Wednesday, February 18, 2015

Keeping Greece in the euro is about far more than money

by Marc Chandler

Financial Times

February 18, 2015

When European leaders talk about Greece they speak the language of economics, no matter what their mother tongue. I am a financial analyst, and I know that language well. Still, it seems to me that the continent’s politicians have chosen the wrong lingua franca. Geopolitics, far more than economics, is what is at stake. The cost of a blunder would be incalculable.

Recall that, as recently as 2013, EU officials were negotiating a trade association deal with Ukraine. No doubt diplomats were aware of the geopolitical ramifications of this endeavour; indeed, ushering Ukraine into the EU was seen in many quarters as a long-term goal. But Brussels, absorbed in the technical complexities of an agreement to open markets, may have taken its eye off the strategic situation.

Russia’s actions in Ukraine would always have been difficult to foresee. But the lens of economics was the wrong one to choose, as diplomats scouted out the lie of the land. This is a mistake that Europe cannot afford to repeat in Greece.

Finance ministers are debating Athens’ demands for a loan that would tide the country over until June, allowing time to negotiate a permanent solution for Greece’s economic woes. The sums involved are large, and the Greek demands raise questions about the monetary and macroeconomic framework of the entire eurozone. They should not be agreed too hastily. But these issues, important though they are, should not blind politicians to Greece’s outsize geopolitical significance.


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