Another month, another EU Summit. And once again, markets are judging the compromise as, at best, incomplete—at worst, disastrously insufficient. On top of everything else, the new agreement has managed to formally isolate Britain from the other 26 EU member states. (British euroskeptics are applauding their country's newfound estrangement, but more considered commentators realize the situation is fraught.) So is Europe ultimately doomed to all that jazz about euro breakup and financial apocalypse? Not quite.
In calling for a referendum on Greece’s bailout plan, Prime Minister George Papandreou has, it could be said, embraced one of his country’s oldest political traditions: direct democracy. The idea that the citizens of a state should all cast votes to decide matters of common interest was arguably born within an easy walk of his Athens office, some two and a half millennia ago. Of course, referendums have remained a part of democratic politics into the modern era, with a formal place in the constitutions of many countries and regions, from France to Australia.
The most serious of Spain's torments is its economy. But, unlike Greece, which is basically an underdeveloped country but with high pretensions to being of the heart of Europe, Spain is at the historical and financial core of the continent. What binds the two countries is the artifice that they are both socialist. It is quite different to run a relatively advanced socialist industrial society like Spain's than a country like Greece where governing runs from grandfather to son to grandson, George Papandreou to Andreas Papandreou to another George.
Shortly after Greek Prime Minister George Papandreou took office last fall, he learned that he’d inherited a massive booby prize: a budget deficit that was twice the amount the previous government had disclosed. But, when Papandreou came clean and promised to address the problem, the financial markets reacted violently. Interest rates soared, adding billions in debt-service costs to an already dire budget picture.