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03Jul15

This euro is destroying the European dream

On Sunday the Greeks vote while the rest of Europe holds its breath. No matter how clunky the wording on the ballot paper, everyone knows what's at stake. This is a moment of great peril, not only for the euro but for the European project itself.

If Greece votes no, it's hard to see how it can stay in the euro, which will represent the most grievous blow in the 16-year history of a currency whose momentum was always meant to be irreversible.

If yes wins, and Syriza duly falls, the victory for the European powers could prove to be pyrrhic. Too many will believe that Brussels, and more pointedly Berlin, engineered the toppling of a democratically elected government. Once Alexis Tzipras had, admittedly, put a gun to his own head by calling Sunday's vote, the EU in effect told the Greek nation that the leaders they had chosen just six months ago were unacceptable and had to be removed. The moment will be cited ever after as proof that the EU's approach to democracy is akin to Henry Ford's view of consumer choice: you can have whatever colour you like, "so long as it is black".

For things to have reached such a pass - in which Greeks are being asked to select yes for organised penury or no for the chaotic variety - is surely an indictment of the single currency. Any scheme that can result in such a crisis - to say nothing of the stagnant growth, unemployment and poverty that have plagued much of the eurozone since the crash - is bound to be branded an unambiguous failure. What's more, it is now acting as a repellent for the European idea itself: witness the rise of populist anti-EU parties in Spain, Italy and beyond.

That prompts a question, one that will only get sharper whether the Greeks leave the euro and descend into economic mayhem or stay and suffer back-breaking debt repayments. Is the disaster of the euro strangling the larger European project it was meant to serve? Could it be time to kill off the euro in order to save the European Union?

So much as whisper that thought to seasoned Euro-folk, as I have this week, and the response is telling. Among other things it reveals the gap, much wider than the Channel, that separates Britain from the rest of Europe - a gap of understanding and experience that explains so much.

The immediate reply to talk of dumping the euro is practical. For struggling economies, the likes of Portugal or Spain, leaving the euro would be a calamity. They want to stay in for the same reason even Syriza is trying to avoid a Grexit: the costs of attempting to leave and revert to a past currency are, say the experts, guaranteed to spell ruin.

As for the rich countries, the euro has been a marvel. Germany gets to trade in a currency that is sufficiently weak to make its exports internationally competitive, all the while selling its cars and washing machines into a captive market of near-neighbours who cannot devalue their own currencies against it. If Berlin had stuck with a too-strong Deutsche Mark, it would have seen its goods become prohibitively expensive.

There are other arguments too, including the assumption that a return to the pre-euro Babel of currencies would see the resurrection of tariffs and protectionism, jeopardising the single market. But economic arguments are not the heart of the matter. Indeed - and this is what can feel so alien to Britons - the euro was never really about economics. It was always a political project, even a dream.

From the start, the animating European idea was to bind the countries of the continent so tightly to each other that they would never again be at war. Mark Leonard, director of the European Council on Foreign Relations, is upfront: "The whole dream was to use economic means for political ends." That was perhaps its fatal flaw: economic steps taken for political reasons tend to end in catastrophe. But you have to acknowledge that initial ideal if you want to understand why so many continental Europeans are attached to a scheme that outsiders breezily dismiss as a failure ripe for the trashcan of history.

And the euro stirs other passions that might not be obvious. For the Baltic states, the Latvians or Estonians, the euro is a matter of national security. Perennially anxious about Russia, they believe their safety relies on being part of something bigger. The more integrated they are in Europe, even sharing a currency, the safer they feel. Nato shelters them under one umbrella, held by the US. The euro protects them under another, gripped by Germany.

Hence the resentment in some "new European" capitals of the current antics in ancient Athens: they believe Syriza is jeopardising a scheme that, for them, is not just about money, but about the independent existence of their nations. In other words, the commitment to the euro is too deep to be forsaken.

But that does not mean that the peoples of the eurozone are trapped inside an inescapably doomed enterprise, even if it looks that way. The roots of the current Greek crisis might not lie in some structural, innate flaw in the euro, but rather in the more contingent and therefore soluble realm of European economic policy. The problem is not so much the euro as this euro.

I'm referring to the peculiar brand of deficit fetishism associated with, but not exclusive to, Angela Merkel's Germany. It is this ultra-austerianism that has led to the cataclysmic beggaring of Greece, bleeding the patient white and then - when seeing that he's dying - insisting that he bleed some more.

None of that is logically inherent in the euro. Just as it's possible to oppose George Osborne's initial deficit monomania on sound, Keynesian grounds without wanting to jettison the pound, so it poses no contradiction to demand an end to Merkelism while wanting to hold fast to the euro.

Framing the problem this way points to the solution. It says that the European creditors should change their focus on Greece from cutting spending to promoting growth, doing whatever it takes to enable the Greeks to rebuild. Eventually the latter might even be in a position to pay back some of their debts. But for now that will mean cutting them some, even a lot of, fiscal slack.

I'm told plenty of European leaders are ready to do it too - but not for Alexis Tsipras. That relationship is too broken, and too few mainstream leaders want to hand the populist challenger Syriza a victory - not when they face rebel parties of their own. But they will need to make such a move eventually. They need to demonstrate that the euro and austerity are not synonymous terms. That the euro need not always look like this euro. And that, indeed, Europe is not fated to look like this Europe - a place not of dreams, but of nightmares.

[Source: By Jonathan Freedland, The Guardian, London, 03Jul15]
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small logoThis document has been published on 06Jul15 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.