The 10th anniversary of the euro’s launch was marked only a month ago. When the euro became a hard currency in 2002, it was a hugely complex multi-national achievement that went more smoothly than expected. But 10 years on, commemorations of the introduction of euro-notes and coins have prompted sombre reflection. Today, the hype that accompanied the launch has given way to despondency.

It is now openly acknowledged by all leading economists that the design and concept of the single euro currency is deeply flawed. The eurozone of 17 members, including Malta, is buckling under the weight of an advancing recession and high rates of unemployment. There is no end in sight to the financial crisis that started three years ago and has already involved bailouts for three states and changes of governments in five, with unelected technocrats foisted on two countries, Italy and Greece, by Germany and France.

The notes and coins that were meant to symbolise European unity a decade ago – and which Malta joined just five years ago with great pride as a mark, as we saw it, of an economy that had finally arrived – are now emblematic of one of the worst crises in Europe’s modern history.

The endemic flaws in the construction of the single currency, and its political and economic fault-lines, lie exposed despite every effort, including the agreement to the Fiscal Compact and a new European Stability Mechanism a fortnight ago, to remedy them. The political and economic risks which were inherent in the euro’s design remain. There has never been an example in history of lasting currency unions without first achieving political union. The European Central Bank still lacks the authority and fire-power to underpin the EU’s financial system. A ‘one-size-fits-all’ interest rate inevitably generates destabilising imbalances between member states. And countries locked into a single currency with no possibility of exchange rate adjustment inevitably develop serious problems of economic competitiveness, as we have seen.

These problems exist today and show little signs of solution in the short-term. But the problems of Greece are immediate – and Italy and Portugal are not far behind. Greece does not have enough cash for a €14.4 billion bond that has to be repaid on 20th March, just over four weeks from now. Economists believe that even now that a deal for further austerity measures has been struck, most think that it will only act as a sticking plaster until the next loan repayment becomes due.

A default could lead to Greece breaking away from the single currency, and to the re-introduction of the drachma. Although European leaders are said to be reluctant to allow Greece to default, they are running out of options. Economists are already working on possible plans to reduce the impact of such a default to the greatest extent possible. But a Greek default would pile market pressure back on Portugal, Italy and, possibly, Ireland, with traders betting on their eventual exit from the euro, thus making contagion more likely.

There seems to be a growing acceptance, particularly among politicians and officials outside the eurozone, that Greece can no longer save itself or be saved. International Monetary Fund officials say that the Greek economy is now so uncompetitive it would need big financial transfers from other member states – essentially Germany – for the foreseeable future.

That kind of commitment is simply not politically acceptable in Germany, and Angela Merkel, conscious that she faces the electorate in a year, is not prepared to give it, no matter how much political autonomy Greece would be forced to give up. The West Germans did it for East Germany, but they have absolutely no appetite for bailing out feckless Greeks (or other southern European countries for that matter) on a semi-permanent basis.

However, there is no certainty that Greece’s departure from the euro would be in the best financial interests of either the Greeks or the Germans. The Greek economy would take a massive hit and there would be a risk that much of the benefit of the devaluation associated with a return to the drachma would be overtaken by inflation. German banks and companies would also be severely affected if Greece defaulted on its debts.

The only consoling factor is that Greece accounts for only two per cent of eurozone GDP and the optimists argue that Greece’s default and departure from the common currency would be manageable if no other countries were to follow. Eurozone leaders have been stressing that Greece is a special case and believe that they can put up a fire-wall around it.

That, however, is the 64,000 dollar question. Can they? There can be little doubt that Greece is an exceptionally bad case. The key economic figures are dismal, with huge year on year drops in output and GDP. But it is the political and cultural issues that make most leading economists question its chances of staying in the euro. Its Prime Minister, an unelected former central banker, is currently leading a unity government ahead of elections shortly (probably in April). The fear is that he will be sabotaged by the established political parties or, more likely, undermined by popular protests against the austerity measures Greece has promised in return for its €130 billion bailout.

Greece is going to miss its financial targets by a huge margin and officials at the IMF and the EU Commission believe there is simply not the social solidarity and popular commitment to take the tough action needed, as has been taken, for example, in Ireland. The strike a fortnight ago by Greek tax collectors says it all. And Angela Merkel’s recent apparent insistence (albeit so far not implemented) that the EU Commission should appoint a Commissioner specifically to examine and control the Greek budget is also indicative of the lack of trust in Greece.

Greece has enough money to last until 20th March. Even with this deal, most commentators agree that, at some point this year, there seems a very good chance that the Germans and the Greeks will decide that they have reached the end of the road and a Greek default will then ensue – with all the turbulence and uncertainties which that will bring.

What then of Malta? Every treasury in the core north European countries is busy examining the possible repercussions and drawing up contingency plans accordingly. We can only hope that our government is doing likewise, although, given that contingency planning is not Malta’s strongest suit – we honestly believe that through the grace of God, who has preserved us so far, we can somehow be spared the consequences of such catastrophes – I have my doubts.

I hope to be proved wrong since it is vitally important that the government prepares us for the economic shoals ahead. The talk of ‘instability’ has so far been a political ploy for domestic political reasons in the wake of the Franco Debono saga. What matters is whether the government can demonstrate the leadership to take the Maltese into its confidence and to tell them frankly what the impact on Malta will be and what it intends to do if and when Greece leaves the euro.