If you fear of losing something, you will. If you live in fear, you will die of fear. Whatever is your weakness will be the cause of your undoing. This is not just true of individuals. It is also the case for institutions, organisations, states and even international organisations. In laying the meaning of its existence, the EU took as basis the level of welfare.
Europe pushed back many other concepts which should have been given significance and protected. The Euro is among the values the EU should be proud and boast of. Of course the Euro is one of the symbols of the EU’s success. However, the EU is not simply an economic cooperation organisation. The EU contains the Eurozone but bears far more meaning than that alone. For many years now, the EU has been displaying itself as the island of prosperity in the world, in an increasingly shallow manner.
The EU saw itself more and more as the centre of the world. This attitude of the EU was a mistake. One half of the world can never live without the other half. The EU saw at least half of the world as consisting of people envious of its wealth. Just like in a science fiction movie, Brussels saw itself as superior, hygienic, disinfected and civilised while an important portion of the rest of the world it viewed as consisting of the poor. According to the EU people from Eastern Europe, the Far East, the Middle East, Latin America and Africa are all trying to get hold of Europe’s wealth. They are trying to diminish the welfare of the EU. There is a hidden aspect of being spoilt in this. This point of view was truly unhealthy.
As 2011 sets in, the EU is looking for answers to the following questions: is the common currency as sound as it was thought to be? What happens if EU member states go bankrupt? Should Greece be expelled from the Eurozone or the Union? The EU will continue to look for answers to these questions throughout 2011. In fact, the anger of citizens of EU member states towards the EU is fully justified. For as 2010 came and went, there was not the slightest alteration in the EU’s perspective of Greece. At the beginning of 2010, it was known that Greece had cheated the EU with false data. It had been proven that Athens had consciously placed its hands in the EU’s pockets with false statistics.
Athens had treated the EU coffers as a free buffet. The result of this should not have been increased support from EU citizens to Greece. The EU should not have nevertheless given Greece more funds, knowing that it would not abide by the rules. In early 2010 when Greece was unable to repay its debt instalments, Olli Rehn, member of the European Commission in charge of Monetary and Fiscal Affairs was trying to calm nerves. In the name of the EU Commission in charge of financing the dolce vita of Greece, Rehn was telling Europeans in February 2010: “I can only say that should such a situation arise, we are in possession of the means and methods to protect the fiscal stability of the Eurozone.” The following months of 2010 showed that these words did not reflect the truth. To protect fiscal stability, EU leaders held numerous meetings throughout the year.
By the time 2010 came to end, everyone had come to agree that the EU had designed what could be done after 2013, meaning the crisis would end then. Yet it could not find a solution to be implemented until 2013. Supporting Greece was a major mistake. In April 2010, German Foreign Minister Guido Westerwelle said “those who open the purse strings before the appropriate time will soon see that Greece does not carry out its duties with the necessary effort and discipline”. According to Westerwelle it could “not be expected that European taxpayers vouch for the mistakes of individual countries”, yet the opposite course of action was taken. In May 2010 and with Germany’s efforts, the EU prepared a major aid package for Greece. In return, Greece would implement austerity measures.
This move by Germany, so stringent about rules and a fetishist of discipline, came as a surprise to all. Those who were in support of the aid wanted to protect the crisis resistance of the EU by keeping the weakest link of the Eurozone standing. It proved not to be so simple. While it was possible to get through 2010 with the heavy problems brought on by Greece and to keep the Euro strong, next in the line is Portugal. It is followed by Spain. Should Spain declare a moratorium, the whole of Europe will default. It has become certain that all of Europe’s money will not be enough to save Spain. On the other hand things are getting worse in Britain and especially in Italy. France is very tense. Indeed many EU countries ranging from Hungary to Lithuania have experienced major problems. In 2011 social explosions, cross-border strikes, boycotts, and acts of violence may be added to the list.
This whole process may also give rise to individual terrorism and passive activism. The EU entered an atmosphere of panic because of Greece. The possibility of the Euro, pride of all, losing its status as legal tender was discussed. Because of the risk of collapse of the Euro, the Eurozone decided to set up a pool worth EUR 750 billion along with the IMF. Thus the EU did not leave Greece alone, did not squander its money and in partnership with the IMF set up an international mechanism. Almost everyone thought that this would be a mechanism governed by strict rules which would ensure a constant supply of liquidity aid. Optimism continued to be pumped to the markets. Public opinion, which was looking for consolation believed everything it was told like the tourists listening to a guide telling them nice stories.
In October 2010 President of the Euro Fiscal Stability Fund Klaus Regling said “I do not predict that there will be withdrawals from the bail fund and that members of the monetary union will be in need of fiscal assistance”. In November 2010, Ireland discredited Regling. Portugal and Spain waiting in line behind Ireland became worried that Ireland may take all of the funds. At the close of 2010, things stood as follows: there will be no issue of Euros. Economic policies of members of the Eurozone will be better coordinated. The recovery fund will not be increased. It will be hoped that Greece does not cheat the EU again. There will be prayers for no more EU member states going bankrupt. The permanent stability mechanism which will become active in 2013 will be used as a last resort. Alarm bells are ringing for the Euro. The risk is growing for the EU.
The EU could not overcome the crisis in 2010. It has made serious errors over Greece. That it should persist in these errors suggests they were made consciously and voluntarily. The cost of these errors may be very high in 2010. For just like spoilt Greece, other countries will also demand support and favours. The European press has been reporting that demands for an issue of Euros have yet to cease. Should the crisis continue to escalate as predicted, the EU may steer all members of the Eurozone to a joint issue of Euros. This is what Christoph Weil, analyst for Commerzbank, thinks. Weil is of the opinion that the issue of Euros will be a topic on the agenda for a long time. Weil is also pleased with the process regarding the mechanism which will come into effect in 2013 and which is expected to protect the Eurozone.
However Carsten Brzeski, expert for ING Bank, takes a different view of things. According to Brzeski, it is not yet certain what Europe will be doing until 2013. Brzeski is greatly concerned that this problem has not been addressed at all in the latest EU summit. According to Brzeski, if no steps are taken in the period leading to 2013, there will not only be zombie banks around in the run up to 2013 but also zombie governments.