Berlin is single-handedly rewriting the Argonaut Conference

Three months and 70 years ago, the future balance of power in Europe was decided by then soon-to-be winners of WWII. In the Livadia* Palace, near Yalta in Crimea, the leaders of the outgoing British empire, the upcoming empire of the USA as well as the totalitarian “Soviet Socialist” successor to the Russian empire, finalized their plan to end nazi Germany's aggression -aimed at establishing its Third Reich- and negotiated their spheres of domination.

Britain's Prime Minister Winston Churchill, President Franklin D. Roosevelt of the USA, and USSR Premier Joseph Stalin, decided that Germany was to be dismembered, demilitarized, denazified and rehabilitated “so as to never again pose a threat to peace in Europe”, divided between the four occupying forces (defeated and afterwards liberated France was to be given a mandate, comprised by US and British concessions).

With a dividing line established in the middle of occupied Germany, all countries in the west and south would be “guided” by the allies, while those neighboring north-east to the USSR in “reasonable” distance would be handed-over to Moscow's rule. With the exception of Greece, which for geo-politico-strategic reasons, although situated in the extremity of the Balkan peninsula (conceded to Soviet influence) was to be the west's enclave in the region.

The political essence of that agreement between the contingent allies was to define the future of the “modern world” of that time. On one side would be the free-market capitalist proponents of the industrial western world and on the other side the self-proclaimed communists who advocated an egalitarian society via an inefficient centrally planed economy, in transition from the absolutist regimes of czarist Russia and the remnants of the Austro-Hungarian empire in the center-eastern part of Europe.

The “sphere of interest” division was transformed -through the iron curtain- into a nearly total separation between the two models, lasting decades until the fall of the Berlin Wall, in 1989. But separation was not total, in the sense that both regimes tried to emulate selected elements of one-another. The so-called Soviet block had unsuccessfully tried to create it's own type of “people's capitalism”, but only achieved in giving a bad name to anything Socialist and the mere idea of social justice. On the other hand, the Western world had successfully created it's own, so far unprecedented, social security system, which ensured that capitalism would enjoy decades of relative peace between the haves and have-nots.

At the time of its collapse, 45 years after the Yalta “Argonaut Conference”, the undemocratic totalitarian Soviet block was unveiled as what it was: A system with basic political goods -as education and health care- offered to all citizens, bar the dissidents, but with very little in terms of justice, infrastructure, organized markets or civic administration able to compete with the other half of Europe.

Meanwhile, West Germany protected and supported by the USA, had once more emerged as a major player in the global economy. It was only natural that the Federal Republic would absorb the former People's Republic and -after a relatively short period of integration- would seek to utilize its capacity in full. Aspiring to dominate on its neighbors, this time not through war, but via its economic might, it played a major role in the transition of former Soviet satellites towards the “new world order” of deregulated global markets for goods, services and financial products. That's where the euro comes into play.

The common European currency was initially devised to be only one of the cornerstone elements towards a hybrid-federal union of states. Separated from the broad strategy, the euro only fueled the inherent imbalances between the various sets of countries. The current account deficit states, not any more controlling a national currency that would smooth out problems through devaluation, entered a vicious circle of internal inflation and external debt. The monetary union -in a sense- degenerated into a rogue transfer union, where the eternal weaklings of Europe transferred their competitiveness to the strongest states, in return for cheap funds, directed mostly not in capital formation but in consumption. That Greece was the first country to collapse in this system, is due to a combination of many mistakes, inefficiencies and breaches of rules, both on the national and the European level.

At this point, Germany had achieved the status of first among unequal partners, able to dictate its political/economic dogma as the only way forward for Europe. Based on the current economic situation and its own interests, Berlin advocates a new redistribution of spheres of interest in Europe, mostly under its own direction. In this new balance of power, Germany is now seen to methodically promote a three tier segregation of European states, in a revision of the Yalta Conference compromise, decided in her absence, 70 years ago.

In the first tier would be the core-members of the EU, the strongest states of central Europe (let's for argument's sake call them the “3.000 euro per month citizen-states”) like Germany and France, which would be the ones to determine (regardless of their citizens' choices) the policies and means available to the other two: The “1.000 euro per month” states of the “immediate outer circle”, comprised by the relatively advanced countries of the former Western World, such as Italy, Spain, Finland, etc. and the “500 euro per month” outer periphery of former eastern block countries (e.g. the Baltic states, Slovakia, Hungary, Romania, Bulgaria etc.), with the addition of some “usual rogues”, such as Greece or even Portugal.

This is -in my view- the true issue at stake in the current conflict between Greece and the Quintet (formerly known as the Institutions and previously as the Troica). And the outcome of this conflict is certainly not something regarding only the Greeks.

At this point Athens is offered the choice between either slow death in the hands of it's "partner/creditors" or quick death down the Grexit cliff. Is there a third way out or is chancellor Merkel to confirm Otto von Bismarck's observation that “it was always a failing of the Germans to want to attain all or nothing and, in their headstrong way, to rely on one particular course” in the pursue of their ambitions?

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*Palace in the Livadiya estate, granted by Empress Catherine II of Russia to Lambros Katsonis (1752–1804), a Greek revolutionary and Imperial Russian Army officer, and named thus after Livadeia, Greece, the town he was born in, then part of the Ottoman Empire. It is now a suburb 3 kms west of Yalta.