The eurozone has become a murder-suicide pact

It's coming down to the wire in Greece. A few days ago, the Greek government instituted capital controls to prevent its banks from collapsing. At loggerheads with its European taskmasters, they have scheduled a referendum on their policy trajectory: "Yes" means austerity and sticking with the euro; "no" means default and likely leaving the monetary union. Most recently, the government missed an IMF payment, making it the first "developed" nation to do so.

The politics of the eurozone have rotted into almost the exact opposite of its original purpose. A policy intended to bind Europe together, so that the awesome horror of the Great Depression and World War II could never be repeated, has instead laid waste to entire nations, and fueled galloping mistrust and hatred. Greece is first on the chopping block — but absent wholesale changes in European politics and policy, it won't be the last.

It's worth carefully examining the timeline of events since Syriza was elected in January, as Dylan Matthews does here. For all their bluster and radical rhetoric, Syriza has basically given up on most of their core commitments, because they simply don't have much leverage now that Greece has been financially ring-fenced. In February, they agreed to an austerity agreement in return for a four-month delay, and in the most recent negotiations, they accepted the amount of demanded austerity, only asking that it be implemented in the form of corporate tax increases rather than pension cuts and a VAT increase. Euro elites would not accept this — essentially demanding full control over all aspects of Greek budget policy — which led to the impasse and referendum.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The politics of the this crisis hinge entirely on resentment, suspicion, and xenophobia rapidly curdling into racism. Northern Europeans are incoherently furious at the supposedly shiftless Greeks for needing a bailout, while Syriza hasn't been above pulling the Nazi card.

Even at the top, it's obvious that most eurozone elites, like German Finance Minister Wolfgang Schaeuble, basically despise Syriza, and are half aiming at regime change in Greece like the one they pulled in Italy. Nations like Ireland meekly accepted the elite judgment and as a consequence got some minor control over their budget policy, including the right to favor tax increases. (Would you like your strychnine injected or snorted?) But Syriza is composed of true leftists who don't hesitate to say in clear language that European elites are a pack of colossal bunglers who have laid waste to Greece for no real reason.

They are right — and if eurozone elites are dissatisfied with Syriza's lip, they have no one to blame but themselves. Previous supine center-left governments, headed by PASOK, did Europe's bidding unquestioningly during the utterly botched Greek bailout of 2010 and debt restructuring of 2012. They would and did accept any "structural reform" proposed, and it would have been trivially cheap to provide them enough cash to keep their economy from collapsing while an orderly debt write-down was arranged. Instead, a huge non-default bailout was arranged (only delaying the inevitable) in return for the economic policy equivalent of sawing off your own leg. Today, Greece's debt-to-GDP ratio is higher than it was in 2012.

It turns out being in power while unemployment skyrockets towards 30 percent is not so great for one's political prospects. PASOK did not just lose, it has been essentially destroyed — falling from 38 percent of the vote in 2009 to less than 5 percent this year.

This matters not at all to Europe's ruling class, however, where the democratic will of sovereign nations is nothing but an irritating formality. When he mentioned Greece's referendum in a Eurogroup meeting, Greek Finance Minister Yanis Varoufakis reported this response: "How do you expect common people to understand such complex issues?"

As Matt Yglesias notes, at this point other nations are probably of greater concern to the European elite. If Greece elects a bunch of angry leftists who manage to extract some concessions and an eventual economic recovery, that would send a problematic message to the other struggling eurozone nations like Spain, Portugal, and Italy. Greece must be cudgeled into cringing subordination — or if it leaves the euro, it must be as brutal an experience as possible, so as to put fear into the hearts of anyone else who would question elite hegemony.

That seems to be the ultimate endpoint of European post-democracy. Eurozone elites were too stupid or insane to avoid crushing Spain and Greece (and every member of the eurozone to some extent, even Germany) with austerity and tight money. Now that the worst-hit country has tried to wriggle out of the iron maiden, it will either be forced to submit or scourged out of the euro. If Spain tries the same trick — it has seen the rise of a similar leftist party — it will surely get the same treatment. God only knows who might be next, when the next financial crisis comes.

Unity, prosperity, and democracy have been struck off the European monument. In its place are division, economic collapse, and an aristocracy of well-credentialed idiots.