At least
they still get to call it "Greece." After months of deadlines gave
way to last chances and more 11th hours than you can count, the negotiations
ended with Athens surrendering on - not coming to - terms set by Europe on a third
bailout worth between 82 billion and 86 billion euros for the next three years.
All Greece had to give up in return was everything.
Greece and Europe haven't so much agreed to
a deal as agreed to agree to a deal if Athens makes a show of good faith first
by doing everything it would have had to do under the bailout it decisively
rejected last week.
On top of that, though, Greece has to make a
slew of reforms that range from the rigorous to the infinitesimally detailed.
It has to redo all the things it had undone the past few months, like firing
the public workers it had rehired, and allow bailout monitors back on the
ground in Athens.
It also has to streamline its bureaucracy
whatever way Europe tells it to, ratify the euro zone's rules about resolving
dying banks, speed up its judicial process, privatize its electricity network,
allow stores to open on Sundays, and create more competition among pharmacies
and bakeries. These last few go further than anything Germany does itself. It's
micro-micromanaging, but it's what Athens has to agree to if it wants to unlock
its bailout money. That's because even though Europe called this a
"negotiation," it was only one in the sense that there are two sides
here. It was really an ultimatum - and one that Greece has submitted to.
It almost didn't, though, because of the
humiliating way that Germany made it surrender its sovereignty. Athens is being
compelled to sell 50 billion euros (about $55 billion) of "valuable Greek
assets" - it can keep the ones that aren't - to help reduce its debt and
recapitalize its banks. This was politically toxic enough that the Financial
Times reports Greek Prime Minister Alexis Tsipras almost walked away from the
deal and the euro itself in the wee hours of Monday morning. The only reason he
didn't is he got two concessions that make it look like the country is being
coerced into handing over its wealth: The fund will run out of Greece instead
of Luxembourg, and some of the money it raises will be invested in Greece's own
economy.
This gets at one of the euro's two
fundamental flaws. The first is that euro doesn't work as currently
constructed. Countries that fall into recession can get stuck in them since the
common currency takes away their ability to fight them. But the second is that
the euro probably can never work since it's virtually impossible to construct
it well enough. That means, before long, we'll be back in a crisis, wondering
if Greece, or maybe Italy or Spain or Portugal, is going to have to leave the
euro zone altogether. Another 86 billion euros isn't going to make this go away
for long.
So now, the people of Greece are going to
suffer even more because of a currency union that leaves them in a slump that
won't and can't end for a long time. But why can't it? Well, the euro has a
problem of too much democracy at the same time that it has a problem of too
little democracy. And so, as a political matter, Europe can't build what it
needs for the common currency to be anything other than a contraption for
turning recessions into deep depressions.
In other words, the economics of the euro are
a disaster, but the politics of the euro are an even bigger one that keep them
from fixing any of it. Not that this should be surprising. Indeed, the euro's
problems were so predictable that Milton Friedman, well, predicted them. The
euro's original sin was having countries share a currency without also sharing
a treasury - and the European government that would have to go with it.
That's a crisis just waiting to happen since
having the same currency means having the same monetary policy, but different
countries need different monetary policies. Greece and Germany can't have a
single bank setting the same interest rates for both of them without one of
them having rates be too high or too low for them. The only way to make up for
this is to have the countries that are doing well send checks every year to the
ones that aren't. That's what happens automatically in a well-functioning
currency union like the dollar zone - a.k.a., the United States - where
struggling states are able to pay less in federal taxes than they receive in
federal benefits, because strong states do the opposite.
But if Europe needs to forge an even closer
union, where rich countries transfer money to poor ones, to make its currency
union work, why wouldn't it? After all, it's spent the past 60 years trying to
get to this very point. It started with the European Coal and Steel Community
in 1951 as a way to make war impossible. It continued with the euro in 1999 as
a paper monument to peace and prosperity that was supposed to secure both. And
the next step is, or was supposed to be, a United States of Europe.
Now, if it sounds like a bad idea to create
a currency that was bound to create a crisis as a pretext for creating a
central government, well, that's because it is. But that's what Europe has
done. German Finance Minister Wolfgang Schäuble just said that they knew
constructing "a monetary union without fiscal and political union would be
a risky business" but they went ahead because, as he explained, "if
we had waited to create political union first, monetary union would never have
happened." So, again, why would Europe let this crisis go to waste?
Well, the snag is figuring out who pays what
and who decides what. In a word, sovereignty. Now, the first problem is of too
little democracy at the European level. Sure, there's a European Parliament,
but it doesn't have any legislative legitimacy or real power of the purse since
its purse is so small. And that's the way the people of Europe want it. That's
right: The elites of Europe might want a United States of Europe, but the
people don't. That brings us to the second problem of too much democracy at the
national level.
Think about the Greek crisis. The other 18
members of the euro zone feel like Athens has lied to them about reforming its
economy, and have democratic mandates to stop bailing it out. But Greece feels
like it's been pushed into self-defeating austerity, and has a democratic
mandate to end that. So whose democracy counts more? Should Greece be able to
vote itself money from the other 18 countries, or should the other 18 countries
be able to vote on how much Greece's pensions should pay people?
The answer, in this case, is that whoever
has the money has the power - especially if their friends at the European Central
Bank can force your banks to close - and that's Germany.
But financial might makes right isn't much
of a principle. If Germany tries to bully countries like it has bullied Greece,
then nobody is going to want to cede any sovereignty to any kind of central
government. And that would leave the euro zone stuck in a status quo where the
European government doesn't have any power and the German government has too
much for anyone else to give up any of theirs.
The result is a system where even the smallest
squabbles can turn into existential ones. Just look at Greece. Its bailout is
only 0.23 percent of the euro zone's annual economic output, but that was still
such an explosive issue that Germany has taken over its budget and threatened
to kick it out of the euro entirely. Compare that with the U.S., where rich
states transfer about 5 percent of their annual income to poorer ones, but
nobody thinks that's a reason to tell, say, Alabama how much it should tax
people, let alone force it out of the dollar zone.
So how are you going to convince northern
Europe to do something that's 20 times worse for them than bailing Greece out -
and do it every year - at the same time that you convince southern Europe to
follow its neighbor's fiscal orders? You're not. And that leads to a depressing
conclusion. If the euro isn't going to get better, and countries can now be
thrown out of the euro, then a country will be thrown out of the euro - and
that will probably be Greece.
Now, there's a good chance the current government
will collapse, but there's not a much better chance that any other government
could implement this deal either. Austerity will continue to hurt Greece's
economy more than Europe expects, so it will continue to miss its budget
targets - which, in turn, will force Athens to cut even more and harm its
economy even more. At some point, whoever is in charge will try to end this
downward spiral. If Germany doesn't hit the eject button over that, Greece
might actually leave the euro first - and from there, who knows who else. Then
there might not be anything to call the "euro zone" anymore.
Πηγή: washingtonpost.com
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