We are all Greek now!

09/05/2011 by

The Friday comico-tragic meeting (that was thrice denied before it was confirmed) in Luxemburg was a first, tentative move to an eye-glaring reality: We are all in it together folks. Whether we like or not (and many certainly do not), we sink or float in unison. Presently, we are sinking. That was the main, helpful, message of an otherwise inaccurate Der Spiegel piece.

And we are sinking entangled in a web of our collective, made-in-the-EU design: an original euro architecture that was never designed to weather a storm of the Crash of 2008 type followed by a ‘bail-out’ mechanism that buys time at the expense of deepening the multifaceted crisis.[1]

For a year now, Europe has been hiding from the truth by means of a desperate attempt at a postmodern (deconstructive, as Derrida might say) economic geography: In May 2010, Ireland was ripping its shirt screaming that it is no Greece. In the following Fall, Portugal was screaming from the rooftops that it is no Ireland. Since March, Spain has been boring everyone with tales of decoupling and various arguments as to why it is no Portugal. Despite its comical organisation and ineffective management, the recent Luxemburg meeting has, at the very least, given us Europeans an opportunity to end this recital of decentralised idiocy; to say out loud that which every European (including us Greek) fears in private: We are all Greek now!

“We think that Greece does need a further adjustment programme,” said Jean-Claude Juncker, Luxembourg’s prime minister and chairman of the eurogroup of finance ministers after the Luxemburg meeting. No Mr Juncker. It is Europe that needs a proper adjustment programme. One that:

  • pools together part of the eurozone’s debt (the Maastricht compliant part),
  • uses the EFSF/ESM forcefully to recapitalise the banks and
  • enlists the European Investment Bank to plan and put in effect a large-scale investment program that will stop the crisis in its tracks.

Then and only then can we all become German, Finns, but also Irish, French, Italian and Greeks without having to apologise for any of our national traits. (See here for the fleshed out version of the above proposal.

In this sense, to realise Europe’s potential, to be able to draw upon the strengths of Germany, of Holland, of Italy, of Ireland, first we must all accept that, at this awful juncture, Greece’s troubles reflect not only Greece’s particular failures but the eurozone’s ill-advised institutional design. Then and only then will we stop the rot throughout the continent. Without that Europe-wide adjustment to the new set of circumstances that the Crash of 2008 shaped for us, for the whole of Europe, we shall continue to dither and to bicker; to worry about what Luxemburg means for Spain’s descent into the land of the bankrupted, to try to find ways by which to extricate Ireland from a poisonous bail-out, to contemplate the unthinkable about France, to be caught up in a twirl of discontent in Germany, to be trapped in a policy cul-de-sac in Portugal where the opposition and the government are competing as to who bears the worst policy mix etc.

Luxemburg was a good start that may, nevertheless, prove another lost opportunity. If it is consumed by nonsense (like so many previous occasions) about Greece’s need to re-structure, to tighten its belt further, to collateralise loans by means of future privatisation receipts, etc., etc., Europe’s crisis will reach new heights. In short, if Europe continues to see Greece as a problem caused by lack of discipline, rather than an early warning that the eurozone itself is a Greece writ large, last Friday’s meeting will have been wasted.

[1] There are at least five facets to the crisis: (a) The Great Banking Conundrum crisis, (b) the sovereign debt crisis, (c) a hideous recession in the periphery, (d) an investment stagnation throughout the continent, and (e) an expanding democratic deficit from Norway to Portugal and from Ireland to Greece.

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