EU considers taking over Greece

[Thanas]

Spiegel

With the debt crisis in Greece spiralling out of control, German EU Energy Commissioner Günther Oettinger suggested some radical solutions on Friday. Not only should EU officials take over tax collection for the 'obviously ineffective' Greeks, but 'deficit sinner' countries should be made to fly their flags at half mast.

Greece clearly needs help escaping from its financial quagmire, according to German European Union Energy Commissioner Günther Oettinger. In fact, the EU should consider using some "unconventional" methods to increase motivation among Greek officials for solving the country's problems, he told daily Bild on Friday.

"There has been the suggestion too of flying the flags of deficit sinners at half mast in front of EU buildings," the member of Chancellor Angela Merkel's conservative Christian Democrats told the paper. "It would just be a symbol, but would still be a big deterrent."

Another tactic for pulling the debt-stricken country out of crisis could be replacing "the obviously ineffective administrators" there, he added. Because Greek officials have failed at collecting outstanding taxes and selling state-owned assets as planned, Oettinger alleged, experts from other EU nations should be sent in to do their jobs instead. "They could operate without concern for resistance and end the inefficiency," he told Bild.

After all: "Those who demand solidarity from the other countries must also be prepared to give up partial responsibility for a certain time."


As pressure from other euro-zone nations to avoid debt default grows, Greece's efforts at achieving promised reforms and fiscal goals have faltered . The country received its first €110-billion bailout a year and a half ago after pledging new austerity measures and other changes, but improvements have been hindered by deep-seated corruption, structural problems and public resistance.

Last week the "troika" of inspectors from the EU, the International Monetary Fund and the European Central Bank left Greece early after putting a stop to talks on paying the next aid tranche because the country had failed to achieve reforms.

Meanwhile a growing chorus of politicians in other EU countries, including senior-level German lawmakers, are now openly discussing the taboo of excluding Greece from the euro zone.

But Oettinger warned against such a move. "That would divide Europe and would be a disastrous signal," he told Bild. "Then investors and markets wouldn't trust us at all anymore for the future."

The suggestions are interesting - especially because there is no legal basis for such measures.

Meanwhile, in light of Greece's failure to introduce the reforms and measures demanded as well as the recent Greek "screw you, you are going to give us the money anyway, so why should we care" attitude in the debt talks, Germany is also apparently considering pulling the plug on that failure of a country.

German Finance Minister Wolfgang Schäuble, who is reportedly doubtful that the country can be saved from bankruptcy, is preparing for the possibility of Greek insolvency. Officials in his ministry are currently reviewing scenarios for handling such a situation, exploring what it might mean for the rest of the euro zone.

More info in German

[MarshalPurnell]

The last time Germans took over the responsibility of running Greece from the Greeks things did not work out very well.

Okay, someone was going to say it... And you can be quite sure the Greeks will, if the proposal is actually aired as anything more than off-the-cuff, reactionary venting by a fundamentally uninvolved EU bureaucrat. That seems particularly unlikely in light of that observation, and I seriously doubt Rome, Madrid, Lisbon, or for that matter Warsaw and London, would react very well to the prospect of "EU experts" taking over the administration of debt-plagued states.

[Rabid]

Alternate title :

"EU technocrat suggest abolishing 'inefficient' Greek democracy - German officials examine idea's feasibility"


Don't get me wrong Thanas, I really like Germany (seriously), but it almost seems as if someone here is trying to live up to the stereotype of Germans being Evil Soulless Monsters who wants to take over Europe.

I mean, practically annexing a country and intently refusing to listen to its people when it say it is not agreeing with what you are doing ? Yeah, nothing can go wrong.

[Thanas]

Nah. I am not in favor of the plan, really - simply because it would be an infringement on national sovereignty.

More seriously, what Oettinger is suggesting is that the EU starts administering Greece directly, bypassing the ineffective financial administration there. The idea has some appeal considering how inefficient and wasteful Greek bureaucracy is. Still, unless Greece consents, nothing of the sort will be done.

I personally suspect this is just the EU and the German Finance minister playing hardball with Greece after the performance in the debt talks. Considering that Germany may well end all payments to Greece unless Merkel can muscle enough votes into submission by the end of September it is unsurprising to see such moves.


EDIT: I mean, Greece will receive a total of 219 Billion EUR.

[Surlethe]

Well, it can't be that bad, can it? I mean, Germany taking over administration of the European periphery is a tried-and-true method of solving world depressions.

[Thanas]

Well, it can't be that bad, can it? I mean, Germany taking over administration of the European periphery is a tried-and-true method of solving world depressions.

Dear God I hope this is sarcasm.

[Surlethe]

Naturally. (I have been kind of itching for an excuse to make that joke since I heard it several weeks ago.)

