Cut off and exposed

Cut off and exposed

Europe will either have to grow up abruptly or slide further into decline. The choice will become evident in 2017. And it will have a decisive impact on Greece’s interests and its future.

Europe is faced with a twin challenge: security and the necessary reforms to break the inertia and compete with the key emerging economies. In terms of security, the Europeans have been rather spoiled. After the end of World War II, it was the United States that took care of Europe’s security umbrella. The Europeans spent little on defense and never paid too much attention to military security, intelligence or terrorism.

Now the threats have multiplied. The election of Donald Trump as US president has been a rude awakening for the Old Continent. It will soon have to face the tough dilemma: “You either pay your share or we pull out and you go it alone.”
When it comes to security, Europe is still in hybrid mode. No one takes Europe seriously on questions of diplomacy and security. Its only advantages are so-called soft power, humanitarian aid and its human rights policy. But when it comes to hard power issues, European officials are treated with an ironic smile, whether it’s in Beijing or Moscow.

As for the economy, a lot will be decided in Italy. During a speech in Milan in 2013, German economist and politician Jorg Asmussen said: “The future of the euro area will not be decided in Paris or Berlin, or in Frankfurt or Brussels. It will be decided in Rome,” he said. “The euro area cannot prosper if its third-largest economy has a potential growth rate of zero. Italy has to grow, and this will not happen by waiting for the cycle to turn.”

The Italians will vote on Prime Minister Matteo Renzi’s constitutional reform referendum next Sunday, even though everyone knows this is just a fairy tale as no major political party really supports what is necessary for Italy.

Many analysts predict that an Italian No vote could have a domino effect on the EU. The case of Francois Fillon, who is running in France’s presidential election, is the only positive sign in a nation which has great leverage but refuses to reform. In any case, it is too early to make any safe predictions.

Above all, there there is Europe’s lack of leadership. German Chancellor Angela Merkel seems to be the only exception to the rule. Greece, meanwhile, is like a wooden dinghy in a big storm. The walls are already up. In economic terms, Greece no longer poses a systemic risk to the eurozone. Our northern borders are sealed and, in the worst-case scenario, hundreds of thousands of refugees will remain stranded here.

Greece resembles a cut-off and exposed chunk of a falling empire. As is so usually the case, we hardly pay any attention to what goes on outside the walls.

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