Economic nationalism

The entire question of a rescue package for Greece has become absurd, as so eloquently shown in the markets, where interest rates on Greek loans remain staggeringly high. The profiteers are not being irrational; instead of «guns at the ready,» they are seeing political foot-dragging. The victim is not just Greece but the entire eurozone. Prime Minister George Papandreou wants the rescue package to be there as a fallback option but he doesn’t want to use it. First of all, because it hurts the country’s already tarnished image and, secondly, because he wants to avoid economic supervision and additional painful measures; therefore he is exhausting all other available avenues. His tactics would be politically relevant if there was any real hope of escaping the fate the markets appear to have in store. But postponing the inevitable will only have other repercussions. That is just one side of the story though. The other is the damaged reputation of the eurozone due to Berlin’s delay tactics. Greece is not merely the prodigal son Germany would like it to be; its problems are also a result of structural imbalances. The existence of a common currency benefits the most competitive economies, Germany first and foremost. Its surpluses are essentially the deficits of Europe’s southern countries that have gradually run into overindebtedness. But Berlin doesn’t like to talk about that, nor about its political hegemony in the European Union, though it likes to remind us that it makes the greatest contribution to the EU budget. The international crisis has brought to light the contradictions in the eurozone; Germany wants a united Europe where it can sell two-thirds of its exports, but doesn’t want to show solidarity in practice. Its economic nationalism undermines the euro and its own mid- to long-term interests. Member states that have lost competitiveness through the euro will react, particularly Spain, Italy and even France. Without fiscal union, without a political union, the monetary union will unavoidably start to show signs of dissolution.

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