• by Johan Galtung
• Monday, April 23, 2012
• Inter Press Service

Germany, with decreasing unit labour costs, high employment, quality export products, and a single euro currency, had an eurozone trade surplus growing from 64 to 140 billion euros in the period 2002-2009. They financed the trade deficits of Greece-Italy-Portugal-Spain-Ireland (GIPSI) with credits from German banks, which amounted to 522 billion euros by 2009. They do not invest in GIPSI, but offer high interest credits to be paid back, thereby putting the GIPSIs in debt bondage, writes Johan Galtung, rector of the TRANSCEND Peace University and author of the forthcoming book "Peace Economics: From a Killing to a Living Economy"

This is a dangerous policy, close to a ‘tipping edge’, endangering not only the euro but also the European Union as a peace project. Debt forgiveness, buying out legitimate creditors, letting other banks collapse, would be better than debt bondage feeding hatred and memories of Nazism in Greece. Is terrorism next? The way out of a complex man-made catastrophe is not to punish the victims.

But we also need political action, which is unlikely to come from the Berlin-Frankfurt-Brussels triangle. Better, "GIPSIs unite, you have only your German banks to lose." They could jointly negotiate better terms, compare successful policies, increase trade with each other, lift themselves out of bondage. But shady Goldman-Sachs has former employees as prime ministers in Greece and Italy, an economy minister in Spain and the head of the European Central Bank. That spells finance, not real economy.

* Johan Galtung, rector of the TRANSCEND Peace University, is author of the forthcoming book "Peace Economics: From a Killing to a Living Economy" (www.transcend.org).

© Inter Press Service (2012) — All Rights Reserved. Original source: Inter Press Service