When the Euro was being proposed and in its early days, some of us had a question: could a common currency be possible within a group of countries all of whom maintained their own individual economic, monetary and fiscal policies?
When we got an answer back, which wasn’t too often, it came in myriad voices.
On one end were those who “promised” us that in some mysterious way this fundamental problem would be solved. At the other end of the spectrum were a few brave if somewhat idealistic souls who advocated the abolition of individual nation states for at least a federal if not a unitary political union for which the common currency would be a handmaiden.
In between, were all the spoken and unspoken solutions, verging from a seemingly commonsense vow that progress toward a commanding central bank and one policy would emerge out of the various European institutions – the bureaucratic European Commission, the nominal multilateral executive, the Council of Ministers and the relatively powerless European Parliament. In addition, this Christmas Tree was decorated with an additional four high-sounding named institutions such as the European Court.
Britain, of course, in the usual pragmatic way of the Anglo-Saxon constitutional process, opted out. It would not and could not abandon sterling, if no longer a challenge to the dollar as a world reserve currency, still served as a handmaiden to The City and the continuing profitable dominance and profitability of London as a leading world currency exchange.
Of course, in what could have easily been predicted would be the new order, each country went its own way. There was even continual conflict between Paris and Berlin, the two central pillars of the new money, with France always flirting with “dirigisme” – central planning – and Germany pretending, at least, to be a full-fledged market economy.
But while the big boys discussed the major issues interminably, the cat was away and the mice, they did play. It was far too easy for Athens [and to an extent Lisbon, Madrid and even Rome, a major EC player] to use their unlimited draw on the common currency to finance lifestyles to which they would like to become accustomed but for which they were either incapable of producing or for which they were unwilling to work hard enough to attain.
True, much of the Greek mess is historical. It has always been easy – with some tjustification — to blame it on the hated Turks’ Ottoman Empire heritage, but now a hundred years away.
Yet no one now speaks above the intense and infinitely complicated negotiations to trim Greece’s exceseses without killing its economy altogether, a game in which Athen’s shrewd if amoral leftwing government pulls the cat’s tail and dares it to take a fatal snap that would destroy the figment of a voluntary association of free nations.