[Thanas]

Well, aside from lake WWII jokes pray tell what should happen here.

[Surlethe]

Well, the first thing that struck me about the article was the measure's efficacy depends on how much of the Greek administrative problems are because the current bureaucrats are corrupt and ineffective versus how much are because Greece is structurally difficult to tax and regulate. The first analysis I read of the Greek crisis was a geopolitical one; it claimed that Greek tax revenues are low simply because Greece's terrain does not lend itself to easy inter-regional law enforcement. I don't know how much truth there is to it, however; modern communications, at least, would seem to make geography irrelevant.

PS- I think you mean "lame" WWII jokes.

[Thanas]

Well, the first thing that struck me about the article was the measure's efficacy depends on how much of the Greek administrative problems are because the current bureaucrats are corrupt and ineffective versus how much are because Greece is structurally difficult to tax and regulate.

All reports I have seen seem to suggest the first is the case.

[Dahak]

Well, the supposed 30 billion Euros outstanding taxes that they said they will regain basically evaporated into (hopefully) 3, mostly because lots of debtors are either state-owned, bankrupt, out of business or a combination of those. So while Greece may be somewhat corrupt it's not their only problem and the grown structure is quite difficult to reform.

[Starglider]

Reforming the Greek kleptocracy is not a matter of giving some mid-layer beurecrats early retirement and replacing them with imported eurocrats.

The unpunished politicians and the eroded democracy of Greece

Greece's democracy resembles more the Eastern types of regimes rather than the typical Western Democracies which exist in other European countries.

Although ancient Greece is considered to have transmitted the light and ideas of democracy throughout the world, nowadays modern Greece seems to lack a real Democracy, a fact that makes Greek people feel even more frustrated. The current economic crisis hitting Greece is only one incidental reason for the general mood of depression that shadows the country at this moment. The main and unassailable explanation for the Greek people's current gloominess is that they are feeling literally betrayed by the kind of their Democracy, in which they believed for well over the last three decades.

This kind of modern democracy, established in Greece after the collapse of the dictatorship in 1974, has evolved and developed as being based -- among others -- on the idea of the political system's non-accountability. To put it bluntly, the members of the political system in Greece cared about protecting themselves from the punishment of the law while breaking the number one rule, which is always the cornerstone of any real democracy, namely, the equality between governors and citizens. So, what it comes down to is that democracy in Greece became over the years the regime of few and select people favoring those who had the political power in their hands. Greek politicians have been gradually transformed from the people's accountable servants into a bipartisan elite group acting mostly for ensuring the rights of its members, many of whom inherited their parliamentary position from their parents. Until today, Greek politicians are still avoiding getting accountable to Justice even for cases where it is more than self-evident that there have been suspicions of corruption, breaking of law, abuse of power and prodigality of public money.

I am not proud of saying this, but the bitter truth is that after about thirty-five years of its establishment, Greece's democracy resembles more the Eastern types of regimes rather than the typical Western Democracies which exist in other European countries. Because, in other European countries, even in the US, no one is above the law, let alone politicians whose public life must be constantly transparent, open to criticism and subject to any kind of inspection by Justice. However, this is not happening in Greece, where politicians are hidden behind an outrageous immunity which protects them from the effects of the law. So, what is the difference between the current political situation in Greece and some Eastern pseudo-democratic regimes against whom people in the Middle-East are now fighting to overthrow? There is no actual difference apart from the free elections and freedom of speech, two things fortunately consolidated in Greece. However the operation of a real Democracy requires one more element, which, if it does not exist, can lead a country to economic collapse and political decadence, as is the case in Greece. There is the necessity of a governance that will not only seem moral, but it will be as well.

Today Greeks are addressing their politicians by yelling "Give back the money you stole" since it is obvious that the huge country's debt was created in some degree by those politicians who, although they have been mired in corruption, they have never been led to Justice. Greek people are outraged not because they are forced to sacrifice their incomes because of the necessary fiscal adjustment of the economy, but because they know that their Democracy's institutions are utterly unable or even reluctant to punish as harshly as required those politicians who became wealthy by driving the country to bankruptcy. So, this crisis in Greece is not only an economic meltdown. It is mostly a deep political crisis that Greece will depart only if its people end up deciding what kind of Democracy they envisage and how they can create it.

While the current political system is being plunged into the waters of corruption, immorality and inefficacy, Greek people are getting more and more depressed and morose. This economic crisis should be turned into an unprecedented opportunity for the Greek nation to not only put in order its messy fiscal house, but, also, to put a definitive end to political behaviors that have hurt Greece all the previous years and eroded the meaning and mission of a real Democracy. The credibility and dignity of the political system in Greece may be restored, but only if the Greek society knows who those politicians responsible for the country's economic falling down are, and how they will be punished in the same way as in any other well-governed democratic state of the West.

