The eurozone crisis has been a radicalising experience – and not only for the Greek protesters exchanging chunks of Syntagma Square for tear-gas canisters in Athens last week. The political and economic turmoil of the past few months has thrown into sharp relief unanswered questions about how member states can be encouraged to take their responsibilities to each other at least as seriously as the incessant demands of national clients and constituencies.
The crisis cannot be discussed in the past tense while the begging bowl for Greece has yet to be conclusively refilled, in the expectation that the EU will be ‘kicking the can down the road’ at least until 2013. Each month that goes by without Athens defaulting on its debts is a month without market contagion driving other countries towards ever more costly rescue packages, a month for French and German banks to strengthen their capital bases and work on roll-over plans for Greek debt, and for Athens to implement budget cuts and privatise state assets.
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Supplying the tension is the fear that at any moment the can will roll down a manhole, to find Greek ministers and civil servants hiding from their policy commitments.
The privatisation requirements imposed on Greece would challenge the world’s most efficient political elites – a group from which the Greek political class is most decidedly excluded. One must hope for his own sake that Antonis Samaras, the leader of the opposition New Democracy party, does not soon find himself running the government in Athens. By ignoring appeals from his centre-right European political family and encouraging his party to vote down the austerity package, he slid beyond the pale instead of wearing the same halo of statesmanship already accorded to Prime Minister George Papandreou.
Like many heads of government until a year or so ago, Samaras has failed to understand that membership of the eurozone involves important responsibilities towards other members, responsibilities that are sometimes uncomfortable but, if breached, erode trust.
There has to be sufficient belief in all capitals that, when necessary, the collective interests of the eurozone will be given at least as much importance as the narrow party political interests of its governments. This means accepting club rules and disciplines even at the expense of short-term political unpopularity. It is now apparent that these rules do not provide for expulsion from the eurozone. If Athens had rejected the austerity programme last week, it is difficult to see how it could have squatted there as a bankrupt country.
In Germany, the Netherlands, Finland and elsewhere in northern Europe, Greece has clearly forfeited public trust for a long time to come. For many years until the end of 2009, they and Greece’s other EU partners had been systematically misled by a regular diet of phony statistics suggesting that the country’s economic problems were manageable.
The European Commission and the Council of Ministers issued ritual recommendations to Athens for fiscal reforms and productivity-raising measures, while the country continued to enjoy a champagne lifestyle although it could scarcely afford cider.
“Let the Greeks pay their taxes and retire at or after 65 like we do”, said one German politician, with the disbelief shared by many on learning of the extraordinary squandering of public money that had become the norm in Athens.
It is now commonplace that trust between partners and mutual respect for the eurozone rules was first holed beneath the waterline by France and Germany in 2003-04, with fiscal policies that arrogantly disregarded the terms of the stability and growth pact. They were never held properly accountable by the Commission and the Council, which were inhibited, as former European commissioner Mario Monti recently explained, by member states’ “unhealthy politeness” towards each other and “excessive deference” to the large member states. ‘Naming and shaming’ was rejected six years ago as a technique for enforcing eurozone rules, but could be used in future under the ‘tough love’ approach now being applied to keep countries in line.
These new surveillance and economic co-ordination processes are steps towards creating the economic union that was missing when the single currency was launched. Their adoption does not, however, solve the eurozone’s serious governance problems. Solutions have to be found based on strength-ening political authority and making leadership properly accountable.
The EU needs an enforcer to ensure that the collective interest can prevail over the exigencies of domestic politics. A couple of decades ago, the role would have fallen to the Commission. But it is too compromised by a recent history of “unhealthy politeness” and “excessive deference” that were rightly seen as weaknesses. And many member states prefer a Commission that is too weak to give effective political leadership.
Jean-Claude Trichet, the president of the European Central Bank, recently offered his vision of a European finance minister, forging policies and enforcing rules that protect the collective interests of the Union. Better still is to provide such leadership only for the eurozone, with a new and separate ministry to sustain it. The UK and others will not want to go down that road. It is time for a de jure two-tier Europe – and one in which shared responsibilities is balanced with democratic accountability.
John Wyles is an independent consultant based in Brussels.