The purpose of a union is to create something that is greater than the sum of its parts. By pulling together, the nations of the European Union agree to work together, giving up some of their individual freedom of action, because they believe that in joint effort they can achieve more.
Within the Eurozone, the bonds are even closer, since the countries have given up control over their own currency, a major sacrifice when it comes to combatting financial difficulties.
Part of the bargain is that if any constituent of the Union gets into trouble, the Union as a whole rallies round to help. Now, following the financial crash of 2008, five EU nations, all within the Eurozone, were particularly harshly affected. These were the so-called PIIGS: Portugal, Italy, Ireland, Greece and Spain.
Several years on, all but Greece seem to have weathered the worst of the pressure. That’s not to say that they’re doing well. No one in the Eurozone is doing well. It’s stagnating as a whole,but that’s a not unexpected result of the austerity economics it has imposed on itself. Austerity cuts people’s spending power, so demand goes out of the economy and, as day follows night, the economy fails to grow.
Greece however is in a far worse state than the others. The EU, the International Monetary Fund and the European Central Bank, clubbed together to provide it with funding and to buy it some debt relief, but only at the cost of an even harsher austerity programme than the other nations underwent. As a result, unemployment rose to one in four of the workforce and, far from growing, the economy has shrunk by a quarter. A catastrophe.
Instead of banding together to help its weakest member out of the mud, the EU has inflicted on Greece policies that could only drive it far deeper still. While its membership of the Euro denies Greece the classic solution of devaluing its currency, as Larry Eliiott explains in The Guardian.
 |
| Guardian photograph from Athens: graffiti expressing increasing anti-Euro feelings |
The result is that it now looks increasingly as though Greece will, as long feared, have to leave the Euro, and perhaps the EU too, if only to have any chance of working its way out of the mess it’s in, with even a shred of dignity left to it.
Make no mistake about it. It would be extremely painful for Greece if it came to that. But it would be a disaster for the EU and the Eurozone. Greece is the first test of the capability of the Union to stand by a member that is in real trouble. They’re on the brink of failing that test. That inevitably raises the question “what is the EU for? If it can’t even rescue a relatively small member from penury…”
Angela Merkel enjoys a high and deserved reputation for her statesmanship. But it is she, and Germany more generally, that has led the campaign to inflict the harsh regime on Greece which it is now rejecting. If she can’t magic some solution out of the chasm in front of her at the moment, her legacy may be that of the leader of Europe who saw the experiment of union founder.
Larry Elliott’s article calls what we are facing now a “Sarajevo moment”. The assassination of the Austrian Archduke in Sarajevo in 1914 initially seemed to be a relatively minor event in a distant place. But within weeks it had engulfed the whole of Europe in the torment of the First World War.
The exit of Greece from the Union might be another minor event, but it will be a critical step in causing the EU project to start to unravel. The Eurozone will have shown that it is incapable of solving a problem within its membership. And the EU will have shown that it can’t look after its constituent nations.
Those of us in Britain who want the country to remain a member of the EU will find our arguments for staying in weakened in the run up to our promised referendum. And Eurosceptic movements in other European nations will also gain momentum. The impact on the Union could be lethal.
Someone has certainly betrayed the ideals of the European Union here. But, Mr Juncker, I’m not sure it’s Greece.
No comments:
Post a Comment