loss of the parliamentary majority by the ruling socialist PASOK, with early elections an immediate necessity.

Elections held May 6 resulted in the collapse of Greece's traditional two party system, which for decades had alternated power between the centrist New Democracy party and PASOK. Instead, anti-austerity parties of the far left and far right took a majority of seats. With so many extreme movements now represented, it was impossible to cobble together a governing majority, so Greece is now set for another round of elections next month.

The Greeks face a bitter choice. If they vote their sentiments, resentful as they are of austerity and the demands of their EU partners for more taxes and spending cuts, they will vote in larger numbers for radical parties that promise to reject Greece's deal with the EU. This path, however, will lead to national bankruptcy, an end to EU aid, and expulsion from the euro currency system. If Greeks hold their noses and vote for New Democracy and PASOK, they will be accepting even deeper cuts in retirement benefits, education and a generous safety net in exchange for remaining in the eurozone.

Current polls predict the extreme left -- most ardent in its rejection not only of austerity, but of capitalism itself -- will win the largest share of seats in the June elections, an ominous result that could begin the unraveling not only of the euro but of the EU itself.

As tempting as it might be to be smug about the impending collapse of European-style socialism -- for so long the envy of the American left, who extolled the virtues of the European welfare state, with its "free" education and health care -- the Greek tragedy unfolding in Athens poses not only risks for the United States but also stands as a serious warning.

The widening economic and political crisis within the EU is already shaking the trans-Atlantic alliance between the United States and Europe. In the midst of their own recessions and slowdowns, the Europeans are gutting spending on their armed forces, which are already in a weakened state. Major political parties are also beginning to speak of protectionist trade measures to assist European industries, a movement that could dramatically impede U.S. exports.

In terms of political developments, if the Greek example, which has seen the collapse of centrist parties in favor of the extremes, is replicated across the continent, the U.S. could find itself in a far less friendly situation.

Finally, the Greek story should serve as a spur to serious U.S. fiscal reform, especially in terms of entitlements, retirement expenditures and benefits paid to government employees. With U.S. debt and deficit levels rising under President Obama to levels approaching those of Greece, the current U.S. economic and political path is unsustainable.

Will the United States learn the right lessons from the mistakes of the Greeks and avoid our own national collapse? In one sense, the U.S. has a more difficult path than do the descendants of the ancient Athenians and Spartans. We have no EU and European Central Bank to offer a bailout, even one with tough conditions. Let us hope that we never test the meaning of the phrase "too big to fail" as it applies to nations.

Wayne H. Bowen, professor and chairman of the Department of History at Southeast Missouri State University, is also a lieutenant colonel in the U.S. Army Reserve.

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