Greece may strengthen the European Union

26 Mar 2015, Market, by www.ekathimerini.com

 

For the past five years we have lived with such insecurity that whatever does not lead to a direct worsening of the situation passes for a victory. This is the case with last week's mini-summit in Brussels, which – one month later – reaffirmed the Eurogroup agreement of February 20. Only this time, Greece was represented by its prime minister, and this was a meeting with the “big guns” of Europe and not just between the finance ministers of eurozone member-states. The meeting concluded with an agreement according to which Greece will propose a list of reforms which, if they are deemed sufficient, will allow our partners to free a section of the 7.2 billion euros remaining in bailout funds for Greece and will also allow the country to get some of the cheap money available in the Eurosystem. This may just save the Greek economy. But perhaps there are more important issues at play.

In the month between the agreements of February 20 and March 20, Greece did not present a detailed proposal of reforms, and its partners did not release any money. Greece's economy suffocated further; revenues crashed and the state struggled to meet its obligations, while citizens continually withdraw savings from banks in fear of capital controls or an exit from the euro. What's even worse, though, is the clash between Greece and Germany at the political level. Until German Chancellor Angela Merkel invited Prime Minister Alexis Tsipras to a meeting in Berlin on Monday, it did not look like there was any adult in the European Union – someone capable of understanding the dangers posed by the continuing clash, who could move to stop the race toward the cliff.

This is perhaps where we may see the most significant development of the past month. The difficulties encountered in saving Greece at the economic level since early 2010 forced the European Union to adopt mechanisms and procedures for helping member-states. The EU's leaders, with Merkel taking the lead, realized that the euro would be saved only through further union, not less. Similarly, perhaps the political ramifications of Greece's difficulties will lead to new structures that will strengthen the EU at the political level. The economic rescue of Greece, apart from the significance for the country, will show the level of political coherence in the Union and will be a measure of its leaders' wisdom. Are they all working toward the same end? Do they care about their common, European home, or do they care for the Union only up to the point that it benefits their country and their own political interests? This question is relevant to Britain, which is flirting with an EU exit, as well as to Greece, Germany and every other member.

The economic aspect of the crisis resulted in banking union, mechanisms for financing countries and banks in their time of need and the European Central Bank's quantative easing policy. The irony is that Greece (whose troubles served as the catalyst for these developments) cannot benefit from them as long as its partners are not convinced that it is abiding by the deal that Athens signed with its creditors.

At the political level, there is clearly a need for new policies and behavior. SYRIZA's election, and its forming a coalition with the Independent Greeks, the new government's total rejection of the bailout deal and the realization that it does not have any plan for handling the crisis other than the desire to return to the pre-bailout era, has served to unite all other EU member-states in concern. Many leaders are irritated by Athens's tactics, and relations between Greece and Germany reached a dangerous low before Merkel's invitation to Tsipras. That was the moment when the chancellor decided to show that Germany will not avoid the responsibility of playing a leading role in the EU that will reflect its economic power. She did point out that this meeting, along with the seven-member summit requested by Tsipras on the fringe of last week's EU summit, could not override the decisions of the Eurogroup – implying that policy would not change overnight. This last week's talks, however, show something more important than Eurogroup decisions. They show a will to overcome obstacles, to keep Greece on track with its partners, to strengthen the idea of union against the forces that want to see it fail. Merkel is showing her commitment to “greater union.” Now it is up to Greece – which brought the EU to choose between greater union and fragmentation – to show whether it can act in a way that will allow it to benefit from a stronger political union, or whether it will find itself on the outside.