The limits of European solidarity

Forecasts, suspicions and concerns about countries leaving the Eurozone are becoming more and more dynamic, and the real probabilities are becoming more and more alarming.

Teodora Angelova

Until recently, the rhetoric was about whether failing countries (mainly Greece) should be “punished” by returning to their national currency. Now, however, a new stage in the Euro chaos is coming – relatively stable countries are becoming the biggest skeptics (most notably Great Britain, Finland, and recently Germany) of the union and are beginning to hesitate whether it would not be more profitable for them to voluntarily surrender the euro themselves. Analysts are starting to point out the possibility that some of the reliable net payers of the Eurozone may rethink their priorities. It is not excluded that they will “punish” the Union for its hopeless inertia in making decisions to get out of the crisis.

The case of Finland and the Euroscepticism gaining momentum in the political and public space are a reason for such reflections. The media is gradually shifting its focus from the “Grexit” perspective to the more frightening “Fixit”. The Eurozone can survive losing a “bad student” like Greece, but not a promising economy like Finland.

In the negotiations over the bailout loans, Finland has claimed guarantees whenever it provides additional bailout funds. These guarantees amount to 770 million euros for the loan to Spain and 900 million euros for the loan to Greece. The purpose of this mechanism is to cover the risk for Finnish taxpayers in the event that the financed country goes bankrupt. That is, the larger the bailout loans the indebted country requests, the larger the guarantees its creditors will demand. This is, of course, a completely logical and fair strategy, but from the point of view of national stability. Analyzing it through the prism of the Eurocrats, if each country demands serious compensation every time it provides money for the funds, the euro will collapse in the short term.

 Неприятната истина за националните правителства на държавите платци е, че  целта на ЕС в края на краищата е да се плати чуждата сметка, което означава, че все пак някой е длъжен да се жертва и да бръкне в джоба на данъкоплатците си. Нататък развръзката за правителствата на силните икономики (или поне на по-практичните) е ясна – осъзнават, че по-нататъшна интеграция в рамките на Съюза би работила само в техен минус и преосмислят своето участие. Това е хипотетична ситуация, но логиката ѝ е неоспорима, особено вземайки се предвид двусмисленото заявление на финландския финансов министър: „Нашата солидарност има граници. Всяка държава трябва да понесе сама отговорност за дълга си и за икономиката си, въпреки доброто ни желание еврото да просъществува.“

In this case, the benefits for Finland from a possible exit, although this prospect is still used only as a threat, are not small at all. The country will not contribute to the European stability funds, it will avoid market shocks and losses in the event of a Eurozone collapse, it will save itself from further harmonization and risk sharing in covering the government deficits of the indebted countries. In short, if the gears of the European “rescue matrix” are set in motion and capital transfers from the stronger to the weaker begin, the best thing Finland could do for its own good is to leave the Eurozone.

To the horror of Euro-enthusiasts, such an action would enjoy public support, as the severity of the crisis and Euroscepticism grow in direct proportion. In such a situation, political leaders, in their quest to maintain popularity and meet the expectations of the taxpayer, are also forced to speak critically of the European Union, which is digging into the pockets of their voters. Evidence of this is the recent statement by, note, the German economy minister that Greece's exit no longer scares anyone, a statement accompanied by firm skepticism that the reforms in the country will be implemented.

The conclusion is that the economic, political and social arguments for a possible breakup of the Eurozone are present. The surprise lies elsewhere – this breakup is likely to start not from the bottom up in the ranking of economic stability, but from the top down – from the stronger ones who find excessive European solidarity ineffective, unjustified and unfair.

The prospects look increasingly bleak, given the above conclusion and the fact that the survival of the Eurozone is a matter of risk sharing and redistribution of responsibilities. European leaders forget that the latter two affect the prosperity of entire sovereign states. And sovereignty means, first of all, justified national egoism. The days of the European project are numbered if the strong leave the battlefield at a time when integration requires sacrifices.

In such a situation, the German approach to the crisis turns out to be at least partially correct – aid should be provided only through implemented reforms, assumed political responsibility and discipline. These three things are the only guarantee – moral, not financial – that can break the vicious circle of European impasse. But will it work?

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