Loss of sovereignty for all. It's a fact - participation in the euro involves a loss of sovereignty, or rather the “pooling”, between eurozone countries, of a part of national sovereignty. By saying this explicitly to his people, Greek Prime Minister George Papandreou simply confirmed a truth. As for monetary aspects, they were already included in the texts which impose rules with regard to budgetary deficit, public debt and so forth. For economic aspects, the pooling of sovereignty is less explicit and this provokes the well-known imbalance between the monetary leg and the economic leg that leads to Economic and Monetary Union (EMU) walking with a limp.
Up until now, the Eurogroup has clearly gone in the direction of strengthening the economic leg, with Germany understanding that this is indispensable for stability in the eurozone. This is not a question of dictating to member states the detailed contents of their economic policies, the main part of which remain within the national remit, but rather, it's a question of discussing and defining together harmonised goals and, above all, of flagging-up what results are necessary to maintain the single currency's stability. The permanent president of the European Council, Herman Van Rompuy, has made this his number one goal but has not yet decided on a definitive name for the instrument: whether it is called “economic governance” or the “coordination of economic policies”, what counts is that it functions effectively. In principle, eurozone countries all appear to agree.
Reasons for a tough stance towards Greece. The conclusions adopted on Tuesday by the Ecofin Council (see our publication yesterday) are just the first part of the detailed implementation of the ongoing process. The objectives outlined, as well as the tough deadlines and controls that have been introduced, put into practice the supervision announced by the European Commission and approved by the European Council in its “declaration” last week. It takes a harsh tone; solidarity with Greece is confirmed but the binding nature of the commitments required is made quite clear. There are several reasons to explain this tough line: Greece had formerly cooked the books too much with regard to its budgetary situation and debt, and it is unacceptable to other member states that such behaviour led to such a significant fall in the value of the euro in comparison to the dollar: 9% in three months!
Understanding Mr Papandreou, but … Just before the Council session began, the Greek prime minister criticised the EU for its weak response to international monetary speculation for which his country was paying the cost. He highlighted the responsibilities of the previous government, which was responsible for the situation that he is now forced to sort out. This position aims to shift responsibility from the current government, which has been a victim of previous mistakes and lies. At a national level, it is understandable (this habitually occurs in other member states too). Nonetheless, at a European level, it is meaningless: for the EU, continuity exists in all member states and the results of the elections do not change this question of continuity. We can understand Mr Papandreou: it is up to him to deal with the discontent expressed by his citizens over the sacrifices imposed upon them. Responsibility for the past, however, falls on Greece's shoulders, as a country.
Indignation. For the remote observer, which I am, indignation should primarily be expressed once again at the behaviour of the international banking community. This has been revealed in the context of the shocking role played by the US bank Goldman Sachs in this Greek tragedy. It appears that it sold technical mechanisms to Greece (for $300 million) for concealing the extent of its public debt and then speculating against this debt. Goldman Sachs then announced spectacular results for 2009 as follows: $12 billion in profits and $16.4 billion in bonuses to its directors and traders! This is indecent. If the banks succeed in making Greece fold, they would be prepared to attack other countries in the eurozone later, which are currently experiencing difficulties. Some financial strategies in London expect that the euro will definitely shatter and affirm that any support granted to Greece will simply delay the shattering of the eurozone. Other experts do not agree at all, especially Jean-Claude Juncker, the president of Eurogroup, who was categorical on this point: “The financial markets are badly mistaken if they think they can pull Greece apart”.
A crisis that could prove healthy? If the current crisis were to speed up implementation of eurozone economic governance, even with the more modest name of coordination of economic policies, we might one day be able to say that the experience has been a healthy one.
(F.R./transl.fl)