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Crises can trigger two different types of reactions: in the face of adversity, either people pool their forces or it’s every man for himself. In the case of the storm kicked up in the eurozone by the threat of Greek default, it looked for a while as though member state solidarity was bound to carry the day. But now, despite the fraconian austerity plan submitted by Athens, every-man-for-himself seems to have won out.
Germany, which would have to bear the lion’s share of the cost of solidarity with Greece and the other countries in trouble (Portugal, Spain), points out that if the latter had followed the rules of fiscal rigour, as Germany did, we wouldn’t be in this fix to begin with, and Germany shouldn’t have to foot the bill for its neighbours’ profligacy.
Berlin’s attitude is justified on several grounds: on the domestic front, Angela Merkel has to reassure an electorate that is wary of having to shell out for a bunch of nonchalant Mediterraneans; on the international front, the chancellor is playing her part as the guardian of budgetary orthodoxy in Europe. So it’s understandable that Berlin is upping the price for giving its blessing to the necessarily exceptional measures to bail out Greece: the country is also afraid of setting a dangerous precedent and opening the door to fiscal laxity.
As Italian economist Lorenzo Bini Smaghi recently pointed out, if a crisis management strategy is drawn up in too explicit terms, economic operators and governments will be tempted to forego rigour, seeing as they can count on being rescued if the worst comes to the worst. To get a member state to behave responsibly, he argues, its partners have to maintain a certain degree of ambiguity about their intervention in case of a crisis, even while being capable of providing assistance if it proves indispensable. But until the Union has set up institutions and ad hoc mechanisms to ensure the single currency is not subject to a form of blackmail reminiscent of nuclear deterrence, Europeans seem to be watching a Greek tragedy and waiting for a deus ex machina – who is taking his time about making his entrance. Gian Paolo Accardo
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