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|The facts are awful. But Europe must face them|
The Times - November 7th 2011
Nicolas Sarkozy has made it perfectly clear that he is not keen on more lectures from the “I’m alright Jacques” Brits about what needs to be done to prevent the eurozone from causing the next Great Depression or, for all we know, the next world war. Yet he and his fellow eurozone leaders could do with borrowing a couple of traditional English traits, even if in truth we display them less often these days ourselves.
One is, despite that reference to world war three, our preference for understatement. It is better to say “we’re in a spot of bother, chaps” than to describe the situation frankly, for to do so would, at least in a family newspaper, require too many asterisks, exclamation marks and displays of emotion—but we all know what you mean, Carruthers. The other, in apparent contradiction, is our liking for stiffening moustache-laden lips and facing the facts.
Until last week,
George Papandreou’s sudden announcement, and then renunciation, of his plan for a referendum on Greece’s latest bail-out terms may be explicable only by a rush of blood to his head, given his failure to consult even his own cabinet on the idea, but he nevertheless did Europe a favour. He finally forced the facts out into the open. The question now is whether France,
At least on exit from the euro, it will be a tad tricky (more English understatement) to get the chat back into the sac. If, as President Sarkozy angrily declared, in a referendum the Greeks would have had to choose whether or not to remain in the euro, it cannot be either impossible or impermissible to leave.
Moreover, as the financial markets have already concluded, it is not only the Greeks who are capable of making that choice. If the Maastricht Treaty that set up the currency can be broken to permit national bail-outs, it can also be broken to allow—or even force—nations to bail out.
For the time being, as long as a government of national unity can be formed, before or after elections, Greek politicians look like choosing to stay in. But Mr Papandreou’s moment of panic, or perhaps high-stakes political gamble, shows that this choice cannot be relied upon as definitive. The pressure from the streets, amid a feeling that other options have been exhausted, could soon bring the issue back.
One rather awkward exception to the fact-facing trend in the past few days has been Silvio Berlusconi, the Italian prime minister who long ago merged his political and personal lives in a sort of TV unreality show. After the Group of 20 summit in
This more or less guarantees that the fashion will not pass, for it confirms that he is not serious about implementing the vague promises of economic reform about which his coalition government has been arguing, for if all is fine they can hardly be necessary. So banks, insurers and pension funds will continue to conclude that none of them will be criticised by their shareholders for owning too few Italian bonds, and the country’s borrowing costs will continue to rise.
Yet perhaps Mr Berlusconi, like Mr Papandreou, is thereby doing
As that storm approaches, it is surely time for Chancellor Merkel and President Sarkozy to accept the logic of their own positions. The euro can survive in its full, ambitious form only if its members agree to take collective responsibility for their debts. But
If so, there really are only two options. One is to abandon the currency altogether, which would cause mayhem and probably a Great Depression, given the integration of
This would be painful not just for
It is a terrible option. But the reality facing the eurozone leaders is that the alternative is even worse. Stiff upper lips, chaps.