Saturday 24 February 2018

Greece's woes highlight power shift across EU

Tourists pause to take in Greece's famous Parthenon
Tourists pause to take in Greece's famous Parthenon

Hamish McRae

What is happening in Europe is about money, of course, but in the past few days it has become clear how much it is also about power. The next stage? Well, it could be about the whole European social model.

It is just a year since Greece received its package of financial support from the EU and the International Monetary Fund. That support has failed in its aim to rehabilitate the country so that it could borrow again from the markets. The markets are shut. In theory it could borrow at 15pc but it cannot afford that and, were it to try, no one would lend it the money anyway. The markets are similarly shut for Ireland and Portugal, though the notional borrowing rates are somewhat lower. So these countries simply cannot pay their bills without help. The governments are not really in charge anymore.

You can see this right now in Greece. It has said it will bring forward the sale of some state-owned enterprises, its telecommunications and power companies and its port authority. That may be enough to persuade the EU and IMF inspectors, who are in Athens this week, to sign off on the bailout's next instalment of €12bn. If they don't, Greece may have to stop paying its creditors, according to the country's finance minister, George Papaconstantinou.

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