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Wednesday, 26 October 2011

Germany's historic debt to Greece

Prior to my grandparents' enforced departure in the 1930s, my mother's family had lived in Germany for many generations. I therefore yield to no-one in my fondness for (in descending order of importance) German beer, food and culture (and let's not forget the wine). I see Germany as having responded commendably well to the legacy of the Holocaust and the other evils committed by Germans in the Nazi period.
I get why hard-working Germans would resent being asked to stump up for Greece's debts. But, in the good years, hard-working Germans did very well out of a European economy of which Greece was a part.

That economy was structured on a model that the Germans (through the EU) played a pivotal role in creating. Sure, the Greeks chose to spend and borrow the money, but they did so as part of a process of integration into first the EU, and then the eurozone - Germany was a key engine of that process of integration, and a key beneficiary of it (thanks in no small part to the hard work of many Germans).

As part of the process of integration, Greeks arguably ditched aspects of their quality of life in pursuit of a higher, market-driven standard of living (built, it now appears, on a mound of debt). Now, thanks (with hindsight) to the foolishness of those who spent and borrowed the money, the Greek economy is facing enormous problems - problems that Germany may now be asked to pay to put right.

As I say, the eurozone's problems stem partly from a system (built on debts and deficits) which Germany not only tolerated, but also benefited from. That is one reason why the Germans, if they can afford it, might bear a particular responsibility for helping Greece out. Germany, of all nations, understands the need for Europe to avoid hyper-inflation, a Depression or a breakdown in law and order.

There is another reason why Germany could decide to be magnanimous towards their Greek allies. It is that it is only a few decades since Greece was subjected to a murderous German occupation. There are people alive who suffered under that occupation, some of whom are presumably very elderly Greeks who are dependent on the very services that the Greek government must now cut back.

That obviously has nothing directly to do with today's Greek economy. But it is perhaps another reason why it wouldn't be the end of the world if Germany chose to be generous in its approach to how it helps the Greeks get back on track. Forgive me, but I think Germany might owe Greece a favour.

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