Term Paper on "Intercultural Communications Failure: The Greek Debt Crisis"

Term Paper 5 pages (1868 words) Sources: 2

[EXCERPT] . . . .

Intercultural Communications Failure: The Greek Debt Crisis

While geographers, until recently, were inclined to the divide the world into East and West, theorists of intercultural communication often conceive of the world's cultures in a slightly different fashion -- as high-context and low-context nations. "High-context refers to societies or groups where people have close connections over a long period of time," and are characterized by less verbally explicit means of communication. Low-context societies are made up of people with less secure ties of shorter duration (Beer 2003). "In these societies, cultural behavior and beliefs may need to be spelled out explicitly so that those coming into the cultural environment know how to behave" (Beer 2003). In general, Nordic and North American nations tend to be low-context in nature while Asian, Mediterranean, and Middle Eastern nations are classified as high-context societies. Another way of thinking of high-context societies is that communication and meaning is highly determined by the context of the communication and the contextual relationship of the speakers.

Notions of high and low-context cultures are rooted in the work of the theorist Geert Hofstede, who proposed that to understand communication between cultures, one must understand the different power distance (the degree of inequality among people which the population of a country considers as normal); individuality (versus the more traditional value of collectivism); the degree to which the nation values traditionally masculine virtues such as competition and aggressiveness; uncertainty avoidance (the society's relative discomfort with unstructured social relationships); and long-term-orientation (valuing thrift and long-term payoffs over sociability and cementing relationships) (Battista 2008).

Understanding this final cornerstone of Hofstede's theory is particularly critical regarding international fiscal and monetary policy: high-context nations that are economically underdeveloped may get into trouble when dealing with more developed low- context nations who expect a more long-term financial orientation in the name of financial stability. Recently, the more financially stable members of the European Community were shocked to learn of the level of mendacity deployed by the Greek government regarding its level of debt. One of the poorest EU nations, Greece flagrantly disobeyed a number of the dictates of EU membership by illegally concealing its level of indebtedness. Members of the EU were flabbergasted, but their level of shock and dismay reflects a fundamental barrier in understanding the differences in culture between many EU nations.

Greece is a nation where high-context communication is all important, and which is characterized by a relatively short-term view of monetary policy. Honoring obligations to family and political patrons is more important than to abstract, higher-level impersonal authorities such as the EU. Greek politicians are more interested in short-term political gains than financial responsibility over the long-term -- even the 'long-term' of several years into the future. Viewing the relationships of Greece and Germany through the lens of the intercultural theorist Geert Hofstede's typology can thus be useful. Hofstede's proposition that all nations can be seen as possessing a high or low degree of long-term focus is useful in understanding the horrified reaction of Germany to the Greece crisis.

Greece is not a future-focused nation, rather it is present-focused, which resulted in Greece's desire to spend money in the here and now, rather than to keep an eye on how this would affect Greece's future. Despite the worries of the world, Greek pensioners, civil servants, and labor unions are still demonstrating in opposition to current austerity cuts, blaming the recently-elected socialist government for disobeying its promises to expand benefits during its tenure. Yet if nothing is done, even more austere measures must be implemented later on, Germany advises. Last year, Greece's deficit equaled 12.7% of its gross domestic product. Greece must raise 25 billion Euros ($34 billion) over the next few months to avoid a sovereign default and downgrading of its bond rating that "officials fear could cause the finances of other weak European economies to collapse" (Schwartz & Chan 2010, p.1). "Greece would need to pay a whopping 7% interest rate just to get people to buy. That is almost a percentage point more than the rate investors received in the previous Greek bond sale, in January, and a full 3 percentage points more than Greece's borrowing cost before the current crisis" (Schwartz & Chan 2010, p.1).

Some analysts state that the problems with Greece reflect an even greater problem with the EU -- members are meant to put aside cultural differences and allegiances in a way that is not natural -- there is no 'European' culture that transcends ethnicity. "Most citizens of the EU still feel far more attached to their own nation than to the Union….The Germans may feel very 'European' in principle. But when they are asked to start writing large checks to support a bankrupt Greek state, they start to feel strangely German again. As for the Greeks, they too have counted among the most ardently pro-European people in the Union. But the price of any EU bail-out of Greece is likely to be savage austerity measures, overseen by officials sent in from Brussels. That is likely to feel more like colonization than a voluntary 'political union' (Rachman 2010). Greece supported the EU when it was in its own financial interest -- but not now.

According to German Chancellor Merkel, she believed she would able to persuade her electorate to support a Greek bailout only if the country was clearly on the brink of collapse, although 71% of all Germans opposed such a measure. Until now Germany has focused on "prodding Greece to get its finances under control, promising stringent monitoring in hopes of reassuring nervous bond market investors that Greece's tough austerity program will work" (Castle 2010, pp.1-2). The less the Euro, the common European currency is worth, the more ordinary Germans and other EU residents who are a part of the single currency will pay for daily necessities. "We cannot expect the citizens, whose taxes are already too high, to go along with supporting the erroneous financial and budget policy of other states of the eurozone," said an outspoken member of Merkel's party (Connolly 2010). Greece's ?financial crisis was "not a result of the economic crisis, but self-made…it would have a negative impact on Germany's -- creditworthiness" and could end up "costing every ?German taxpayer an extra 40 Euros this year" (Connolly 2010). The lack of concern amongst ordinary Greeks, who were merely protesting their own loss of pensions garnered little sympathy. "The Greeks go onto the streets to protest against the increase of the ?pension age from 61 to 63.Does that mean that the Germans should in future extend the working age from 67 to 69, so that the Greeks can enjoy their "retirement" asked another German politician (Connolly 2010).

Greece openly hid its debt with the help of Wall Street banks: "Greece's financial condition has worsened; undermining the euro, the role of Goldman Sachs and other major banks in masking the true extent of the country's problems has drawn criticism from European leaders. But even before that issue became apparent, a little-known company backed by Goldman, JP Morgan Chase and about a dozen other banks had created an index that enabled market players to bet on whether Greece and other European nations would go bust" (Chan & Schwartz, Banks, 2010, p.1). Without Greece's or the EU's knowledge, Wall Street banks helped Greece hide its debt and then enabled investors to 'bet' that Greece would go bankrupt.

This image of Mediterranean profligacy (and cool, low-context American investment banker's calculation) is what makes Germany so angry, given that Germans, have some of the highest rates of savings of all Europeans, and who have been the most resistant to government deficit spending to stimulate their lagging economy. The clash between different cultural values echoes Hofstede's dichotomy of low-context cultures like Germany, versus high-context nations like Greece, which are fused together in the form of the European Community. In Germany impersonal values are all-important, while in Greece, interpersonal relationships and 'who one knows' and who one pleases rather than 'what one knows' or logical, forward-thinking fiscal policy, determines the culture's system of value.

Germany also emphasizes planning to a much greater degree than Greece. While both European nations rate high in uncertainty avoidance, another of Hofstede's cultural measurements, because both nations have such distinct other cultural differences, this has caused mutual intransigence on both sides. Because "in Germany there is a reasonable high uncertainty avoidance & #8230;Germans are not to keen on uncertainty, by planning everything carefully they try to avoid the uncertainty. In Germany there is a society that relies on rules, laws and regulations. Germany wants to reduce its risks to the minimum and proceed with changes step-by-step" (Uncertainty avoidance, 2010, Clearly cultural). Greece also has a high degree of uncertainty avoidance, but in this case, the refusal to change means that Greece is focused on values and practices that have emphasized care for the elderly, generous pensions, and a citizen culture of tax avoidance, support of labor unions, and a tolerance for high degrees of… READ MORE

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