Structural weakness and deficiencies of the eurozone building
At this point, the question arises as to whether the structure and methods of the eurozone can be criticized in connection with the Greek crisis and, if so, what is its responsibility.
During the negotiations for the Maastricht Treaty in 1991, there was a long debate as to whether a monetary union that shares the same currency can function without a common fiscal policy. This – it was argued – would impose rules of obedience in the exercise of the economic and social policies of the Member States and would heal the imbalances and the loss of competitiveness caused by the activity of a common market and the exercise of a single monetary policy. However, it has been objected that such an undertaking would entail a politically and legally very binding situation, with repercussions not only on the management of economic policy, and would also lead to a collective administration of public debt (for example, through the issuance of common instruments, such as Eurobonds) and binding rules that are detrimental to competition (i.e. the exact opposite of the Lisbon Strategy, now called ‘Europe 2020’). Accepting a common fiscal policy would have meant a very advanced political union, which did not exist at the time of Maastricht, just as there was no form of social solidarity (as is evident from the preparation of the non-bailout clauses, in accordance with which Member States cannot guarantee the debt of another Community country, or by the provisions regarding the prohibition of monetary financing of the public debt of the Member States). Such a politically advanced union does not even exist in our day, nor is it expected to easily arise in the near future. Furthermore,
The only relevant provision within the Maastricht Treaty concerns the prohibition of excessive deficit for member states, defined with the adoption of the Stability and Growth Pact, which introduced the concept of economic situation. According to this approach, in a regular or favorable economic situation, Member States are required to cyclically adjusted budgets, close to balance or in surplus. In principle, this should facilitate the overcoming of a possible adverse economic situation, by reducing the deficit and excessive public debt. The Commission and the Council are responsible, together with the Member States, for the implementation of the Pact. Their obligations include identifying excessive deficits, monitoring their management, recommendations for their correction. In the event of non-compliance, they have not only the capacity but also the obligation to impose financial penalties. Experience has shown, however, that expressing ‘solidarity’ through the imposition of fines does not save a nation from bankruptcy. On the contrary, such a policy can provoke it to the limit.
Very valid and reasonable arguments were advanced by economists, politicians, businessmen and ordinary citizens to highlight the reasons why the objectives set by the Maastricht Treaty, in particular the establishment of a common European currency, were not achievable. The euro was adopted despite these catastrophic forecasts, and successfully disproved them for a decade (1999-2009). When the international economic crisis hit, followed by Greece’s fiscal collapse, the eurozone found itself facing challenges that highlighted its historical weaknesses and structural shortcomings. Fundamental decisions were needed on two fronts. We had to react to regain control of development and face international markets – including speculators -, effectively addressing the Greek crisis to avoid the bankruptcy of one of the Member States and its domino effect. The danger of the crisis spreading to other nations and their banking systems was sensitive and the Treaty provisions relating to no-bailout clauses and sanctions for non-compliance with the recommendations appeared inadequate to the gravity of the situation and its implications. Another obvious reality also had to be addressed, namely that a fair number of Member States were experiencing a substantial, and disconcerting, loss of competitiveness. The danger of the crisis spreading to other nations and their banking systems was sensitive and the Treaty provisions relating to no-bailout clauses and sanctions for non-compliance with the recommendations appeared inadequate to the gravity of the situation and its implications. Another obvious reality also had to be addressed, namely that a fair number of Member States were experiencing a substantial, and disconcerting, loss of competitiveness. The danger of the crisis spreading to other nations and their banking systems was sensitive and the Treaty provisions relating to no-bailout clauses and sanctions for non-compliance with the recommendations appeared inadequate to the gravity of the situation and its implications. Another obvious reality also had to be addressed, namely that a fair number of Member States were experiencing a substantial, and disconcerting, loss of competitiveness.
