As far as I can understand the “strategy” of the EU, it is now to prepare for Greece to leave the single currency. Not that the Greeks themselves are anything like psychologically ready to quit: the politicians are punch-drunk, exhausted, and appalled at the loss of face and loss of security that would go with a sundering from “Europe”. Most voters choose pro-euro parties. But money is being withdrawn from banks; events are gathering momentum; and it is clear from their remarks that other EU leaders are getting ready for an outcome which until recently was held to be impolite to mention: the Grexit.
And then what? And then the strategy would appear to be to cauterise the amputation; to circle the wagons; to issue the most ringing and convincing proclamation to the markets that no more depredations will be tolerated; and to get the Germans to stump up, big time, to protect Spain and Portugal. We are told that the only solution now is a Fiscal Union (or FU). We must have “more Europe”, say our leaders, not less Europe – even though more Europe means more suffering, and a refusal to recognise what has gone wrong in Greece.
The euro has turned out to be a doomsday machine, a destroyer of jobs, a killer of growth, because it entrenches and exacerbates the fundamental and historic inability of some countries to compete with Germany in making high-quality goods with low-unit labour costs. Unable to devalue their way back into the game, these countries are forced to watch industry wilt under German imports, as the euro serves as a giant trebuchet to fire swish German saloon cars and machine tools across the rest of Europe.
Germany is almost alone in recording economic growth in the first part of 2012; Germany is doing well from the euro; and so the theory is that Germany should pay to keep the whole racket going by bailing out the improvident and the uncompetitive, just as London and the South East subsidise the rest of the UK.
Alas, it is not a strategy that is likely to work. As Angela Merkel has made clear, there is little political support – let alone popular support – in Germany. EU leaders may want a fiscal union, but it is deeply anti-democratic. We accept large fiscal transfers in this country because Britain has a single language and a single political consciousness in a way that Europe never will. Rather than creating an “economic government of Europe”, the project will lead to endless bitterness between the resentful donors and the humiliated recipients, as these diminished satrapies will be instructed to accept cuts and “reforms” – designed in Berlin and announced in Brussels – as the price of their dosh.
And it is not as if the markets will believe in these “firewalls”, or not for very long. If they can prise away Greece, they will know they can prise away others. As long as the euro can break up, there is always a risk that it will break up. So it is frankly unbelievable that we should now be urging our neighbours to go for fiscal union. It is like seeing a driver heading full-tilt for a brick wall, and then telling them to hit the accelerator rather than the brake.
Europe now has the lowest growth of any region in the world. We have already wasted years in trying to control this sickness in the euro, and we are saving the cancer and killing the patient. We have blighted countless lives and lost countless jobs by kidding ourselves that the answer to the crisis might be “more Europe”. And all for what? To salvage the prestige of the European Project, and to spare the egos of those who were wrong and muddle-headed enough to campaign for the euro.
Surely it is now time to accept that the short-term pain of a managed euro rupture – a wholesale realignment, possibly a north/south bisection – would be better than continuing to immiserate so many people around the continent.
At the end of a day in Athens, I was so sad at what I had seen that I went to a kafeneion and ordered a metaxa. And then another. At length, I fished into my wallet and found a rather handsome banknote, with an image of Apollo from Olympia. “Not today,” said the owner, politely declining my drachmas. “In a month, yes.” It will be awful for Greece, and turbulent for Britain, but at present I can think of no better solution.