Focus on the big picture to save the Eurozone

As is often the case in situations of conflict, each side tends to see the problem exclusively through its own lens. The problems of Greece are to be found in Greece not elsewhere, remarked recently the German Finance minister Mr. Schauble. Austerity imposed by its lenders destroys society and must be stopped, the newly elected Greek PM Mr. Tsiprasargued in parliament. They are both right. If each one could accept this, they would start thinking differently – more like visionary statesmen, less like stubborn politicians. There is no doubt that Greece has several institutional flaws that not only made it the weakest link of the Eurozone, but have multiplied the harsh effects of austerity imposed on it by its bailout. At the same time, there is no doubt that, as even the IMF has acknowledged, the austerity imposed on Greece has been too severe for any society to endure, comparable only to the Great Depression in the 1930s. As long as each side sticks to its own view of the problem, it will lose sight of the big picture. And the big picture is the need to preserve the Eurozone. A break up would be catastrophic economically. Politically,it would plunge the continent into chaos, reversing the ambitious post-War project of ever closer cooperation among European nations. To act with the big picture in mind implies that each player will behave in a way that is self-restrained, since it can now acknowledge the right of the opposite side. This, in turn, means that the interests of both sides will be best served if each is willing to modify its view rather than merely assert its own right. Germany needs to acknowledge that the Eurozone is an ill-designed structure. The euro is not supported by a political community that is willing to share risks.The austerity imposed on Greece by its lenders has generated consequences far more adverse than envisaged. Greece ought to accept that it has dragged its feet on structural reform for too long; it has been living on borrowed money and EU subsidies for decades, postponing modernization for the sake of preserving a clientelist system. Modernity has not fully arrived in a country whose state administration is captured by party political cronies, whose rule of law has often been perverted to the rule by oligarchs, corrupt politicians, and powerful special interests. To preserve the Eurozone, its members must seek to better balance its two main pillars (economics and politics) and, thus,gradually form a political community capable of sharing risks. Germany needs to be more risk-sharing and open-minded. But for a political community to be viable certain institutional norms must be enacted and respected. Greece ought to embrace reform - not simply economic but institutional. If the right of the opposite side is acknowledged, new possibilities open up. It is not only the other side that must change, but one’s own side too. Principled compromise becomes possible. The classic tragedians were aware of this. In Antigone, Sophocles shows the devastating consequences of self-righteous stubbornness.  On the one hand there is the right of Creon, the King of Thebes, to enforce the law. On the other hand, there is the unwritten right of Antigone to bury her dead brother, even if he was a traitor to his city and, according to law, should remain unburried. By each one stubbornly sticking to his or her right, Creon and Antigone bring tragedy to their city. At the end of the play, having lost his son and his wife, Creon realizes his poor judgment. Tragedy taught him wisdom, but, alas, it is too late! The play ends with the Chorus noting that “the mighty words of the proud are paid in full with mighty blows of fate. And at long last, those blows will teach us wisdom”. Here is the Sophoclean challenge for our politicians: true statesmanship is finding the courage and having the intelligence to be wise without experiencing tragedy - to see the big picture, to acknowledge the right of the other side, to craft space for compromise. Can Eurozone decision makers live up to that challenge? Haridimos Tsoukas (www.htsoukas.com) is a Columbia Ship Management Professor of Strategic Management, University of Cyprus. He has co-edited the volume From Stagnation to Forced Adjustment: Reforms in Greece, 1974-2010 (Columbia University Press, 2012).