One size does not fit all
Berlin hopes to see Greece remain steady and wise, faithful to the path of fiscal adaptation and structural reform. The mantra has been repeated again and again over the past few days by Germany’s Finance Minister Wolfgang Schaeuble and Foreign Minister Guido Westerwelle. A meeting of the eurozone’s finance ministers in Brussels on Monday will determine whether Greece can draw 8.1 billion euros from its ongoing bailout.
Germany would obviously like to send a message of stability to the uneasy markets and dispel fears of political instability amid the southern nations of the euro area. Similarly it is keen to curb skepticism over signs that the programs of austerity are not exactly working. Furthermore, Chancellor Angela Merkel does not want to disrupt Germany’s own federal elections, set to take place in September, but instead wants to focus on rallying her forces.
It is also clear that for the first time since the outbreak of the unprecedented crisis, Germany is beginning to realize that its insistence on fiscal discipline is not enough to cure the disease. It is only just starting to realize that its own adaptation paradigm, also known as Agenda 2010, is not a one-size-fits-all strategy, even less so in the wake of the huge credit crisis of 2008 and inside the asymmetrical architecture of the eurozone.
Behind the pomp and the diplomatic niceties, the only optimistic signs are that the Europeans are slowly starting to talk again about the need to issue a single type of eurobond. At the same time, there is talk of setting up a Greek investment fund with the participation of German investment bank KfW – to the extent of course that the fund can be injected with cash and be immediately operational.
Words are just that: words. The real economy is in a process of slow death and, unfortunately, the troika is insisting on more austerity as the Greek government seems bereft of any ideas to induce growth.
