Reform, support and trust in the eurozone


About a year ago I was at a meeting addressed by Luxembourg’s Prime Minister and euro group spokesman, Jean Claude-Juncker, about the latest state of play in the resolving the Greek debt crisis. During his presentation Juncker came up with a phrase that has resonated ever since – to be honest, it is the roadblock that threatens to unravel the single currency and erode the basis of the EU: ‘support fatigue in the north, reform fatigue in the south’.

The Greek crisis has become a full blown tragedy, with the latest will they/won’t they machinations over whether the latest plan of swingeing spending cuts will pass muster with the north Europeans just the latest humiliation for Greece. Unemployment  already stands at a truly frightening 25% – the Gods who devised this tragic farce certainly have a penchant for black humour.

Nobody should be under any illusions about the scale of the sacrifices that the Greek people have been committed to. Public spending, which has already been cut by around 25%, is going to be slashed even further. The minimum wage will fall by 20%. Pensions will be further cut, taxes will go up. Former ECB Vice-President Lucas Papedemos, brought back from a professorial post in the US to rescue his country, has committed his people to a desperately tough but hopefully heroic future.

Needless to say, the price will not be borne by those responsible for Greece’s financial ruin – the political class that presided over the bust is still largely in place. Meanwhile, the country’s wealthiest, who dodged tax on an impressive scale, got their money out and moved to London and Paris. The idea that economic pain can be avoided is still being put about by the Nationalist party leader Antonis Samaras, whose party was responsible for at least one of the country’s statistical frauds, and is feeding rumours that, should he win the April elections, he will renege on the terms of the bailout.

But the blame for the current crisis cannot be laid exclusively at Greek doors. The divisions in Angela Merkel’s cabinet indicate that, no matter what penury the Greek people are signed up to, it will never be enough for some. Finance Minister Wolfgang Schauble is said to be the leading nay-sayer, with the likes of the Netherlands and Finland also said to be hoping Greece will leave the euro.

Samaras and Schauble are the two diametrically opposed sides of the same problem. To be blunt, Samaras needs to decide whether he is serious about Greece remaining in the euro and getting their finances in shape. Schauble needs to say if he just wants the Greeks out, regardless of what they promise. In fact, their political choice is the one which is at the heart of the reform fatigue/support fatigue conundrum. The debtor countries need to take steps to get their houses in order – the richer nations need to take their fellow European’s plans at face value.

Brussels’ numerous debating chambers are always awash with talk of ‘solidarity’ – often invoked by politicians who mean it least. The EU, with its concepts of ‘shared sovereignty’ and ‘co-decision’, is built upon trust and mutual dependence. So is resolving the debt crisis which, after two years, still engulfs the eurozone. It’s time politicians stopped talking, challenged their domestic electorates, and made their respective leaps of faith.

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