Eurozone crisis: The dangerous game of bailing out
14 April 2011
After Greece and Ireland, now it's Portugal's turn. But isn't helping out indebted countries with the money of other indebted countries going to kill the euro? A Slovak columnist doesn't understand just what the EU is playing at.
When reading reports on the assistance that Portugal is asking for, three things took my breath away. One was the repugnant ease with which some European politicians are asking for, and others in turn are disposing of, astronomical sums of public funds. Just to illustrate: little Portugal has now requested an amount that would cover the cost of building 2,400 kilometres of our own overpriced highways (let’s not forget how our own government sings its own praises when it builds 50 or 100 kilometres of highways over four years).
Even worse, Portugal is asking for those tens of billions of euros from countries that are all themselves in debt. And you know what? Not only does this fail to faze them: they just nod yes, and when other countries going bust come to them with similar pleas their response is to pump even more money into an even bigger euro bulwark – the European Financial Stabilisation Mechanism, the European Financial Stability Facility, and the European Stability Mechanism. Debts and debtors are therefore being happily sorted out with even more debts and debtors. Can you follow that? I can’t.
The second thing that’s hard to stomach is the knowledge that while European countries can see their problem, they have failed to tackle it for decades. And they keep making it bigger. Portugal, for example, was the first country to violate the Stability Pact, in 2001. And what happened? Were penalties imposed, and did the country subsequently come charging back to its senses? Not a chance. The squandering continued. Ten years later Portugal is no healthier. In fact, it’s going bust. Breaking the rules, it seems, doesn’t get punished. It’s tolerated, though it may drag all of Europe and the euro to the bottom. Can you follow that? I can’t.
Communist central planning stealing back via EU
Thirdly, what is particularly unbearable is what those huge debts in Europe are creating. It’s not that European countries lack the money for investing in education, science, or great projects that promise future returns, and so sometimes they borrow too much. It’s that the gargantuan European debts have been brought on by overeating, by excessive social benefits, uncovered pensions, catastrophically bloated state sectors and millions of people living beyond their means. Debts aren’t incurred in the name of a better future. They’re incurred at the cost of a debased future. And yet they meet not resistance, but consent. Can you follow that? I can’t.
Portugal isn’t addressing the question of reforms. They’ve just turned those down. They’re asking for 80 billion euros, and they’re getting them. As happened in Greece, the upshot is another increase in its debt, which it will never repay, and at the same time the loan increases the indebtedness of all the others who are contributing to this non-recoverable loan. This is the Europe of today – the former golden boy of the world who thought it had left behind sweat and tears, that it was enough to shift around fictitious billions from one euro bulwark to another and prosperity would be guaranteed. I don’t like to compare Brussels and Moscow. They’re very different places. But I fear that that the central planning of the communists, that we tossed out the doors in the November revolution, is stealing back in through the windows of the EU.
Nearing the edge of the crumbling Eurozone
I know that in Europe this is about more than just the euro. I realise that a Europe without cooperation was often a Europe at war. And I even grasp as well that the euro rescue mechanisms and the astronomical loans may rescue not only three indebted Eurozone countries but perhaps the entire European project.
But that’s just what lies at the core of the dispute: can European cooperation be salvaged over the long term based on an idea that seems to be wrong? In other words, is the peace and prosperity of Europe not endangered by those who recklessly, and often against the will of entire nations, push their dream of a Eurostate, as opposed to those who from the very start have insisted that reasonable cooperation in Europe does not necessarily mean common currency, a common tax or a joint Ministry of Finance, but rather fair rules and lively competition?
Standing in line behind little Portugal wait much bigger Spain and Italy. We are already nearing the edge of the crumbling Eurozone, beyond which the unthinkable return to the Slovak crown becomes one of our possible scenarios. That’s not good news. Except for one thing – the demise of the euro illusion will also end Slovakia’s successful flight from its own emptiness.