A Speech of Hope for Greece – a Project Syndicate Op-Ed

ATHENS – On September 6, 1946 US Secretary of State James F. Byrnes traveled to Stuttgart to deliver his historic “Speech of Hope.” Byrnes’ address marked America’s post-war change of heart vis-à-vis Germany and gave a fallen nation a chance to imagine recovery, growth, and a return to normalcy. Seven decades later, it is my country, Greece, that needs such a chance.
Until Byrnes’ “Speech of Hope,” the Allies were committed to converting “…Germany into a country primarily agricultural and pastoral in character.” That was the express intention of the Morgenthau Plan, devised by US Treasury Secretary Henry Morgenthau Jr. and co-signed by the United States and Britain two years earlier, in September 1944.

Indeed, when the US, the Soviet Union, and the United Kingdom signed the Potsdam Agreement in August 1945, they agreed on the “reduction or destruction of all civilian heavy-industry with war potential” and on “restructuring the German economy toward agriculture and light industry.” By 1946, the Allies had reduced Germany’s steel output to 75% of its pre-war level. Car production plummeted to around 10% of pre-war output. By the end of the decade, 706 industrial plants were destroyed.
Byrnes’ speech signaled to the German people a reversal of that punitive de-industrialization drive. Of course, Germany owes its post-war recovery and wealth to its people and their hard work, innovation, and devotion to a united, democratic Europe. But Germans could not have staged their magnificent post-war renaissance without the support signified by the “Speech of Hope.”
Prior to Byrnes’ speech, and for a while afterwards, America’s allies were not keen to restore hope to the defeated Germans. But once President Harry Truman’s administration decided to rehabilitate Germany, there was no turning back. Its rebirth was underway, facilitated by the Marshall Plan, the US-sponsored 1953 debt write-down, and by the infusion of migrant labor from Italy, Yugoslavia, and Greece.
Europe could not have united in peace and democracy without that sea change. Someone had to put aside moralistic objections and look dispassionately at a country locked in a set of circumstances that would only reproduce discord and fragmentation across the continent. The US, having emerged from the war as the only creditor country, did precisely that.
Today, it is my country that is locked in such circumstances and in need of hope. Moralistic objections to helping Greece abound, denying its people a shot at achieving their own renaissance. Greater austerity is being demanded from an economy that is on its knees, owing to the heftiest dose of austerity any country has ever had to endure in peacetime. No offer of debt relief. No plan for boosting investment. And certainly, as of yet, no “Speech of Hope” for this fallen people.
It is the mark of ancient societies, like those of Germany and of Greece, that contemporary tribulations revive old fears and foment new discord. So we must be careful. Teenagers should never be told that, due to some “prodigal sin,” they deserve to be educated in cash-strapped schools and weighed down by mass unemployment, whether the scene is Germany in the late 1940s or Greece today.
As I write these lines, the Greek government is presenting the European Union with a set of proposals for deep reforms, debt management, and an investment plan to kick-start the economy. Greece is indeed ready and willing to enter into a compact with Europe that will eliminate the deformities that caused it to be the first domino to fall in 2010.
But, if Greece is to implement these reforms successfully, its citizens need a missing ingredient: Hope. A “Speech of Hope” for Greece would make all the difference now – not only for us, but also for our creditors, as our renaissance would terminate the default risk.
What should such a declaration include? Just as Byrnes’ address was short on detail but long on symbolism, a “Speech of Hope” for Greece does not have to be technical. It should simply mark a sea change, a break with the past five years of adding new loans on top of already unsustainable debt, conditional on further doses of punitive austerity.
Who should deliver it? In my mind, the speaker should be German Chancellor Angela Merkel, addressing an audience in Athens or Thessaloniki or any Greek city of her choice. She could use the opportunity to hint at a new approach to European integration, one that starts in the country that has suffered the most, a victim both of the eurozone’s faulty monetary design and of its society’s own failings.
Hope was a force for good in post-war Europe, and it can be a force for positive transformation now. A speech by Germany’s leader in a Greek city could go a long way toward delivering it.

