You don’t often find Paul Krugman and the Wall Street Journal editorial page in agreement, but this morning they did agree on one thing: the austerity that has been inflicted on Greece has been short-sighted and destructive, and the smashing electoral victory by the leftist protest party, Syriza, is an entirely understandable reaction.
Good for the Greeks! I don’t know if Syriza will be able to find a way up out of Greece’s economic collapse, but it’s clear that a new approach needs to be tried. The existing Greek political establishment hasn’t had the spine to assay any resistance to the disastrous austerity regime imposed by the IMF, the European Central Bank and the European Commission. The Syriza victory was absolutely necessary. As Krugman has pointed out endlessly, austerity has been bad not just for Greece, but for the European Union as a whole. I don’t know enough about intra-European politics to understand how the German-led forces of austerity have been able to enjoy such dominance in the face of overwhelming evidence of failure, but hopefully the Greek rebellion will strengthen rising anti-austerian voices in in Italy, Spain, France and Portugal.
Any just solution to Greece’s problems will have to involve large-scale debt relief. Yes, the Greeks were fiscally imprudent for years, but punishing Greece for its sins has made matters only worse. In an interview last year Syriza’s leader, Alexis Tsipras, made a pointed observation:
Back in 1953, under the London Debt Agreement, America asked European countries, including Greece, to agree to write off 60 percent of Germany’s debts from World War II and to put a moratorium on debt repayments. That was accepted as a solution. What we are asking from Germany is basically the same.
The debt forgiveness for Germany reflected the practical understanding that a revived Germany was necessary for an economically vibrant Europe. Greece doesn’t have the same relative importance for the European economy, of course, but it is still important, and Greece is in a much stronger position morally to expect Europe’s forbearance than was Germany after World War II. I hope and trust that Tsipris and others will not be shy about making that point to Angela Merkel.