It’s high noon in Europe. In Greece, the far-left Syriza had long promised the Greek people auspicious outcomes that they could never deliver. When the government in Athens failed to muscle their way out of a debtor’s obligations through sheer force of personality and overwrought rhetoric, they sought a plebiscite that would allow them to evade making the tough choices a government often confronts. Unsurprisingly, when asked if they would prefer the harsh reality imposed on them by the nation’s creditors to a fantasy, the Greeks resoundingly voted “No.” The standoff the Greeks inaugurated appears set to resolve itself in the worst of ways. They have presented Europeans with a horrible choice: Follow up on their threats and invite the conditions that could lead to Greece’s exit from the Eurozone, or fold in the face of threats and sow the seeds of political chaos that could tear the continent apart.
According to Syriza’s preferred whimsy, the “No” vote would demonstrate that democracy would always triumph over the cruel burdens imposed upon the Greek people from far-flung creditors in Northern European capitals. The referendum would compel Greece’s benefactors to forgive some or all of their debt to preserve the integrity of the Eurozone, and would forestall reforms in the form of pension benefits cuts and tax increases. The wide-eyed academic-turned-Greek Finance Minister Yanis Varoufakis promised his country that, in the wake of the referendum, not 48 hours would pass before a new and more favorable deal with the country’s creditors would be inked. Less than 24 hours after all the ballots had been counted, Varoufakis resigned.
For weeks, Europe’s leaders had been issuing stinging condemnations of Greek profligacy and threatening that a “No” vote would likely lead to Greece’s forced expulsion from the European Union’s common currency. Today, that scenario is no longer a troubling prospect but a terrifying reality. Writing in the New York Times, Neil Irwin identified the horrible choice Europe now faces: Let Greece go and endure the destabilizing effects that will follow, or retreat from their position and usher in an era of ultimatums and extremism in the E.U.’s debtor nations.
As Irwin observed, the Greek crisis is no longer a matter of monetary policy. The debate over whether the European Central Bank’s terms can be altered to a point at which they are mutually agreeable, or Athens can secure a bailout, debt relaxation, and favorable new loans is irrelevant. “The fact is that the time for those debates is over for now,” he wrote. “[W]e’re in the realm of power politics, not substantive economic policy debates.”
Already, European leaders are growing visibly uncomfortable about the prospect of essentially forcing Greece out of the Union. If the Eurocrats acquiesce to Greece’s ultimatum, they will invite similar tactics in countries like Portugal, Spain, and Italy; nations that have substantial debt burdens and have embraced the politically costly financial reforms imposed on them by their creditors. “Parties of the left in Italy, Portugal and Spain will have a new argument to make against the reforms that have begun to show some progress: Vote to reject the reforms that creditors demand, and the creditors will reward you anyway,” the Wall Street Journal editorial board fretted. “This could doom the center-right Spanish government of Mariano Rajoy as it goes to the polls later this year.”
The response to Greece’s “No” vote has been hailed as a welcome development by an unlikely union of far-left and fringe right political leaders. No doubt, a capitulation to the Greeks’ unreasonable demands will only facilitate the rise of extremist political elements on the continent.
The alternative to this course is to stand strong, cut off funds, force the Greek banking system into collapse, and compel the country to reinstitute a currency that they can value as they see fit to attract new investors and tourists from abroad. The easy part of this lamentable state of affairs would be the reprinting and reintroduction of the Drachma – and that will be a substantial challenge. A financial hardship of a kind unknown in a developed nation for generations will soon descend across the archipelago. A Greece that is suddenly untethered to Europe for the first time in nearly 70 years will present an inviting target for revanchist powers intent on overturning the present geopolitical order.
Near the open of America in Retreat: The New Isolationism and the Coming Global Disorder from Wall Street Journal columnist Bret Stephens, he relates an anecdote that serves as an illustration for how the Pax Americana began. Shortly after the end of World War II, as Greece and Turkey were descending into a crisis that many feared would lead both nations to tip into the Soviet sphere of influence, the British informed members of the Truman administration that they could no longer maintain their traditional role as guarantors of financial and military stability in the Eastern Mediterranean. The urgency of the crisis led to the development and practice of what became known as the Truman Doctrine, which held that the United States would support any nation threatened by Soviet communism in service to Kennan’s policy of containment. Just as a crisis in Greece heralded the beginning of America’s embrace of its global hegemonic status, a new crisis in Greece could signal the start of a new geopolitical epoch.
Russian President Vladimir Putin, an irredentist who is acutely vexed by the lost Soviet empire, is surely aware of all that Greece represents. He has spent political and hard capital reintegrating the “near abroad” into Moscow’s orbit by any means necessary and is busily doing the same for those nations that were once Soviet vassals. Moscow recently cajoled Egyptian President Abdul Fattah al-Sisi, chafing from what he perceives to be the rejection of Cairo’s allies in Washington, to request military aid from the Kremlin and to join Russia’s competing free economic zone, the Eurasian Economic Union. The EEU, a single market of nearly 200 million people with a GDP of over $4 trillion, is going to appear an attractive alternative to the European Union if Athens is suddenly cast adrift.
While Scandinavian countries openly flirt with the prospect of NATO membership in response to Russian threats – a possibility they did not seriously indulge even at the height of the Cold War – the Kremlin has to view demonstrating the fragility of at least one European alliance as a chief foreign policy priority. For their part, the Greeks may willingly aid Moscow in this pursuit. Given Syriza’s friendliness toward Russia and the Greek cultural affinity for its Orthodox brethren, the choice between East and West might not be all that difficult.
The choice facing Europe is a terrible one. There is no good option before them; do they invite the disintegration of their Union from within or allow it to be newly and uniquely assailed from without? In either case, dark days are ahead for the continent.