Abstract
The approval of the Maastricht Treaty by an overwhelming majority in the Greek Parliament in July 1992 was a milestone in the history of Greece’s integration in the European edifice—or any other similar world order—for both historical and practical reasons. In historical terms, the Treaty was the first that Greece ever signed on a par and simultaneously with the other founding members, as opposed to other partial, belated or lopsided involvements in previous international arrangements.
The author benefited from useful comments and suggestions by D. Papadimitriou, G. Moschonas, P. Ioakeimidis and the editor S. Pons. The usual disclaimer applies. A further caveat is that the author has served in the Greek government as Deputy Minister in the Treasury (1996‒2000) and Minister of Finance (2001‒2004), and was also acting Chairman of the Eurogroup (July 2002‒June 2003). As some opinions expressed here draw on my personal experience, they may not appear as unbiased as intended.
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Notes
- 1.
EC, ‘On the Deepening of the Economic and Monetary Union’, Reflection Paper COM, No. 291, Brussels, May, 2017, emphasis added.
- 2.
Martin Feldstein, ‘The Euro’s Fundamental Flaws’, The International Economy 24, no. 2 (2010), 11–12.
- 3.
The Union was viewed as the forerunner of the Single Market as described in the ‘Stikker Plan’ that was presented in 1950 bythe Dutch Foreign Minister Dirk Stikker. For the history and details of the Plan, see Edmund Dell, The Schuman Plan and the British Abdication of Leadership in Europe (Oxford: Clarendon Press, 1995), chapter 13.
- 4.
Evanthis Hatzivassiliou,Greece and the Cold War. Frontline State, 1952–1967 (Στα σύνορα των κόσμων: Η Ελλάδα και ο Ψυχρός Πόλεμος, 1952–1967) (Athens: Patakis, 2009), 157.
- 5.
For details see Ioakeimidis P., 1995. European Political Union: Greece and the Maastricht Treaty. Themelio editions, Athens (in Greek, p. 435).
- 6.
Over time, their debt was multiplied and underwritten by the state. See George Pagoulatos, ‘The Politics of Privatisation: Redrawing the Public–Private Boundary’, West European Politics 28, no. 2 (2005), 358–380.
- 7.
For a detailed description of the ambitions of the memorandum, see Romeos G. (2014), Europe and Greece: From Crisis to Hope. Patakis editions, Athens (in Greek).
- 8.
Commission of EC, The Integrated Mediterranean Programmes. European File, vol. 1, January 1986.
- 9.
A list of companies is given by Pagoulatos op. cit.
- 10.
The public sector borrowing requirement feel from 17.9% of GDP in 1985 to 13.2% of GDP in 1987; see Panayotis Kapopoulos, ‘Stabilization Programmes and Fiscal Adjustment: The Case of Small Open European Economies’, Spoudai 46, no. 1–2 (1996), 38–61.
- 11.
The government included the Conservative Party, the Socialist Party and the Coalition of the Left, including the Communist Party. Posts in the Ministry of the Economy and Finance were allocated to all three parties, thus making a consolidation strategy utterly impossible.
- 12.
No significant contribution to the ongoing debate was attempted by the leaders in Athens, as noted in Kevin Featherstone, Georgios Kazamias, and Dimitris Papadimitriou, ‘Greece and the Negotiation of Economic and Monetary Union: Preferences, Strategies, and Institutions’, Journal of Modern Greek Studies 18, no. 2 (2000), 393–414.
- 13.
Note that at this stage, negotiations regarded the preparation of the EMU project in the Treaty, not the entry of the country. The latter was accomplished by the government of Kostas Simitis in 2000.
- 14.
Further details are provided by Featherstone et al., op. cit.
- 15.
A collection of country case studies is provided by David Cobham and George Zis, From EMS to EMU: 1979 to 1999 and Beyond (Basingstoke: Macmillan, 1999).
- 16.
For details and why the outcome was satisfactory for Greece, see Ioakeimidis op. cit.
- 17.
