Athens burning – next step containment

Athens is not really burning, not much of it anyway. The traffic lights may all be destroyed, the museums wide open to burglars, but the infrastructure is all in place, waiting for the upturn.

But what is going up in flames is the Greek European dream, of joining the old geographic core – Europe. Europe has long been composed solidly by one third of the traditional core countries (the other two thirds in North America and Japan), plus semi-peripheral countries in South and East Europe. The EU project tried, for decades to transform these semi-peripheral European countries and have them join the core. Under the post-WWII system, this would be beneficial for all involved, creating a larger home base for European structures. EU solidarity reached its peak in the last quarter of the 20th century, exactly when the old structures were coming to an end.

The rise of inequality in the core that started in the 1970s, combined to the failure of some semi-peripheral countries to modernise and join the core, is now evidencing the new core-periphery structure. Within each EU country, the former homogeneity has disappeared. In the same city, we can have core closed condominiums coexisting with peripheral neighbourhoods. Even in the same building we can have core people with jobs in a core cell (for instance, with central functions in a multinational) living in one flat, while peripheral people occupy the next flat (for instance, an out-sourced branch doing the same work for half the money and no job security at all).

This new non-geographical core-periphery structure, that thrives on inhomogeneity across a region, across an enterprise, and even across a profession, is itself inhomogeneous: while, generally speaking, in the old geographical core (the EU as a whole) we can expect that about 1/3 of people will be demoted to the new periphery, some countries will fare better than others.

As always, the main characteristic of the semi-periphery is that is movable and has no special privileges: before, different semi-peripheral countries or regions competed with each other for the chance to be of use to the core. Now, it is semi-peripheral cells (which can be small firms, or service firms, or individuals who became service providers) that compete with each other.

The tragedy for Greece is that the new non-geographical core-periphery structure is still superimposed to the old one. And, if an entire nation decides that it no longer wants to accept the rules of the system, then that nation will obtain what it wants: and it will be cut off from the system. The inevitable consequence is to abandon all hopes of joining the core, and to slide firmly into a lower position in the network, becoming closer to the periphery, such as Albania or some parts of Yugoslavia.

What we are witnessing in Athens is the self immolation of a people, a sort of a collective suicide.

It happens that Greece is not a small cell of the network. It is a large one, a fairly large one. While small cells are easily cut off from the network, large cells present a challenge. But make no mistake: the issue is no longer to heal this particular cell, but to contain the damage it is able to do to the network, which is healthy.

Two decades ago, the Balkan wars posed a similar problem. Albeit of a different nature, it risked spreading and affecting the network at large. The strategy adopted to deal with it was containment – prevent the war to extend to other regions, cutting off the sick cell from the healthy network  This worked very well for the EU, and the problems in Sarajevo did not lead a new world war, not even to a regional war. The war remained local , as did the deaths and the destruction. From the point of view of the EU, containment was a unmitigated success.

Success now will be judged by how many other cells will be affected, and how important they are in the network. If a fairly large cell, but also part of the old geographical semi-periphery that didn’t make it to the core, such as Portugal, is so badly affected that it also fails, then the same containment strategy will need to be adopted. Containment can’t go much further than this without threatening the EU network, so, ideally, it should be restricted to Greece.

This is clearly the strategy adopted: let the Greeks burn Athens if they so will, but nothing else. Let it remain a Greek problem, for the Greeks to deal with the aftermath on their own, as well as they can. If the Portuguese decide to burn Lisbon, the same strategy will be adopted.