Wednesday, July 01, 2015

Greece & The Euro: Some words of wisdom from a Swiss Ambassador

Dr Daniel Woker
In an article headed Greece and the Nattering Nabobs of the Anglosphere in Real Clear World, Dr. Daniel Woker has some timely advice to the chattering classes: Cool it, you just don’t get it. 

A former Swiss Ambassador to Singapore and Australia, and now a lecturer at the University of St. Gallen, Switzerland, as well as a columnist, Woker is spot on with this observation:
Where the EU is concerned, the nabobs in London, Washington and elsewhere in Tony Abbott's Anglosphere don't get it, as shown by recent comments on events in Greece and on Germany's role in Europe.

No soccer match, tennis game or golf play-off would ever dare to go into the number of prolongations we are all exposed to by the interminable tragi-comedy of Greece vs Europe. At the time of writing, Greek banks are closed but the final outcome is still far from clear. We don't know if there will be a clear cut 'Grexit', the much discussed exit of Greece from the euro. What will certainly ensue, however, is a prolonged period of muddling through, with severe capital controls and budget policies.

Dr Woker is also right on the money with his observation of the what the Eurozone really is, as compared to the facile assumptions by many commentators:

The Eurozone is not a monetary union such as we have seen before but an economic reaction to the fact that the EU some time ago become one large manufacturing and service-providing area made up of countless cross-border value chains. An area-wide currency provides for a level playing field for suppliers and assemblers regardless of national borders. Contrary to what is often claimed, the political decision to create a single currency (and with it a common banking, regulatory and eventually fiscal union) followed economic reality rather than leading it. As a result, national sovereignty was transferred for the greater good of all. (This is of course anathema to nationalists all over the EU, yet the idea that the UK prefers to opt out of full European integration continues to baffle observers on the continent. After all, Britain without Europe is just an island adrift.)

A union that important to close to half a billion Europeans will not easily allow itself to be torn apart by problems affecting less than 2% of the economic space it encompasses.

So relax, everyone: It is a dark and stormy night right now, but dawn will come.

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