Wednesday 26 October 2016

Good politics are needed to belatedly save the euro

Published 13/07/2015 | 02:30

'A new twist on Ancient Greek tradition' cartoon
'A new twist on Ancient Greek tradition' cartoon

The 'pretend and extend' Greek eurozone fix is no longer an option. It has only taken five years, three prime ministers, six months of extreme brinksmanship, a landmark referendum, and a fortnight of the Greek banks being closed for business amid tight currency controls.

  • Go To

The delays and foot-dragging do not reflect well on anybody involved. The deviations into low-grade and pointless stereotyping - dictatorial Germans and lazy Greeks to cite but two - has degraded all kinds of important relationships inside the 28-nation European Union and its inner chamber, the 19-nation eurozone.

There is ample blame to be shared around and no shortage of time to consider such matters - once some tenable remedies have been put in place. Two previous bailouts, and an impending third, leave Greece with debt it cannot sustain. Political leaders in Athens never intended to keep the promises they made at their various meetings in Brussels.

Again and again, we are reminded that the euro was always a political project with the economic and monetary bits added by its founders. The specific timeframe for the introduction of the EU's single currency was a kind of Faustian pact between Francois Mitterrand and Helmut Kohl after the fall of the Berlin Wall in November 1989.

The key point was that both men shared personal and bitter memories of their people's suffering in the Hitler era and its aftermath. Ever-deepening European cooperation with a single currency was a way of keeping the continent safe from any repeats.

Both men are long gone off the stage. Mitterrand soon after his retirement in 1995 and Kohl, now in his 85th year, retired in 1998. Their idealism cannot easily be replicated by a post-war generation. It is not always easy to see today's challenges against the horrors of that era.

They had their flaws - not least a very limited interest in matters economic and monetary. In fact, writer Philip Short, in his recent biography 'Mitterand, A Study in Ambiguity' makes the point that the French president was instrumental in paving the way for Greece to join the euro in 2002.

Mitterrand had earlier helped bend the rules for Italy to join, thereby creating the precedent which helped Greece slip in later. Everyone now agrees that Greece should never have been allowed to join. But the flaws in the euro's monetary architecture were such that a crisis of these proportions was always likely to hit.

So, it again falls to politics rather than economics to save the euro. And the politicians' challenge in this coming week is to find ways of defusing people's sense of powerlessness and confusion.

It was most apparent in Greece where eight days ago, the voters - most of whom want to keep the euro - voted by six out of 10 for something which risked driving them out of the currency. It is apparent also in countries like Finland, whose leaders feel that up to 10pc of their GDP may be laid on the line in vain rescue efforts for Greece.

It is ever-present in Germany, as a sort of mirror-image of the Greek sentiment. The Germans were convinced in the 1990s by Kohl that they could risk their symbol of post-World War II pride, the Deutschmark, and that the euro would not see them being dragged down by weaker, less-fiscally-tight partner countries.

Ireland has two enemies now that must be avoided. Smugness and/or past recrimination about not fighting with the EU-ECB-IMF Troika.

The risk of smugness is self-evident. We have had many of Greece's difficulties and some of them persist: corruption, incompetence and poor fiscal governance to name but a few. Smugness is always odious and corrosive - but the Irish are among the least best placed to engage in it.

The other risk - a danger of harking back to the failure to be more aggressive in Ireland's dealings with the Troika - is now the most time-wasting of practices. As if the parlous position of Greece right now was not self-explanatory, people like the Anti Austerity Alliance and Sinn Féin keep hurling abuse at the parties engaged in the last government and this one.

We need political unity at home right now in efforts to ensure Ireland can play its part in finding remedies for Greece. It is also important that Ireland is strong to withstand any upcoming economic shocks.

It has long been easier for countries in difficulty to channel public anger against Brussels first off. But it has often not been in any way helpful.

The German plan for a Greek departure from the euro, finally confirmed in the margins of the EU leaders' summit in Brussels last night, may or may not become a reality. For quite some time now it has been very difficult to see a situation whereby Greece could stay within the currency union.

But good politics, based on a broader picture of global affairs, may win out. Ultimately, it is good that the euro is political.

Irish Independent

Read More

Promoted articles

Don't Miss

Editor's Choice