Superficial criticisms for PR consumption aside, the EU political elite regards the Greek political class as besieged comrades and is propping up as much as they are propping up the country's economy. Every tranche of bailout merely reaffirms their legitimacy and their license to cheat, steal and ignore the welfare of the electorate. Every day more Greek graduates leave, more companies go bankrupt and more sovereign debt piles up. At this point Greece needs nothing less than regieme change; a rising fraction of disenfranchised Greeks is ready and willing to do this. Of course the EU is desperate to prevent it, at almost any cost, due to both political and financial contagion. Expect more token efforts, increasingly hilarous PR fantasies and free money from the EU until things finally break down into violence, default and economic collapse.

[Thanas]

*sigh*

Yeah...at this point it really looks as if some reconstruction project like what happened to Eastern Germany would be the best - of course the Greeks do not want it either.

[Rabid]

I think the problem with such a plan is not so much the idea in itself (reconstructing the whole Greek political/administrative system to put it up to European standards), but the way in which it will be implemented, and the possible/probable lack of transparency and democratic control the Greek people will likely have over such process.

If the people feel that what is done to their country isn't in their best interest, while having no mean to "correct" the perceived wrongs done to them, they will revolt, and everything will come crashing down.

[aerius]

Well, aside from lake WWII jokes pray tell what should happen here.

The Iceland option. Give the people 1 year or something like that to draw up a new constitution, throw the corrupt government officials out of power, put the new system into place and make a start at fixing their problems. In exchange they get some loan forgiveness and free aid to get themselves up & running. If the people refuse to do that then you can either cut them off entirely and let whatever happens happen or go in and run their country for them until they get their shit together.

I think the key is the "or else" part. It needs to be made clear that certain bad things will happen if they don't work towards fixing things up. Right now it's kinda like "we'll give you bailouts if you do austerity programs, but if you don't meet the goals we'll pretend to withold the bailout, but give it to you anyway at the end, even when you fail". They know that, and they know you know that they know it so it pretty much becomes political theatre. No one takes it seriously, the Greek government & administration isn't getting fixed so all that happens is the people get screwed. There has to be an "or else" to get them outta there and at the same time empower the people to make the changes & choices required to reform the system.

Of course that shits over a ton of EU treaties and probably breaks a hundred international laws so it's not happening.

[Logicomix]

Meanwhile, in light of Greece's failure to introduce the reforms and measures demanded as well as the recent Greek "screw you, you are going to give us the money anyway, so why should we care" attitude in the debt talks, Germany is also apparently considering pulling the plug on that failure of a country.

It is not Greece that has failed. It is Germany and France and their utterly retarded social experiment that is known as the European Monetary Union. It was bound to fail sooner or later. The US caused a global financial crisis that made it sooner (thank God for that).

I find the whole situation with Greece extremely interesting. Greece has the power to dissolve the EMU in one day, yet its corrupt government refuses to follow reason and look after the interests of the Greek people, and bows to the whim of the IMF and Greece's creditors instead.

This vid is a true eye opener in regards to the economic crisis in the US, Europe and especially Greece.

www.youtube.com/watch?v=_Tu2uiV1lps

All countries should deny to pay any and all debt to the IMF (even if that means they have to default), and all lender countries (especially Germany) should pardon most if not all debt. This crisis cannot and will not be alleviated via continued borrowing.
Let's just all accept that the EMU is a failed social experiment, and leave it at that.

[Thanas]

Meanwhile, in light of Greece's failure to introduce the reforms and measures demanded as well as the recent Greek "screw you, you are going to give us the money anyway, so why should we care" attitude in the debt talks, Germany is also apparently considering pulling the plug on that failure of a country.

It is not Greece that has failed.

Really now? Let me guess, the EU is responsible for Greece's situation because they believed the lies Greece told them to get into it? Curious logic there.

It is Germany and France and their utterly retarded social experiment that is known as the European Monetary Union. It was bound to fail sooner or later.

The EMU is not a failure as a whole and btw, it was also not Germany's idea in the first place.

All countries should deny to pay any and all debt to the IMF (even if that means they have to default), and all lender countries (especially Germany) should pardon most if not all debt.

Germany is not going to be the country that other countries leech off from and then go "no, sorry, never going to pay you back."

[Starglider]

The EMU is not a failure as a whole and btw, it was also not Germany's idea in the first place.

Which and how many countries would have to leave the euro before you would admitt that the Eurozone has failed?

[Thanas]

The EMU is not a failure as a whole and btw, it was also not Germany's idea in the first place.

Which and how many countries would have to leave the euro before you would admitt that the Eurozone has failed?

Greece, Portugal, Ireland, Italy and Spain. The trouble is not the core but the periphery.

