Everything seems obvious, but nothing seems obvious. This is in summary the paradoxical situation of the Greek crisis. It is obvious that there is an opposition between creditors and debtors. Exacerbated by clear signs of inability to repay the debt, despite several postponements and reductions. But it is not obvious that, as would happen for any insolvent company, Greece will go bankrupt. Also because the bankruptcy of a sovereign state does not lead to the liquidation of assets for the benefit of creditors. Who have no recourse. They would have to bear the full damage, having no legal means to defend them.
Scholars of financial crises remind us that history is full of insolvent countries, even of high lineage: like England in the fourteenth century to the detriment of Florentine banks, Spain in the sixteenth century to the detriment of Genoese banks, France which declared bankruptcy 8 times in the two centuries preceding the Revolution. Latin American countries accumulated 126 public debt crises from 1800 to 2000, the last one being the Argentine crisis which brought serious losses to Italian savers (and others).
With the support of these numerous examples, it would seem obvious to resort to the weapon of bankruptcy which would allow Greece to pass the costs on to creditors, who are now the international institutions, which have replaced private banks. But it's not obvious. A first brake comes from the loss of reputation, which would prevent future international loans from being obtained. Hesitation partially mitigated by the observation that the financial markets have a short memory. Above all if, as history teaches again, the country manages to restart, lightened by the burden of repaying past debts, and recovers the road to economic and social recovery. Wait and see is one of the rules of financial investors. This does not mean that the request for new loans would not be met with much more prudence than in the past and with higher rates which include the Greek risk.
The main brake on Greece's bankruptcy comes from its dual membership of the EU and the EMU. In this case the damage would be much more serious. Beyond the loss inflicted on creditors, there would be a serious institutional crisis in the first instance of the monetary union and, albeit more attenuated, of the economic union.
The UME is an interactive club, the exit from which would cause damages both for those who leave and for those who stay. The major cost for the exiting country would be the sharp devaluation of the new currency, which will not be able to maintain parity with the euro. This signal of external weakness would be accompanied by strong internal inflation, which is the worst tax on the purchasing power of the weakest. The eurozone would prove to be vulnerable in terms of institutional credibility. Greece has a very small economic weight. But the destabilizing potential of speculative attacks on other more indebted countries, of which Italy is the largest, should not be underestimated.
Our government considers it obvious that Italy, having made (it would be better to say started) the reforms, is immune from contagion. But it's not obvious. There will be a cost to be incurred both at the national level and at the EMU level. Apart from the economic cost of the buffer measures that will have to be adopted, the greatest cost would be in the setback of the institutional integration process. And it is a cost which would primarily concern the EMU, but which would involve the entire EU. In this regard, another aspect full of obviousness is the lack of a European federal government, legitimized by a political vote to act from a supranational perspective.
But again, if it's obvious, it's not a given that we'll come to this solution. It's not in the programs even if everyone expresses the need, in principle, but few want it to prove the facts. All these inconsistencies have come into play in the case of Greece. As indeed also in the case of immigration. Between postponements, second thoughts, instrumental recourse to popular democracy, requests for deferments, counts, adjustment plans seen, rejected and revised, references to cultural roots, ethical principles opposed to survival needs, and the repeated summit meetings, Amidst all of this (and the list could go on) Europeans are balancing two fundamental stakes.
In the first place, the heritage of ideas of the great pro-European fathers determined to put limits on opposing nationalisms, after the tragedies of the two world wars. Heritage that has materialized in institutions such as the EU and the EMU, which must be strengthened rather than weakened. If only because, secondly, what is at stake is Europe's possibility of playing a role on the world stage, in the presence of a proliferation of conflicts which, among other things, concern us closely.
The short-sightedness with which the Greek crisis is being faced is a very worrying sign of the lack of a ruling class capable of enhancing European identity. Failing to find a shared solution would be a serious responsibility of which future generations will suffer the consequences, more than the debts to be repaid.
