Hans-Olaf Henkel is a former CEO of IBM Europe, a former head of the German Federation of Industries (BDI). He is a Member of the European Parliament and Vice-Chair of the European Conservatives and Reformists Group.
As Open Europe reported on July 15, David Cameron said, “It is not for Britain to bail out eurozone countries and we wouldn’t do that. But as a member of the European Union, if Greece were, for instance, to leave the Euro and wanted humanitarian assistance, I’m sure that this House and the British public would take a more generous view.” This position is precisely in line with the view of the German delegation in the European Conservatives and Reformists Group.
The new bailout for Greece is neither a great success of the eurozone’s leaders nor a success of the Greek government. If anything, the last summit in Brussels was a regrettable spectacle, showing not only a sharp disconnect with economic reality but also the intellectual trap of the ‘ever closer union’ mindset. Membership in the eurozone has turned out to be a tragic trap for Greece, and the bitter price paid by the Greek society has been, by all standards, inhumane. An unemployment rate above 25 per cent, and twice as high for the Greek youth, can only match the scale of tragedy known from the great crisis of the 1930s.
The terms of the next bailout have been widely criticised in the global media. We heard voices that a Carthaginian peace was offered to Athens. Indeed, the Greek government has sacrificed a substantial part of its sovereignty on the altar of the Euro, but what should be added is that this sacrifice is pointless, as the perspective of a Grexit has been merely postponed.
How is it even possible that a Prime Minister of Greece is ready to make more concessions which undermine the very foundations of democracy and sovereignty of his country in order to stick to the Euro? The answer is simple, the Euro has long been a dogma for European elites across the continent, and no serious discussion about the costs of the single currency has taken place. The Greek media, like most of the media in Western Europe, back the Euro project and are unwilling to face up to reality and admit the disastrous costs of the common currency. The most basic economic truths are being neglected in the public debate. One needs to underline, however, that a part of the British press has been a notable exception to the misery of intellectual debate concerning the Euro.
We have been told that only ‘more Europe’ can save Greece and the eurozone, but again this claim can make a tragic situation even worse. The notion of ‘ever closer union’ has done enough damage to the societies of Southern Europe, because the problems of Greece stem from the same roots as the problems of Italy, Spain, Portugal and even France. The Euro, which was supposed to be ‘one-size-fits-all’ currency, turned out to be ‘one-size-fits-nobody’ currency. It has long been too strong for Southern Europe and too weak for Germany. Devaluation is the right solution for countries suffering for an overvalued currency, not a painful and self-defeating strategy of internal devaluation.
Greece desperately needs currency devaluation and a debt-write off. But any kind of debt restructuring for Greece within the eurozone makes no economic sense, as the Greek economy needs to be liberated from the trap of the single currency to start growing again in a manner which is necessary.
The eurozone’s leaders have managed to prolong the suffering of Greek society with their insistence on keeping Greece in the eurozone. However, the Euro-rescue policy has implications far beyond Greece and the question of whether the new bailout has any justification, as in order to save the eurozone they are ready to profoundly transform the nature of the EU. Since the eurozone crisis started, we hear only that more harmonisation, socialisation of debts and centralisation is needed in Europe, but exactly this philosophy led us to the tragic point in which we found ourselves. We should not be surprised that Britain does not want to accept such a vision of the EU.
The Euro-rescue policy has led to an economic crucifixion of Greece, and is pushing Britain out of the EU. Therefore, a complete rejection of this discredited policy is a sine qua non to secure a real Greek recovery and make the European Union attractive to Britain and its citizens once more.