The Euro Crisis Is All Politics - Rerun of a Bad Movie

The euro crisis will not be resolved until the citizens of Europe have greater confidence in the ability and the willingness of their national leaders to serve the public interest. Pundits may blame the bankers and politicians may blame the press, but over the last year on many trips to Brussels and Athens I have seen both the patent lack of political leadership and the deep mistrust of ordinary middle class Europeans.

The TV cameras showed anarchists fighting the police in front of the Greek parliament, but I was there and that news clip was a sensational hype. Overwhelmingly, the demonstrations were peaceful and full of ordinary people displaying only an emotion of quiet sadness as their economy slipped over the precipice. The demonstrators wanted honest and competent government.

I think the hard-pressed people of Spain and Ireland and Italy and Portugal want just the same things, yet everywhere they are being let down.

Meanwhile, I would be on the fringe of endless Brussels meetings of politicians and top civil servants designed to solve the deepening crisis. Small cabals of finance ministers would meet with experts from the International monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC). This ‘Troika’ would constantly revise their multi-year economic forecasts, seeing ever greater gloom ahead and proposing ever harsher medicine. The finance ministers constantly ignored the truth, announced modest palliatives – and the crisis escalated.

If we were talking football, then the coaches would long have been sent into retirement – but in euroland nobody gets fired: the officials keep their high-paying jobs, the president of the Euro Group of finance chiefs, Prime Minister Junker of Luxembourg has just been reappointed.

The core risk is not the extensive era of mass unemployment and recession that assuredly faces tens of millions of Europeans now. Rather, the risk is that the region’s middle-class turns in bitter frustration to populist radical politicians, who will surely emerge. We have seen this grim movie before.