The cradle of Democracy could very well become the grave of European hopes. Greece,was not qualified to join the Euro, the European common currency, back in 1997 when they applied. They did not fall within either of the three so-called Maastricht criteria (debt, deficit and GDP). But it would have been politically harsch to leave out the Mother of Democracies, the land of Aristotle, Pericles and Homer. So the founding fathers of the Euro closed their eyes and let Greece use the Euro instead of the Drachma. What they did not know at the time is that even the dismal figures the Greek authorities were showing were grossly inflated. Once they had the Euro, and a low interest rate to boot, the Greeks went beserk. It is as if they had gotten ahold of the family checkbook and embark on a shopping spree. Alas for them, the George Bush Great Recession brought the orgy to a halt, and now, the bills have started to accumulate. Greece`s debt is 130% of its GDP. But since they share a currency with Germany and 14 other Euro member states, they cannot devalue (which would have made it easier to reimburse the debt). Since they used the reserves accumulated by other member states, it is as if they had stolen it from them. Worse, because they now have to reimburse foreign banks, they might default on their loans. German and French taxpayers are understandably reluctant to bail out their Greek associates. All the more since the same disease seems to have infected the PIIGS (Portugal, Ireland, Italy, Greece and Spain).
Speculators have already bet against the Euro. This is a blow to the European construction and to Europe as a whole. Already the nomination of thenew EU prsidents and its Foreign Affair envoy had been a blow to Europe.
Back at the Dublin Summit, when Helmut Kohl sought to impose sanctions to member states who would leave the Maastricht criteria, President Chirac watered down the heavy fines, proposed `talks`instead. We can see the results today.
