Eurozone is primarily a political project. Can it be rescued from an economic dead-end? The anxieties that the Greek sovereign debt crisis are visiting on India will pass. Greece itself will recover,like Argentina did from a 2001 disaster that offers striking similarities cooked-up government accounts,runaway external debt and a growth bubble created by an artificially pegged currency. The real casualty of the Greek tragedy could be the idea of Europe,which was to be not merely an economic entity but an institution to secure peace in a conflict-happy continent where two world wars were born. Monetary union was to be the tool to bind European nations so tightly that conflict would seem unimaginably expensive. Ironically,Europe and global finance had invested so deeply in the eurozone that the cost of scaling down seemed to be prohibitive. The crisis intensified because Europe and the IMF persisted in lending to an insolvent Greece. Danger signs were visible on the ground as early as last October when local barter economies began to spring up all over the country with the blessings of government. This weeks run on the banks,in which Greeks withdrew over 700 million euros,was effectively a no-confidence vote. No to the Greek states austerities,to Angela Merkels bailouts,to the euro and to artificially prolonging the life of Europe in its present form. If Greece exits,other embattled countries like Portugal and Ireland may follow,whereupon the eurozone would dwindle into a clique of power nations. But in the thick of the crisis,perhaps we are forgetting that unification was principally a political project to which currency union served as handmaiden. The crisis,too,is largely political. The Economist Intelligence Unit has observed that if the eurozone were regarded as a national economy,it would be pronounced healthy. Its deficit and debt to GDP ratio are acceptable. Crises are confined to member countries but they are uncontrollable because the zone has only the central bank in Frankfurt,not the network of institutions which collaborate to address local problems in nations. If the eurozone wants to grow,it has to go beyond the contract of the union and sanction such a network. That would also bring it one step closer to the ideal of pan-European governance.
