A Euro tragedy.can Zeus fly to the rescue?

Published on the Malta Today¸ issue 20th Augusut 2011

Zeus was the almighty god of the sky and ruler of the Olympian Gods in ancient Greece .His powerful weapon is a thunderbolt which he hurls at those who displease him¸ so both President Sarkozy and Chancellor Angela please be careful as Greece’s economic and social destiny is in your hands .The duo are so called the continent’s most unlikely couple. The irony of it all is that with all his Godly powers Zues (George Papandreou) may feel helpless to rescue the beleaguered Athenians. Still the battle for the Euro survival rages on and we see how Germany and France (lovingly referred to as the inseparable duo) struck a deal surreptitiously intended to rescue Greece and the euro from financial ruin. The Titans of the Greek mythology (read contagion) were buffeted and cornered by the Germans and French politicians and seemingly a compromise is in the air to save Greece and curtail the agony of a faltering Euro.

Last month in an emergency summit of the 17 leaders of single-currency countries they collectively discussed the merits of a magic potion concocted by the two main protagonists (above mentioned duo). The leaders of the eurozone¸ plus the heads of the European Central Bank¸ the Commission¸ and Christine Lagarde¸ (as the new head of the International Monetary Fund) all converged to discuss the plan suggested by the now famous duo. During the summit reigned an air of heavy responsibility and solidarity with the weak euro …….itself in sick bay and needing intensive care and possibly resuscitation. Skeptics may record this event as a historically charged moment with an ominous sense that the euro pact was facing a make-or-break moment. Leaders felt the stress placed upon their shoulders with drama plying up that they need to be united .In fact othey did act decisively in the euro’s darkest hour. Such an agreement still needs ratification in 17 parliaments.

The duo suggested a novel idea to levy a stealth tax on banks (primarily the custodians of billions of Greek bonds) but this was resisted by most. The compromise cure is a bipolar recipe which included a long-term Greek debt rollover stretching for decades mingled with an dosage of more austerity. At eurozone summit¸ Germany’s chancellor was treading a fine line between showing European solidarity and keeping her voters happy. Last year¸ Germans protested about having to bail out bankrupt Greece. After a similar emergency summit last year Angela Merkel forced eurozone leaders to agree a German veto on future bailouts and insisted with EU states and the European Central Bank¸ that the International Monetary Fund has to contribute to the rescue package.German intransigence worsened the crisis. At one point¸ an angry Sarkozy was reported to have thumped the table and threatened to leave the summit if Germany refused to go along with his bailout plan.

Sarkozy insisted that only through surgery can the patient be cured of its crippling debt levels. Some considered this multi-pronged formula as a smart move which would inexorably avoid having Greece being deemed to be in sovereign default if not de-facto but at least on paper. It is a sad story which saw the Greeks being granted a €110bn bailout in May last year.The remedy misfired as debt has soared to €340bn¸ reaching 160% of gross domestic product and still rising .Following last year’s first unsuccessful bailout ¸ Brussels prescribed another bailout of a generous amount to keep it a