Greece and the folly of the EU

The Greek crisis shines the clearest spotlight yet on how utterly economically unwise this European Union can be.
I’m not sure if I am yet convinced that, so long as we keep our currency separate and opt out of things we don’t like, we really need to leave. Mr Cameron doesn’t seem to know what he’s going to offer me to vote on, so why should I make up my mind just yet? I am happy to languish in uncertainty for a bit.
What I am confident of is this: no-one will be getting good vibes watching what’s going on now.

Whatever happens to Greece, the mood within the EU elite will inevitably favour strengthening financial integration within the Eurozone. As that happens, the appetite will be for more, rather than less, political integration too.

That is why, aside from British exposure to Greek debt, and concern for both our fellow human beings and our holiday in the sun, we ought to keep a very close eye on how this Greek tragedy plays itself out.

This crisis is, quite simply, an embarrassment to those who fight desperately to keep the economic dream of monetary union going.

The Greek government, in its handling of the crisis, looks totally incompetent. It has decided to ignore the 30th June deadline for further bailout funding to pay down its debts, in order to hold a referendum, which we all know EU leaders hate.

They, meanwhile, seem to be carrying on like nothing is happening, condemning Greece in no uncertain terms.
Basically the bailout ends tomorrow if not extended, and Greece has to pay the International Monetary Fund £1.6bn, meaning the disaster might have already happened before the vote on Sunday.

Greek banks have already been closed in anticipation of fears of default sparking an even more devastating run on the banks as citizens, with some justification, decide that under the mattress might be the best bank for their money.

In ignoring the deadline and calling a snap referendum the Greek government has, by one analysis, demonstrated the ultimate cowardice.

Bound by pre-election promises it now knows it can’t keep, and under pressure to produce new proposals that place more emphasis on spending cuts rather than more and more tax hikes, it has simply bottled it and left it to the people, knowing they will kick the boot in to the nasty German paymasters with a resounding no. This would, of course, spell the end for their membership of the single currency, despite their claims to the contrary.
Another analysis, however, sees this as a clever, calculated move. So desperate are the Europhiles to save their blessed single currency that politics will continue to triumph over sound economic judgement as it has done so far. Perhaps the Greek government thinks they will give in, knowing it’s do or die. It would not be entirely stupid if that was its plan.

We know that talks keep going to the wire. Depressingly, we know that even if this crisis is averted, we’ll be back here again in 6 months, with more deadlock, more brinkmanship, and further hopelessness for this crippled nation.

The reputation of this currency is on the line. IF one of its members defaults and exits the Euro, it will be the ultimate proof that, firstly, you can’t have economic union without political union. Second, it will be proof of the recklessness of virtually every country turning a blind eye to the rules requiring budget deficits to be no higher than 3.5% as an entry criteria.

IT will prove that the project’s major failing is that, when one of its members gets itself in dreadful bother, the effect of not having at one’s disposal the standard tool of currency devaluation to boost the competitiveness of exports, can be utterly catastrophic. Greece might be a special case, but it is not so special that it can crash out of the currency without leaving its glaring holes as a concept wide open, for everyone to see.

I have little sympathy for Greece, though I recognise the suffering of ordinary Greeks who failed in their first duty as an electorate, to elect competent governments.

Yet keeping them hopelessly uncompetitive, politically unstable and unable to help themselves clean up their mess, for the sake of keeping a political project’s reputation squeaky clean is a joke. If everyone suffers, that’s too bad for ploughing ahead with this single currency with such a determination that you made your own rather sensible rules an unimportant distraction.

If, like me, you’re bored of the brinkmanship, the rhetoric, the endless lavish dinners where none of Europe’s pressing problems are tackled effectively, then I’m sorry to tell you this, but you’ve got a load more of it to come yet.