Michael Goldfarb

Eastern Europe’s Hitler nostalgia

In Lithuania and Latvia, SS veterans are honored as heroes. What's behind the pro-Nazi sentiment?

With Latvian flags, people march in a procession to honor soldiers who fought in a Waffen SS unit during World War II, in Riga, Latvia, Tuesday, March 16, 2012 (Credit: AP Photo/Roman Koksarov)
This article originally appeared on GlobalPost.

WARSAW, Poland — In the Baltic States they celebrate their liberation from the Soviet Union in the middle of March.

Global PostWinter’s worst lies grey on the streets, but that doesn’t stop people in Vilnius, capital of Lithuania, and Riga, capital of Latvia, from marching solemnly to honor the heroes who fought vainly to keep the Soviet Union at bay.

Among those who march are groups who honor those who fell wearing the uniform of the Waffen SS, the military arm of the notorious Nazi paramilitary unit. These SS veteran marches are not fringe events. Thousands march and thousands more turn out to cheer them on.

The parades’ permits are applied for by members of the governing party in parliament. Marchers are defended by the government.

Latvia’s president Andris Berzins reportedly praised the SS veterans on Latvian television last week, “It’s crazy to think they’re war criminals.” Berzins added, “Many people lost their lives for the future of Latvia. I don’t see any basis to deny this … it seems to me it’s not acceptable to dishonor these people, before whom we should bow our heads,” he said.

It’s not just on Independence Day that the Nazi past intrudes on public life.

In 2008, the Lithuanian parliament passed a law banning the display of Soviet and Nazi symbols.

In 2010, a local Lithuanian court ruled that Swastikas were exempt from that law because the twisted crosses were ‘Lithuania’s historical heritage rather than symbols of Nazi Germany.” It would be easier to accept that explanation if the crowds didn’t cheer the marchers on with cries of “Juden Raus!” or “Jews out!” as eyewitnesses have attested.

The official tolerance for marches honoring those who fought with the SS is part of a general trend in the Baltic States and all along the eastern borders of Europe: an embrace of a form of exclusionary nationalism that belongs to the 19th century, rather than the globalized 21st. It is the kind of nationalism that underpinned Hitler’s theory of “One People and One Reich.”

In recent weeks, Latvian voters rejected a proposition that Russian be acknowledged as the country’s second official language. Around 27 percent of Latvia’s population of 2 million is native Russian speaking. When the votes were counted Latvian president Berzins, said, “An overwhelming majority of Latvian citizens have expressed their unequivocal support for one of the core constitutional values, the national language.”

Tensions between Lithuania and Poland are also high over language. Officially, government forms and all shop signs are supposed to be in the Lithuanian language. The largest minority in Lithuania is Polish, around 6.7 percent of the population. There are significant differences in the Polish language from Lithuanian.

Lithuania’s Polish minority is demanding the right to spell their names on official documents in Polish rather than in the Lithuanian alphabet. They also want Polish shops to be able to put signs up in Polish. Quantifying the strength of the ultra-nationalists is almost impossible. Dovid Katz, an American scholar based in Vilnius who runs Defendinghistory.com, says it is sizable.

“Ultra-nationalism is a real trend and it’s being mainstreamed. Many of its supporters are young and they have dynamism.” Katz adds, “It’s hard too imagine that these EU and NATO countries are taking up this nativist ideology.”

Certainly, the Baltic states’ counterparts in the EU and NATO are deeply concerned. On March 11th, the American Embassy in Vilnius backed an alternative parade, “Celebrate Freedom” organized by leading human rights campaigners.

The Council of Europe published a report on the Nazi marches in Latvia in February. It said, “All attempts to commemorate persons who fought in the Waffen SS and collaborated with the Nazis, should be condemned. Any gathering or march legitimizing in any way Nazism should be banned.”

The report went on to state that the EC, “cannot but express concern about any attempt to justify fighting in the Waffen SS and collaborating with the Nazis, as it risks fueling racism, xenophobia, antisemitism and intolerance … ”

That is the key point. The endorsement of Nazi collaboration by some officials gives encouragement to racists and violent xenophobes. It discriminates against minorities and preserves an official place for the kind of racial hatred which has watered too much of the soil that lies in the land between the Baltic and the Black Sea.

