Monday 2 February 2015

Greece: Answering Juergen Kaiser's Question.

Using the German historical experience as illustration of the convenience of debt relief, Juergen Kaiser ("One made it out of the debt trap"), from the social-democratic Friedrich-Ebert-Stiftung, makes a good case for debt relief to Greece (h/t Bill Mitchell).

Kaiser structures section 4 of his paper as replies to a series of objections against debt relief. Ironically, in that section, he himself points precisely to the reason further debt relief is unlikely to be voluntarily given.

This is the fourth objection (page 19):
"Germany obtained its debt relief only because of the Cold War".
And this is his reply:
"Quite correct. The agreement and its generous terms demonstrate two things: (1) the strong commitment of the Western Allies not to repeat the mistake committed after the First World War, namely destabilising the defeated enemy politically and socially by imposing an unpayable toll; (2) the ability of the Adenauer government to capitalise on West Germany’s unique position as a front-line state in the Cold War. Without this latter point, aspect (1) would still have been valid. John Maynard Keynes and other architects of the post-war global economy stressed it time and again. However, the ultimate relief might have been somewhat less generous, had it not been considered to be a contribution towards the containment of the 'communist threat'."
He closes that reply thus:
"But what does that mean? Are present-day commitments -- for instance, to economic and political stability in the Eurozone or to the Millennium Development Goals -- less serious than Western political interests in the 1950s?"
My answer: Obviously.

See here.

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