Greece and the Euro Stagger Towards the Brink

Negotiations in Brussels to resolve the Greek fiscal crisis appear deadlocked, with Athens heading toward default. German Chancellor Angela Merkel insisted that Greece make a deal before the markets open Monday. The Eurogroup will meet again tomorrow on the issue.

The European Union was supposed to create a de facto United States of Europe. But after last January’s Greek election it was obvious that the EU does not speak for Greece, or perhaps anyone else other than the Eurocrats, an amalgam of bureaucrats, academics, journalists, businessmen, politicians, and lobbyists who dominate Brussels.

To most EU leaders common people are an impediment. The Eurocrats reflexively intone “more Europe” in answer to every question, but voters increasingly are supporting protest parties, some populist, some worse.

Advocates weren’t shy about their ambitions. In 1992 German Chancellor Helmut Kohl predicted “creation of what the founding fathers of modern Europe dreamed of after the war, the United States of Europe.”

The Euro was one step in the unification process. A more powerful EU was expected.

Alas, the organization has three presidents, who compete for attention and authority. The parliament has only passing connection to the people of Europe. No European would die for Brussels, not even the Belgians, who barely averted the break-up of their badly divided nation.

But the EU carries on, secure in the support of the vast majority of the continent’s elite. The Euro crisis has shaken this political foundation, however.

Until January the popular revolt was contained. But then radical left-wing Syriza won a near majority. The new government rejected the Brussels consensus and default threatens, which most likely would mean a Greek exit from the Eurozone (“Grexit”) and possibly even from the EU.

However the crisis is resolved, the march toward ever greater power in Brussels appears over. Euroskeptic and radical parties are on the rise.

Among the most spectacular Euro villains?

1.      Helmut Kohl. The first chancellor of a united Germany, Kohl agreed to sacrifice the legendary German Mark for the Euro.

2.      The Greek political establishment. Both the dominant parties, Pasok and New Democracy, profited from the sclerotic and venal state they created.

3.      Greece’s creditors. They lent money at near-German interest rates to a nation unlike Germany.

4.      The International Monetary Fund. Originally created to support a system of fixed exchange rates, it has become one of the primary financiers of Greece.

5.      Alexis Tsipris and Syriza. This disparate movement of the left believed in fiscal alchemy—more government spending, taxing, and regulating would turn into a roaring economy.

6.      The European Central Bank. The ECB shifted from economics to politics when it began buying the bonds of deeply indebted European states, most notably Greece, to subsidize the improvident.

7.      The Greek people. Euro-subsidized borrowing allowed them to prosper despite their economy being littered with bloated bureaucracies and privileged cartels, and hamstrung with debilitating regulations and profiteering politics.

8.      The French political elite. France’s people suffer from stultifying state controls and high taxes. The right is as statist as the left.

9.      The European Parliament. More often than not voters use EP contests as an opportunity to protest against unpopular rulers at home.

10.  Angela Merkel. She has spent her years in office doing as little consequential as possible. A Eurocrat to the core, she opined:  “We have a common currency, but no common political and economic union.  And this is exactly what we must change.”

The European story is reaching its climax and no one knows how it is going to end. Greece and the European establishment might yet come to terms and the Euro might stagger along. But this almost certainly is not the Eurozone’s last crisis.

As I point out in Forbes: “It appears that many Europeans have had just about as much Europe as they can stand. In coming months and years the debate is likely to be over how much and how fast they can roll back ‘Europe’.”