Commercial and bureaucratic hindrances collided with an uncontrollable reality: the faith of many players.
There can come a point when levels of indebtedness are so high that efforts to pay in full will be counter-productive.
The early church father Tertullian famously declared: “What has Athens got to do with Jerusalem?” In the same way, some might feel Christianity has very little to say about the current Greek debt crisis. Well, actually, it has a lot to say. Not least because of how often debt is used in the Bible to represent sin, with the cancellation of debt representing forgiveness. It is also striking how the accumulation of debt both within and between the nations of Europe, is now acting as a poison inside the body politic in a way which is worryingly reminiscent of the 1920s and the 1930s.
We have been taught to pray, “… forgive us our debts, as we forgive our debtors”. Similarly, the Bible tells us, in the Parable of the Unforgiving Servant, we are meant to recognise that the implication of the large amounts (our sins) we have been forgiven, is that we should forgive others. In the Old Testament, we are warned that being in debt, especially at a national level, can be result of a curse from God (Deuteronomy 28:43-44, and Proverbs 22:7). So, how should we apply this to Europe in 2015?
We should be concerned about rising levels of debt and not just - although this is important - in terms of the personal indebtedness of the poor. High and rising levels of government, or “national debt”, relative to national income (GDP) is probably neither sustainable nor morally healthy. The economist Paul Mills has pointed out that whereas in 2007 the total value of UK Government debt was equivalent to 1.2 times total annual tax receipts, by 2013 this had increased to 2.3 times. Uncomfortable though it may be, there may be wisdom in austerity policies.
Unfortunately, it is not only government debt that has mushroomed. According to a recent study by global management consulting firm McKinsey, by mid-2014 the total value of government, household and company debt in the UK was equal to 252 per cent of GDP. The same study demonstrated that between 2007-14, the total debt level had risen in almost every Western economy in Europe.
Interestingly, the German word for debt, Schulden, is linked to the words for “fault” and “guilt”. The German philosopher Friedrich Nietzsche noted this and more recently, so have the BBC and other commentators. Although it may easy to say this in the abstract, we should be people who are content with what we have and so avoid debt (1 Timothy 6: 7 -8). If we have debt, we should labour to fulfil our obligations (Romans 13-8).
However, while I believe we have an obligation to pay off our debt, there may also be times when it is right and/or expedient to forgive others their debt. This is not just because of the Old Testament teaching on debt write-offs (Deuteronomy 15: 1-11) but also because there can come a point when levels of indebtedness are so high that efforts to pay in full will be counter-productive. Greece, for example, probably reached that point some time ago. While a third bail-out package was agreed, Greece’s level of debt relative to GDP is already so high – and still rising – that perhaps the International Monetary Fund is right to conclude this cannot be a permanent solution.
While Christians may feel nervous about expressing moral judgment about debt and its repayment or cancellation, we should not be shy of talking morality. The leading protagonists in the Greek crisis have already done so! The German Finance Minister Wolfgang Schäuble argues it would be immoral for Northern European tax payers to bail out their Greek counterparts when, for example, Greek state pensions are allegedly more generous than those in Germany. Some of this is true, although it underestimates the extent to which the Greek welfare and pension system has already been cut - and will be cut further - and the extent to which Germany’s massive trade surplus with Greece is itself the mirror image of Greek borrowing.
For his part, the former Greece Finance Minister, Yanus Varoufakis, also used a morality tale; poor Greece being crushed under the Minotaur of the European Union and global capitalism. For Varoufakis and Greek Prime Minister Alexis Tsipras, it was significant that, according to them, Germany had learned nothing from its own history, and in particular the 1953 Treaty of London whereby 55 per cent of its Second World War and pre-war debt was cancelled. Again, true to an extent, but this indicates a denial of self-responsibility. This and previous Greek governments have spent imprudently and failed to raise sufficient tax revenues.
So, the difficulty is not in placing the Greek crisis in a moral perspective but in choosing which moral framework, and then moving on to a workable economic policy response. My view is that some substantial write-off of Greek debt is going to be necessary, regardless of whether Greece stays in the Euro or exits. To the extent that Greece’s problems are due to internal mismanagement, such forgiveness might seem like rewarding misbehaviour - the Schulden view of debt which modern economics calls “moral hazard”. However, in an imperfect world this may be the least bad option, and it also seems to be the direction in which both the Old and New testaments point.
Esmond Birnie is an author, economist and former member of the Northern Ireland Assembly.
This article was first published in Solas magazine. Solas is published quarterly in the U.K. Click here to learn more or subscribe.