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Featured Greek NewsGreece and Israel: Two States at the Tipping Point  ...

Greece and Israel: Two States at the Tipping Point   By Dr. Robert Zaller

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Greece and Israel are two small modern states with ancient pasts, one at the geographical edge of Europe and the other of the West itself. Each has played a role in the shaping of Western civilization far out of proportion to its physical size. Each, in a different way, now faces a crisis that goes to the core of what that civilization means, today and tomorrow.

Greece joined the European Union under false pretenses in 2001. Its economy, classically underdeveloped, had many of the characteristics of such economies: overurbanization, clientelism, and elite corruption. It subsequently followed a classic trajectory of predatory loans and collusive borrowing by state actors over the next seven years, sealed by bribes and covert understandings. It will take a long time to fully disentangle the story, but the outlines are clear: Greek politicians mortgaged their country’s economic and cultural assets, and its political sovereignty as well, to international banks and to the hegemonic ambitions of the European Union’s dominant power, Germany. By 2008, Greek indebtedness, although a minor item on the balance sheet of the European Union, was enough that any large-scale crisis could render the country technically insolvent. Such a crisis occurred that year in the worldwide financial collapse known as the Great Recession.

Greece was swept up in this crisis in much the same way as other debtor nations, particularly on the periphery of Europe: Iceland, Ireland, Portugal, Spain, and Italy. All were subjected to ruthless regimes of austerity that led to severe economic contractions that, in the case of Greece and Spain, resulted in sustained unemployment above 25%—rates that exceeded the worst figures of the Great Depression of the 1930s. The purpose of this was to extract wealth to repay sovereign and banking creditors: in short, the very agents responsible for the financial crash would have their losses borne by their chief victims.

A not dissimilar scenario played out in the United States, where banks and corporations deemed too big to fail were bailed out at public expense. There was, however, a significant difference: the U.S. at no time contemplated the default of individual states, many of which were themselves at the point of bankruptcy. Instead, they were given direct cash infusions by Washington. Federal policy did many things in the wake of the crisis that exacerbated it, and great hardship was avoidably visited on the many millions who lost their homes and employment. But it did not attempt to single out particular states for fiscal punishment, or use the crisis as an opportunity to mulct them of their assets and strip them of their sovereign authority. This did occur in Europe, and especially in the case of Greece.

Greece was not only subjected to what has justly been called fiscal waterboarding to a greater extent than anywhere else in Europe, but it has also been excoriated and vilified as has no other EU member. It may or may not be a coincidence, but neither Ireland nor any of the other Mediterranean countries exposed to austerity resisted German aggression during World War II (Italy was, of course, an ally). Only Greece did. The Greeks have long memories of this experience, which resulted in an occupation that cost them 200,000 dead. It may be that the Germans do as well. In any case, the humiliation of Greece has been exemplary and thorough.

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And the Greeks have at last rebelled. While all the other austeritized states of Europe have submitted to their punishment—that is to say, immiseration and forced wealth transfers—under quisling “conservative” regimes, Greece voted in a leftist coalition, Syriza, which has asserted the odd-sounding doctrine that actually starving citizens come before debt-hungry banks. The Germans and their fellow players in the European Central Bank responded with fury when the new government announced a 200 million euro relief fund for its neediest citizens without asking creditor permission. This has led to renewed threats to push Greece into open default and force its exit from the eurozone.

I think the Greeks should get up and leave on their own. I think they should have done so six years ago, when the EU imposed terms on them that were certain to plunge Greece into lasting depression and debt peonage, and put its economy into foreign receivership. It will be harder to do so today, but there is no other path forward unless the EU unclenches its jaws and permits Greece to recover on its own terms. The events of the past two months, and the ones that loom ahead, make it highly unlikely that it will do so.

