Business Focus: Europe Rebooted

The abyss was sidestepped once again. Eurozone ministers on Thursday agreed to give Greece a €7 billion (£5bn) bridging loan from an EU-wide fund. The money, to repay debts to the European Central Bank and the IMF due tomorrow, has allowed the stricken country to stay afloat until then, while the ECB agreed to increase emergency funding to the country for the first time since June, with Mario Draghi, ECB president, raising its limit on emergency loans to Greek banks by €900 million over the week, the lenders may open their doors again tomorrow.

All of which was made possible earlier in the week by the Greek parliament passing tougher Troika-imposed reform measures than those it had already been offered and refused, a vote which was won convincingly despite prime minister Alexis Tsipras saying that he couldn’t “commend” Brussels’ terms, and a majority of his own left-wing Syriza Party voting against the package.

Greece must now cough up €4.2bn to the ECB, as well as making up its missed payments to the IMF, all of which means last week’s proffered €7bn will barely touch the sides. The extremity of the country’s plight is highlighted by the fact Greece is now in the absurd position of being unable to access EU funds earmarked for the support of Europe’s poorer corners, because it is too poor to pay down the stake that the EU can match-fund, the only way to extract money from Brussels according to strict EU rules. “A real Through The Looking Glass situation”, as one European Parliamentarian put it.

Given that the European periphery is – in some parts of Athens, literally – on fire, and the EU is facing the ignominy of a failed state within its own purview, it might be expected that the “Brussels bubble” would be infused with despair.

Not so, according to David Martin, the independent-minded Scottish Labour MEP, whose 30 years in the Parliament have made him a good judge of crises.

“This will sound counter-intuitive but the Greek crisis has almost been invigorating for the EU,” he said. “It’s a problem that people have had to deal with, there has been a crisis that has motivated the institutions, far more than, say, the Lisbon Agenda [the 2000-10 growth and jobs strategy]. When Tsipras came to the European Parliament recently, we had one of the best debates we’ve ever had there.

“It got pretty lively. We had the German EPP leader making very strong pro-austerity statements, the socialists strangely enough being the compromisers trying to bring them together, and the liberal leader Guy Verhofstadt telling Tsipras to stop deceiving his own people. [And] also telling the leaders of eurozone that they should have dealt with this 10 years ago and that they left us in a mess by not dealing with it when it should have been dealt with.”

For Ian Duncan, the sole Scots Tory MEP, this landmark debate had two distinguishing features: one was that most of the speakers spoke in English, which, he said, they only do when they want to cut through the muffling and delaying effects of the interpretation service, and make their points forcefully.

The second was that the far-left and the far-right of the chamber’s horseshoe seating arrangement were applauding at the same time at the same things, while the larger centre-right and centre-left groupings metaphorically sat on their hands. Just one among the current parliament’s patchwork of insurgent stunt-loving parties of the extremes, Ukip, was making common cause with the far-left in opposing austerity for Greece, even holding up signs saying “Oxi” or urging the Greeks to resist Europe’s terms for a bailout.

“At one point Verhofstadt said to Tsipras ‘Look who’s applauding you!’ which was a very powerful line,” Duncan said.

Both of these Scots MSPs have been impressed by Commission President Jean-Claude Juncker, whose bid for the presidency was unsuccessfully opposed by Prime Minister David Cameron last year.

There are questions about how accountable Juncker is for his sweeping chess moves against Athens, also the basis of his authority to dictate strategy. Nevertheless, he has managed to avoid the meltdown of a disorderly Grexit through a skilful mix of firmness – telling Tsipras to stop lying to his parliament about the EU’s offers – and his willingness to play “soft cop” in contrast to Germany.

While the crisis has raged, he has also pared down the Commission’s output, allowing Europe to concentrate on Europe’s major crises, which, Greece apart, include the plight of migrants in the Mediterranean and the threat of a Brexit. The Juncker presidency is staking a lot of its credibility on its ability to deliver the Transatlantic Trade and Investment Partnership (TTIP), a hugely ambitious and complex trade facilitation deal with the US, the 10th round of which took place in Brussels last week. Its promoters claim – over the protests of non-governmental organisations and an alliance of parliamentarians of right and left – that it will facilitate the economic growth that the continent so desperately needs.

Long considered “out of the game”, French president Francois Hollande has also surprised on the upside, taking Greece’s part against a hardline Germany that many believe wishes to relaunch the eurozone with a wave of new public investment, this time with Greece on the outside.

Martin said: “It has been difficult this week not to draw the conclusion that Wolfgang Schauble [German finance minister] did not want the Greeks out of the euro.

“Why that should be is more difficult to assess. There is a theory that if the Greeks went, then he would then agree to a ‘haircut’ for all the other debtor countries, and would relaunch the euro, but he wasn’t prepared to do that while the Greeks were causing difficulties for the Germans.

“Germany might then have relaxed their very strong austerity, which I think would be an excellent idea. The euro is still languishing because the deficit countries like the Irish, the Spanish and the Portuguese are still paying off debt. It has become manageable debt but it is still depressing their economies. If that debt burden could be partly lifted, there would be more money for public sector investment which would hopefully then drag in some private-sector investment and get the economy of Europe growing again.”

Although primarily a disaster for the all-but-failed state of Greece and most of its poor, old and sick, the crisis is forcing a profound rethink of the form and function of political “Europe”. When the EU’s biggest member appears itching to kick out a fellow member, the assumption of “ever-closer union” that concerned Eurosceptics so much has self-evidently expired, and with it some of the perceived Brussels arrogance. The intellectual case for the euro is rarely made these days, and there are fewer platitudes about solidarity.

“There is no virtue in everyone joining hands if the perception is that you aren’t going anywhere,” said one official, who also pointed out that it was exactly this compulsion to preserve the veneer of solidarity that meant that Greece escaped the kind of scrutiny 10 years ago that might have averted the current mess.

All of which tends to suggest that the EU’s age of assertions and gestures – well exemplified by that kitsch euro statue – has passed. The now rarely-mentioned Lisbon Agenda, which was meant to turn Europe into “the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion” is now acknowledged to have failed, partly because it was overtaken by the great financial crisis, but also because, in the view of Ian Duncan, a Conservative: “It’s actually quite hard for any government to create economic dynamism, growth and jobs. Governments tend to get that by intervening less not by legislating for it.”

Even if Brussels does still tend to see the crisis in terms of the Greeks letting down Europe rather than Europe failing Greece, the country’s agonies have increased the importance of the European project being able to show measurable, tangible, not rhetorical gains. The age of assertions is passed.

For Duncan, a moderate on his party’s pro-European wing, the statue of the euro-girl might reasonably be replaced with the broken idol of Percy Shelley’s poem Ozymandias, whose grandiose claims for itself and the glory of its empire are belied by surrounding acres of bare sand. Even with the disgrace of Greece on its conscience, no-one is seriously suggesting that the European project now equates to a desert, but Brussels is a changed and chastened place these days.