Greece, Germany and the Debt Issue – Piketty: Germany could ’destroy Europe’ with austerity demands

, by CAPON Felicity

One of the world’s leading economists has spoken out about Germany’s role in the Greek debt crisis, accusing the country of being on course to “destroy Europe and the European idea, all because of their shocking ignorance of history”.

Thomas Piketty, the French academic who leapt to fame with the publication of his 2013 book, Capital in the Twenty-First Century, which criticises wealth and income inequality, told the German newspaper Die Zeit, that Germany has “no standing to lecture other nations”.

He said it was a “joke” that Germany was demanding Greece repay the €1.6bn it owes to the IMF highlighting that in the past, Germany’s debts had been forgiven.

“What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt”, the star economist said.

“Germany’s past, in this respect, should be of great significance to today’s Germans,” he continued.

Piketty also accused Germany of benefitting from Greece’s financial woes. “Currently, Germany is profiting from Greece as it extends loans at comparatively high interest rates,” he pointed out.

Greece overwhelmingly voted ’No’ in last night’s referendum, choosing to reject creditors’ demands for more austerity.

Yanis Varoufakis, Greece’s charismatic former finance minister who has now resigned despite the outcome of the vote, said Sunday’s referendum would “stay in history as a unique moment when a small European nation rose up against debt-bondage”.

Piketty argues that Germany’s Wirtschaftswunder, or “economic miracle” that occurred after the Second World War was based on the kind of debt relief currently being denied to Greece.

“[Germany] has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt”, the economist said.

Piketty concludes the interview saying there are many ways to repay debt, and urging Germany’s chancellor, Angela Merkel, to seek a solution.

“Those who want to chase Greece out of the eurozone today will end up on the trash heap of history,” he says. “If the Chancellor wants to secure her place in the history books, just like [Helmut] Kohl did during reunification, then she must forge a solution to the Greek question, including a debt conference where we can start with a clean slate. But with renewed, much stronger fiscal discipline.”

It is not the first time historical parallels have been raised in relation to Greece’s debt crisis. Greece has repeatedly called on Germany to pay €278.7bn in reparations for the Nazi occupation of the country during the Second World War, something which German political figures have dismissed as “stupid”.

Yesterday, the French Economy Minister Emmanuel Macron warned against punishing Greece in a similar way to what happened to Germany at the end of the First World War. The Treaty of Versailles which was signed in 1919 enforced a crippling debt on Germany which many historians say helped to lead to the rise of Adolf Hitler.06.07.15

Felicity Capon - Newsweek