Once Greece returns to its own currency, the drachma, it can either recalculate its obligations in terms of the drachma’s exchange value or opt for default. To survive, it will have to cultivate its assets, notably shipping and tourism, and put an end to its clientelism. It will also have to find fresh sources of capital, since it will certainly be frozen out of European currency markets, and almost as certainly the International Monetary Fund. It will have to find new diplomatic partners at the same time. Russia comes immediately to mind, and, not coincidentally, Greece’s new prime minister, Alexis Tsipras, will soon be visiting Moscow. China has already heavily invested in the reconstruction of Greece’s chief port, Piraeus.

Some observers think a Greek exit from the eurozone could lead to the unraveling of the European Union itself. There couldn’t be a happier result. Under German domination, the EU has become a Fourth Reich. In economic terms, it has been little better for much of Europe than the Third one was.

Israel has a different problem. Since it proclaimed statehood in 1948, its chief sponsor and protector has been the United States. Even before that, the Jewish community in Palestine was regarded in the Arab world as a spearhead of Western imperial interests. There has been more than a little truth to this perception. Israel joined Britain and France in their ill-conceived venture to seize the Suez Canal from Egypt in 1956. It was rescued from defeat and destruction by American intervention when the Arab League attacked it in 1973. It receives more military aid from the U.S. than any other country, and its security service, Mossad, is highly integrated with its American counterparts. The Iron Dome missile defense system that protected its cities from bombardment by Hamas last summer relied heavily on American subvention.

Since America’s chief geopolitical interest in the Middle East has been access to its oil, however, its support for Israel—whose presence as a felt intrusion on Muslim soil has never been accepted in the region—has always been a source of tension. This has been particularly true since 1967, when Israel occupied the West Bank of the Jordan River following the Six Day War. For nearly fifty years, the creation of an independent Palestinian state on this territory has been the principal diplomatic issue in the Middle East.

In the past several years, however, there has been a tectonic shift in the Middle East. The destabilizing effects of America’s invasion of Iraq produced the Arab Spring revolutions of 2011, the disastrous civil war in Syria, and the creation of a de facto Islamic state, ISIS, across broad swaths of northern Iraq and western Syria. The principal beneficiary of this unrest has been Iran, America’s chief rival in the Middle East, whose influence has grown exponentially in Iraq, Syria, Lebanon, and Yemen. An all-but declared war exists between Shi’ite Iran and the chief Sunni powers, Saudi Arabia and Egypt, and is being waged by proxy in Syria and Yemen. The U.S., seeking to keep its fast-weakening foothold in the region, has made an alliance of convenience with Iran against ISIS, and engaged it in multipower negotiations aimed at lifting economic sanctions in place against Iran for nearly two generations in return for a promise not to build nuclear weapons for ten years.

Since Iran has repeatedly proclaimed the annihilation of Israel as a solemn obligation since 1979, the prospect of cooperation if not accord between Teheran and Washington is a nightmare scenario for the Israelis, whose Prime Minister , Benjamin Netanyahu, made an impassioned plea before a joint session of Congress last month against the proposed nuclear treaty. An infuriated President Obama, seizing upon Netanyahu’s (since-retracted) comment that Israeli-Palestinian negotiations were a dead letter, all but threatened to leave Israel to its fate.

This is a hasty summary of a complex set of issues, but it raises for Israel, as in a different way for Greece, a pertinent question: why should it not take control of its fate?

Separating (not necessarily parting) from the United States would have important advantages—and challenges—for Israel. Israel’s destiny, if it is to have one, will be as a Middle Eastern country, not as an appendage of the West. It has, at the moment, decided assets to offer the Sunni powers in the region, most obviously its own nuclear capacity, but also its cyberwar skills and its intelligence network. A de facto alliance with Saudi Arabia and Egypt (with which it already cooperates) could have ancillary benefits on the Palestinian question, too. All of this is risky and, for the moment, conjectural; but Israel’s future in its neighborhood is as a savvy player protecting its own interests, not as an American proxy. It may not be the Israel we have been used to. But it might be an Israel with a better chance to survive.


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