Greek tragedy, European drama

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If we look at the international financial press we can reach at the following safe conclusion: The global political-economic system operates in a way that it is easier for a state than for a bank to go bankrupt. Banks are always “too big” to close, therefore taxpayers must support them. The Euro-zone on the hand despite being a product of the political will of sixteen countries, it may now collapse due to Greece’s debts.

The problem is that this will is an excuse. While politics has been limited at the national level, financial transactions dominate worldwide. Obviously, states are squeezed in the corner: Although national governments must show their support, banks and various funds can bring countries to their knees even if they have the problems that Greece now faces.

This asymmetry between politics and economy is the root of the problem. While economy is transnational politics is still local. It is not accidental that the so-called Economic and Monetary Union is in fact only a monetary union, a matter of logistics. An economic union, on the contrary, presupposes certain choices that violate politics as we know it. This is because a concession of national sovereignty is required.

The uneven globalization drained national governments from power. It led them to lower denominator policies and as a result to inability to apply minimum measures such as Obama’s attempt to cut the bonuses of all the executives who work in those banks previously rescued by the tax-payers.

Today, uneven globalization threatens even political choices such as the European integration project. On the one hand a state alone is too small to challenge the markets; on the other hand Europe is too fragmented. This means that speculators can effectively attack the group starting from the weakest member.

This is the “European drama”. The political deficit is evident by the controversial messages sent by EU institutions to the countries hit most by the crisis. While Europe was offering a monetary solution for normal periods it is now totally unable to provide a political solution to the crisis. This is a problem revealed by the “Greek tragedy”.

Of course, the “Greek tragedy” may have highlighted the “European drama” but is not the result of the latter. Greece’s structural problems led to this situation: A big, over-centralized and non-productive state that led to extensive corruption. It is characteristic that Greek problems have always to do with the huge public debt (112% of the GDP, estimated to reach 125% in 2010) and the big fiscal deficits (12.7% in 2009). On the contrary, the overall public and private debt will reach 200% of the GDP, which is lower than that of other countries of the Euro- zone. This means that what went bankrupt was not Greece but the Greek state. That is why radical reforms are needed in order to stop producing deficits and debts.

Greek people feel that is about time to pay the bill for the waste of the past. On the other hand, the government knows that the model on which the operation of the Greek state was based must change. However, because of the markets’ pressure it is highly likely to overlook the latter. It is in other words possible to correct the numbers but not the economy, as it is required. Greeks already started paying through horizontal cuts in wages and public spending. But, apparently, this is not enough. Without robust political intervention of the EU markets will not restructure Greek economy. On the contrary, they will bring it to the knees before passing to the next one.

It was published in the Spanish newspaper «El Mundo» 21.2.2010