We often confuse what is right and fair with what is realistic and feasible.
No reasonable observer can disagree with criticism of Berlin’s obsession with fiscal discipline. European Central Bank (ECB) President Mario Draghi, European Commission President Jean-Claude Juncker and even US President Barack Obama all agree that Germany needs to rethink its policy.
However, does this really mean anything for us in Greece? Can anybody really conclude that Germany and the rest of our European Union peers will ever be ready to agree on a significant debt write-off or an unconditional financing of Greek deficits? You’d have to live on another planet to believe so.
To be sure, the political landscape and alliances in Europe are shifting. Italy is on the brink of a huge crisis as the country’s prime minister, Matteo Renzi, appears to be fast exhausting any possibility he has for pushing through radical reforms.
German economist and politician Joerg Asmussen put it clearly during a speech in Milan. “The future of the euro will not be decided in Berlin, in Brussels or in Frankfurt, but here in Italy,” the German official said. What Asmussen was saying is that unless they manage to convince the markets that they can save themselves, no one will be able to save them. In a way, he was turning the usual mantra – “but Italy is too big to fail” – on its head – “Italy is too big to rescue.”
People close to French officials in Paris get the same feeling we had in Athens at the end of 2009, in other words that something big and ugly is coming their way whose fallout no one can fully predict.
As for Germany, it appears to be entering a recession but, as usual, it will take time before Chancellor Angela Merkel decides to have any reaction. The rise of Euroskeptics combined with the decline of economic indicators will undermine decision-making even more.
Merkel, as she has often told officials from other nations, has had to live with the fear of an Italian or French meltdown while she is at the driving seat of the EU. The German leader is probably saying this because she knows that if disaster did strike, then she would be the one to go down in history as the undoer of the European project.
Let us not delude ourselves. Maybe the common currency project is going to hit a deadlock while we are busy shouting “we told you so.” Sure, it’s good to see your predictions being vindicated but it would be even better if we managed to hammer out some contingency plan in case this scenario were to materialize.