Read more at http://www.project-syndicate.org/commentary/speech-of-hope-for-greece-by-yanis-varoufakis-2015-06#0WvMWCrO6hYLJsph.99


  • YANIS, I have a great deal of personal sympathy for you. This is a brilliant piece. But it seems to me a Hail Mary that is going to fall on deaf ears. I see nothing but the most hostile reaction against you. Ridiculous declarations by people like Martin Schultz, complaining that you irritate him, demonstrating his own hopeless ignorance of economics and even common political sense. You seem like Alexander Fleming arguing with a bunch of people in the Middle Ages about the causes of Bubonic Plague. To make matters worse, Mr Schauble, who was the architect of OSI Ponzi loan and deflationary/ financial repression policies that monetize the banking losses on the middle classes in Europe, has got all the former pro-Nazi, newly fledged Eastern European member states rallied against Greece and yourself, seeking an uncollectible pound of flesh. So I fear that your eloquent piece is made before a pack of werewolves ready to tear your flesh and Greece to pieces.

    My modest proposal would be to find a way to unravel the Eurozone so suffering members like Greece can re-couple and change the architecture of the EU to a looser free trade zone for UK, Scandinavia and European South with a Northern European core remaining in a currency zone that complies with Mundell criteria. Greece needs a completely new bilateral IMF program for transition for which morally the EU should be providing substantial reparations. In any case, existing OSI debt should be cut very deeply, maybe as much at 80% of nominal value in the ensuing composition agreement winding up affairs in the Eurozone and existing to a national currency. Something like this has already been suggested by Hans Werner Sinn. Nearly all the EU southern European members need similar relief and exit from the Eurozone.

  • “…Teenagers should never be told that, due to some “prodigal sin,” they deserve to be educated in cash-strapped schools and weighed down by mass unemployment, whether the scene is Germany in the late 1940s or Greece today…”
    … regarding greek Teens, it’s too late, I’m afraid…

  • Before Merkel makes the trip down, It would be worth thanking Germany for their support and the German taxpayers for funding that support (for two bailouts already). We all need to realise however that at a time when the ECB is creating billions and pouring them into the European economy to fight deflation, it is a morally repugnant thing to ask Greek pensioners and workers to suffer more cuts in their incomes. This problem is not a problem for faceless markets, it is a problem for real people. How would you feel if your salary went down 10% or 20% or 40%? How would you live? How would you explain to your kids the change in lifestyle? Would you say it is the fault of ‘governments’ so its ok that YOU pay? Can the German taxpayer really say that Greek families need to pay for the faults in the design of the Euro, the manipulations of Goldman Sachs, the actions of predatory elites foreign and domestic?

    There are many things wrong with Greece, and many things wrong with the Greek leadership at the moment. Yet, in a rotten system, rotten policies like the deflationary, recessionary austerity that the German government is insisting on are not pointing to a path of prosperity and peace for Europe. Blame not the Greeks for the current troubles and allow some of the money printed out-of-thin-air by the ECB to actually invest in the real economy, as opposed to making profits for financials. Greece needs a change, but families do not deserve to suffer for historical and institutional failures. 

    Read more here: https://iglinavos.wordpress.com/2015/05/28/i-would-like-to-thank-the-german-people-a-letter-to-germany/ 

  • Dear Yanis,
    You wrote: “By 1946, the Allies had reduced Germany’s steel output to 75% of its pre-war level. Car production plummeted to around 10% of pre-war output. By the end of the decade, 706 industrial plants were destroyed.”
    The comparisons to the current economic disaster occurring in Greece due to the punitive policies of austerity are only too obvious. A “Speech of Hope” indeed needs to be delivered. If no one steps up to the plate voluntarily, please recruit someone who can deliver!!

