Is the debate on the lessons of the Greek crisis already under way? It seems it is – at least in the big European capitals, despite the fact that the real talking on the third bailout for Greece is only now getting going, with all the possibility of drama and renewed Grexit threats which this may well bring.
Predictably, one thing is clear. The decision of German finance minister Wolfgang Schäuble to raise the prospect of a temporary Greek euro exit during the crunch talks earlier this month has put the idea that a country could actually leave the single currency firmly into circulation.
Latest to float it was Germany’s council of economic experts, a five-person government advisory panel. It recommended this week that, for the future, euro exit should be possible for a country, as a last resort, as otherwise the remaining members could be faced with unreasonable demands.
We have yet to see how the Greek talks play out, but the issue now is that the next time a country gets into severe difficulty, the possibility of it leaving the euro will surely be raised, with all the opportunities for bond market speculation that entails.
On the flipside of the argument, there are also discussions in Paris, Rome and Berlin about measures to bring the euro zone countries closer together in economic terms.
French president François Hollande has called for a common economic governance across the euro zone, and there is support in France and Italy for exploring ideas such as a common European unemployment insurance fund, a half-step towards the kind of fiscal union which might give the euro a more stable long-term foundation.
Germany also supports closer union, but its idea appears more centred on ensuring that other countries do not let their budgets get out of control, rather than any move to what it would see as a “transfer” union, where the richer countries support the poorer ones.
The difficulty in agreeing a common approach on Greece shows how fraught all this could become. Everyone agrees that the euro is not yet a finished project, but agreeing on a recipe to move forward will be very difficult, particularly at a time of low growth when living standards are under pressure in many countries.
Reform is tough enough in good times, never mind when you are just recovering from a crisis.
