Setback for Europe

No sober-minded observer will question the statement that the poor handling of Greece’s finances over the past 30 years by administrations of all colors (but particularly during PASOK’s 20-year rule) is to blame for the financial mess we are facing to today. Again, most would agree that, regardless of the loan agreement signed with the European Union and the International Monetary Fund, Greece would have had to make radical changes to its economy in any case. However, Greece is not a unique case – for better and for worse. As a eurozone member, it has experienced a decade of false exuberance. Now the country’s exit from the crisis is said to depend on the strict implementation of the demands listed in the so-called memorandum signed by the Socialist administration of George Papandreou. Still, one cannot be sure what the future holds. Speaking at the Greek Parliament’s economic affairs committee on Tuesday, IMF chief Dominique Strauss-Kahn warned that if something were to happen to the eurozone, if something were to happen on a global level, then things for Greece and other countries would become worse. The problem, of course, is that something has already happened to the eurozone. Two members of the eurozone, Greece and Ireland, have already signed up for a rescue package while many analysts speculate that Portugal, Spain, Belgium and Italy – each for a different reason – may follow. So something is clearly wrong with the eurozone. In Greece, a country of perennial division, the restructuring of the national economy has split the political class into two: the cheerleaders and the critics of the memorandum. But it’s a bit late for that. Regardless of its strengths and flows, the memorandum is already being treated as fact by the financial markets. The question now for all the countries facing a problem is when the restructuring of debt will take place and whether this will be accompanied by a return to the old national currency. Some say Germany may be tempted to leave the eurozone. All of this does not necessarily spell the end of the European integration project. But it does indicate that the whole business of the eurozone was not treated seriously enough – by neither responsible nor irresponsible states.

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