The reason for this resurgence in ugly ultra-nationalism is an unanswered question of history: who was worse, Hitler or Stalin? This may seem like a question for the seminar room, but not here. In the countries between the Baltic and the Black Sea the question is deeply emotional. It has been rephrased this way: Does the blood of someone killed fighting the Soviet Union cry out louder from the grave than someone who died fighting with the Soviets against the Nazis? And what about those who were simply murdered without taking up arms?

In the eastern borderlands of Europe, those deep questions are the meat of politics. When a small group of Lithuania’s Social Democrats signed an international declaration in January on the 70th anniversary of the Wannsee conference; when the Nazis initiated the “Final Solution” for Europe’s Jews.

The declaration said it was wrong to diminish the Holocaust by saying it was “equal to, similar to or equivalent to” Soviet Communism’s crimes. Lithuania’s foreign minister, Audronius Azubalis, tore into them, “In essence, this sort of rhetoric by the Social Democrats repeats the Kremlin’s ideological positions, that Stalin is good and Hitler bad. It isn’t possible to find differences between Hitler and Stalin except in their moustaches (Hitler’s was shorter).”

The statement gave offense, but Azubalis was simply playing on a view that is common in the area. Marek Chodakiewicz, Polish-born professor of history at Washington’s Institute of World Politics tells an old Polish joke: “Whom do we fight first? Nazis or Communists? Let’s fight the former first: business before pleasure.”

The importance of history

Historians and sociologists around Europe’s eastern edge all agree: the basic questions of politics in the area have been settled.

All the countries are ruled by right-of-center governments who buy into free-market economics.

“Ideology does not drive political discussion in Poland. Politicians, journalists, when they get into arguments, it’s about history,” says Jan Olaszek, a historian at Poland’s Institute of National Remembrance, a government created, quasi-official institution that uses historical research for activist purposes — bringing prosecutions for “Crimes against the Polish Nation.”

That view is echoed down the road in L’viv Ukraine. “History is extremely politicized here,” says Sofia Dyak, director of the Center for Urban History in Eastern Europe. “History is not an objective study. It is about serving an ideological agenda. It used to be Soviet. Now it is about a nationalist history. So it is used in a highly selective manner.”

Things can get very twisted in this highly selective, political use of the historical record. Much of that twisting can be found in the persistence of anti-Semitism in the region. One hundred years ago, the area from the Baltic to the Black Sea was the heartland of world Jewry. Today there are virtually no Jews left. Between 90 and 95 percent were murdered in the Holocaust, those who survived left for Israel, the United States and other countries.

“Lack of Jews is not a problem for anti-Semites,” says Polish sociologist Rafal Pankoswki. “Anti-Semites don’t need Jews around to hate them.” In Pankowski’s view, anti-Semitic language, “is a kind of discourse of hostility not just to Jews but to the whole idea of diversity. It is a form of social protest to express anger about things.”

Part of the new nationalist mythology is based on old canards. Jews are an international cabal that seek to rule the world. Soviet communism was part of that plot. Marx was Jewish, right? So was Trotsky, so were many of the early Bolsheviks. Even today in Poland, Pankowski points out, liberals have the epithet “zydokomuna,”which means, “Jew communist” thrown at them when they defend anything from gay rights to the European Union.

According to Pankowski, using the word Jew as a general term of abuse occurs most at soccer games. “At matches fans abuse each other by calling each other Jews. At one match last year in Przesow one set of fans unfurled a banner with the slogan ‘Death to the Hook-Nosed Ones’ written over a stereotyped picture of a Jewish man with a big nose wearing a yarmulke.”

Were there any Jews in the stadium?

“No,” says Pankowski. “This is how fans act everywhere.”

In Lithuania, the explicit connection in many minds between Jews and the Soviet Union is demonstrated in the bizarre case of two elderly Holocaust survivors, Fania Branstovsky, a librarian at the Vilnius Yiddish library, and Dr. Rachel Margolis, a biologist. Both escaped from the Vilnius ghetto during the war. Both joined Soviet-backed partisans fighting the Nazis.

