For years many commentators, including myself, believed Europe had two options to choose from in order to manage the debt crisis: ‘ever closer union,’ or a breakup. European authorities unexpectedly found a third solution, which is to muddle along under the current framework and lurch from one doomsday to the next, with last minute compromises and deals to keep the system going. I was surprised that the third option worked as well as it did, but we might have finally come to the time to make a yes-or-no decision.
The Greek Prime Minister Alexis Tsipras has called a referendum on his country’s bailout package. The referendum is scheduled for 5 July, but a lot can and will happen before then. A Greek bank run seems to be occurring and the financial system is only propped up by emergency assistance from the European Central Bank. I suspect the current crisis will be resolved before the referendum, one way or another.
The choice has been portrayed as Greece must accept austerity and remain in the Euro, or else they must refuse the current bailout terms and leave the common currency. According to surveys the people of Greece don’t want austerity but want the Euro, but these seem to be mutually exclusive choices.
Since the beginning of the sovereign debt crisis there has been a revolver on the table. The gun has been placed there by Europe, with the understanding that Greece can comply with our terms or play Russian Roulette. If Greece chooses to play the question is whether the hammer will fall on an empty chamber or a bullet. Tsipras has finally picked up the revolver and spun the cylinder. Now Europe must decide whether to allow him to play or convince him to put the gun back down again.
In the traditional game of Russian Roulette the odds are a one in six chance of killing yourself. The problem in the Greek case is that we don’t know how many bullets are in the revolver. Maybe there are none. Maybe there are six. We simply don’t know what will happen if a choice is made to leave the Euro or to submit to further austerity. Economists have been arguing about how many bullets are in the revolver for years now, and we still don’t know.
I believe that Europe needs to make a choice. We need to decide if we are all in this together or if we want to go it alone. I believe if the grand European experiment calls for ‘ever closer union,’ then that is what we should do. We should forgive enough of Greece’s debt so they can be self-sustaining. This isn’t a popular opinion, but I feel it is the best choice. Greece will have to surrender part of its fiscal sovereignty, but it has already done so. We will have to see some of our tax money go to another country, which is specifically forbidden, but we have already done that as well.
Tsipras may go down in history as the man who finally forced Europe to choose. He might be our messiah in being the person who had the nerve to pick up the revolver, spin the cylinder, put the muzzle against his head and pull the trigger. It has to be done at some point; we can’t put it off forever. I just hope Europe has the will to take the bullets out of the gun before he plays.