The past few days have shown the unique way in which football has become the common shorthand for discussion of difficult and abstract concepts of macro-economic theory. On the other hand, it could also be an example of how nationalistic sentiments dangerously clear the air and reduce everything to simple concepts that can be grasped by anyone.
On Thursday night in Brussels the euro nations wrangled upstairs while down in the press room bar at the Council building (Justus Lipsius) journalists from all over Europe roared and shouted as Italy beat Germany.
It could not have been because they were all Italians who were shouting their heads off. I saw journalists from many other countries highly pleased that mighty Germany was getting a drubbing.
This symbiotic relationship between football and politics then carried over to the visual presentation of what ensued that long night, as another Super Mario – Monti this time, not Balotelli – scored yet another goal against the hapless Angela (Merkel).
It was, of course, the Italian press who came up with the most telling images but even the staid Financial Times published a cartoon with a football flavour, depicting Merkel in goal overwhelmed by a euro sailing over her head.
Was Mario Monti, who says he does not follow football, making a football comment when he appeared to have said that Germany had been beaten twice in the long discussion – was he referring to the two points he wanted to make or to Italy’s two goals?
One has to keep reminding oneself that football is a game and that many times the end result does not adequately describe the many chances lost, and the different strategies adopted. A football game, then, simplifies matters extraordinarily because, when all is said and done, it’s only the goals that matter.
As to discussion and explanation of a difficult and complex negotiation between states, the football analogy then simplifies matters to the point of distorting them beyond recognition.
The tough and difficult discussion that culminated in the pre-dawn agreement on Friday was not a tug-of-war between all the countries in the EU – or even in the eurozone – on the one hand and Germany on the other. Germany’s stance on the side of discipline and virtuous public finances is shared by other northern countries such as Holland and Finland.
And in Brussels on Thursday, of course, the discussion was not at all between Germany on the one hand and Greece – profligate and dissolute Greece – on the other, as the new Greek prime minister was not allowed by his doctors to travel, following the operation on his retina.
Nor was it between Germany and France, the two core countries in Europe, who have now chosen divergent policies and whose showdown is yet to come.
Coming into the summit, Germany promised one and all it would stand firm. The Economist implored Merkel to stand firm “on behalf of all Europe”. In all the discussions and fora on the issue over the past months, Germany has insisted that Europe would not have been in this mess, had member states observed the euro’s strict rules. I myself heard (German finance minister) Schauble say: “Pacta sunt servanda” (“Promises must be kept”).
But Mario Monti and the Spanish PM Mariano Rajoy had an urgent appeal to make. Monti’s effectiveness as an unelected prime minister was being undermined and he faced an imminent threat of being unseated and seeing Italy going into an election for which it is unprepared, which will most probably solve nothing and which would begin for Italy the long slope that leads down to the Greek bottom of the heap.
Monti found he could not deliver on promises of liberalising the economy because any sector he touched faced him with vested interests all through.
Spain’s PM faced the prospect of seeing an austerity programme being doomed to failure because of the huge problems in the banking sector, which has gorged itself on property speculation and now faces imminent collapse.
Spain is facing the spectre of mass unemployment, averaging over 20 per cent and rising to over 50 per cent in the case of youth unemployment. Visitors to Barcelona, Madrid or Seville will not see any direct evidence of poverty, but people I know who ventured off the tourist track saw people rummaging about in skips to find something to eat.
As we all know, Italy’s problems are, if anything, more intractable.
Coming into the summit, both Monti and Rajoy were becoming desperate. Compared to the reluctant Greeks, they had taken the bitter pill, as is acknowledged by one and all. The austerity programmes they came up with had been approved by everyone – programmes that have brought pain and sacrifice to the country. Nevertheless, whenever Spain or Italy goes to the markets to borrow money, they have to pay anything like six or seven per cent, where Germany, because it is virtuous, pays only one per cent or so.
Spain and Italy saw this piling on of pressure on countries that cannot take it as very unfair.
Coming into the summit, Germany saw things in a different perspective. The German people would not agree to pay more to profligate peoples. The Germans were sick and tired of having to bail out countries where people lazed about or skived off from their duties or spent their time on the beach while the Germans worked their butts off.
This was the reason why Angela Merkel and her government refused to accept the Eurobond proposal – precisely because they saw it as once again encouraging peoples to get by without the same painful reforms that Germany had already undergone in previous years and that are now bearing fruit.
The clash was going to take place at the eurozone lunch at the end of the summit (on Friday afternoon). Instead, as we lesser mortals downstairs were cheering on Italy against Germany, Monti and Rajoy, doubtlessly with firmness but courtesy as well, stood their ground and insisted they could not – or would not – sign the growth pact until their financing problems were eased.
In the end, Merkel appeared to have dropped her insistence on recapitalisation funds to banks being channelled through governments but kept her demand that any such aid be combined with demands for reform of the financial sector.
The accord paves the way for the eurozone’s €500-billion bail-out fund to recapitalise ailing banks directly, without passing through national budgets and adding to struggling countries’ debt mountains.
However, this would occur only after a Europe-wide banking supervisory body is established, with leaders aiming for this to happen at the end of the year.
It could be said that this was only a small concession by Germany, although it has already been turned by the mass tabloids in Germany into an enormous one – fuelled by German popular resentment at being kicked out by Mario Balotelli. Merkel will now have to persuade her parliament and coalition that German sovereignty and well-earned money is not being squandered by profligate nations.
This is where, perhaps, Greece has caused the most damage. It was not just that the Greeks fiddled their numbers to join the euro, nor that they wilfully kept adding to public sector employment when they knew their public finances were awry, but also that they expected the Europeans to pay for them as “Europe cannot afford a Greek default”, as they cheekily said.
But neither Spain, with all its problems, nor Italy, can be included in the same category as Greece. The best example comes from Ireland – which has accepted the bitter pill and is well on its way to returning to the markets. And, in fact, the early Friday morning agreement carries a retrospective effect which benefits Ireland.
For all the agreement, Spain and Italy are not out of the wood yet. Spain still has to tackle the banking crisis, especially Bankia, with the close relations between Rajoy’s party and the men at the top of the banks. There is also the problem of how to reconcile the central government with those of the almost autonomous provinces and regions. Italy still has to come to terms with a vision of where it wants to be, ensuring its political parties want that, and ensuring the interest groups – from the Mafia to taxi drivers passing through the unions – are no longer in a position to impede progress.
It now depends on the markets to pass judgement on the pre-dawn deal. The first reaction was EU-phoria but we have been through that many times in the past. The first initial positive reaction lasts only a day or two before reality sets in, or a downgrade or two.
Once again, however, this reminds me of one reason why the euro and the EU itself were established. And this is where football, rather than helping us understand what happened, alarmingly distorts the picture.
For football is essentially nationalistic: we even have England, Scotland and Wales still as separate countries instead of the one Great Britain. So by pitting nation against nation we revert to the old nation state concept of the 19th century – even though Balotelli plays in the same team as England goalkeeper Hart.
But the concept underlying the EU and even more so the euro (although the latter was flawed from conception) is based on solidarity between nations, rather than (as in football) making them compete against each other. Now, when the Germans keep insisting that they do not want ‘their money’ to go to other profligate countries, they are right, because solidarity must not be abused, but they forget that Germany owes its growth to the still imperfect single market with which it carries out the majority of its trade.
So it is not football that can explain the current crisis in Euroland. Football is a game that should be enjoyed – as undoubtedly are the Tour de France and the coming Olympics. But football is no shorthand for understanding the complexities of macroeconomics. On the contrary, it may even be a huge distortion.
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