Wolfgang Schaeuble’s ‘Black Zero’ dogma finds a new adept: Greece

By Vasiliki Siouti

It is perhaps indicative of the situation that the two Eurozone countries which are aiming for the ‘black zero’ (in German Schwarze Null, in other words a balanced budget which includes the servicing of the debt) are its strongest (Germany) and its weakest (Greece).

Schauble, however, has come under intense criticism from many in Germany over the ‘black zero’ that he is aiming for in 2015 budget. Even the ‘wise’ advisors of the German government, such as Peter Bofinger , have said that the ‘black zero’ is proof that Schauble knows nothing about economics. But this has not fazed the Greek prime minister who also wants to achieve a ‘black zero’. This can only be accomplished with harsh austerity and fiscal discipline.

What is almost certain is that the German government does not intend to loosen the grip on Greece. German officials are still insisting, four years on, that Greece is a ‘special case’.

They say that Greece’s situation is not comparable to that of Ireland and Portugal or even that of Cyprus. Greece, they claim, is ‘problematic structurally, because of the political system, corruption and nepotism, to a degree found only in third world countries.”

German officials who have dealt with Greece in the past years say that these ills also exist in the other countries but, insist “such an inefficient, incompetent and corrupt state is found nowhere else”.

“The fact that signatures were asked for [that Greece will uphold the terms of the bailout agreements signed with international creditors], even from the leader of the opposition, was demeaning,” a German analyst said.

“This indicates the degree of mistrust that Germany felt towards the Greek state and its political system, even towards those of the same ideological persuasions of Merkel and Schauble.”

The Germans acknowledge that the Greek government voted through laws that were not easy to pass but at the same, they hold it against it for delaying to implement a lot of these laws. It is obvious that they are convinced that Greece will only stay in line if it is strictly supervised and monitored.

In the mind of the Germans – and this is clear to anybody who follows German analyses of Greece- that what the country needs is life-long reform. They believe that the Greeks don’t want this and that, once they are not under supervision, they will roll back to their old ways.  This is not something they believe about the Irish or the Portuguese. It’s just about the Greeks.
 
They also know, and stress, that Greece – contrary to 2010- cannot press the red button. Greece no longer poses a systemic danger, and is not feared by the Germans. The EU, they say, is fully fortified today. For this reason, they do not feel threatened by a possible – but not welcome-  Syriza win in the next elections.

When Antonis Samaras last visited Berlin (despite the recommendations to the contrary by the Greek ambassador who is also relative of the prime minister) he attempted a mini coup, mainly because of the panic triggered by Syriza’s lead in the polls. Merkel did not reveal her cards at the time, but she did note that his move was a foul: The fact the Greek prime minister had publicly (and unilaterally) stated that Greece will exit the bailout, only showed that he is applying pressure without the capability of achieving it. 

The German government knows, and shows that it understands, that the third bailout they wanted to impose, would possibly mark the political end of Antonis Samaras and his government. The markets though, as well as Germany, do not agree with an exit as they do not believe that Greece is ready.

This is how they came up with the ‘precautionary line [of credit]’ and the ‘ousting’ of the IMF, which, in essence, will bring no change to the policies enshrined in the memorandum. On the contrary, the memorandum will continue with, perhaps, even tougher measures, if one considers the laws in the medium term budget that was voted through and the surpluses that Samaras wants to achieve in the coming years with anaemic growth. 

The ‘black zero’ that he wants can only be achieved by further squeezing wage earners and pensioners and by further shrinking the welfare state (whatever’s left of it).

The Germans, though, don’t appear especially frightened of Syriza, nor the threat of a Greek eurozone exit. They say they are ready for everything and insist that they will not back down. Besides, the Germans, in contrast to the Greek, not only have a plan B, but plans C and D as well to deal with any eventuality.