Or Oi! Desmond! No!
So the outcome of the emergency meeting on Greece’s financial situation was – unclear. A whole lot of commentary by the British press focusing mainly on whether:
1) Greece going bakrupt would mean the end for the Euro;
2) the British taxpayer would be bailing out Greece.
As it turns out, neither happened. Yet.
A very sensible commentary from the FT’s City editor pointed out that, in the USA, cities and states go bankrupt all the time (California did so recently) but no one talks about the US dollar collapsing as a result. It’s a big deal yes, but not a ginormous one.
But something had to be done. Whether explicitly or tacitly, Greece needed to be helped by the stronger Euro countries.
In part this is a Treaty requirement. The Treaty of Rome set out that it is desirable that the Member States regard their economic policies as a matter of common concern. As EUpedia points out, Article 103 stipulated that they should consult each other and the Commission on the measures to be taken in the light of the prevailing circumstances.
But in the end the risk of the “contagion” effect – making investing in the other Euro countries, which in turn would affect investment in economies such as ours in the UK which have such closely linked economies- meant that there was self-interest as well as altruism in acting.
So self-interest dictates that something had to be done, and it will be, probably. The agreement reached was not exactly a master piece of clarity. But it will do as a starting point and the seriousness with which it is being taken was illustrated by stern words from Angela Merckel and the brilliant commentary by an unnamed German diplomat to the effect that other Eurozone members did not want to see their economies suffer so that the Greeks could have nice lives.
image from the must-read www.mailwatch.co.uk
And will the UK have to bail out Greece?
Peter Mandelson has been in the press recently saying that “talking down” the UK economy (whether that’s -say- to international audiences, for which also read competitors at Davos, or making unflattering comparisons between the UK and Greece’s economies) and he has something of a point, not least because of the contagion effect explained above.
And it seems that the Chancellor of the Exchequer, Alistair Darling, has been robust in saying that this is a eurozone rather than an EU problem. But remember what I said about the contagion – it is not in the UK’s interests for the Euro to fail, particularly since – because of the way in which Treaties are written- we are still technically supposed to be lining up to join the Euro and therefore have a convergence plan.
I have not had a chance to read the agreement that’s emerged after the meeting, but I imagine that the text will not shut the door on whole-EU action at some unspecificed future point if the alternative was total economic collapse… and so in that way I suppose the UK taxpayer could at some future point still step in to support the Euro.
But I just can’t see how that corresponds into that headline “Now We Have to Bail Out the Euro”.
Firstly, define “now”? As far as I can see that’s an inappropriate use of the word. France and Germany, primarily, seem to be bailing out the Euro. Not Britain.
But hold on… may be this is a new pro-European “we” that I would not previously have expected from the Daily Express where the impact of the bail out on the French and German taxpayers (amongst others) is being expressed as a kind of pan-European shared pain? Somehow I suspect not…
Was this all fair on Greece? Criticism of Greece which the Prime Minister has angrily refuted covered everything from alleged lying in accounting to the fact that the retirement age for public servants in Greece is 47.
47!!! It’s currently 60 here, going to 65, but I can’t help thinking for my generation we’re going to be minimum 70 and probably til-we-drop before we can think of retiring.
And Germany – due to a low birthrate and the complete lack of childcare that resulted in women having to make a choice between being out of the labour market and having children or remaining childless in order to work – is also facing a pension crisis.
No wonder that German diplomat was so scathing… not so much Greeks bearing gifts as what must be borne by others to prop their economy up…
The Greek Prime Minister blamed the previous administration for most of the problems – that’s par for the course from most public officials facing problems.
But he also blamed the European Commission for not having kept enough of an eye out and not having stepped in if it expected problems.
Interesting stuff. That’s what some people I know would call a “Belgian” approach to the EU – if it’s hard to keep your own house in order you call for the EU to provide a solution. But to blame the Commission for not doing something it’s not supposed to do? And somthing which, if it was proposed that it should do, we’d have an issue with?
Why can’t the British press do something useful like take the Greek prime minister to task for this sort of expansionist approach to the role of the EU rather than print what turned out to be a completely untrue story? But that’s too much to expect.
Although the Daily Express did manage to put out an apology for the ludicrous “EU spouts off about our milk jugs” nonsense they published the other day… well done @EULondonRep!