The Responsibility of the EU

Abstract

‘If you break it, you own it.’ This Chapter takes a critical political economy approach to the whole strategy adopted by the EU and its constituent authorities (ECB, Commission, EFSF and ESM) as well as the IMF towards Greece once it became clear that the country is insolvent. It argues that the main responsibility for the continuing debacle over a country whose debt is of the order of 2% of EU GDP lies with the EU and its overall approach—which is not to ignore or downplay the serious failures and weaknesses of Greece itself. Particular themes of the critique include the fact that co-responsibility for the country’s excessive indebtedness lies also with the lenders who financed the exorbitant debts in the first place; but who then were fully rescued, at least in the beginning. The country has had very little political clout over the adjustment programmes that have been imposed on it, micro-management of which from outside seriously erodes its sovereignty and democracy. The resulting austerity has been largely self-propagating and self-defeating, plunging the country into a perma-recession for generations to come, with grave social consequences.