In 2008, when they were both in their late 80s, criminal investigators, in a glare of publicity announced they intended to arrest the pair for war crimes for their alleged participation in an action around a Lithuanian village in 1944 in which civilians were killed. No charges were brought, no apologies were given. Although both women, now in their 90s, are alive to receive such an apology. Whether the ultra-nationalists will continue to assert themselves into national life is unclear.

Dovid Katz notes, “Lithuanian Prime Minister Andreas Kubilius doesn’t have a fascist bone in his body.” But Katz notes, while many politicians disapprove of the ultra-nationalists they keep silent. “The politicians could easily condemn this. There is a total lack of moral courage.”

What is odd about the entrenchment of ultra-nationalism is that the area was always one of shifting national boundaries and mixed populations. Every country in the region has been subject to repeated subjugation to larger countries’ imperial designs. The Soviet Union was only the most recent. One hundred years ago none of these countries were independent either. They were subject to Russian, Prussian and Austro-Hungarian imperial hegemony.

Many historians and politicians in the region constantly remind western visitors that their newly liberated nations are only just being allowed to go through historical processes America and western Europe went through in the 18th and 19th century.

Professor Marek Chodakiewicz says, “The people of the Intermarium, the lands between the Black and Baltic Seas, were frozen in the Soviet totalitarian iceberg for 50 to 70 years. Now they are finally free to kvetch. And kvetch they do. It is a necessary, therapeutic, and cathartical exercise. Without coming to grips with the past, there is chaos.” But it’s a question of how you come to grips with the past.

To paraphrase George Santayana, “Those who cannot remember the past accurately are condemned to repeat it.”

The strange case of the Toulouse shooter

As facts emerge about the Muslim extremist who allegedly attacked a Jewish school in Toulouse, more questions arise

French police secure the area where they exchanged fire with a gunman who claims connections to al-Qaida and is suspected of killing three Jewish schoolchildren, a rabbi and three paratroopers, Wednesday, March 21, 2012 in Toulouse, southwestern France (Credit: AP Photo/Bruno Martin)
This article originally appeared on GlobalPost.

The suspect is cornered. As I write this it seems only a matter of time before he either gives himself up or ends things in a suicide by cop action.

Global PostBut it is clear that this event is, in the words of French political commentator Agnes Poirier, “France’s 7/7.” July 7th, 2005 was the day jihadi suicide bombers killed more than 50 people in London.

The body count in France is thankfully smaller but the reason Poirier makes the 7/7 analogy is that the killer is home grown. He is not someone sent from abroad to carry out a mission, but rather a French citizen, radicalized on French soil. A cursory reading of the French press shows another similarity. Although the victims were from minority groups this is a tragedy for the entire French nation.

The Guardian’s Angelique Chrisafis is in Toulouse and put together a quick biographic dispatch on Mohammed Merah for the paper’s live blog on the event (scroll down to 1:20 p.m.):

“On the streets near the apartment block under siege, several young men gathered who claimed they knew the suspect from Les Izards, a mixed neighborhood of Toulouse where he had grown up. A 25-year-old French man, whose parents were born in Algeria, said: “I grew up with him. I’m totally shocked and surprised, I can’t believe that he could do this. His mum was French of Algerian origin — she brought him up alone. He didn’t have a dad. This has absolutely nothing to do with Islam, or with us, and I really hope that all the young people of our type of neighborhood won’t be sullied by this. It has always been hard enough living in France with prejudice but now it’s going to be much worse.”

Even as the facts about Mohammed Merah emerge, more questions arise. Police say they were following him for several years. How did they miss out on at least following him after the first shooting … and if not the first, why not after the second?

Or did it take the attack on a Jewish school to make them think this was a Muslim extremist at work?

Was there any truth to the allegation yesterday that the killer was seen wearing a camera on his chest like Norwegian neo-Nazi Anders Breivik and filming the killings at the Jewish school? Or was this something the police and Interior Minister Claude Gueant put out so that Merah thought they were looking for a neo_Nazi and not him?

Finally, it is not to soon to ask, what effect will the events of the last 72 hours have on the French presidential election. First round voting is a month away. Before the events of the last 72 hours Nicolas Sarkozy was trailing the Socialist Party’s Francois Hollande.

