Greek Debt Crisis: Pragmatism vs. Theology

To follow up a bit on Friday’s post about the EU’s latest “non-solution solution” to the Greek debt crisis, I’d add that in choosing pragmatism over theology, the decision is pretty consistent with the history of European construction. If the distant horizon of European integration has historically been defined by Europhile “theologians,” actual construction has always been driven by pragmatists.

Part of that has to do with the nature of political compromise. But part of it also has to do with the the role that crisis has played in driving European construction. And although crisis often provokes religious thinking, it generates pragmatic action. The result for the EU has been solutions that offer enough to respond to the crisis at hand, if not to prevent or withstand the one to come.

And that’s exactly what’s happening here. There is some wisdom to the consistent reiteration of support for Greece while only vaguely defining actual mechanisms for putting it into action. The latter would only be effective if the politically achievable mechanisms were able to withstand the market’s assault not just on Greece, which is not in question, but on the euro zone, which is less certain. So by not committing its defenses, the EU avoids revealing them to be ineffective.

In other words, there are actually two bluffs going on here. One is within the EU to determine who gets their favored terms regarding the balance between fiscal solidarity versus fiscal discipline. Clearly, Germany won that hand with regard to Greece, and although Berlin is suffering a popularity hit as a result, the pragmatic approach will probably grow more palatable with time.

The other bluff is external to the EU, regarding how concrete the package must be to serve as an effective deterrent to further financial attacks on the euro zone in general. And on that one, the verdict hasn’t come in yet. So, as usual for the EU, we have a response for this crisis, but not for the next one.

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