Much has been said about the euro being the problem of Greece. This is true, but only partially. The euro indeed plays a major role in the Greek drama, but the ultimate cause of the Greek economic turmoil lies somewhere else. The real problem is that the architects of the euro used it as a turbo that was meant to speed up the integration engine of the eurozone, while encouraging other European countries to do so as well.
This means that there is an ideological aspect of the very foundation of the euro project. An ideological vision of a united European Union with unified policies executed by centralized institutions in Brussels. This calculation was based on the assumption that political integration and centralization will face resistance from the “bottom“. And this resistance was to be overcome by economic integration with the euro as its main force.
The first part of this assumption has indeed already been fulfilled. The Brussels‘ attempts at centralization have not really been met with understanding of the other member states. However, the second part of the assumption has been a tragic mistake. Euro is not a natural integration accelerator. It was used as a “ram“ to create pressure for the creation of more centralized (and later federal) instititutions. Everything was subject to this. That is why eyes were closed over not fulfilling the basic criteria. That is why economic reality was ignored.
So the biggest threat to Europe is not Greece, but rash and irresponsible attempts at European turbointegration. The shocking thing is that the people responsible for that refuse to understand it. They cry rivers over the fact the the euro project, designed to help integration, is now causing disintegration. And they call it a paradox, but it is no paradox after all. Greek problems were amplified when Greece got into the eurozone, where it admittedly had no business being a part of it.
Another irony is that as the Greek crisis escalated, the “Five Presidents‘ report“ was issued. The EU institutions‘ report on the future of the economic and monetary union is still stubbornly holding on to the fatally mistaken notion that first got Greece into the monetary union and then it grinded it alive. According to the report, the economic and monetary union should be strengthened and completed until 2025. This involves the creation of a common Ministry of Finance of the eurozone(!). It seems like the authors of this idea do not realize that rash centralization and a transfer of competences to the EU level is the cause of the radicalized views on Brussels.
If you still see nothing wrong with the plan of one currency – one monetary policy – one fiscal policy, I suggest you try the following thought experiment. First, try to vividly remember the recent heated discussions about migration qutoas in the EU. Then substitute the unified migration policy with a unified fiscal policy that is so fanatically pursued by so many people. Then substitute today’s united decision making about the migration quota redistribution with a united decision making about a redistribution of tax burdens and expenditures. Now, can you imagine the conflicts and tensions that would be brought about with a unified fiscal policy? And these conflicts and tensions would grow with the growth of a common European budget.
You do not really need a PhD from Political Economics to see that. But why then is this overlooked by the authors of this report and the like? As it turns out, it doesn’t take much to overestimate the benefits of integration and completely ignore the huge risks of disintegration that come with turbointegration.
Translation by Jakub Jablonický