Brussels Colonizes Greece, as Both Debtors and Creditors Pay the Price

Greece OXI (NO) Flags
Flags bearing the word "No" (Oxi) flew in front of the parliament building before an anti-austerity rally in Athens in the build-up to the referendum Yannis Behrakis/Reuters

Under the terms of the latest bailout Athens will, in effect, be ruled by Brussels. Greece will implement further drastic austerity measures. It will place state assets worth €50 billion ($54 billion) into a fund supervised by the European Commission and the European Central Bank.

The assets, which include airports, land and state-owned companies, will be privatized. EU officials will be based in Athens to ensure that the government sticks to the agreed terms. Even Der Spiegel called Germany's terms for saving Greece a "catalogue of horrors". EU officials talked of Alexis Tsipras, the Greek prime minister, being "crucified" and "waterboarded".

Greece faces an unprecedented loss of sovereignty, says Mujtaba Rahman, eurozone practice head at the Eurasia Group.

"The country is now going to be subject to the most intrusive surveillance in any of the bailouts since 2012. The programme de facto necessitates a change of government, and the creditors are looking for a technocratic administration. There is an asymmetry to the concessions that the debtors have extracted from Greece. There is a degree of scrutiny and lack of trust that will manifest how the bailout is managed. This is more extreme and intrusive than anything that has come before."

But while Germany may have won the battle to force Greece to surrender, Europe's economic powerhouse, and the European Union itself, may yet pay a high price. From the Baltic to the Balkans, governments, and voters, are processing the raw display of German force that brought Greece to its knees and delivered a terminal blow to the idea of a united European family. Anger over Berlin's power politics is spreading, and could slowly corrode support for the EU.

The hashtag #ThisIsACoup went viral across Europe on Twitter. Some pictures showed the stars on the blue European flag rearranged into a swastika. Nobel laureate economist Paul Krugman called the latest deal as "a grotesque betrayal of everything the European project was supposed to stand for", and "beyond harsh into pure vindictiveness, complete destruction of national sovereignty and no hope of relief".

The Greek financial crisis certainly shows the limits of national sovereignty within the eurozone, says Rahman. "The more that countries integrate economically, the greater the knock-on effect of domestic policy choices. That is true for both debtor and creditor countries. Germany's current account surplus has an impact on Greece, and Greece's current account deficit has an impact on Germany. Both sides need to adjust and move to a solution, but in the eurozone the burden of adjustment is much higher on debtor countries."

Many in Greece believe Germany's harsh demands are rooted in a desire to take revenge for the country's resistance against the Nazis. The German occupation of Greece during the Second World War was one of the harshest in Europe. German soldiers slaughtered civilians, burned villages and left the country devastated. Memories are still vivid, wounds raw.

The relationship between Greece and Germany is very complex, says Stathis Gourgouris, author of Dream Nation: Enlightenment, Colonisation and the Institution of Modern Greece. "There were SS officers here in the Second World War who were in awe of classical Greek civilisation, but who behaved with appalling brutality. Yet some of the German public go for this idea modern Greeks are interlopers in the European Union."

Both sides are playing a blame game, George Papandreou, Greek PM from 2009 to 2011, tells Newsweek. "The Germans blame the Greeks, and vice-versa. We have seen the rise of nationalism across Europe because of austerity. There is a sense here that there is a directorate in Brussels, or Germany, or both, an elite that is taking decisions."

When economic times were good, this was tolerated. But when austerity, imposed by outside forces, bites, European ideals fade away, says Papandreou. "They say the EU is not working and they will return to the idea of the nation."

Not just Greeks but all Europeans need to push for change, says Gourgouris. "We need to assert a different view of Europe. If more people demanded a different kind of Europe, maybe this change would happen, that democracy could triumph over oligarchy."