One Last Word about Greece and the Euro: Kaput?



Most economists consider the Euro a mistake, a non-viable currency. The proof that it is non-viable? It cannot face bad weather, as the Greek tragedy, started five years ago, has amply documented.

And now, drawing the lessons from the third, incredibly cruel bailout deal shaped by Germany's insistence on austerity, reforms and on Greece having to pay back its debt in full, it would seem that Grexit is more than ever on the table.

And not only Grexit. But also a Euro exit for France and Germany, as recently suggested by Shanin Vallée in an arresting New York Times Op-Ed commented by a Cyprus-based blogger, Dr. Alf (see here).

In short, we are talking now openly about the collapse of the Euro, something that was never done before.

Good-bye, Euro, nobody ever really wanted you in Europe. When it was conceived in the late 1990s, it was only meant as a way to force European countries to come closer together, a last step to oblige them to unite their economic and social policies, to create a single fiscal system and a common Treasury.

A pipe dream that Mr. Schaueble has kicked to pieces. Sixty years of Europe-building brought to naught. The German-French entente is dead.

Eurozone members refuse to consider themselves as part of a union with all that it entails: transfer of funds, helping your neighbour, compassion, collaboration. All values that have become meaningless to Europeans - and all because Germany won't hear of it. Germany is showing itself to be fundamentally anti-European. The only Europe it will tolerate is the one marching to the German tune: balance your budget, ya! And do it every year, or else.

This is an accountant's Europe.

And Dr. Alf asks hopefully:
"Will David Cameron be able to exploit to the UK’s advantage the emerging policy gaps between France and Germany?"
I am quite certain that the UK could exploit the situation - but what situation are we talking about? Is David Cameron in fact a vulture happy to grab and tear apart a dead carcass?

Is a non-Europe to the UK's advantage?

Quite frankly, I believe all this is exaggerated.

There are several reasons I believe the Euro and the dream of a United Europe is not about to disappear:

1. Not all Germans agree with Merkel and Schaueble's stringent policies on Greece. Doubts about the "German model" are rising in Germany where public infrastructures are fast deteriorating and in urgent need of maintenance and repairs - something that cannot presently be done because of Merkel's insistence on balancing the budget;

2. The International Monetary Fund is pushing for a "sustainable debt" - that's jargon to say the debt must not weigh down on Greece's economy so that recovery becomes possible - implicitly, forms of debt relief and writing off are on the table.

3. The Greek bailout might work against all odds: Greece could implement the reforms demanded and find they help its economy rebound - but that scenario will work out only if:

  • the European Central Bank gives Greece monetary breathing space, i.e. maintains the Greek banking system functioning;
  • the privatization of state assets - that infamous €50 billion fund demanded by Schaueble - is put on the back burner: in the current investment climate in Greece, it is impossible for the State to sell its assets and indeed so far, very little has been sold (less than €3 billion)
So, I'm keeping my fingers crossed...Go on, Greece, don't listen to the Erynies who want to see you out of the Euro, you can make it! 

But, Greece, my friend,  you need to be serious about implementing those reforms, you need to show you mean business and regain the trust of your fellow Europeans...Walking around with this kind of poster doesn't help:

Photo from TML Weekly

We need to leave this behind us. We need to return to a vision of a peaceful, harmonious and progressive Europe. The dream is still there, the promise is there, it is up to us, Greeks and other Europeans, to make it come true.


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