Financial Times
May 20, 2012
Future historians are unlikely to look with favour on the way that the eurozone crisis has been handled by the region’s leaders. Whether or not Greece now leaves the single currency, hindsight will surely record that from an objective perspective there was a better way to have dealt with the crisis. If the Greeks do depart, which has seemed the most likely course for at least six months, the bill for not confronting and securing that outcome much earlier will be very high.
Even if the Greeks vote to stay in, the steps that will be necessary to enable Greece and the other peripheral countries to stay in the eurozone – which must eventually include fiscal union, greater powers for the European Central Bank and eurozone bonds – are patently also ones that could have been put in place earlier. (It is worth repeating that while that solution would enable the euro to survive, it will do nothing to resolve the underlying structural problem of competitiveness within the weaker countries that the current crisis has so brutally exposed).
It is of course easy to explain why the crisis has evolved in the way that it has. The policy of creeping integration that was adopted by the euro’s creators was deliberately chosen to bypass the inconvenient fact that the creation of a single currency lacked democratic legitimacy. It is doubtful whether it has ever carried majority popular support across the continent as a whole.
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