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Where is the deal between Athens and Berlin?

Wed, 11 Feb 2015 04:56:16 GMT

I am on my way to Strasbourg, to meet Marine le Pen, leader of the Front National, for the second time in just a few months - for a film I've been making about the significance of the surge in popularity of younger populist parties of left and right throughout Europe.

Their rise and rise is both a response to the lamentable economics of Europe and - especially - the eurozone. And they will be the big influence on the region's economic future, for better or worse.

Le Pen, for example, is the only French politician more-or-less certain to be in the second and final round of voting in the 2017 presidential elections - and if the weekend's parliamentary by-election in Doubs is a guide, if she loses it will be by a whisker.

In Spain, Podemos from the left has become a formidable force and existential threat to Rajoy's government in record breaking time.

And, to state the obvious, Syriza is in power in Greece and - for now at least - is the biggest noise in the whole of Europe.

These parties, for all their differing ideologies, have a couple of big things in common: they are convinced austerity is needlessly impoverishing their nations; and they believe the economics of the eurozone have been rigged to serve the interests of a discredited political establishment and to the detriment of working people.

The best way perhaps of understanding the anger that has turned them into the great political force of our age is in the differing life prospects of Spanish and German 17-year-olds - the first almost certainly condemned to years of unemployment or chronic under-employment, the latter more-or-less guaranteed high-skilled remunerative employment for life.

It is all very well to blame the fecklessness and greed of past governments and banking executives in southern Europe for the mess that Spain, Greece, Portugal and Italy find themselves in today. But no one can surely blame a teenage Spaniard or Greek for the absence of job opportunities today.

Which seems to me to point to arguably the most disturbing characteristic of the current refusal of the German, Spanish or Finnish governments to contemplate lessening the debt burden on Greece, or allowing the Greek government to ease up on mandated cuts.

To be clear, the German moral hazard argument - that if countries are always cushioned from the errors of their spendthrift ways, they will never learn - is not unimportant.

But what seems more to be driving eurozone governments' intransigence is that if they are seen to be giving in to Syriza, they will then have to cave in to Podemos, the Front National and who knows which other populist and nationalist movements.

But this is surely to see the likes of Syriza and the Front National as a kind of eurozone illness or malaise that has to be cut out. Whereas arguably they are just the symptoms or manifestations of the eurozone's actual malaise, which is that it has singularly failed to deliver either prosperity or the hope of increased prosperity to a majority of its citizens outside Germany and the rich exporting north since the crash of 2008.

That is why when the Greek finance minister, Yanis Varoufakis, repeats to his fellow finance ministers on the Eurogroup - as he surely will today - that the thrust of what he wants offers a way out not just for Greece but for the whole of the eurozone, this may not be just hot air.

This is not to argue that Greece does not need to be a more competitive and less corrupt economy. Varoufakis accepts that reform is imperative - as he told me when I interviewed him last week.

But reform that involves the smashing of cancerous vested interests will be easier to deliver in a growing economy - as of course Germany knows all too well, since the reconstruction of its own economy a decade ago, of which it is so proud, took place when the global economy was booming.

There is no possibility of a boom being artificially pumped up to help Greece, Spain, France and Italy sell shrinkage of the welfare state and liberalisation of product and labour markets to populations that will feel squeezed and occasionally bewildered.

But some easing of austerity, a removal of the hairiest shirt, and a formal recognition of what almost every economist outside Germany knows - that there is not the faintest chance Greece will be able to repay all its public-sector debts - would perhaps restore hope that there is gain from the pain.

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