Europe is taking stock of Greece again these days, on the 15th and the 16th of March. But above all, it is taking stock of its own predicament. Greek prime minister George Papandreou, has actually done us all a big favour in stepping up the pace of progress towards a bona fide economic union. After having pushed through a draconian austerity plan for his country, he is now taking on the financial speculators who put their money on the demise of the euro. And he has taken the EU to task, announcing that if it does not hold up its end of the bargain and stand by Greece in its present plight, it will turn to the International Monetary Fund (IMF). And that would be tantamount to saying the single currency is internationally useless.

That suddenly puts a new slant on the public debate. All eyes are no longer riveted on the Greek peril (which was exaggerated anyway: its economy accounts for a mere 0.3% of the eurozone), but on the need for a European response. Ad-hoc and made-to-measure proposals are coming thick and fast in the (quite possible) event that Greece should need help in avoiding an excessive increase in sovereign debt emissions, which could culminate in a national default.

IMF does not fit the bill

In a word, the Greek question is not a strictly Greek affair: it concerns the whole eurozone, which needs to flesh out the mechanisms of monetary union and move towards a binding, not just voluntary, economic union. Those mechanisms, which must be permanent and preventive, should include an emergency fund to keep dangerously teetering countries afloat. The terms of access to this carefully regulated fund should be stringent and precise (to ward off any temptation towards laxity and mismanagement), but transparent and universally applicable. It stands to reason that this fund should be drawn from the EU budget: having a war chest at one’s disposal shields against potentially fatal blows and facilitates rapid reaction, as we saw in Washington DC after Lehman Brothers went to the wall.

One variant of this idea has just been proposed by Daniel Gros, director of the Centre for European Policy Studies (CEPS, the most high-profile think tank in Brussels), and Thomas Mayer, a leading economist at the Deutsche Bank, in a policy brief entitled “How to deal with sovereign default in Europe: Towards a Euro(pean) Monetary Fund”. This EMF would be a Continental copy of the IMF. The IMF does not fit the bill, argue the authors, because “it is helpless in the face of a determined offender, as the case of Argentina in 2001 shows”, and the drama would end in a tragedy for the euro. The EMF, on the other hand, would give concrete expression to our avowals of European solidarity. Paradoxically, moreover, it would be funded by the countries that veer farthest from the straight and narrow of Maastricht parameters (public debt limit: 60% of GDP, government budget deficit limit: 3%), which is the most controversial aspect of the scheme.

Europe helped finance German reunification

While the onus has thus far been on Greece to get serious again, it is now Germany’s turn to provide the requisite leadership – and, as a “net contributor”, to bury its understandable axe to grind about those freeloading cheats (in Athens) that cooked their books and welshed on their obligations. But we’d be better off appealing to common interests than calling in a helmsman to save the ship. After all, everyone has benefited by the monetary union: thanks to its stability, which kept domestic whirlwinds and foreign speculators more or less at bay for a whole decade; thanks to its low interest rates; thanks to the international clout of the currency itself, which is configured as a solid reserve currency more than the Deutschmark ever was; and thanks to its incentives to keep public finances on an even keel.

It’s true that some of the less prosperous (Mediterranean and other) countries that are net beneficiaries of European aid used the EU’s structural policy as an essential lever to join the eurozone. They have received abundant modernisation aid – averaging out to 1% of their GDP p.a. In return, however, that enabled Germany and other net contributors to consolidate their trade surplus by tapping these less-developed industrial markets: witness the German-built Siemens metro trains in Athens and French-built Frem frigates in Piraeus.

Furthermore, Europe has borne much of the burden of German reunification. Germany’s eastern Länder are the second-biggest beneficiaries of EU structural aid. And the unification of the West and East German mark entailed adopting a tight monetary policy, with high interest rates that were exported to everyone. Not only that, the EU allowed Germany (and France) to break the rules of the Stability Pact in 2003, going as far as to suspend and then rewrite the rules in 2005 in order to write off "financial contributions for European unification". Talk about a made-to-measure outfit! Well then, if it’s all for one, then it’s one for all too.