USC’s Jacob Soll says German anger is sabotaging Greece

A deal has finally been reached that could keep Greece in the eurozone. Few are happy with the outcome. We’ve heard a lot about how the Greeks feel humiliated. But we’ve heard less about German anger, and we know they are angry. Finance Minister Wolfgang Schäuble was reported to have started yelling during Saturday night’s negotiations. France and Italy have both made huge loans to Greece, but neither country has expressed hostility to Greece. Why is Germany so angry?

As an economic historian, I got a taste of this resentment during a conference on Greek sovereign debt held in Munich last week. It took place at the Center for Economic Studies and the Ifo Institute, which are headed by Hans-Werner Sinn, the German economist and longtime proponent of a Grexit. The conference included economists, accountants, journalists, investors and government officials from both Greece and Germany. Diverging views were aired by Mitu Gulati, the Duke law professor who helped devise an earlier Greek bailout; by Ashoka Mody, an economist, formerly of the International Monetary Fund, who preaches debt forgiveness; by accounting experts, who agreed that Greece’s total debts seem to have been inflated; and by Mr. Sinn.

But when the German economists spoke at the final session, a completely different tone took over the room. Within the economic theories and numbers came a moral message: The Germans were honest dupes and the Greeks corrupt, unreliable and incompetent. Both parties were reduced to caricatures of themselves. We’ve heard this story throughout the negotiations, but in that room, it was clear how much resentment shapes the views of German economists.

Clemens Fuest, of the Center for European Economic Research, who has advised Mr. Schäuble, kept reciting numbers about Greek debt and growth, and said the Greeks had failed at every level over the past several years to manage their debt. He believed they should simply be thrown out of the eurozone. Henrik Enderlein, of the pro-European Jacques Delors Institute, said that Greece should stay in the eurozone, but only if it applied more austerity and better management. Daniel Gros, director of the Center for European Policy Studies, theorized that Greek debt and economic woes could be countered only with better export numbers.

All points were important, but to hear it from these economists, Germany played no real part in the Greek tragedy. They handed over their money and watched as the Greeks destroyed themselves over the past four years. Now the Greeks deserved what was coming to them. ...