by Ashoka Mody
February 19, 2015
A most unusual thing happened at the February 11 meeting of Eurozone finance ministers. A piece of paper needed to be signed by all who were present. It had gentle words to satisfy all. For the “creditor” countries, it said that Greece would “explore the possibilities of extending the programme.” That was the softest way for the creditors to draw their red line. Even for the Greeks, who hate the word “programme,” the phrase “explore the possibilities” seemed a reasonable qualifier. The Greeks, in turn, sought “bridge” (interim) financing between the current programme and the one they hope to negotiate. For them, the phrase “bridge the time” seemed suitable.
Thus, it was something of a shock that a bogus agreement was not reached. A deep concern now prevails that there may be no words that satisfy both parties. Never mind the substance of the debate: how deep will the debt relief be, how much easing of austerity will occur? Instead, the consuming concern is whether adequate substitutes can be found for such words as “programme,” “troika,” and “extension.” That disquiet deepened after the February 16 failure to agree on yet another piece of paper.
It all started in October 1970 with the Werner Report, the blueprint of the incomplete monetary union within which the Eurozone now operates. Commenting on the Werner Report, Hans Tietmeyer, a former president of the Deutsche Bundesbank, pointed out the obvious: it was, he said, “an attempt to reconcile the irreconcilable.” The stark economic and political incongruity of the incomplete union—and the risks that entailed—stared at the reader of the Werner Report, but clever words were found that worked for all.