But a national tragedy like this gives a president a chance to act presidential.  Sarkozy has certainly been doing that. He has convened meetings of the leaders of France’s religious communities. During the course of today he has been at the police station in Toulouse where the operation to bring the killer in has been headquartered. He has attended the funerals of the paratroopers murder by Merah last week and continues to make all the right sounds about not allowing these events to threaten the social integrity of France.

French magazine Le Nouvel Observateur also notes that Sarkozy is rated higher than Hollande, on the issue of national security. It’s likely that security will become a major issue now in the campaign.

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Anthony Shadid, the best of his generation

The NYT reporter, acclaimed for his unparalleled coverage of the Middle East, died in Syria on Thursday

Anthony Shadid, winner of the 2010 Pulitzer Prize for International Reporting with The Washington Post (Credit: AP)
This article originally appeared on GlobalPost.

WARSAW, Poland — I woke up this morning to the news that Anthony Shadid has died — apparently of an asthma attack — while on assignment in Syria. Whether you knew his byline or not, the loss is incalculable.

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I can speak in absolutes about the quality of his work. No one reported the Middle East with greater clarity and nuance than Shadid. No one brought the humanity of the people of the region, people who live in a perpetual state of stress even when they are living in the comparative comfort of Beirut and Tel Aviv, to the wider world with a surer touch than Anthony.

He could have coasted on his one great advantage — fluency in Arabic — to beat other reporters to the story. He did not. He used it as a foundation to serve readers — and help colleagues. When I left Iraq after the overthrow of Saddam, a sizeable part of my heart was left behind with new friends who were struggling to make the country a better place. Amid the constant shifts in the chaotic post-war era, Anthony’s dispatches were the ones I relied on to give me the complete picture of what was happening around the country.

American reporters are trained to be objective. It is an ideal to aspire to, more than an achievable goal. We are human beings and those of us who cover conflicts have our emotions challenged every day. The desire to bear witness and to make readers and listeners feel what we feel is overwhelming. Sometimes this gets in the way of objectivity. Anthony, who saw more terrible things than most, managed to stay closer to that ideal than any one. That’s what makes his reporting the best and why in years to come, it will truly be seen as the first draft of history.

We published books on Iraq at the same time and shared a panel at the Brattle Theatre in Cambridge, Mass. on Iraq. I had long since decided that objectivity was getting in the way of my reporting. It was important to let my readers know that I was angry and that my friend had died because of the criminally poor planning of the bigwigs in Washington. That emotion suffused my book. Anthony’s book was scrupulously written, you could never guess what he felt about the war.

My memory is that during the course of the conversation I pressed him about keeping his feelings about the war out of the book. He came back at me with full vigor, eloquently defending the importance of objectivity. He was a big-hearted, supremely talented man — and disciplined about the work. The panel was recorded by C-Span and you can watch Anthony and get some sense of who he was and what we have lost here.

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Paris’ legendary American bookseller dies

George Whitman, famous owner of Shakespeare & Company, passes away at 98

This article originally appeared on GlobalPost.

George Whitman has died. He was 98.

Global PostYou may not know his name but if you speak English and have ever visited Paris you probably know his bookshop: Shakespeare & Co.

Whitman set up the shop in 1951. He was one of a generation of Americans — mostly ex GIs on the GI bill — who went to Paris after World War II and tried to re-start the party that made the French capital the center of western culture in the ’20s and ’30s, the place where the Hemingway and Fitzgerald legends were born.

The Paris Review was started. William Styron, Norman Mailer, James Jones, George Plimpton, humorist Art Buchwald and jazz musicians too numerous to mention moved back. There were so many Americans in the city that M-G-M made a Gene Kelly musical about ex-patriot life called “An American in Paris” the year Whitman opened his shop.  It won the Best Picture Oscar.

By the mid-1950′s though it was clear the party was over and New York was the place where cutting edge culture was being created. Paris was something of a perfectly preserved museum of an era comprehensively demolished by war. Most of the ex-pats headed home.

George Whitman stuck it out. In the golden days of Paris there had been an English language bookshop called Shakespeare and Company. It was run by an American woman named Sylvia Beach. It was more than a place to sell books. Beach was a patron of writers, most famously James Joyce. She effectively edited and published Ulysses. But her shop had not survived the disruption of the war.

Whitman decided to open a used bookstore and called his establishment Shakespeare and Company in memory of Beach’s store (and perhaps to trade in a little on her legend).

