For now
Time and circumstance continue to take an unforgiving toll on the European Union. Of the two main reasons for its existence, one was reining in the interest-rate-swinging influence of the Bundesbank (German’s powerful central bank). After decades of back-and-forth, the Union finally came to rest on a barter of sorts between Paris and Bonn (former West German capital) when President Mitterand put German unification on the table if Chancellor Kohl abandoned the Deutch mark. They agreed, of course, but one great recession later almost all of Europe’s big and small, including France, have flirted with contagion; with Germany (read Bundesbank) bailing them out again and again.
Greece stands out because it is the one case they could not handle in time. Or where a seriously left-of-centre government was allowed to call a referendum. Things were pretty bad in Italy a couple of years ago. But the ‘installment’, not election, of the banker prime minister helped midwife the painful reality of long-term austerity. The Greek ‘no’ upset matters, but only as far as headlines are concerned. The agreement now reached, after 17 hours of negotiations, is not much different than the one that triggered the referendum. Prime Minister Tsipras must have realised how much egg he suddenly has on his face, and how embarrassing the debate in parliament will now be. And all that will start is talks about the bailout.
The other reason for the Union was ending persistent conflict. Every few years two or three of the bigger powers would go to war till some or all were almost completely bankrupt. Ad hoc taxation and war economics had finally debilitated the working middle class, which had also come to dominate politics in much of mainland Europe. Hence a comprehensive union that binds political, foreign and financial policy. Now there are prominent political and financial fissures. And the frantic huddle just ended will only begin a painfully long process for a small economy at the periphery. The continent is far, far from overcoming its problems. It seems, therefore, that while Grexit, and a euro rout, has been avoided – from the looks of things – it won’t be long before another leak appears that Berlin will have to fix, one way or the other. For now, they’ll bail Greece out – they won’t let the Union break for such a small country – but they’ll let it hurt.
