More effective economic coordination to stabilise the Eurozone

The acute debt cri­sis that Greece expe­ri­enced in the first months of 2010, a cri­sis that almost brought about default for the coun­try, has dom­i­nat­ed pub­lic life and monop­o­lised the inter­est of pub­lic opin­ion. The EC/ECB/IMF agree­ment11Agree­ment between the Euro­pean Com­mis­sion (EC), the Euro­pean Cen­tral Bank (ECB) and the Inter­na­tion­al Mon­e­tary Fund (IMF). for a 110 bil­lion Euro sup­port pack­age, with an extreme­ly strict pro­gramme of fis­cal retrench­ment and struc­tur­al change, was greet­ed with huge relief since it fol­lowed weeks of unprece­dent­ed aggres­sion on part of the finan­cial mar­kets. This assault against Greek bonds caused their spreads to rise to over 400 basis points, while Cred­it Default Swaps (CDSs) for insur­ance against Greek default also soared, thus effec­tive­ly shut­ting Greece out of the mar­kets.22See among oth­ers R. Someri­tis, in: TO VIMA, 25 March 20010; K. Ior­dani­dis, in: KATHIMERINI, 25 March 2010; K. Botopou­los, in: METARRYTHMISSI, Vol. 35, May 2010. But the days of nego­ti­a­tion of the EC/ECB/IMF pack­age deeply scarred pub­lic opin­ion, since they asso­ci­at­ed the sense of help­less­ness and risk at the hands of the mar­kets with an abrupt rever­sal of deep stereo­types (accord­ing to which the IMF was “the scourge of peo­ples”, etc.) and with a feel­ing of qua­si hos­til­i­ty on the part of “Europe” or from seg­ments of “Europe”.33See A.D. Papayan­ni­dis: Europe “After Lis­bon” and Greece as a Com­pan­ion of Fate, in: Inter­na­tion­al and Euro­pean Pol­i­tics (Vol. 17), p. 49; Eliza Papada­ki, Before Greece default­ed it was the Insti­tu­tion­al Frame­work of the Euro that Default­ed, p. 28. The posi­tion tak­en by Ger­many on the Greek issue – both from polit­i­cal cir­cles and from pop­ulist media, if not from wider pub­lic opin­ion – con­sti­tutes the source of a deep change in Greece regard­ing the notion of Euro­pean sol­i­dar­i­ty.44See G. Bakat­sianos: Inter­na­tion­al and Euro­pean Coop­er­a­tion in front of the finan­cial cri­sis and Greece [in Greek], in: From Bush to Oba­ma: Inter­na­tion­al Pol­i­tics in a Chang­ing World, Papazis­sis, Athens 2010, p. 319. As soon as the extent of the bud­get cuts and of the labour law-and-pen­sion reform includ­ed in the EC/ECB/IMF pro­gramme was realised, social unrest came to the sur­face. Not only the polit­i­cal left (the strict Com­mu­nist Par­ty of Greece – KKE and the ex-Euro­com­mu­nist Synaspis­mos – SYN) but most remark­ably cen­tre-right New Democ­ra­cy vot­ed against the EC/ECB/IMF pack­age – with the result of being aggres­sive­ly crit­i­cised by mem­bers of the Euro­pean People’s Par­ty (EPP) in the Euro­pean Parliament.

Both pub­lic sec­tor and pri­vate sec­tor unions are opposed to the sta­bil­i­sa­tion attempt­ed. The tone of demon­stra­tions in Greece gets more and more bel­li­cose, while a fire­bomb­ing of a bank has already claimed four vic­tims. All the while, pub­lic opin­ion watch­es pas­sive­ly but unrest sim­mers just under the sur­face.55See, among many oth­ers, S. Kaly­vas: Three (com­fort­able) myths about vio­lence [in Greek], in: KATHIMERINI, 16 May 2010. Here a dis­tinc­tion is made between pub­lic unrest and vio­lent acts per­pe­trat­ed by small mar­gin­al groups who rely on the improb­a­bil­i­ty of being arrest­ed and punished.

The extreme prej­u­dice that the debt cri­sis brought to Greece, a coun­try that oper­at­ed for almost a decade as a mem­ber of the Euro­zone and under the Sta­bil­i­ty Pact, caused the real­i­sa­tion that more effec­tive eco­nom­ic coor­di­na­tion would have to be estab­lished, if the Euro­zone is to sur­vive. Thus, the notion of “eco­nom­ic gov­er­nance” is win­ning favour, notwith­stand­ing the fact that the Greek econ­o­my would have to under­go even deep­er struc­tur­al change (and sub­mit to clos­er scruti­ny) in the future. The con­cept of “eco­nom­ic gov­er­nance” sup­port­ed by France is often dis­cussed, but its effec­tive con­tent is con­strued in diverg­ing ways accord­ing to the audi­ence tar­get­ed.66See G. Gounaris: Europe after the eco­nom­ic cri­sis: Insti­tu­tion­al Reform and Strate­gic Options [in Greek], in: From Bush to Oba­ma: Inter­na­tion­al Pol­i­tics in a Chang­ing World, Papazis­sis, Athens 2010, p. 330.