It was set on the tiny Rue de la Bucherie with an unobstructed view towards Notre Dame. It became a clubhouse for the millions passing through. A rainy day in Paris could be waited out reading in a corner of the shop. A student whose money had run out and couldn’t afford to while away an afternoon over a few beers in a cafe could hang out for hours without hassle.

Whitman sat by the cash register in the middle of the downstairs area amid the clutter of his massive stock of books — some in good condition, most bearing the signs of wear and tear from having been passed around by many readers.

He would engage in book talk and dispense travel advice: willingly to pretty young women, in a more surly tone to young men or the more bumptious tourists.

By the time I made my first visits there 40 years ago, the bookshop was an anchor of Paris life and Whitman a well-established character: wizened, missing his front teeth, their absence highlighted by his wispy goatee.  He could be alternately charming and rude.

To me he was mostly rude. There was a young woman I met there, one of the many he flirted with, and we used to entwine ourselves in the upstairs front room. Nothing pornographic, just two students kissing fervently, playing our parts in the imaginary film of being young artists in Paris, a film with ten million versions that unspool in the minds of people from 16 to 98 who have grown up on the romance of Paris’ past. (Woody Allen’s version of his fantasy, “Midnight in Paris,” is currently in the cinema.)  He was a jealous old guy and took to noisily shutting up the shop whenever I dropped in and asked after the girl.  He would re-open as soon as I turned the corner and headed up the Rue St. Jacques.

There were others who passed through. Years later, during the war to overthrow Saddam, I met the Iraqi Kurdish man who became my translator. He recounted the story of his one brief visit to Paris in the early 1970s and how he had gone to the English language bookstore and met the very odd man who ran the place. It was at Shakespeare and Company that he found a used copy of “The Portable Faulkner.” The reason I hired him to be my translator was that when I interviewed him we spent most of the time talking about Faulkner. It was not a conversation I expected to have in Erbil the night before the war started.

When Ahmad Shawkat was murdered five months after Saddam was overthrown, I wrote a book about his life and included his visit to Shakespeare and Company.

As the decades have gone by, my relationship to Paris has changed. I don’t buy the myths of the past and enjoy the city for its relationship to the present, specifically, who I am in the present.

I am no longer a student dreaming of being an artist. I stopped going into Shakespeare and Company years ago. Walking past the shop was like walking past a building on a film set — a film that I was no longer appearing in.

But for millions of others it remained and remains a real place. Whitman’s cantankerous nature preserved it for 60 years: a slice of Paris as it was… and many still want it to be.

That is a real achievement, a long life’s worthy life work.

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What will be Britain’s new role in Europe?

In an effort to protect bankers, the U.K. opts out of a summit to solve the euro zone's financial crisis

British Prime Minister David Cameron speaks during a media conference at an EU summit in Brussels on Friday, Dec. 9, 2011. European leaders are wrestling over how much of their sovereignty they are willing to give up in a desperate attempt to save the ambitious project of continental unity that grew from the ashes of World War II. At stake at the summit in Brussels, which began Thursday evening, is not only the future of the euro, but also the stability of the global financial system and the balance of power in Europe. (AP Photo/Michel Euler) (Credit: AP)
This article originally appeared on GlobalPost.

LONDON, England — After ten hours of negotiations at the European Union summit in Brussels — starting with canapes on Thursday evening and lasting past four in the morning today — the heads of the 27 European Union countries reached a decision to forge ahead with a two-tier solution to the euro zone’s debt crisis.

Global Post

Crucially, the leaders of all 17 euro zone countries concluded that the only way to fix the euro’s flaws is by establishing a fiscal union that includes centralized control of national budget deficits.

But Britain will not be part of the negotiations defining the new fiscal union, setting the stage for a two-tier Europe.

Britain’s opt-out is a monumental development for Europe, and a significant defeat for Prime Minister David Cameron.

At other crisis moments over the last quarter century, as the drive towards closer economic and political union were being negotiated, the EU’s big three — Germany, France and Britain — always found ways to paper over their differences, issuing special opt-outs for Britain, or postponing decision making until the Brits got their house in order. Likewise, Cameron had sought a deal with Europe that would provide special exemptions for the U.K..

