The United States of Europe

Interesting post in the Financial Times, “Greece can expect no gifts from Europe

The current strategy of the EU is to raise the political pressure – perhaps even provoke a political crisis – with the strategic objective that the Greek government might eventually relent.
So what happens if Greece cannot meet a payment on its bonds, or fails to roll over existing debt? About two-thirds of Greece’s public debt is held by foreigners. According to calculations from Deutsche Bank, Greece is looking to raise some €31bn ($46bn, £28bn) in new borrowing and €16bn to roll over existing debt next year. In the absence of help from the eurozone, the Greek government would have to resort to the International Monetary Fund if it were to encounter difficulties refinancing the debt.

Previously, I had assumed that the major road to European federalism was via treaties and agreements which slowly work to export sovereignty to Brussels. I hadn’t anticipated that the EU, which withholds the power to print money from its member states, would use fiscal emergencies and the natural proclivity of social democracies to run deficits to make larger, more pronounced gains in sovereignty.

While there is no evidence that this is happening yet (at last in the EU), all of the pieces and players look remarkably like the game the IMF plays with developing nations.


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