Leading article: Beware easy fixes for the euro crisis

 

Share
Related Topics

The situation in Greece in the aftermath of Sunday's election is far from encouraging. First, the centre-right New Democracy party failed to form a workable coalition. Now, second-placed Syriza is trying for a leftist government committed to rejecting austerity measures that its leader, Alexis Tsipras, damns as "barbaric". Amid a confusion that could see voters back at the polls within weeks, all that is clear is the overwhelming disenchantment of the Greek public – both with the political class who freewheeled the country into this mess and with subsequent efforts to rescue it. Turning to either political extreme, however, is not the answer.

For all the bluster of Mr Tsipras, without the next international loan, due in June, Greece will default on its debts, with catastrophic results for itself and Europe. It is too simplistic to claim that austerity-focused Germany must cut Greece some slack. Even leaving aside Berlin's domestic political issues, such a move would immediately reignite the panic in the bond markets threatening Spain, Italy and even France.

It is also too easy to conclude that Greece's exit from the currency union is somehow inevitable. It may be true that the country's problems would be more solvable were it in control of its currency. But that is not the starting point, and going back to the drachma comes with vast and unquantifiable risks belied by the glibness with which the option is often discussed.

That said, there are still options for easing the burden on Greece. The future of the eurozone cannot rest on austerity in Greece alone; nor can the Greeks be expected to face successive years of recession with no prospect of reprieve.

Until the necessary austerity in over-indebted euro countries is accompanied by looser fiscal policy, and a concomitant rise in demand from healthier counterparts – notably Germany – the response to the crisis remains dangerously lopsided. There is also scope for a Marshall-style programme of targeted foreign investment to provide some much-needed immediate stimulus. But Europe must act, and act quickly. More than anything, the political ructions in Greece are a sign that time is running out.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Ashdown Group: Learning and Development Advisor - (HR, L&D) - Rugby

£25000 per annum: Ashdown Group: A highly successful and well established busi...

Recruitment Genius: Product Owner - Business Analyst

Negotiable: Recruitment Genius: A Product Owner/Business Analyst is required t...

Recruitment Genius: Quality Technician

£28800 per annum: Recruitment Genius: This company is going through a period o...

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

Day In a Page

Read Next
Pressure is growing on Chris Grayling to abandon the Government bid to advise Saudi Arabia on running its prisons (Getty)  

What in sanity’s name is Chris Grayling doing in the job of Justice Secretary?

Matthew Norman
Health workers of the Red Cross and Medecins Sans Frontieres take part in training  

Are we starting to see the end of Ebola? Not quite, but we're well on our way

Tom Solomon
Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea