Deceitful deal sure to end in tears
SOMETIMES it is hard to understand the outcomes of major international summits – but not this one. The leaders of the Eurozone nations have cut a deal that makes believers in Cinderella and Sleeping Beauty seem like realists. They have agreed not to reduce Greece’s unsustainable debt and not to admit that Athens will never implement the financial reforms its joke prime minister has agreed. They will start negotiating a £60billion loan package that offers no prospect of reviving the shattered Greek economy. Greece’s people will remain embittered pensioners on German charity.
One of the most respected leaders in the world, Germany’s Angela Merkel, has sacrificed her own credibility in the name of solidarity, to keep alive the ideal of an indissoluble eurozone.
She is party to two grand deceits. The first is refusal to admit that most Greek debt is irrecoverable – this is to avoid being lynched by her own electorate.
The second is the pretence that the Eurozone can maintain its present membership.
Mrs Merkel has flinched from a showdown with her French counterpart Francois Hollande, who fears that if Greece drops out of the euro, the financial markets will spotlight the vulnerability of Spain, Ireland, Portugal – and France.
For the French economy and public finances are in desperate straits. Only their German-made corset staves off a showdown. Hollande is celebrating yesterday’s uber-fudge because it does more to save his own skin than that of any Greek.
Statesmen are supposed to be people capable of taking a long view. David Cameron, though, gives the impression that he believes that strategy is about how to get past next Tuesday.
BUT in comparison, the Eurozone leaders make him seem far-sighted. If they had been rational, they would have set a schedule for an organised withdrawal of Greece from the euro, supported by a write-off of irrecoverable debt. They would have agreed a financial aid package to assist Greece towards an economically sustainable path, and prevent it from becoming a failing state.
Instead, we have a solution to nothing. The Greeks will remain in turmoil. Their finances remain as parlous as ever. The emergency summit process will simply be repeated when Athens suffers its next collapse, next week or next month.
Of course, no nation finds it easy to come to terms with policy failure and diminished status. In Britain, it took our forefathers the best part of a century to acknowledge that the empire had become an economic liability and not an asset, and thereafter that they must compete commercially or starve. And if it is hard for one nation to shed cherished illusions, it is harder still for 19 (the members of the eurozone).
Some years ago, I heard a German parliamentarian say: ‘For you British, Europe is just about economics, but for us it is something much more profound – an article of faith.’
This is why the Germans, in many respects the most successful and hard-headed in Europe, were instrumental in setting up the euro without ensuring that the constituent states worked towards economic convergence or a common government.
Many Germans – albeit a diminishing number as they count the cost of being paymaster for most of the Continent – are still obsessed with the objective of political integration. Despite the economic perils since the 2008 banking crash and fierce competition from Asia. Yet few politicians have the courage to tell their people unwelcome truths about the future. In Greece, things are far worse, because the country has been consistently and corruptly misgoverned, with a bloated state sector and pension rights among the most generous in the EU.
Greeks have come to believe that they deserve a standard of living comparable with that of the Germans, even though their industrial, scientific and technological achievements can be summarised on a postage stamp.
There can be no lasting happiness for any society until it complies with the dreary old rule of middle-class prudence, and lives within its means. Today, not a single southern EU member does so, and it is arguable that we British are still not doing so either.
Inevitably, the Greek people are in a ferment about being subjected to ‘German tyranny’. Yet their predicament is no different from that in which any of us find ourselves if we fail to keep up mortgage payments and the bank forecloses.
This Greek fiasco seems likely to signal the beginning, and not the end, of a crisis that will end with the break-up of the Eurozone in its present form. The process may take years, but eventually German voters will refuse to continue cashing other people’s dud cheques.
‘Don’t take me for a fool!’, snapped Germany’s finance minister Wolfgang Schauble to the president of the European Central Bank at a vexed moment during Saturday night’s negotiations.
Schauble, who is portrayed on hate-posters in the streets of Athens with a Hitler moustache, knows better than most that Greek promises are worthless; that German money given to Athens might as well be tipped by dumper truck into the Aegean Sea.
AND it is important to recall that it was a former German chancellor, Helmut Kohl, who dragged the single currency into existence – freely admitting that he acted as a dictator, his own word – to force the system into being. Thus the Germans, as architects of this madness, feel obliged to keep it going just a little longer. What happens when it collapses is anybody’s guess.
Mrs Merkel has always insisted that without the Eurozone, the European Union would be at risk. But the EU seems likely to survive – even if it might look very different a decade hence, shorn of its grand vision for integration.
The tragedy is that after yesterday’s black farce, the European pantomime season will run and run, until Western governments (including our own), start telling their electorates more of the truth.