Foreign Exchange: Can the Greeks be more like the Germans?

Theo Moore is a senior director in APCO Worldwide’s Brussels office. He specialises in corporate and issues-based communication, stakeholder management and media relations. Liza Olsen, senior director in APCO Worldwide’s New York office, focuses on financial communication, corporate communication, litigation and crisis communication, and issues management.

The following is the third in an occasional series of brief exchanges on the sometimes divergent North American and European perspectives on interesting financial sector topics within APCO’s global financial services practice. Click here to view their last post on the fiscal cliff.

Liza Olsen

We just witnessed the second inauguration of President Obama.  After such a long, divisive election process, it was nice to have a moment to come together.  And while some might cynically say the moment lasted the 30 seconds it took him to repeat the oath of office, one thing is true:  Americans have different beliefs, cultures, religions, ideologies, etc. but somehow it works.  E pluribus unum.

In contrast, we worry there isn’t enough common ground for the European Union to rally around in order to deal with your challenges.  Take a look at how Greece’s economic policies differ from Germany’s.  Greece has embraced decades of unsustainable public spending.  Germany applies more thrift and budgetary rigor, paying taxes and promoting monetary stability.  How do these policies get reconciled?  Can the Greeks ever be more like Germans?

They probably need to be.  Germany and the United States have similar jobless rates, 6.9% and 7.9%, respectively.  These aren’t great, but Greece and Spain are now both over 26%. That is staggering. Not to mention that in both countries, more than 50% of those under 25 are unemployed. The last thing the EU needs is unemployed, politically disillusioned, angry youths rioting in the streets.

Theo Moore

Old World unity is oddly youthful. We stopped fighting each other in 1945; you stopped in 1865. Your foundational Constitution is late 18^th century but we got the Treaty of Lisbon in 2007 and the Treaty of Rome 50 years before that. We’re messy, incomplete, recent. The Berlin Wall only came down in 1989 and ten of our current Member States came from “the other side” of the Cold War. But we’re not as fragmented as you think. Greeks are Greeks and Germans are Germans but there are common histories and values across Europe. Ask Athenians or Berliners if they think balanced accounts, transparent politics, citizens paying taxes and a strong economy are good things. Europe is forging its “national economic identity” without detouring via Bull Run or Gettysburg. We’re comfortable that Greece will never be Germany because Portugal has neighboured Spain forever and they’re still hilariously different. We find common ground around a social market model; yes even Britain, even after Thatcher. Gerhard Schröder’s “carrot and stick” (Agenda 2010) made Germany what it is today by emphasizing both freedom and responsibility; pay hasn’t risen much, productivity has. Building this balanced model isn’t easy or pleasant but it is what we’re doing.

(Oh and I can’t resist: the first king of Greece was a German…)

Reply:

We’re hopeful for you, but getting mixed signals.  On the one hand, we hear Angela Merkel at Davos, expressing assurance over more European integration.  On the other, we continue to wonder whether Greece will leave the Eurozone.  And now, what about the UK?    My obsession with Downton Abbey notwithstanding, a European Union without Britain seems unworkable.  What’s needed now is action.  Europe needs to move toward a more distinct federal structure, giving the EU’s executive arm more power to govern.

(PS, Germans are everywhere among us.  Queen Elizabeth – German.  The Presidents Bush — German.  Even Barack Obama has German roots.)

Final Point:

I’ll confess I thought Greece would go but for now it looks stable(-ish). Today Brussels fears Brexit over Grexit. Cameron’s much delayed speech has lit a fuse. If 11 million Greeks leaving would threaten the EU’s future, what about 63 million Brits?

Re. federal structure, remember that FTT? It’ll be the first ever European tax. Sure, it’s only 11 countries but includes France and Germany.  And a Banking Union is forming up, meaning the ECB will now supervise  around 150 European banks, not national authorities.

We still need a resolution plan and to establish if the Eurozone is a transfer union, but there’s more than one way of being federal, surely?