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Friday, 8 June 2012

Awaiting zero-hour – The moment of truth for Europe

Less than ten days remaining, then the Greek people will be called to the ballots for a new parliament, for the second time this year. While Europe anxiously looks at Greece, it also keeps an eye on Spain, which will most likely require assets from the European Financial Stability Facility (EFSF) to stabilize its crippled banking sector. Two crucial acts which will decide over Europe’s future. The European people await the all feared zero-hour, the moment in which Greece will drop out of the Euro-Zone.

Nobody knows what is going to happen afterwards, which effects it will cause for the Greek people and the entire EU as an economic and monetary union, and what it will mean for the EU’s political institutions and its entire achievements since the beginning of the European integration process in the early 1950s.

The pressure is on the EU policy makers, who will have to achieve two steps in a very short period of time: first, to bring Spain into the European Stability Mechanism (ESM); and secondly, to convince Germany to agree to this expanded ESM, which is planned to come into force on 1st July 2012. If either one of both fails, Europe will face its imminent failure.

From a Greek perspective, a doomsday mood is prevailing in public. The Greeks don’t know how they should spend the last remaining days, and if the elections on the 17th of June will affect the Greek crisis in any way, neither to the better, nor to the worse. It seems like Greece is facing its imminent destruction, equal to a country in war facing and fearing the moment after surrender. Whatever will happen after zero-hour, it is most certain that it might get even worse than it already is.

German chancellor Angela Merkel will be the one who will take the most crucial decision in this crisis. It is up to the German government to withdraw from its rigid austerity strategy and agree on wider fiscal and monetary reforms for the ESM, as demanded by the IMF and other global actors, specifically by the USA. On 11th July, Merkel will receive other decision makers in Berlin, to discuss the final strategy for the ESM. If the European leaders failed to approve on a solution, it would be a disastrous embarrassment, for Europe and above all for Germany.

Evidently, a Greek drop-out is already in the planned theatre for the ESM, even with the new one to be introduced in July. This drop-out, of which no one can predict if it will happen within a week or within three months, will open the gates to the unknown, and candidates are already queuing on the same line as Greece: Spain is designated number two, Italy is also already waiting.

For the moment, it seems that Europe is being efficiently distracted by the European Football Championship taking place in Poland and the Ukraine as of today. The old Roman rule “Panem et circenses” (“Bread and circuses”) will be a very brief placebo effect, a last party before the all decisive final act, with a massive hangover and most likely even worse results.

And zero-hour is approaching fast.

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