The outline of Europe’s five-year crisis is clear. What started in Greece in 2010 came to a head in Greece in 2015.
We know the big picture, and the main turning points this far. What we do not know so well are the stories behind the scenes and the alternatives, that almost became turning points in the big picture.
One of the stories where a lot is still to be known is what happened in the week following the Greek referendum of July 5th, and during the long weekend of 10-13th in particular.
Today’s Financial Times has given a dramatic glimpse of what was about to happen then. But before turning into that, let us summarize the past and the present of the eurocrisis.
For the crisis the pivotal moment was spring 2010, when Greece received its first bailout package. What followed in Greece, in other indebted countries, and all around Europe and its institutions, are by and large direct consequences of those decisions and principles laid out then.
The heart of the matter was Europe’s banking system and the credibility of the euro as a currency. The stability of these were to be maintained with the least possible political and economic costs in the short term.
Trouble became to mount when the short term became longer and longer.
The current and ongoing discussions about the need for Greece’s debt relief, and of the strengthening of the EMU’s institutional and governance structure, are also consequences of the same decisions and events of spring 2010.
After the short term became the long term, discussions about the long term could not be avoided. But they can take a long time.
All the above is well known, and a lot has been written about it.
We can imagine how all this probably ends. Greece will eventually receive debt relief in the form of extended maturities for its loans. While this creates permanent income transfers from creditors to Greece for decades to come, it will not be acknowledged as such – at least not among the EU’s northern members.
Instead an acrimonius debate between those, led by France, who want to develop the EMU towards a genuine economic union, and those who are opposed to it, in the beginning led by Germany, will go on well into the 2020s. The outcome will be largely settled when the Germans decide what kind of an EMU, and Europe, they want.
The twists and turns of this process will be material for histories and historians of Europe long in to the future. In the meantime the unknown histories of the eurocrisis will be written from the trenches, where the battle for the euro showed its ugliest face.
A lot remains to be studied on what happened in Greece under Syriza, what its prime minister Alexis Tsipras tried to achieve, and what happened within his loosely formed, eurorevolutionary party. The study of the doings and thinkings of his finance minister Giannis Varoufakis will likely have its own subgenre.
The Balkans has always been competitive in exporting history to the rest of the continent, but Greece is now clearly in the lead.
Tsipras’s character is interesting for a historian because of the presence of opposites: idealism and opportunism shake hands in his person in way that keeps everyone guessing what may transpire next. We are thrilled to follow his act, even when we know, or strongly suspect, where it all probably leads him.
No less interesting are the minor characters and the internal dynamics of Syriza. From its election victory onwards and the months-long so called negotiations with Greece’s eurocreditors, it was difficult to tell what they were trying to achieve. Maybe they honestly believed the creditors would change course (and their ideology) and Greece would lead a general leftward turn in the eurogroup.
But when months passed and it must have become clear that this was not going to happen, it seemed that the only plausible explanation for Syriza’s behaviour was that they were preparing to lead Greece towards a profound economic and social transformation, nothing less than a revolution.
This would have included removing Greece from the euro, one way or another. But what did Tsipras think of all this?
According to today’s Financial Times, the hard left of Syriza had indeed readied itself for a takeover that would have restored the drakhma and established a heavily state-controlled economy in Greece.
This would have meant taking control of the Greek central bank, arrest its general director, take hold of its reserves and the mint to produce the currency.
What the planners of this Pancho Villa -style revolution did not foresee was that the European Central Bank would immediately have declared the euros produced in Greece as counterfeit money. Then they would have cut Greek banks off life support. Syriza would not have been able to finance their country’s elementary needs in the months it would have needed to start printing drakhmas. The Varoufakis IOU’s would not have worked in such a scheme.
At least not without external assistance in large scale, from outside the EU.
The consequences of cutting Greece abruptly off from the international banking and financial system would have effectively meant a socialist revolution. But of course this is not what happened. As is known, Prime Minister Alexis Tsipras made his U-turn and in the Greek parliament drove through the harsh terms of its third bailout package.
Varoufakis’s resignation happened precisely at the same time when the Syriza’s revolutionaries’ plans came to a head. A good question is if he resigned since he did not want to be a part of such a scheme. Or did he resign since he wanted to be a part of it, but saw it not happening?
The revolution that almost happened may be a form of revolution that is the most common in history. In the critical moment there just is not enough daring, foolhardiness, or external incitement and support, to make it happen.
These are the histories of the eurocrisis that did not run their full course, but happened nearly enough to make them histories we want to learn more about.
In particular as they may have sequels.