The Greek clash with the EU continues. Jean-Claude Junker, the EU Commission’s president, has publically taken umbrage at the Greek prime minister’s attack against him. In parliament at the end of last week Alexis Tsipras said Junker’s latest proposals were “absurd” and “irrational, blackmailing demands”. Junker likes to think that he is a moderating voice in the confrontation between Greece, the EU and the International Monetary Fund (IMF). However, there is no middle way as long as Germany insists the EU be as hard as nails. The blunt truth is that Germany has neither the facts nor history on its side. Joseph Stiglitz, a Nobel laureate in economics and one of the key policymakers in the Clinton administration’s “Goldilock’s economy”, pointed out this weekend that “Greece has met its creditors’ demands more than half way. Yet Germany and Greece’s other creditors continue to demand that the country sign on to a programme that has proven to be a failure and that few economists ever thought could, would, or should be implemented.” He continues: “The fact is (under the reforms of the last government) the swing in Greece’s fiscal position from a large primary deficit to a surplus was almost unprecedented. The demand that the country achieve a primary surplus of 4.5 percent of GDP is unconscionable.” The European Central Bank, prodded by Germany, has cut off the Greek banks’ access to the unlimited cheap liquidity that other Eurozone banks enjoy and instead drip-feeds them pricier liquidity. The need for Greek capital controls have been loudly suggested by the EU but this has merely encouraged withdrawals from Greek banks. The Greeks have also been refused permission for Greek banks to buy more Greek treasury bills. Now, after the GDP has been cut by a quarter, we have the opportunity to get a clear perspective on the mistakes made. The “troika” of the European Commission, the IMF and the European Central Bank have made forecasts that have been wrong by a wide margin. Greek voters were right to demand a change in course. Inevitably, with the rest of Europe — Poland excepted — also making the wrong decisions about their much lesser economic problems, Greece was bound to get the flagellation treatment. Whereas the Obama administration has stayed true to Keynesian economics, with its textbook proposition that deficit spending is actually a good thing in a depressed economy, European policymakers have thrown the textbooks out of the window and, led by Germany, concocted their own, home-brewed, version of economics in which the supposed making of “confidence” is worth the depression of austerity. If you cannot speak the language of austerity you are shunned. However, all the academic research that has tried to justify European economics has been shot through with holes. Its data has been shown to be inaccurate. Yet mistake continues to be heaped on mistake. The Troika believes that by forcing Greece to its knees and accepting its terms the path to recovery will be laid. It will not. Indeed, one could argue that the whole of German economic policy with its chronic trade surplus lies at the heart of Europe’s economic malaise. Its massive trade surplus — last year it was $ 250 billion — drags down the European, even the world, economy. Perhaps it is Germany that should leave the Eurozone, not Greece. The late William Pfaff wrote in one of his last columns, “Germany in modern times has been far and away the greatest burden upon the taxpayers of other countries, not least by twice destroying by war much of Europe’s industry, cultural inheritance and social structure.” As Gillian Tett of the Financial Times has written, Germany has benefited from national bailouts from the international community in 1924, 1929, 1931 and 1953. “It definitely is not politically correct to say this,” wrote Pfaff, “but nearly all that debt was acquired in pursuing, or recovering from two savage world wars for which Germany was responsible.” One should not be surprised at those Greeks who ask why Germany has never paid reparations for the terrible economic and social regime imposed on Greek society during the Nazi occupation of the country. And what about Greece’s pre-Second World War stock of gold, allegedly appropriated during the war? None of this is meant to excuse the faults in Greek policy over decades. Some profound changes have to be made, not least raising the retirement age by seven years — to nearer Northern European levels — which in one move would profoundly alter the dynamics of the debt crisis. But change of this magnitude can be imposed in a democracy only when growth — Keynesian style — is allowed to drive the country forward. Keynes made the point that unlike cuts in a household cuts in a national economy in a time of recession only drive it further downhill. Ending austerity and restoring demand is the imperative for Greece. Germany must be made to understand this. The writer has been a foreign affairs columnist for the International Herald Tribune for 20 years and author of the much acclaimed new book, Conundrums of Humanity — the Big Foreign Policy Questions of Our Age. He may be contacted at jonathanpower95@gmail.com