  • You describe very clearly the agony of Greek peaple after 2010, who after all can’t be blamed for the foul of Greek plitical and economical elites of the past. Yet, EU is not only Germany, nation whose historical responsibility for the misery of Europe prevailing unt

    • You describe very clearly the agony of Greek people after 2010, who after all can’t be blamed for the fault of Greek plitical and economical elites of the past. Yet, EU is not only Germany, nation whose historical responsibility for the misery in many places of Europe prevails until now. Take country like Poland or Czechoslovakia, countries who vere the first victims of Nazi Germany. Then after the war they were victimized by the Stalinist USSR, and 25 years ago slipped out of this reign of evil with tooth and eye. And let me to remain you, these countries before WWII were economically among the most advanced nations in the world, as contrary to Greece of those days. Today, 25 years after the fall of Berlin wall, and after investing enormous effort to rebuild their economies and even more their society crippled by 40 years of despotism, humiliation, imposed policy of systematic destruction of local elites in every field, where these countries are? People in these countries until now had never tasted the welfare created by the post war western Europeans. Their standard of living is still under that of the post 2010 Greece. And lets not forget, as contrary to Greece, they are not victims of cynical local elits, but of two big European nations, they happened to be located between.

    • The lack of a social system in countries you have described is not an argument for the destruction of established social systems in others. In my mind, and clearly the agony of most people (working people), is that at the end of the day, they will not die on the street like dogs, after 15-20-25 and 35 years of work.

      You should do some research about the US paradigm which seems to enthrall you. Ask how many Americans fear nothing more than losing their jobs? Do you know what they put up with to maintain their jobs just to have basic health care? Do you understand what patronizing means and harassment in the workplace?

      Just to get a taste of the culture that this paradigm has bred, watch some American TV. An extreme but classic example is the famous show NCIS (i.e. sexual harassment, head slapping, employees/subordinates sucking up, acting like slavish children wanting -begging- to be pleasing to their masters – bosses). It is an exageration, but not too far from the truth. People hold on to jobs like bagging groceries just for the benefits, but without any real prospects for career or financial stability. As for rest time and vacations, well you can forget that. Never mind that elderly people keep working just to keep their health benefits, either for themselves or their families. And this is AMERICA! The land of FREEDOM and JUSTICE, where DREAMS come true. Now imagine other countries less prosperous. The idea of someone being treated with respect, as an active contributor to his country, being tossed on the side once he or she is too old or ill, is unthinkable. It is ANIMAL!

      I live in Canada, and most of these behaviors would be condemned as harassment in the work force. Why, because Canadians, do not fear left in the ditch for dead if they lose their job.
      But I suppose this is not the kind of social net you promote. You seem to like the American model.

    • Dear Nicholas, thank you for your response and let me clarify my standpoint on the issue. I myself was born in one of the communistic countries, tasting the despotism of this regime deep in to my bones, even if i left to the free world as a teenager. Of course this is my personal story, while the more common story is of the people hateing risk and changes, and any of these puts them out of balance.
      The other issue is the agony you are describing of those working years in a working places without the knowledge what will bring the next day. If in the US the social security system was never really developed, mainly not the health care, in Europe it is collapsing due to several macroeconomic and demographic trends. European economy turned from full employed economy to an economy with more than 10% unemployment, while most unemployed are the young new generation and workers not organized in the unions. This phenomena will not change easily, in contrary i expect further deepening of this process in the future.
      As to the demography the aging of the European population, puts unacceptable burden on the young population, that has its own problems of finding steady jobs even if well educated. The technological revolution, that in the last decade squeezed even more the employment opportunities, is speeding up.
      So what all this means to those whom you describe rightly as … “People hold on to jobs like bagging groceries just for the benefits, but without any real prospects for career or financial stability”….. They have to change their concept of life. In the future world, will be no secure jobs, no huge employers with organized work. Most probably those who don’t adopt, will be out of work. Yet this doesn’t mean they are doomed to despair. The future economies in country where there is a relatively normally functioning democratic government, without too much corruption will be rich enough to take care of those people who are out of the jobs. Definitely should be given to them health care, but also social security and free education-training for all the ages. Yet to make this happen a political change is needed, from a world where the main actors in politics and economics don’t join forces to impoverish the rest of the population, but let them share the wealth created by the new sciences and technologies.

  • I cannot resist to show my own view of the progress of your negotiation progress. I think that your title could easily be changed to read: “A Speech of Hope for Germany and EU” (take a look at the EURUSD exchange daily chart date the climb start after hitting bottom)EURUSDDaily.png