On this site earlier this year, Liam Fox set out four possible solutions to the problems of the Eurozone. First, a return to the pre-Euro national currencies. Second, the exit of Greece and most if not all of the PIIGs from the Euro. Third (a “possibly more logical, but politically impossible alternative”), the exit of Germany instead. Finally, complete economic, monetary and political union in the Eurozone.
Option three apparently being off the table, options two or perhaps even option one may follow, sooner or later, if Greece leaves the Euro. While the rest of Europe waits to see whether, as so often before, a compromise is reached to prevent that happening, the country’s debt-to-GDP ratio will remain at 177 per cent cent, half of Greece’s young people will remain unemployed, demand for soup kitchens will stay buoyant (see the video above from the time of January’s elections), and support for extremist parties will continue to rise.
The nub of the matter is that Greece cannot bear so crushing a burden of debt – at least, not while remaining in the Euro and not without competing to bankruptcy. Much of it must either be written off by the creditors or paid for by someone else. And in the absence of anyone else, that someone else must be Germany, and the wealthier Eurozone countries. Which leaves Fox’s final option. Here in Britain, much rhetoric is spilt over whether or not David Cameron’s renegotiation should be the one that he wants or the one that many Eurosceptics prefer – the fundamental one that is tantamount to being Out.
The best option of all would be neither – or, rather, EU-wide treaty change that, if the Euro project is to continue, carves the EU into a Eurozone with complete economic, monetary and political union, and a non-Eurozone through treaty change. However, German voters are, not unreasonably, unwilling to pay for such a plan. So Greek ones, among others, must meanwhile bear the consequences.