The Eurozone is a contradiction wrapped in an oxymoron, inside a beautiful ideal. An elite project to safeguard peace and democracy in Europe that has led to rioting in the streets and the condemnation of a national referendum. There are two deficits in Europe; one fiscal, the other democratic.
There is no such thing as Euroscepticism. For the European project is about ever-closer union. The Americans seek to form a more perfect union. The Europeans, we’ll settle for just being closer. Therefore, to be Euroscpetic is about as useful as grumbling about the weather. Everyone complains, but no one ever does anything about it.
Like many, I was flabbergasted by Georgos Papendreou’s decision to hold a referendum on the latest bailout package to Greece. How could he be so irresponsible? How could he be so ungrateful? In what position is he to dictate terms? But this immediate reaction, whilst understandable, is as stupid as it is arrogant. In October 2009 the Greek people voted in elections. They gave Papandreou’s Pasok Party a working majority in parliament. Then, a bunch of really bad things happened one after another, and France and Germany imposed a further austerity package on Greece in exchange for a 50% haircut on Greek sovereign debt. What this means is that in exchange for a partial default, the Greeks will cede control of their fiscal policy to Merkel and Sarkozy, or whoever will beat the two bumbling leaders in 2012 and 2013 respectively. When the Greek people voted in 2009, they assumed they were voting for a parliament that would control its own fiscal future. This being no longer the case, how can any man, woman or Eurozone leader deny the Greeks' right to a referendum?
The Euro hasn't worked because the Eurozone remained a group of disparate nations which seemed surprised to find themselves with one currency and one interest rate. And the catastrophic rescue attempts have reflected this. Sarkozy cares only about the state of his toxic-Greek-debt-exposed banks, Merkel with inflation, and Berlusconi with staying in power. The connection between a democratic deficit and the failure of the Euro is that the Euro required far greater integration of member states, integration that would have required either referenda that would have been tricky for governments to get ascension to, or simply ignoring the electorate and giving away not just monetary, but fiscal powers to Brussels. The lack of democratic legitimacy in the Eurozone it's hamartia.
The solution to this crisis is the same now as it was two years ago – print money. Eurozone countries have vast debts, like the United Kingdom, like the United States, like Japan. But unlike these countries, the European Central bank (ECB) has acted about as economically adept as its acronym-sake, the English Cricket Board, could be expected to. It hasn’t just done nothing. The until very recently Chair of the ECB, Jean-Claude Trichet, actually raised interest rates to 1.5%. Raised them at the same time that Portugal found itself exactly level with the Atlantic. Germany, the main beneficiary of the Euro, is still terrified of the printing presses, because the last time they used them there was hyperinflation and fascism. Despite the fact that most of the money being used in Europe is German, the Germans have benefited more than anyone from the single currency. Without it, the Deutschmark would be painfully expensive, and Germany’s exports would be inaccessible to the world.
It’s a great shame that the Euro is failing, because the EU, Monnet’s masterpiece, has fostered peace in Europe (at least between its members) since 1945. We take this for granted now, and the idea of Germany invading Belgium tomorrow seems absurd. But it remains one of the great achievements of modern human history. Throw in the fact that free trade is a jolly good thing and you have yourself a success story.
The people get the government they deserve, and this time is no different. We weren’t paying attention. We weren’t voting; we were consuming, and we didn’t care by what means. I find it frankly embarrassing that, as a European, we cannot sort this mess out. We knock the Americans endlessly for their missteps, their failures in global leadership and for electing sub-standard presidents. Shame on us. It was hubris and we had it coming. And if the Greeks have taught us anything, it’s that hubris is nothing to worry about.
