Deutsche Wirtschafts Nachrichten (German Economic News) July 7, 2015
translated from German by Georgi Stankov
The EU is on the verge of splitting. The summit (of the EU heads of state on Tuesday, July 7, 2015) laid the fault lines brutally frank: the southern Europeans want something else than the North or the East. Greece is the catalyst for a centrifugal dynamics. Amidst all this Angela Merkel: Tired, exhausted, overwhelmed. She can only watch how it is falling apart, what was supposed to be forced into a union with the temptation of money.
The summit in Brussels has shown, as no other meeting of the Euro-rescuers, that the EU is not working. Greece is no longer the problem. The next candidates are Italy and France, probably Spain. The errors are systemic and can not be fixed by compromises. The reasons are easy to analyze, but too complex to be resolved. During the crisis, everything flies apart that cannot be chained together by a credit orgy.
The EU institutions no longer function in the crisis: The EU consists of far too many imperfect bodies. It was telling that Angela Merkel herself had lost track of them at the press conference. She seemed momentarily not to know which session had actually taken place. She spoke about the summit as the “Council”, however, had to be corrected later: The leaders of the euro zone had met. The EU Commission is floating somewhere in Nirvana. Jean-Claude Juncker is like from another planet. He implored the unity, but one could deduce from his spongy records that he no longer believes in the unity. The Council is represented by Donald Tusk. Tusk has no clue what to do. He does not understand the Brussels’ World. The Parliament lives its own life and complains that it does not have enough weight. The ECB is considered by many as the savior in dire need. It has power, but accepts no responsibility – a typical constellation in investment banking. The ESM (European Stability Mechanism) should now solve the problem. It is so complicated that no one knows how it can ever be used.
The Member States’ interests are opposite: Italian Prime Minister Matteo Renzi told most clearly what the Southern Europeans think: one needs a different Europe. He considers the principle problem of the EU to be more serious than the Greek problem. He does not want a Europe of austerity, but of growth. Francois Hollande said, he wanted Greece to absolutely stay in the Euro zone. He knows that when it comes to a humanitarian catastrophe in Greece, Marine Le Pen would no longer need loans from Russian President Vladimir Putin. An EU in dissolution is a free election campaign machine for the National Front. Germany can not give up, because Merkel and Schäuble have promised the Germans that Greece is on the right track. The billions of tax money that disappeared in the Greek cliques were presented as a good investment. Sigmar Gabriel and the hardliners are instigating bad feelings against Greece. The East Europeans have, obediently and emphatically, fallen into the austerity trap. They do not want to share the other pots of money with the Greeks. The small states have growing euro-skeptic parties. In this complex situation, a unifying political will is impossible.
The solidarity in the EU only works as long as it serves the national selfishness: Renzi has rightly complained that dealing with the refugees is a first-class scandal. Italy is left alone with the problem. When the wave of refugees from Greece starts, the already minimal helpfulness of the other states will quickly erode. The use of military against refugee boats discredits a community that is supposedly defined by values. Even if it the technocrats do not want to admit it: a political union always shatters by a serious humanitarian Fall from Grace.
The EU has made itself a hostage to the troika: the ECB, the IMF and the EU Commission have totally failed in the Greek crisis. They have committed themselves to a pure austerity policy: Taxes up, social spending down, privatization. That may look good on an Excel sheet. In practice it does not. The complex system is unable to correct errors. The development in Greece speaks volumes. With the onset of the credit orgy coupled with austerity the economy has nose-dived, as the graph of Standard & Poor’s is an impressive example.
Angela Merkel has passed the zenith of her career: The Chancellor is tired, overwhelmed, exhausted. Due to lack of political willpower she gets tangled up in technocratic and pseudo-legal wrangling. To a parallel currency in Greece, the only thing that she can mumble is that it should be discussed by the finance ministers. She insists on agreements that none of her colleagues knows anymore. No one has ever observed these agreements: The red-green federal government was the first that broke the Maastricht Treaty, so as not to interfere with the NRW election. Austrian Chancellor Werner Faymann said on the issue that an euro exit was not legally possible: “The lawyers would still be arguing on it in 20 years. Now facts must be created”. Anarchy from the top – this is also the way how political systems generally shatter.
Maybe there will be a compromise with Greece at the last minute: Now a two-year ESM program is in discussion. There will not be a haircut because Merkel still believes that it is better to die as a self-opinionated person than to minimize the damage. She says, a haircut would be a prohibited state funding. But when a Grexit occurs, 340 billion euros are gone – which would also be a prohibited state funding, but only in retrospect. Perhaps they can now agree on technical solutions, such as the extension of maturities or the suspension of interest payments. In six months, the dilemma will be for re-submission, because the troika “reforms” only cause destruction and the real structural measures, such as the abolition of corrupt national cliques, are not monitored from the outside.
The Brussels summit has put an end to all tactics. Now the facts are stronger than ideologies. No political system can survive 50 percent youth unemployment. Eroding pension systems, homemade madness such as the Russia-sanctions or external factors such as the looming crash in China will finish the EU.
The future generations need to reinvent Europe. But they will not deal with a rich heritage. Their irresponsible ancestors have imposed on them an oppressive debt package. They will need a lot of courage, motivation and creativity to reach first the zero line. The Greek tragedy is a European drama of epic proportions.