BERLIN – From the start of the Greek debt crisis in 2010, the major European players should have understood the risks and consequences that it posed for the European Union. They certainly don’t give that impression to onlookers.
The crisis was always about much more than Greece: a disorderly insolvency there would threaten to pull other economies on the EU’s southern periphery, including some very big ones, into the fiscal abyss, along with major European banks and insurers. That could plunge the global economy into another financial crisis, delivering a shock equivalent to the autumn of 2008. It would also mean a eurozone failure that would not leave the Common Market unharmed.
For the first time in its history, the very continuance of the European project is at stake. And yet the behavior of the EU and its most important member states has been irresolute and dithering, owing to national egotism and a breathtaking absence of leadership.
States can go bust just like companies, but, unlike companies, they don’t disappear when that happens. That is why states should not be punished, and why their ongoing interests should not be underestimated. Insolvent states need help with restructuring, both in the financial sector and well beyond it, so that they can work their way out of crisis.