Greece: Shades of Weimar?

Nikhil Venkatesh

After the Treaty of Versailles, an unstable, war-wearied and poor Germany (with a new government based in Weimar) was made to pay £284 billion (in today’s money) to the Allied powers. Germany was humiliated; throughout the next decade its economy was run not in the interests of the German people, but in the interests of paying back its foreign creditors. This led to crippling hyper-inflation, an economy vulnerable to the Wall Street Crash (1929), an upsurge in nationalism and communism, and ultimately the rise of Hitler. Amazing as it may be, some people predicted that the harsh financial terms of the treaty would mutilate the German economy, endanger its fledgling democracy, and lead to another war in about 1940. JM Keynes wrote about it in The Economic Consequences of the Peace, and even the cartoonist in The Daily Herald had an inkling of a ‘second world war’ (see picture) – he was a year out.

The moral of the story is that if a country’s economy isn’t run in the interests of the people (what Chomsky calls ‘economic sovereignty’), the people will not be happy. They will revolt, riot, and go to war.

The most terrible thing about the bail-out agreement with Greece is that the Greek people do not feature in it. The policies are designed to stop (mainly French, German and British) banks from losing the money they rashly lent to the Greek government. Greece will be forced to impose austerity measures that may well make their citizens’ lives worse – but this is secondary to keeping the bankers afloat. Any money the Greek government has will have to go into paying off debt ahead of being spent on public services. Foreign economists, like the French troops occupying Germany’s Ruhr valley in 1923, will remain until the debtor country can be trusted to uphold its side of the bargain. The Greek people don’t get a choice; Greek economic policy is unaccountable to its own taxpayers; money will be transferred from some of Europe’s poorest people to some of its wealthiest.

The Greek people won’t stand for it. Rioting is so common that the military could be called on to impose martial law. The elections may well be won by an extreme party that refuses to go along with the bail-out. And who could blame the Greeks for becoming nationalists, when their money is going to foreigners? Who could blame them for turning to Marx when their money is going to bankers?

Germany only paid back its reparations in 2010, 91 years on from Versailles. Can its government really have such a short memory as to impose a similar punishment on Greece?


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