Monday, July 13, 2015

Euro wins, Europe loses: From Beethoven's Ode to Joy to Rihanna's S&M

So in the end my faint glimmer of hope was misplaced. It came down to a German diktat, with Hollande sitting in the room probably congratulating himself that he had prevented Wolfgang Schäuble from forcing Greece out of the euro, along the lines I suggested yesterday. But in retrospect it seems clear that Schäuble was prepared to yield on Grexit if nothing else. He got everything he wanted and more. Merkel, when she finally ended her temporizing, proved to be German at heart rather than European.

So the euro is saved, but the euro, it is now clear, is going to be a thorn in Europe's side if not a spike in its heart for years to come. Institutional change is impossible in today's climate of inflamed nationalism. One can even doubt that there is anything left in the European project worth saving. Europe should change its anthem from Beethoven's Ode to Joy to Rihanna's S&M.

Perhaps tomorrow will look brighter.


Parisian_in_Sweden said...

Depressing indeed... I do not see any of the supposedly needed institutional changes (i.e. more democracy, transparency in EU decisions) to be feasible in the next political generation. In fact, I am not even sure now that more democracy is a good thing: if a global EU referendum were held now, Schauble's views might well secure a close majority. The question I have now is: how can northern European people have been so brainwashed against Greece, against common economic sense?

Parisian_in_Sweden said...

Regarding bargaining tactics, I am not sure there was anything Hollande could have done better. The Grexit threat by the Germans was very credible: if it happened, Germany's borrowing costs would be even lower. The only thing Germans were risking was reputational loss, but this is very intangible and can easily be downplayed over a week-end of negotiations with a tight deadline.

France stood to lose much more from Grexit (remember the euro was imposed on Germany in exchange for the acceptance of reunification), and it was an entirely credible outcome, so Hollande had to secure Greece's membership, at the cost of accepting a lot from Germany.

In those conditions, it was just not possible to bargain for both Greece membership and reasonable terms for the Greek government.

Again, what's sad about this is that it reveals that, absent military threats, German governments and their Eastern European allies just do not care about the general interest of Europe. Maybe the solution would be to prop up the Putin threat (sad, very sad).

Anonymous said...

Marine le Pen in France, and other EU nations -- Spain, Italy, Austria, Finland -- with thrusting anti-EU parties can't believe their luck, by autocratically overplaying its hand Germany has shattered the post-war dispensation.