EU public debt

Greece’s fiscal emergency is a most mystifying crisis.  At one level, it is the most serious test of the eurozone’s unity since the launch of the euro in 1999.  Unless correctly handled, the problem with Greece’s public finances could shake the foundations of Europe’s monetary union.

At another level, however, Greece itself seems to be getting off remarkably lightly.  Germany suffered a 5 per cent slump in gross domestic product last year; Greece is expected to have suffered a fall of about 1.1 per cent.  Spain has a 19 per cent unemployment rate; Greece’s rate is only 9 per cent.  The Irish government is imposing extreme austerity measures on its citizens to protect Ireland’s eurozone membership; Greece’s government is, so far, doing nothing of the sort.  No wonder Greece’s 15 eurozone partners, the European Commission and the European Central Bank are furious with the political classes in Athens. 

A couple of months ago, some European Union policymakers talked despairingly of how 2009 risked turning out to be “a wasted year”.  Now the EU is on a roll.  The impasse over José Manuel Barroso’s reappointment as European Commission president was removed last month when the European parliament stopped playing games and renewed his term of office.

And all of a sudden, it looks as if “a decade of deadening debate over the European Union’s institutional shape” – as British foreign secretary David Miliband puts it in today’s FT – will soon come to an end, after Ireland’s referendum on the Lisbon treaty produced a massive majority in favour.  It may not be long before the EU has its first full-time president, a new head of foreign policy and a new Commission with a five-year mandate serving under Barroso.