Thieß Petersen, Michael Böhmer and Johannes Weisser, ‘20 Years of the European Single Market: Growth Effects of EU Integration’, Bertelsmann Stiftung, Policy Brief, No. 2 (2014).
- 18.
A discussion is offered by Robert Flood and Charles Kramer ‘Economic Models of Speculative Attacks and the Drachma Crisis of May 1994’, Open Economies Review 7, no. 1 (1996), 591–600.
- 19.
Assessment based on the predictions of an estimated model by Nicos Christodoulakis and Sarantis Kalyvitis, Growth, Employment and the Environment: Modelling and Forecasting the Greek Economy (Amsterdam: Kluwer Academic Publishers, 2001), 57.
- 20.
A detailed analysis was carried out by Nicos Christodoulakis, Sophia Dimelis and Tryphon Kollintzas, ‘Business Cycles in the EC: Idiosyncrasies and Regularities’, Economica 62, no. 245 (1993), 1–27. The findings were used in a study commissioned by the European Parliament to examine the compatibility of national economies in their way to EMU; see Ben Patterson and Simona Amati, ‘Adjustment to Asymmetric Shocks’, Economic Affairs Series, ECON-104, September 1998, 19–46.
- 21.
As described in the seminal study by Michael Emerson, Daniel Gros, Alexander Italianer and Jean Pisani-Ferry, One Market, One Money: An Evaluation of the Potential Benefits and Costs of Forming an Economic and Monetary Union (Oxford: Oxford University Press, 1992).
- 22.
Kurt Hafner, Jennifer Jager, ‘The Optimum Currency Area Theory and the EMU’, Intereconomics: Review of European Economic Policy 48, no. 5 (2013), 315–322.
- 23.
Laura González-Cabanillas and Eric Ruscher, ‘The Great Moderation in the Euro Area: What Role Have Macroeconomic Policies Played?’, European Economy, Economic Papers, No. 331, June 2008.
- 24.
Paul De Grauwe and Yuemei Ji, ‘Flexibility Versus Stability. A Difficult Trade-Off in the Eurozone’, Centre for Economic Policy Research, London, 2016. For the post-crisis cycles, see Ansgar Belke, Clemens Domnick and Daniel Gros, ‘Business Cycle Synchronization in the EMU: Core vs. Periphery’, CEPS Working Document, No. 427, November 2016.
- 25.
Philip Lane, ‘Capital Flows in the Euro Area’, European Commission, DG for Economic and Financial Affairs, Economic Papers 497, April 2013.
- 26.
Alfonso Arpaia, Aron Kiss, Balazs Palvolgyi and Alessandro Turrini, ‘Labour Mobility and Labour Market Adjustment in the EU. European Commission, DG for Economic and Financial Affairs’, Economic Papers 539, December 2014.
- 27.
For a non-technical discussion of such a case, see Steven Rattner, ‘The Secrets of Germany’s Success: What Europe’s Manufacturing Powerhouse Can Teach America’, Foreign Affairs 90, no. 4 (2011), 7–11.
- 28.
For definitions and analysis based on a two-sector model, see Nicos Christodoulakis and Vassilis Sarantides, ‘External Asymmetries in the Euro Area and the Role of Foreign Direct Investment’, World Economy, 40, no. 2 (February 2017), 393–423.
- 29.
An extensive description and evaluation are provided by Nicos Christodoulakis, ‘Market Reforms in Greece 1990–2008’, in From Stagnation to Forced Adjustment: Reforms in Greece, 1974–2010, eds. Stathis Kalyvas, George Pagoulatos and Haridimos Tsoukas (Oxford: Oxford University Press, 2012).
- 30.
Platon Tinios, ‘The Pensions Merry-Go-Round’, in From Stagnation to Forced Adjustment.
- 31.
These included the reappointment of thousands of ageing agro-guards who were laid off in 1994 and replaced by a new and better-trained formation of border guards.
- 32.
In 1995 the current public expenditure was 31% of GDP. Ameco database (2020).
- 33.
Nicos Christodoulakis, ‘Greece and the Euro Area: The Cost of Weak Institutions’, Working Paper. Conference ‘Greece and the Euro’, Tufts University, Boston, April 2019.