[The Duchess of Zeon]

The EU should have never existed in the first place. Fundamentally the economies of Portugal, Spain, Italy, Greece and the other Balkan states, operate on a fundamentally different organisational level than the rest of the EU. This is why there is such resistance in the northern economies to adopting the euro. The old Latin Monetary Union was an excellent plan and should have been expanded. There should be, if you will, a Mediterranean Union and a Northern European League, as the Netherlands, Germany, Austria, and the Scandinavian countries operate in basically the same way and expanded influence in a peace-developing fashion through central Europe to create agreeable relations with the Czechs and Poles and Baltic states. The old 19th century LMU states for the most part operate on constant currency inflation. For the entire history of modern economics their economies have been entirely structured around keeping currency vastly inflated compared to other nations and having a poorly valued currency to encourage international trade to flow to them. They respond to problems by taking out loans and accruing more debts and accept occasional spasmodic collapses of the economic system to reset things and start the game over again.

Fusing them into northern Europe was an idea that was strictly political. Their economic systems are entirely incompatible. The goal of the European Union was to prevent war in Europe, and turning Europe into two or three competing economic blocs was not exactly what the founders of the EU wanted. They wanted a single European state so it wouldn't lead to more intramural bloodshed in Europe, the problem is that economically the states are entirely incompatible, furthermore they are entirely incompatible in their culture of governance. Political "instability" is simply how the systems of the Mediterranean states have been designed to function. The northern European states rely on stability and on a strong currency and low debt to maintain a stable fiscal policy which delivers consistent results for its citizens. This is incompatible with southern Europe.

The problem which prevented Europe from simply forming into two blocs which would be respectable entities in their own right was of course France, which doesn't exactly adhere to either system, showing more fiscal responsibility than the other Mediterranean countries but still sharing most of their culture of governance and having somewhat looser restrictions on debt. By creating a bridge between the two and by being the political driver of a united Europe, the French essentially guaranteed that there would be a single EU rather than two economic conglomerations, which was good for European peace but bad for the European economies. Interestingly the economy closest to that of France is probably Britain's; Britain which tries to simultaneously maintain a strong currency and yet also run up very high debts as a legacy of being a world power and holder of the world's reserve currency for basically 150 years, the UK has a US-style economic system to this day and if there is a grid pattern to European economic systems northern Europe is clustered at the far right, the Mediterranean at the far left, France in the middle, and the UK at the middle and top of the grid. Structurally the constitutions, laws, bureaucratic procedures, and cultures of governance of Europe are split into three roughly definable groups based on fiscal behaviour -- nothern and central Europe, Mediterranean Europe, and France and Britain. France and Britain could probably adapt to the system of governance of either the northern or southern blocs but they simply cannot act as a bridge between the two because there's no power to enforce change to start with, it would give them too much power in a union of equals, and things just don't work that way in terms of unified fiscal policy to begin with.

I really think at this point that the safest thing to do would be to cast off the Mediterranean to do whatever it wants and focus on harmonizing British and French economic policies with those of northern Europe to create a strong bloc, unfortunately the way the EU's governing laws are written this is functionally impossible, which means it is likely the EU will collapse and then be reformed without the Mediterranean states, which when they recover from the economic collapse can reform their own union including the new Arab democracies of the southern tier of the Mediterranean. Economically and culturally, Greece is a better fit for a union including Algeria and Morocco than one including Germany and Denmark.

[Thanas]

Economically and culturally, Greece is a better fit for a union including Algeria and Morocco than one including Germany and Denmark.

What now?

[K. A. Pital]

I think the EMU was a counterbeneficial system, but we will have to wait to see if it survives. After all, you can strongarm people to remain inside a counterbeneficial system for decades. The periphery and central states' budgets are promptly screwed, but it is not like anybody gives a shit about them.

On the other hand, the ECB seems to be building a fancy new headquarters building just right outta my windows! Nicely done!

[The Duchess of Zeon]

Economically and culturally, Greece is a better fit for a union including Algeria and Morocco than one including Germany and Denmark.

What now?

Exactly what I said--the economic system of Greece is structurally an origination from the same sort of thinking and from the same original source (Ottoman tributaries in the early 19th century--little changed after independence in Greece at first)--and basically Greece would be a better and more comfortable member of a Latin Monetary Union also including Italy, Portugal, Spain, the various other Balkan countries, Algeria, Morocco, etc, and unifying the Mediterranean basin. I'm saying that you would need a revolution with a totally new government and civil service to make Greece compatible with the northern members of the EU, and the same is true for a lot of the rest of the southern tier.

[Thanas]

Is this based on anything besides your opinion about the Ottoman empire?

[K. A. Pital]

Schumpeter considered historical conditions rather important for any economic analysis, so Duchess' opinion on the Ottoman Empire is actually not a bad argument in and of itself.