Catarina Principe — A New European Narrative

On Thursday, Germany refused any negotiations with Greece, and the European Central Bank (ECB) refused to accept Greek bonds as collateral (since there are no guarantees that the Greek government will carry out the “adjustment” plan). Although this does not amount to an immediate push to kick Greece out of the eurozone, it is certainly a threat in that direction. 

In order to understand the motivations behind this recalcitrance, and the competing interests at work, Germany’s special relationship with the euro must be understood. The eurozone’s stated goal was to create a currency strong enough to build a unified European financial bloc that could compete with the US and China. 

However, this was never the full truth. This “unified” bloc has always been composed of competing nation states, and the big, industrialized countries at the center have been keen on making the peripheral economies dependent on the core. 

With the introduction of the single currency, there was a devaluation of Germany’s deutsche mark in comparison to the other national currencies. This meant not only that labor value was diminished, but also that the country’s manufactured products became cheaper and more competitive in the world market. 

The resulting overvaluation of the southern countries’ national currencies solidified them as peripheral economies and established export markets for German products. Their productive sectors destroyed, the peripheral economies became dependent on imports, especially from Germany. 

Germany, then, clearly benefits from Greece’s presence in the eurozone; a Grexit is not in its economic interest. Nonetheless, German Chancellor Angela Merkel is sending a veiled threat that this is what might happen. Why?….

Analysis from the left. Jacobin A New European Narrative