This week’s news that the credit rating agencies have decided to label Greek debt with the value of treble-C, making Greece the lowest-rated country in the world, should raise the question of what has gone wrong: and who is going to put it right?
During a visit to the Greek Parliament two weeks ago it was very apparent how angry ordinary people there are at the way in which their economy – and their lives – is being sacrificed in pursuit of a dream created many hundreds of miles away: the people of Greece are being made to pay the price of a political ambition that threatens to destroy the very heart of our continent. The situation has worsened since my visit and we are now witnessing riots. The truth is that Greece is bust and the country might become ungovernable.
No Conservative politician can forget the trauma of Black Wednesday, when the United Kingdom found itself unable to sustain its exchange rate within the tight constraints of the then European Exchange Rate Mechanism, a forerunner to the single currency. As the Government tried desperately to overcome the pressures (exacerbated by the efforts of a few traders unconvinced of our ability to prevent the inevitable), interest rates shot up in a violent and desperate bid to maintain our position within the ERM. Within the course of just a few hours, we were forced to exit from the mechanism, and allow our economy to re-calibrate separate from the pressures under which it had been stressed.
Our swift exit from the ERM probably served to keep us outside of the European Single Currency: yet the pressures and stresses placed on other European Union member states, such as Greece, Ireland and Portugal (as well as some other countries whose ignominy has not yet erupted in quite the same way) are caused by the identical pressures that obstructed our experience: a monetary policy that is not configured to suit the needs of a particular functional economic area giving rise to pressures elsewhere that inflict great harm and injury to those in its wake.
Which is why the debate on the question of eurozone bail-outs rather misses the point: it is the case that the Greek government has been woefully inadequate in collecting the taxes that it seeks to levy, and that this has been done alongside a relaxed attitude to fiscal management and a dangerous lack of concern for the consequences of individual social policies, which undermine economic growth: but these are not new factors, and they should have been addressed in advance of the country being able to join the single currency.
But to have mended these problems – not just with Greece – would have delayed the project and therewith the glory of achieving the dream. That is why it is the ordinary Greek citizen who is being made to pay the price: and, for them, the dream is increasingly feeling like a nightmare – and one with no comfortable wake-up to which they can look forward.
But the single currency zealots remain committed to their cause: it seems that the perilous state of their project and the strains and stresses it is causing across the continent elude them. The answer to this crisis does not lie in ‘soft re-structuring’ or ‘voluntary re-profiling’, but a recognition of the brutal reality: this political project has been advanced at too great a pace and with too little thought for the consequences. One wonders if the price being paid across the entire European Union is worth paying. Certainly that question is on the lips of many Greeks but they sadly feel there is nowhere else to go, and they feel lost. Perhaps those who created the Euro for political reasons need to go back to the drawing board.