As the BBC Europe editor, Gavin Hewitt, points out
To the issue that caused a tremor in the markets on Friday: that Greece may opt to leave the euro. It has been met with fierce denials. For the moment it seems a highly unlikely option. And yet in German circles it is being discussed.
In Berlin at government level the idea is dismissed. The Economy Minister, Rainer Bruederle, said yesterday: “our goal must be to strengthen Europe”. But elsewhere some, like Hans-Werner Sinn of the Ifo Institute, see a Greek exit as preferable to permanent fiscal transfusions from German coffers.
For the moment the most likely outcome is that Greece will be given some extra help, but the fundamental problem will not have been addressed. Can you have monetary union without fiscal union? And can you have fiscal union without political union – for which there is almost no appetite? [added emphasis]
On this Europe Day, the problems of the euro cast a shadow over the European project. Bail-outs are deepening divisions between the northern European countries and the south.
This seems to be just one part of the increasing pressure on the entire concept of a united Europe. When Germany refused to go along with Britain and France in attempting to stop the slaughter in Libya, it called into question the concept of a European Common Foreign and Security Policy, notwithstanding the enormous resources being poured into the newly established European External Action Service, a euphemism for a full-fledged foreign service. And when France resurrected border controls and check points to prevent a flood of Tunisian immigrants from Italy, and Italy retaliated by issuing travel documents to some of the 25,000 immigrants who were passing through Italy en route to the EU country thought to have the most generous benefits, it put a serious dent in the concept of the free movement of peoples throughout the EU. Finally, a chasm has opened between the prosperous north and the less-hard-working south; between the 17 EU members that comprise the eurozone on one side and the 10 other EU members who have their own currencies and want no part of the bailouts; within the gang of 17, between Germany and Finland; and between the exporting machine that is Germany and protectionist France.
The vision of a united Europe still has a powerful hold on the elites of Europe, who see the transfer of power from nation-states to an unelected bureaucracy as insurance against future wars and, if truth be told, a relief from democratic pressures. In addition, the prospect of a euro that would replace the dollar as the world’s reserve currency, or at least weaken its role in world trade, has a powerful hold on the French, who make no secret of their antipathy to Anglo-Saxon capitalism.
The “European project” won’t go quietly into the night. But it just might go noisily into the ashcan of history if the Germans decide they cannot convert the Greeks into hard-working, tax-paying euro-citizens worthy of continuing handouts. Or, at minimum, we might end up with a euro-nord and euro-sud, as Martin Feldstein once suggested.
Read the whole thing.
But whether or not the “European project” goes quietly, or even noisily, “the result [remains] a crisis in European democracy”.