Germany, Greece and the Euro Conundrum

by Ray_North on February 20, 2015

imagesI think about Greece and the European Union and I find my thoughts run into a sticky coagulated mess, as though my brain has suddenly been dipped into a large vat of honey and is struggling to get out.

Here’s the nub – on one hand, I have total respect and support for the people of Greece and their absolute right to elect a government that will enact public policy that is in line with their desire to end austerity; on the other hand, I am a European and am broadly sympathetic with the notion of a Europe that co-operates and works together towards some kind of common goal; on a third hand (see I told you my thoughts were messy), I am unhappy with the way in which the German government are effectively bullying the Greeks into a submission, but, I can understand how Angela Merkel feels able to declare, well, the Greeks signed up for the Euro and all it entailed and to renege now, means that they will be spending German tax payers money in a way that is at odds to what they have previously agreed.

Now, don’t get me wrong, I am in agreement with those who write on these pages with the overwhelming argument, that the best way forward for the Greeks (and indeed the Germans and vis a vis the rest of Europe), would be for the Germans to relax the conditions that they imposed upon the Greeks, and allow them to implement their own economic policy within Europe and the Eurozone.

But, herein lies the fundamental flaw with the whole notion of Europe – Europe is not like the United States, the federalism of the USA, though, often criticized by the American right-wing, is underpinned by a fundamental feeling of ‘Americanism’ – the same is not felt by the people of Europe. In Europe there is no deep-rooted understanding and trust in a central Parliament, the Pork Barrel politics that is tolerated in the USA, cannot be replicated in Europe, whilst the individual political systems and procedures are at odds with the creation of a system where all European Nation might live in economic and political harmony. Think about it – the people of Greece want to end austerity and implement a system of public expenditure to get themselves out of the quagmire of economic depression whilst the people of Germany want to continue with the programme of austerity and don’t really want to bail out the people of Greece. We can criticize Merkel for an aggressive, almost imperialistic policy towards Greece, but, she has a national mandate to pursue that – whereas, of course, she has no mandate whatsoever from the Greeks.

So, what’s the solution?

Greece bails out of the Euro and ploughs its own furrow? Ouch, the consequences of that are pretty frightening, especially for the Greeks.

Germany capitulates? Ok, that is more sensible, but, where would that leave the EU and the Euro? The answer is that it would end up in a more confused mess than even my squelching honey-ridden thought process.

The reality is that the Euro has proved to be a fundamentally difficult currency to make work – partly because of the lack of homogenized political system and culture, and partly because of the inherent economic challenge of trying to harmonise countries that are profoundly different in terms of their economic performance and desires.

In hindsight – when Gordon Brown set the test for UK involvement at an almost impossible level, he was absolutely right, and probably did the country a massive service.

One day, Europe may work – and perhaps the only way to make it work is to impose a fully federal structure, democratically elected and accountable which is able to properly override the national parliaments of those involved, and hope that ultimately the people of Europe bow into that; or alternatively, strip the European Union back to its bare bones and return it once again to a collection of trading nations.

The idealist in me says the former, the pessimist says the latter, the realist in me says – I’ve no idea.

{ 1 comment… read it below or add one }

Mike Killingworth February 21, 2015 at 8:19 am

Perhaps there could be a “MedEuro” for Greece, Portugal, and others.

Probably it’s Germany that should be expelled from the Euro, though.


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