Lessons from Greece? Individuals Matter

European integration is a process that derives from broad social movements. We look for its origins in the terrifying experience of the twenty years’ crisis, bookended by two cataclysmic world wars. ‘Europe’ is not necessarily a rejection of the nation state, but it is an attempt to rescue the nation state from its inherent limitations and vices. It is a forum within which France and Germany can reconcile their differences; Britain can adapt to its relative decline; Southern Europe can find a bulwark for democracy; and Eastern Europe can emerge from communism.

But Europe is made by people and sometimes individuals can play a decisive role. The events of the past summer are a good example. There are many prominent scholars who have tried to cast the Greek crisis as some kind of clash of economic cultures or institutional path dependence gone wrong. Those arguments have merit. But they do not capture the essence of what happened; they fail to explain how Europe came so close to disaster; and they make it harder to anticipate what could still go wrong.

A handful of people made a difference. If we could swap them out and rerun the story, it would probably have a different ending. Consider the role of Mario Draghi, for example. Draghi was not the first choice for European Central Bank (ECB) President. That role went to Bundesbank President Axel Weber. Draghi came into the frame only once Weber indicated that he would not accept the position as ECB President in protest over the ECB’s securities markets program. Had Weber made a different choice, European policymakers would not have spent the summer focussing on Greece because they probably would not have had the long-term refinancing operations or the open monetary transactions that allowed Europe’s sovereign debt crisis to drag on past 2012. [And EUSA would have commissioned this forum three years ago with a focus on Italy and Spain rather than Greece.]

We could also swap out Wolfgang Schäuble. Schäuble is important because he has such strong views on moral hazard and the rule-based structure of European macroeconomic policy coordination. We could argue that these are an essential feature of the German economics establishment. Similar views explain why Weber was so opposed to the securities markets program; they explain why ECB Executive Board Member Jürgen Stark resigned his position in 2011 as well. Yet we also know that prominent policymakers close to the SPD have different views. Peer Steinbrück promised not to let the Greeks go bankrupt in February 2009; all Greek prime minister George Papandreou wanted twelve months later was for Germany to reassure the markets that commitment remained in place. When it became clear that Schäuble would offer no such support, Papandreou asked for the bailout.

The SPD-leaning ECB Executive Board Member who was appointed to replace Stark –  Jörg Asmussen –  was also more flexible. Asmussen split with Weber’s successor, Jens Weidmann, over the legality of outright monetary tractions, for example. Hence it is worth considering whether a German finance minister closer to Steinbrück or Asmussen would have circulated a proposal suggesting that the Greeks be given a ‘temporary’ exit from the euro.

We could have had different Greeks as well. Imagine if the Syriza victory brought with it a finance minister as bright as Yanis Varoufakis but with better interpersonal and diplomatic skills. Such a person might have won more concessions from the ECB (like and extension of the waiver on eligibility requirements for use of Greek sovereign debt instruments as collateral) or from the Eurogroup as a whole. Life would have been easier for Greece if Eurogroup President Jeroen Dijsselbloem had not felt compelled to threaten the collapse of the Greek banks (as Varoufakis alleges). Even simply not antagonizing Schäuble might have resulted in better conditions. We will never know. A less charismatic and audacious leader than Alexis Tsipras is another plausible counterfactual. A weaker leader would have withdrawn the referendum threat (like Papandreou did) or followed the referendum outcome to its logical (and disastrous) conclusion. I say this not in admiration of Tsipras but rather out of recognition that I never predicted (or could have predicted) that he would successfully navigate the path he has.

A final example is German Chancellor Angela Merkel. It goes almost without saying that she was at the centre of this crisis. It is easy to imagine that things would have evolved differently without her in that role. She managed to hold her coalition together and to rein in her finance minister –  all the while winning enough concessions from the Greek government to satisfy other, more recalcitrant, EU member state governments. Her performance was not perfect, but I am not sure who could have done better. I still worry about the consequences had this crisis been allowed to spiral out of control.

This point about individuals is important because all politicians are vulnerable. Merkel managed to hold Europe together during the Greek crisis only to ignite an even larger crisis over migration. She did not create Europe’s migration problems – or the war in Syria, the failed stabilization in Libya, etc. –  but they did emerge on her watch and how she manages them will make all the difference. The same can be said now for Tsipras in Greece, even with Varoufakis out of the picture. Greece is the point of entry for more than 80 percent of migrants into the Schengen area –  roughly 800,000 in the first eleven months of 2015 with even more to follow in the coming year.

Both Schäuble and Draghi will play critical roles in responding to the migration crisis as well. Schäuble is critical because this migration crisis creates fissures in the governing coalition in Germany that Merkel cannot handle directly. Migration also places upward pressure on fiscal spending and so raises new questions about how to interpret European rules. Draghi is important because the ECB has run out of room for manoeuvre to stimulate European macroeconomic performance. The migration crisis is as adverse shock to business confidence; efforts to respond to the crisis are lowering the efficiency of the internal market. A full-blown political crisis around the migration issue will only make matters worse.

The lesson from Greece is that individuals matter. This does not deny the significance of broad social movements. Anyone looking at the masses walking across the western Balkans or the rise of right-wing populist movements can see that there is change afoot that must be managed. If individuals mattered in the Greek crisis, it is reassuring that they avoided disaster. That will not always be the case. We may soon learn that even well-tested political leaders can fail to rise to the challenge.


NB: This essay first appeared in the forum section of the political economy interest section newsletter (December 2015) of the European Union Studies Association of the United States. That forum is worth reading in full because it includes contributions from Mark Blyth, Kathleen R. McNamara, Hubert Zimmermann, Daniela Schwarzer, and Amy Verdun. Many thanks to Miguel Otero-Iglesias for doing such an excellent job pulling the forum together. Miguel’s introduction is a reflection worth reading on its own.

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