The Lis­bon Strat­e­gy of 2000–2010 used to be cit­ed as an impor­tant EU achieve­ment in Greece, since it would lead to “the most com­pet­i­tive knowl­edge-based econ­o­my in the world”. The fact that the Strat­e­gy had been derailed since the mid-2000s received lit­tle atten­tion, part­ly because Greece con­stant­ly ranked near the bot­tom in “Lis­bon achieve­ments”. Now, the wave of the finan­cial cri­sis (and the spe­cif­ic impasse that Greece faces) has shift­ed atten­tion to more press­ing mat­ters. Still, the per­spec­tive of a Europe 2020 Strat­e­gy is again greet­ed pos­i­tive­ly, since, due to the EC/ECB/IMF con­di­tion­al assis­tance, the exten­sive, struc­tur­al over­haul that will be under­tak­en makes it pos­si­ble that, this time, the Lis­bon approach will work for Greece.77The top­ic rais­es an increas­ing inter­est among aca­d­e­mics and a small cir­cle of politi­cians and opin­ion mak­ers on the occa­sion of var­i­ous col­lo­quia. EKEME organ­ised on 14 May 2010 a sym­po­sium: From the cur­rent Cri­sis to Europe 2020: The EU and Greece in front of the Chal­lenge of Eco­nom­ic Gov­er­nance, with emi­nent speak­ers, includ­ing Defence Min­is­ter E. Venize­los and J.V. Louis.

    Footnotes

  • 1Agree­ment between the Euro­pean Com­mis­sion (EC), the Euro­pean Cen­tral Bank (ECB) and the Inter­na­tion­al Mon­e­tary Fund (IMF).
  • 2See among oth­ers R. Someri­tis, in: TO VIMA, 25 March 20010; K. Ior­dani­dis, in: KATHIMERINI, 25 March 2010; K. Botopou­los, in: METARRYTHMISSI, Vol. 35, May 2010.
  • 3See A.D. Papayan­ni­dis: Europe “After Lis­bon” and Greece as a Com­pan­ion of Fate, in: Inter­na­tion­al and Euro­pean Pol­i­tics (Vol. 17), p. 49; Eliza Papada­ki, Before Greece default­ed it was the Insti­tu­tion­al Frame­work of the Euro that Default­ed, p. 28.
  • 4See G. Bakat­sianos: Inter­na­tion­al and Euro­pean Coop­er­a­tion in front of the finan­cial cri­sis and Greece [in Greek], in: From Bush to Oba­ma: Inter­na­tion­al Pol­i­tics in a Chang­ing World, Papazis­sis, Athens 2010, p. 319.
  • 5See, among many oth­ers, S. Kaly­vas: Three (com­fort­able) myths about vio­lence [in Greek], in: KATHIMERINI, 16 May 2010. Here a dis­tinc­tion is made between pub­lic unrest and vio­lent acts per­pe­trat­ed by small mar­gin­al groups who rely on the improb­a­bil­i­ty of being arrest­ed and punished.
  • 6See G. Gounaris: Europe after the eco­nom­ic cri­sis: Insti­tu­tion­al Reform and Strate­gic Options [in Greek], in: From Bush to Oba­ma: Inter­na­tion­al Pol­i­tics in a Chang­ing World, Papazis­sis, Athens 2010, p. 330.
  • 7The top­ic rais­es an increas­ing inter­est among aca­d­e­mics and a small cir­cle of politi­cians and opin­ion mak­ers on the occa­sion of var­i­ous col­lo­quia. EKEME organ­ised on 14 May 2010 a sym­po­sium: From the cur­rent Cri­sis to Europe 2020: The EU and Greece in front of the Chal­lenge of Eco­nom­ic Gov­er­nance, with emi­nent speak­ers, includ­ing Defence Min­is­ter E. Venize­los and J.V. Louis.

The reports focus on a report­ing peri­od from Decem­ber 2009 until May 2010. This sur­vey was con­duct­ed on the basis of a ques­tion­naire that has been elab­o­rat­ed in March and April 2010. Most of the 31 reports were deliv­ered in May 2010.

The EU-27 Watch No. 9 receives sig­nif­i­cant fund­ing from the Otto Wolff-Foun­da­tion, Cologne, in the frame­work of the ‘Dia­log Europa der Otto Wolff-Stiftung’, and finan­cial sup­port from the Euro­pean Com­mis­sion. The Euro­pean Com­mis­sion is not respon­si­ble for any use that may be made of the infor­ma­tion con­tained therein.