The euro: Buying time and muddling through are no longer enough

As EU leaders gather in Brussels for the European Council meeting, they need to remember that their efforts to save the euro do not just affect their impact at the next elections, but also their long term legacy. Buying time and muddling through are no longer enough.  

The ongoing fractiousness of the Greek body politic in the face of national peril has all but destroyed vestigial hopes that Greece might be able to reinvent overnight the way it manages its public affairs and thus move on the long road towards full repayment of its staggering debt. With each passing week, the crisis management strategy hitherto preferred by the eurozone’s national leaders – buying time and muddling through – looks like an even more desperate attempt to postpone the inevitable moment of truth in dealing with Greece and the larger crisis engulfing the eurozone .

There are deep historic reasons for Greece’s predicament. Centuries of Turkish occupation have deprived the Balkans of participation in the Renaissance and the Enlightenment, weakening the foundation of statehood and civil society. Even more relevant to Greece’s current predicament is the devastation wrought by the ravages of German occupation and the ensuing civil war. The ludicrous bloating of the Greek state is partly the result of a successful strategy to buy social peace in a politically fragile society. Anger in Europe about the refusal of the Greek opposition to close ranks with the embattled government in Athens is warranted – as is anger in Greece about the decade of recklessness that must now be atoned for with searing social pain. But it would help if political leaders in The Hague or Berlin spent less time feeding the prejudices of their populace, and more time reflecting and explaining why Greece is having such a hard time of it. Of course the country should not have joined the eurozone when it did. But errors do happen and this one has been made and shared by most. All that must matter now is how best to manage its consequences.

The refusal to stem the crisis of confidence in the eurozone’s future early on through much bolder signals of European resolve – such as the creation of a European fund to stabilise the banking system, or the pooling of public debt though a switch to Eurobonds  – is relentlessly pushing this generation of European leaders towards an even more dramatic choice. If the dynamics currently at work in the markets continue to operate, the leaders will be compelled either to accept the necessity to transfer far more power and money to a joint level of decision-making – thereby moving the European Union further towards a full-fledged federation-, or risk a political and economic earthquake which might both throw the world economy back into the abyss and precipitate European integration into its deepest crisis since World War II..

It is indeed an often-made error of analysis to assume that the choice leaders such as Angela Merkel will then be facing is one between politically suicidal steps into deeper European fiscal and budgetary federalism on the one hand, or a retreat into the safety of some pre-EMU status quo on the other. The fact is that the unravelling of the eurozone – or even a partial Greek default insufficiently counterbalanced by a move into deeper financial and political eurozone integration – might unleash dynamics whose combined impact would be far more destabilising and politically damaging than any further move into European federalist territory. What then? The responsibility for disruption of 60 years of European integration would be rightly laid at the feet of today’s national leaders; Angela Merkel would secure her place in the history books as the Chancellor whose lack of courage, lack of ambition, and sheer lack of wisdom destroyed the work of her predecessors and threw Germany back into the role of the main agent of instability on the European continent.

With financial markets once again co-authoring the European script, there is no way even the wisest observers can predict today which chain of events will result from the situation Europe is facing. If an inward-looking Germany continues to dither, sow confusion through conflicting announcements, and refuses to even discuss the conditions for a permanent expansion of European authority coupled with more financial transfers within the EU, then a politically and economically catastrophic end to the present crisis is entirely conceivable.  

But we should be clear that the eurozone’s leaders will not be balancing a brave leap into deeper European integration against an easy return to some 1990ies halcyon past.  The choice that looks set to be on offer sooner rather than later will be one between finding the courage to shape history and build on the work of their predecessors, or yield to hostile historical forces and let Europe collapse into disarray. Too many of our current leaders may lack the ability and the willpower to think beyond the next elections. But few would want to spend their political retirement as objects of political contempt. If prudence is the better part of valour, then prudence may yet produce boldness rather than a continuing European stasis which in today’s crisis is the surest road to disaster.


The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


ECFR Alumni · Former Senior Policy Fellow

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