ATHENS — For decades, a large bomb sat under a gas station in a densely crowded neighborhood near the heart of Thessaloniki, Greece’s second-largest city. Last Sunday, the authorities evacuated some 72,000 residents from the area so a military explosives disposal crew could defuse the 550-pound bomb and take it away. It was reported to have been dropped in an Allied raid in World War II, when Greece was under German occupation and members of Thessaloniki’s ancient and flourishing Jewish community were being murdered in camps in occupied Poland.
In Greece, the wounds of history are never far from the surface. And this small country on Europe’s periphery sits squarely on the fault lines of the many difficulties that face Western democracies today. For seven years now, Greece and its creditors have failed to defuse the European Union’s first great crisis since the euro was adopted, despite the biggest bailout of a debtor in history. Donald J. Trump’s election, the Brexit vote and the inexorable rise of anger and aggression in the politics of many nations further undermine the European Union and threaten the achievements and promise of liberal democracy itself.
The last time a political system was under such stress was in 1989, when the collapse of the Berlin Wall revealed the bankruptcy of the Communist system. What liberal democracy and the open economy face today is not the failure of their promise of stability and prosperity for ever greater numbers of people — it is not the system that is exhausted but those who should protect it from its failings and from its enemies. Nowhere is the array of problems and the lack of leadership more evident than in the case of Greece.
Even as the Thessaloniki bomb was being dismantled, Greek officials and the representatives of foreign creditors were stuck in the latest of a seemingly endless series of talks aimed at releasing bailout funds in return for Greece carrying out more economic reforms and imposing further austerity. Failure to reach a deal could mean Greece defaulting in July on debt payments to the European Central Bank, other creditors and investors. This could prompt the country’s exit from the eurozone, something that previous talks were believed to have settled. But the Greek crisis is even more significant: It reveals the dangerous rifts among major players and the lack of leadership and vision at the European Union level.Continue reading the main story
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The problems that many European countries face today are present in Greece: the attractions of populist politics and the dead ends to which they lead; the shock of mass immigration and the reactions to it; an unpredictable United States administration that might swing between isolationism and intervention; the strains of economies that cannot sustain the promises of the past. These dynamics have shaped Greece’s domestic politics and the country’s relationship with its European Union partners, leading to today’s dangerous impasse.
The European Union’s inadequate response to the Greek crisis was always a greater danger to the union than the failure of a member state with a small economy. First, Greece’s dependence on debt was not dealt with until it had become too big to handle. Then, when crisis struck, the leaders of rich countries (most notably Germany) chose to save their banks, which had lent money to Greece, while presenting the issue as a moral failure on the part of the spendthrift Greeks — who, after great sacrifices, are now suffering under greater debt than before.
Whatever the responsibility of the Greeks and their successive governments, playing with such sentiments released hidden emotions into mainstream politics in many countries (not least, Greece and Germany). Technical economic issues that should have been handled by the mechanisms of a shared currency suddenly became politically flammable.
With European Union officials choosing not to close ranks around Greece in 2010 and deal with its debt as an in-house affair, the situation here today is worse than ever. But there is also greater divergence between European Union members and the International Monetary Fund.
It is not clear whether President Trump will want the I.M.F. to stay in the Greek bailout program; he seemed to express opposition to this in 2012, when he tweeted, “Greece should get out of the euro and go back to their own currency — they are just wasting time.” His enmity toward the European Union is no secret, with his praise for Brexit and criticism of German dominance of the union. Germany, which is Greece’s main national creditor, says that the I.M.F. must remain in the program.
The I.M.F. will do so only if there is significant debt relief for Greece — which Germany will not contemplate. Without debt relief, Greece must force further austerity on an exhausted population, but its government says it will not do this. Unless one of the three backs down and loses face with its own constituency, the failure of the Greek program — and a Grexit — looks inevitable.
Germany faces national elections this fall and is not likely to favor debt relief for Greece. The Greek government may go for broke, calling elections instead of signing a deal. That would solve nothing and might make Grexit inevitable. With Britain’s departure already underway, and with anti-European Union parties looking strong in the Netherlands, Italy, France and elsewhere, this would be another blow to the union.
On March 25, the member states’ leaders will meet in Rome to commemorate the treaties signed in that city 60 years ago, which set the Continent on its path toward union, unprecedented peace and prosperity. “United we stand, divided we fall,” Donald Tusk, the president of the European Council, declared in a letter to the 27 leaders last month. In Rome, under dark clouds of disagreement and uncertainty, they will discuss a “white paper” on the future of their union.
To deal with today’s challenges, though, Europe’s leaders will have to acknowledge the twin plagues of overreach and complacency that brought them to this dangerous point: overreach in going for the grand gesture — a currency union, ambitious expansion to include former Eastern Bloc countries, open borders and global markets; complacency about the consequences — neither within each nation nor at the European Union level.
Now economic problems, immigration and aggressiveness strengthen nationalist demagogues everywhere, causing further disruption inside countries and between them. It will take a very strong declaration of faith to change this, to inspire people to defend the union. If the European Union’s strengths and weaknesses — along with the perils that its collapse would cause — are not at the center of domestic political campaigns, Europe will not hold together. Solving the riddle of Greece, getting the country back on its feet without taxpayers elsewhere feeling cheated, would be a convincing sign of a new determination.
Greece lies like a bomb in the European Union’s foundations. The choices are defusing it, wishing it will go away ... or waiting for the blast.