But that is not what happened this time. With the EU and the global economy facing unimaginable consequences if the euro were to fail, this was not the moment to fudge and play politics with the solutions. There was no time to postpone a decision either. So Britain will not be part of the process.

The question that remains is whether that decision will lead to a solution of the crisis.

It was agreed overnight that the 17 members of the euro zone along with the six other countries will forge a new treaty linking them in a fiscal union with tough rules on debt. To achieve this will require some surrender of national control over the budget process.

In addition to Britain, Hungary said it wants to consider the details before deciding whether to participate. The leaders of Sweden and the Czech Republic will consult their parliaments before deciding. In the meantime, all three countries are now expected to take part in the negotiations.

There were polite quotes and expressions of regret when the marathon meeting ended. European Commission President Jose Manuel Barrosso told reporters in Brussels, “Having seen it was not possible to get unanimity, it was the proper decision to go ahead at least with those ready to commit immediately.” He added, “We would have preferred a unanimous agreement.”

British Prime Minister David Cameron, who just a week ago was insisting that all 27 EU nations should be involved in negotiations to fix the euro’s flaws, explained his about face this way: “Britain’s interest in the European Union, keeping markets open, free trade, selling our goods and services with rules over which we have a major say, all those things are protected, they don’t change.”

Cameron’s phrase “selling our goods and services” doesn’t quite mean what it says. Britain doesn’t make a lot of goods to sell these days. It’s manufacturing sector is barely 10 percent of the economy and shrinking by the month as the country heads back towards recession.

It is services that Britain sells: financial services. The City of London, Britain’s financial heart is the world’s largest financial services center, largely because regulations are light and taxes are minimal.

Cameron was acting to protect the City when he withdrew from the agreement last night.

Britain’s continental European partners want tighter regulation of the banking industry. They also want to impose a “Tobin” tax on financial transactions. Cameron was seeking an opt-out for the City on that rule.

French President Nicolas Sarkozy told reporters this morning, “We would have preferred an accord of the 27 but that was not possible because of the position of our British friends.” Sarkozy added, “We can’t have a waiver for the U.K. because in our view it would have undermined a lot of what we’ve done regarding the financial sector.”

The euro-sceptic British newspaper The Daily Telegraph quoted one unnamed French official saying Cameron was, “like a man who wants to go to a wife-swapping party without taking his own wife.”

That anonymous quote gives a hint at the other main reason for Cameron’s inflexibility at the summit. Cameron’s Conservative Party — and its house newspapers like the Telegraph (aka the Torygraph) — are fundamentally anti-European Union. (Some of Conservative MP’s are fundamentally anti-Europe but that is a different thing.)

In the days leading up to the summit his own backbenchers were demanding a referendum on whether Britain should even stay in the EU. Two members of his cabinet even argued that any treaty deal to fix the euro should be broadened to completely renegotiate 2007′s Treaty of Lisbon, which is essentially the EU’s constitution.

Britain’s EU membership has been poison inside the Conservative Party since Margaret Thatcher was prime minister. The party was split between pro-Europe Tory grandees, who endorsed Britain playing a larger role in EU integration, and Thatcher and her supporters, who saw Europe as something alien that needed to be controlled if it couldn’t be avoided.

Thatcher’s anti-European views were among the main reasons her party’s grandees deposed her in 1990. Ever since, Conservative Party leaders have been caught between the two factions.

Cameron is no different. His skill as a politician is demonstrated by the fact that no one is quite sure what he thinks about the EU. The question of whether he was acting on deeply held belief or out of pragmatism is one worth trying to answer.

So with Britain and a handful of others out of the equation, will the remaining countries find a solution to the euro’s flaws?

German Chancellor Angela Merkel seems to think so, “I have always said the 17 states of the euro zone need to win back credibility. And I think that this can happen, will happen, with today’s decision.”

As usual, it is the details that are missing. The leaders of the 17 euro zone countries are going back into session today to work on them. Hopefully, by the end of the day we will know more.

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What if Greece drops the euro

Once presumed unthinkable, the possibility is increasingly likely. Here's why analysts are predicting panic

(Credit: Losevsky Pavel via Shutterstock)
This article originally appeared on GlobalPost.

