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Greece and the Euro-crisis – the end of sovereignty?

 Speakers
By Dr Spyros Economides, London School of Economics and Dr Reuben Wong, Associate Fellow, EU Centre

 Date
10 Jan 2012

 Venue
Level 13, ESSEC Amphitheatre, 100 Victoria Street, National Library Building, Singapore 188064

 Time
5.00pm – 6.30pm

 Downloads


Spyros-Reuben 109

There is no doubt that the sovereign debt and financial crises in which Greece and the eurozone are engulfed have profound economic consequences. In his relatively brief but comprehensive talk, Dr Economides emphasised the political dimensions of both the Greek and the eurozone crisis. He added that while economic solutions need to be found, for them to have any lasting effect, political solutions are necessary, and for this one needs to retflect on the nature of the EU and its relationship to the member states, thereby rethinking the eurozone and its current construction.

For Greece, the indicator showing that its economy was in crisis was its ballooning deficit of over 12 per cent, and sovereign debt, which more than doubled in the years from 2007-2010, from about 60 per cent to 130 per cent. Politicians used the state as a cash cow and the Greek state spent beyond its means, primarily on political projects, and had sub-par revenue due to its inefficient tax collection system. Thus the political crisis was a long time in the making. The flawed Greek political system spiralled out of control after years of state patronage and clienteleism.

The Greek economy was not ready for the consequences of euro membership, yet it was allowed to join the single currency area, where its problems were magnified. Because of the way the EU and eurozone was set up, this was not an optimal currency area, and without fiscal centralisation, it was difficult to have an efficient functioning currency area. Both Greece and the eurozone have reached critical stages, but dealing with the crisis has been slow.

There is no answer as yet to whether the crises precipitate an end of sovereignty, but if one looks to Greece for an indication, the answer is not very positive. It is no longer functioning as a sovereign state, and instead is part of a broader plan to which it has little control in determining. There is also the perception that Greece is not run by Greeks anymore, but by the unelected Troika (which to a lesser extent, is also determining the fate of the eurozone as a whole). In seeking solutions and ways out of the crises, debates at the European level hinge on whether to pursue more inter-governmental solutions or more federal arrangements, a debate that there is no easy way around, as it forces a rethink of the nature and identity of both the EU and its member states.

The lecture was followed by the launch of the book National and European Foreign Policies: Towards Europeanisation (Routledge). Dr Reuben Wong (EU Centre Associate Fellow & Assistant Professor, Department of Political Science, National University of Singapore), who co-edited the book with Christopher Hill, gave an introduction to the issues surrounding the coordination of foreign policy in the EU, which he, like Dr Economides, linked to the issue of identity. Dr Wong asserted that while foreign policy is supposed to be an intergovernmental arena in the EU, it has been infected by the community process. The process of Europeanisation has resulted in less of a national reflex in foreign policy by member state governments, precisely because they are seeing themselves as more European. He did concede though, that the process of becoming European is not a predetermined course, and something that can stop abruptly, or even go into reverse, highlighting the necessity for strong institutions.

Click here for more information on the book.

A report on Dr Economides’ visit to Singapore can be found in the LSE Staff Newsletter here.