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[...] it looks as if all these impossible events have been happening in the Euro area, so what should the club do about it? [...] the immediate crisis must be resolved; no time now for lengthy discussion of grandiose plans.

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									                                                                                THEWORLDTODAY.ORG MARCH 2010
                                                                                                                                                            PAGE 27
  GREECE AND THE EURO
  Vanessa Rossi, SENIOR RESEARCH FELLOW, INTERNATIONAL ECONOMICS, CHATHAM HOUSE




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This is the crisis that could never happen. European leaders gathered in Brussels
in mid-February for talks on the Greek debt problem probably expected to wake
up suddenly and find it was all a bad dream. This may also explain the seemingly
erratic outpourings from these meetings, lurching from promises of support –
club members stand shoulder-to-shoulder – to rather harsh demands for Athens
to make tougher budget deficit cuts, with no sign of any money being put on the
table in support. Greece may be wondering why it was there, like an unwelcome
ghost at the feast. The truth was the Eurozone had no plan.




t              HE EURO CURRENCY ENTRY RULES, MEMBERSHIP
                rules, and the Maastricht Treaty – the
                blueprint for the single currency which came
                into being in 1999 – were all designed
                with one critical purpose in mind: to
                guarantee that prudence governed member
government’s budgets and that public sector debt would never
reach a level that could possibly pose a risk to the stability
of a member state. There is very little else required or said
about economic policy and other important balances and
                                                                 targets. Indeed in 2002, Romano Prodi, then President of
                                                                 the European Commission, famously caused a furore for
                                                                 calling the Maastricht rules stupid, to the annoyance of
                                                                 some, but the delight of others.
                                                                    In the tradition of a gentlemen’s agreement, it was
                                                                 assumed that members would never cheat or make a mistake.
                                                                 And global crises that could damage the whole monetary
                                                                 union ‘club’ in such a way that deficit and debt targets would
                                                                 be smashed could never happen. No need to plan for
                                                                 something that was impossible.

                                                                                                   PA R E S H / T H E K H A L E E J T I M E S / D U B A I
THEWORLDTODAY.ORG MARCH 2010
PAGE 28




          P R U D E N T TO P R O F L IG AT E                                    got around to it; all very complicated no doubt and why
             There are some clauses in the Treaty about bail outs.              bother as the probability of a nasty event was so low?
          Absolutely, there can be none; no concept of bail outs,
          collective or individual. Indeed, they are deemed illegal except
          in circumstances of, say, natural catastrophe. Perhaps this is        F I N D T H E M O N EY
          what has happened to Greece? Lack of tax collection and                   This cannot continu
								
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