LONDON — In the long saga of the euro zone crisis, Greece may be approaching a tipping point. Governments and businesses are starting to make plans for how to manage the country’s possible departure from the euro.

Global PostUntil recently, European politicians didn’t publicly acknowledge that any nation might abandon the currency. But late last week, Luxembourg’s Prime Minister Jean-Claude Juncker said, “We would like Greece to remain a member, but we’re not saying Greece has to stay a member at all costs.”

This was followed by the news that TUI, Germany’s largest package-tour operator, sent a letter to Greek hotels requesting that they accept payment in drachmas in the event that Greece is forced to return to its old currency.

With Greek politics in turmoil since last Monday, when then-Prime Minister George Papandreou called for a referendum related to the euro zone bailout, sources in the European Commission acknowledge that contingency planning is underway for a possible Greek exit from the euro.

“Plan A through Plans E and F are under discussion,” says a source. But details are not available because a Greek departure from the currency union would be a monumental event.

For example, private banks holding Greek bonds have agreed to take a 50 percent “haircut” on their value. If Greece leaves the euro, their losses would increase significantly, given that the country’s currency would drop sharply. Some European banks would be unlikely to survive that kind of loss. So how do you protect them? Should you protect them?

The other reason it is difficult to figure out how to proceed is that there was never any thought given when the single currency was created to any country actually leaving the euro.

Analysts are looking at the one recent case with some similarities to the situation with Greece.

“You have to look at Argentina,” says German-born Waltraud Schelkle, senior lecturer at the London School of Economics. “It had as hard a currency pact with the dollar as a country could have without unification of the two.”

“One Argentine peso was fixed to be worth exactly one dollar,” recalls Schelkle’s LSE colleague, Ken Shadlen, a frequent visitor to the South American nation. Shadlen remembers people buying coffee at one of Buenos Aires wonderful cafes, getting a bill for seven pesos and paying with both currencies — say four pesos and three dollars.

But Argentina was strangled with un-payable sovereign debts. It defaulted and uncoupled its peso from the dollar in 2001. What happened next wasn’t pretty, recalls Shadlen.

“A week before Christmas, all bank accounts were frozen. This caused riots and mayhem. ”

The accounts were frozen to prevent people from exchanging all their pesos for dollars. When the peso was allowed to float on currency markets, it would be worth much less than the dollar.

In January 2002, the Argentine government declared a unilateral moratorium on debt repayments. There followed three years of negotiations with bond holders before the Argentine government announced it would exchange the old bonds for new paper “worth around 30 cents on the dollar,” according to Shadlen. You can imagine what this lead to: litigation — lots of it. The suits are still unresolved. As a result, Argentina still can’t borrow money on private markets.

Shadlen notes that the parallels between Greece and Argentina are limited. In the midst of its pain, the South American country had one big asset: it grows massive quantities of soy beans, which China imports to feed its people.

Almost immediately following the depreciation of the peso, Argentine soy exports to China soared. The Argentine economy began to grow rapidly. So a violent contraction in GDP was followed by a decade of solid growth.

The problem for Greece is that it doesn’t export much. A fifth of its GDP comes from tourism. It has abundant sunshine, but may already have mortgaged the future of Project Helios solar energy farm to the project’s German backers.

So what lessons can euro zone policymakers learn from the Argentine situation?

If or when Greece departs the euro, its banks will have to close down to prevent depositors from withdrawing euros or wiring their capital to a bank in France or Germany.

Private bond holders who have already agreed to write off half the value of their Greek bonds will be told that they will only get 30 percent of the face value (or even less) of their bonds. If they balk, they will have to be told, “Sue us.”

Since most private Greek debt is held by banks, the LSE’s Waltraud says, “What you have to do is re-capitalize Europe’s banks, but not all of them.” Some hold too much Greek debt and they will have to be allowed to fail.

Currency analyst Stephen Gallo, of Schneider FX, says, “I cannot see how they (euro zone leaders) can let Greece go without simultaneously backstopping the rest of the euro zone countries in order to prevent a domino effect.”

And it’s by no means a sure thing that Europe can come up with the cash to do that, especially with Italy’s debt at more than $2 trillion.

Shadlen jokes, “Presumably someone in Greece is designing a new drachma.”

In the end that is probably the easiest part of the whole process. Everything else is up in the air.

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