- 34.
It is worth noticing that a severe deterioration of ULC competitiveness and external balances took place in all peripheral eurozone countries that later sought some sort of bailout agreements (in Ireland by 12%, Portugal by 8%, Spain by 9% and Italy by 8%).
- 35.
Article 130(a). EC, Treaty on European Union. Office for Official Publications of the European Communities. Luxembourg, 1992.
- 36.
EC, The Presidency Conclusions, Lisbon summit, 2000; available at http://www.europarl.europa.eu/summits/lis1_en.htm.
- 37.
The main reason was that LSG lacked a concerted action, according to Jean Pisani-Ferry, What Is Wrong with Lisbon?, Mimeo 2005. According to another study, the lack of links to markets made it look very much like an obsolete Soviet plan; see Charles Wyplosz, ‘The Failure of the Lisbon Strategy’, VOX Policy Portal, January 2010. https://voxeu.org/article/failure-lisbon-strategy.
- 38.
EC, EUROPE 2020: A Strategy for Smart, Sustainable and Inclusive Growth. Document 52010DC2020, Brussels, March 2010.
- 39.
EC, 2017, op. cit.
- 40.
Olivier Blanchard and Francesco Giavazzi, ‘Current Account Deficits in the Euro Area: The End of the Feldstein Horioka Puzzle?’, Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution 33, no. 2 (2002), 147–210.
- 41.
Thomas Grjebine, Jérôme Héricourt and Fabien Tripier, ‘Sectoral Reallocations, Real Estate Shocks and Productivity Divergence in Europe: A Tale of Three Countries’, EconPol, Policy Report 15, vol. 3, June 2019.
- 42.
Paul Krugman, ‘Revenge of the Optimum Currency Area’, NBER, Macroeconomics Annual 27 (2012), 439–448.
- 43.
Salvador Barrios, Per Iversen, Magdalena Lewandowska and Ralph Setzer, ‘Determinants of Intra-Euro Area Government Bond Spreads During the Financial Crisis’, European Economy. Economic Papers, No. 388, November 2009.
- 44.
Juan Luis Diaz del Hoyo, Ettore Dorrucci, Frigyes Ferdinand Heinz and Sona Muzikarova, ‘Real Convergence in the Euro Area: A Long-Term Perspective’, European Central Bank. Occasional Paper Series, No. 203, December 2017.
- 45.
K. Masuch, E. Moshammer and B. Pierluigi, ‘Institutions, Public Debt and Growth in Europe’, ECB Working Paper, No. 1963, September 2016.
- 46.
Maria Demertzis, André Sapir and Guntram Wolff, ‘Promoting Sustainable and Inclusive Growth and Convergence in the European Union’, Report for the ECOFIN Meeting, Bucharest, 5 April 2019.
- 47.
Christodoulakis, ‘Greece and the Euro Area’.
- 48.
The idea was put forward in James Meade, ‘The Meaning of Internal Balance’, Economic Journal 88 (1978), 423–435. It was popularized in the textbook by Paul Krugman, Maurice Obstfeld and Marc Melitz, International Economics: Theory and Policy (Boston: Pearson publishers, 2003), Ch. 18.
- 49.
Martin Weale, Andrew Blake, Nicos Christodoulakis, David Vines and James Meade, Macroeconomic Policy: Inflation, Wealth and the Exchange Rate (London: Routledge, 2016), 135.
- 50.
Romano Prodi, EU president, 2002. See the interview in https://www.theguardian.com/business/2002/oct/18/theeuro.europeanunion.
- 51.
For more details on the policy rules for achieving internal and external balances within the eurozone framework, see Nicos Christodoulakis, ‘Aspects of Economic Governance in the Euro Area: Restoring Internal and External Balances’, Politica Economica 32, no 3. (2016), 489–510.
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Christodoulakis, N. (2023). Greece and the Maastricht Treaty: The Fortress That Wasn’t. In: Di Donato, M., Pons, S. (eds) European Integration and the Global Financial Crisis. Security, Conflict and Cooperation in the Contemporary World. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-06797-6_13
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