A few weeks ago I penned an article in this paper entitled “United Stakes of Europe”. In a nutshell, I had joined an increasingly large chorus of columnists who were expressing their uneasiness as the euro crisis unfolded.
I followed the latest sequence of events surrounding the continued slow but excruciatingly painful economic collapse of Greece and the possible scenarios surrounding this financial debacle, which, coupled with unbelievable moments of brinkmanship threatened the very stability of the entire European project. A project that has been nurtured for decades and risks being unravelled much quicker than anyone may have thought possible!
In a relatively short period of time, prime ministers and ministers from all over Europe have shuttled continuously to and fro in an attempt to formulate a viable solution and calm an increasingly wary and nervous market. Alas, almost two months have passed since then and eurozone finances remain firmly in gridlock. There are moments of intense gloom interspersed with moments of cathartic relief although it seems the latter fizzles out very quickly.
The dark clouds that hung over Greece have not cleared. Without a clear and lasting solution in sight, the gloom has spread over other parts of the eurozone as merciless speculators pick at the softer underbelly of other fragile states. Their latest target is the third largest economy in the eurozone and this is none other than Italy. Although our immediate neighbour is far from being Greece, years of profligate spending and second division style politics have saddled the nation with enormous debts that require equally jumbo financing. Clearly, France may be their next target but this is a story that has yet to run its course.
If anything, these last few weeks have revealed a number of outstanding issues that would have been taboo to raise until very recently. Time and again, the biggest problem is that with all the economic luminaries, guarantees and political mandarin machinations culminating in the Maastricht Treaty, some very simple but crucial aspects were overlooked in the implementation of the euro − simply put, a ‘one size fits all’ economic union with a single currency that does not contemplate fiscal union is looking increasingly strained if not outright unmanageable given the economic conditions that have prevailed for the last three years! Moreover it is becoming increasingly obvious that some countries were admitted into the euro without serious due diligence of their respective nations’ finances. To boot, on entry such countries were not reined in and made to abide by the very basic rules of the game. Clearly, the go-go days of the growth years can no longer mask some hideously ugly realities.
Evidently, the foundations that support the euro are being shaken by the fact that no one seems to have ever contemplated the present scenario. It seems surreal that with all the terms and conditions, with all rules of engagement in place the founding members of the eurozone had overlooked one vital aspect. How does a member state in the eurozone exit the system without practically disintegrating the sum of parts in the process? This may seem naive but up to now critics of this situation stand corrected.
For some time, concocted bailout plans seemed to contain the fires that engulfed smaller countries such as Ireland, Portugal and to an extent Greece. There have been evident political consequences and a visible public backlash with governments booted out unceremoniously in Lisbon, Athens, Dublin and Rome. This weekend will probably see Zapatero’s Spanish government also lose its tenuous grip on power. French President Nicholas Sarkozy is faring no better and has the worst ratings for a President on record.
What happens next is anybody’s guess. One glimmer of hope remains and that is the steely resolve of the majority of leaders to support the euro spearheaded by German Chancellor Angela Merkel. She has been clear − “Because the world is changing so much, we must be prepared to answer the challenges. That will mean more Europe not less Europe.” There is no doubt that these are ‘interesting’ times. It is also a time for massively difficult decisions that can alter the course of things for our children’s future. We have yet to see if as Europeans we can pull through this, as the alternatives remain unfortunately severely unpalatable.
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