In the Brussels bunker

Economist
September 17, 2011

There is surreal calm in Brussels, amid the greatest crisis to befall the European project in its history. The euro is besieged, several members lie gravely wounded or exposed to heavy fire and the defenders are running out of ammunition. The weakest outpost, Greece, could fall any day. Many fear this might lead to a collapse on all fronts. Yet European institutions churn along, producing myriad meetings, consultations and regulations. “I feel like a filing clerk in Berlin in 1945. The work of government goes on, even as the war approaches,” says one ambassador.

This week, for instance, ministers of European affairs argued ardently over the seven-year EU budget to 2020, even though nobody knows who will be left standing or what currencies they will use, in seven months’ or even weeks’ time. In the corridors the talk is of looming disaster. Without the next tranche of loans Greece will be unable to pay its bills in October. Even if it can get over this test, what of the next quarterly assessment?

Eurocrats talk apocalyptically of the consequences of a euro break-up (Poland’s finance minister has suggested that a real war could erupt within a decade). But now that markets are pricing in the near-certainty of a Greek default, nobody is thinking about how to manage it. One senior diplomat speaks of Brussels gripped by paralysis. Perhaps officials simply do not believe that Germany will act on its public threats to cut the Greeks loose—Chancellor Angela Merkel has made reassuring noises. Or maybe they fear that even a hint of defeatism will increase the panic.

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