European supervision


Many things will be decided in 2018, not just for us here in Greece, but for the rest of Europe as well. It will be a benchmark year. Berlin has decided that after the German elections this month, it will yield to French demands for a European version of the International Monetary Fund.

This may come as music to the ears of those who wanted the IMF to get out of our lives and out of Europe, but they should consider what this actually means before they start celebrating.

Germany has set strict terms for the creation of a European monetary fund. Emmanuel Macron has been asked to create a “German” France. We are already seeing this, as the new French president is proceeding with ambitious labor reforms that will change the way things have been done for decades in a country where such things could never be changed.

Greece will be the guinea pig on which the new European surveillance mechanisms will be tested. The European inspectors will be especially strict, more so than Poul Thomsen. They’ll have to convince Berlin and the markets that they’re not the stereotypical European organization that just pushes around countries that are undergoing adjustment programs. Europeans will be demanding on issues of structural reforms. They will not tolerate the derailment or undoing of any part of an ongoing program.

In Athens, the government is eager to celebrate the final exit from the memorandum next August. It’s in for a rude awakening. Sure, we’ll exit the memorandum, but will we be able to handle another equally suffocating control framework? Supervision won’t simply stop next August, because by then, the new supervision of all European countries, especially ours, through an EMF will have begun.

Whoever is dreaming of a goodbye party after which agreed measures will be overturned is indeed in a very deep sleep. It’s hard to see how we’ll get a free pass if we go back to our old ways.

It would be a destructive error for Prime Minister Alexis Tsipras to start celebrating Greece’s exit from memorandums now. Next year Greece will have to show that it is capable of combining fiscal self-discipline with major reforms. Always hard to please, the markets will be waiting to see if the new European supervisors or anyone else is thinking of investing in Greece.

I fear some of us have not yet understood this and are rushing to celebrate prematurely. At some point, the prime minister will understand this new reality. He will have to show whether he can survive in it or if it will seem in insurmountable challenge, in which case, if Greece’s recent habits are anything to go by, he’ll back down and let the next lot have a go and trip themselves up.