The Gift Horse: The Euro crisis

Beware of Greeks bearing gifts. The advice has endured for many centuries. Far more recent is the advice to the Greeks to beware of Europeans bearing gifts, such as that which slashes what they owe by 50%. The Greeks, though, know a thing or two about deceptive gifts. They invented them. Or it. The European Trojan Horse that the Greeks are expected to admit into their walls comes stuffed with an army-load of more austerity. Ingrates they may be, sending the markets back into further turmoil, but when presented with a dubious gift, they do the only sensible thing - and that's to call a referendum.

When the Greeks say no and send the Trojan Horse packing, they'll be waving it goodbye from a dock side in Piraeus with banners proclaiming the default it was meant to avoid and their fond adieus to the Eurozone. Why bother waiting? Let them default now and get on with it.

Of course there is another way of looking at it. The referendum ruse is a way of extracting more gifts. 50%? Why not make it 25%? Or one can also see it as the Greeks wanting to get a bit of pride back. They have spent the last few months being portrayed as tax-swindling, idle ne'er-do-wells and now have to put up with Sarkozy saying that they made their numbers up on the back of a fag packet after a good night on the retsina.

Well, they probably did make up their numbers, pre-Euro admission, but then most European countries have played fast and loose to different degrees with "the rules". The French, for example.

In the days - when were they, as they seem like centuries ago - when Gordon Brown was arriving at his tests for the UK's entry into Euroland, a key measure was the ability to comply with the stability pact, the one that the French (and the Germans) regularly flouted. In fact, everyone did with the probable exception of the powerhouse that is Luxembourg.

Anyway, let's not worry too much about who made up what figures, more pressing is what happens when Greece goes totally belly-up, as in Papandreou loses the referendum, Greece exits the euro, total chaos ensues and hyperinflation takes over with the printers pumping out so many notes that it will require pantechnicons to carry the money and not the wheelbarrows of the Weimar Republic.

Hmm, ah yes, Weimar Republic, economic and political chaos, hyperinflation. The Germans should know all about what follows from such circumstances. Indeed the Greeks should have a shrewd idea what can happen as well.

But then it is only Greece. Except of course it isn't. There is always, well, Spain for instance. So just hypothesise for a moment. Poor old Mariano Rajoy, some time into his tenure as prime minister, finds himself in dire need of a bail-out, Europe comes along bearing gifts (assuming any of the trillion or so is left or the Chinese keep pumping money in) and effectively takes over the government, which, more or less, is what would happen in Greece. Referendum follows. Chaos ensues.

Leaving the Eurozone doesn't mean leaving the European Union, but much would depend on how the political chaos is handled. The Greeks, and the Spanish, have, when all said and done, some form. It wouldn't be a case of choosing to leave the European Union but of possibly being booted out. Idiotic concerns about having an identity residence card or not would be supplanted by rather different concerns.

The Spanish hypothesis might remain just that - an hypothesis. Much though a Greek no could create the long-anticipated domino effect that brings Spain to its financial knees, the possibility exists that Europe would still support Greece. It is also just possible that the Greeks would vote yes. Faced with more European-imposed austerity or leaving the Eurozone, they may decide to err in favour of the Euro.

Much might rest, however, on what voices come to the fore in the meantime. As this is as much a political as it is an economic issue, chuck some highly populist mouthpiece into the equation, one that damns Europe and anyone or anything else, and who knows what might happen. This might be the worry, either before or after a Greek referendum, and so it might also be for other countries, Spain included.

Whither the European Odyssey now? Who can predict with certainty, just as who could have predicted how the journey would unfold before the adventure was embarked upon. Whether the Greeks prefer to look a gift horse in the mouth will depend upon what they understand by "gift". In German the word means poison.


Any comments to andrew@thealcudiaguide.com please.