Greeks and other southern Europeans could now be feeling schadenfreude as Germany faces the collapse of its economic model in the face of the Ukraine war and the new cold war with China. But with a democratic Europe in the balance, this is no time to gloat.
ATHENS – It is never easy to wake up to the news that your country’s business model is busted. It is difficult to acknowledge the obvious: that your political leaders had either been deluded or lying to you when they assured you for decades that your hard-earned living standards were safe. That your immediate future now relies on the kindness of foreigners determined to crush you. That the European Union, in which you had placed your trust, had been engaging in a permanent concealment exercise. That your EU partners, to whom you are now appealing for help, look at you as a villain whose comeuppance is long overdue. That economic elites in your country and beyond are seeking novel ways to ensure that your country remains stuck. That you must endure massive, painful changes to ensure that nothing changes.
Greeks know this feeling. We experienced it in our bones in early 2010. Today, it is the Germans who are facing a wall of condescension, antipathy, and even mockery. Ironic as it may seem, no Europeans are better placed than the Greeks to understand that the Germans deserve better; that their current predicament is the result of our collective, European failure; and that no one – least of all the long-suffering Greeks, southern Italians, Spaniards, and Portuguese (the PIGS as we were once called) – benefits from schadenfreude.
The tables have been turned on Germany because its economic model relied on repressed wages, cheap Russian gas, and excellence in mid-tech mechanical engineering – particularly manufacturing cars with internal combustion engines. This resulted in massive trade surpluses during four distinct post-World War II phases: under the US-led Bretton Woods system, which provided fixed exchange rates and market access to Europe, Asia, and the Americas; then, after the collapse of Bretton Woods, when the single European market proved highly lucrative for German exports; again following the introduction of the euro, when vendor financing opened the floodgates for both goods and capital flowing from Germany to Europe’s periphery; and, finally, when China’s hunger for intermediate and final manufacturing products took up the slack after the euro crisis dampened demand for German goods in southern Europe.