Does Greece with just 2% of EU GDP have the ability to destabilize the EU simply by refusing the IMF-EU imposed austerity program, or does Germany have such power because it has been trying to impose its economic hegemony over the rest of Europe?
On 19 February 2015, German Finance Minister Wolfgang Schaeuble rejected a Greek compromise proposal for a Greek “bridge loan” that would essentially buy six-month time for the new SYRIZA government in Athens to restructure the fiscal system and stabilize the government’s finances while meeting domestic needs.
Rejecting the proposal from Athens, a proposal that most of the EU members are willing to support, Germany demanded that the new SYRIZA (center-left) government of Greece continue with IMF-EU austerity as previous (neo-liberal oriented) governments had agreed in the past five years. Of course, austerity has resulted in a drop in GDP of 25%, drop in one-third of incomes (wages, benefits and social security) for about two-thirds of the population, unemployment of 26% and a mass exodus for college educated people, while leaving the public health care system in shambles because money was transferred from health care to paying interest on debt. At the same time, debt-to-GDP ratio rose from 110% before austerity to 175% in 2015. The strongest argument against austerity is that every single promise the IMFand Germany made about its results - economic development, lower unemployment, lower debt-to-GDP ratio, healthier government revenues - turned out to be entirely false.
For its part, Germany insists that Greece is trying to negotiate an extension of euro zone funding with no strings attached and it must abide by all neo-liberal policies previous governments agreed to implement, regardless of the cost to the middle class and workers, to health care and education, as long as the defense sector stays untouched because Germany exports weapons, submarines, etc to Greece. Meanwhile, Athens promises to meet its debt obligations as long as it has better terms and no interference in domestic policies. This means no interference in the country's institutions impacting everything from health care and education to the fiscal system and privatization of public assets that Germany wants sold for pennies on the euro to billionaires waiting for the fire sale. Ruling out any compromise, Schaeuble argued that: "Our room for maneuver is limited. We must keep in mind that we have a huge responsibility to keep Europe stable."