GOOd news was hard to find Thursday as the 16 euro-zone countries hijacked a planned Brussels summit for all EU member states, and tried to hammer out a way of supporting the tottering Greek economy. The EU’s new President Herman Van Rompuy did his best when he pointed out that Greece had not asked for a bailout package. This, however, rather misses the point that the euro zone bloc is currently trying to save its currency rather than the profligate Greeks.
This is the first serious challenge to the euro’s credibility since it was launched in 1999.
Remarkably, a series of fudges and fixes at the outset, so that the 11 founder countries could qualify under their own apparently strict membership rules, did not impact on the euro’s early reception. France had massaged its formal accounting by including pension deposits. Germany was stopped by the courts from revaluing its gold holdings and Belgium’s rule-breaking high debt to GDP ratio was nevertheless overlooked, because it was being reduced.
With such a pedigree, when Greece was accepted as the next euro zone country two years later, it is not surprising the European Central Bank (ECB) did not do a forensic examination of the economic figures supplied by the Greek government. There is now a clear feeling that even then the data supplied by the financial authorities in Athens were almost certainly to some degree fraudulent. However, in booming times, the false figures did not matter. As is so often the case, only with recession is financial sleight of hand revealed.
Next Monday euro zone finance ministers will meet to seek a way to restore the euro’s credibility by producing robust support for the Greek government. The talk, however, is now all of “moral hazard”. If governments know they will be rescued from financial disaster by other euro zone countries, will they be tempted into rash borrowing? If Athens receives a generous package to buttress its economy, will the same be necessary for other troubled states including Spain, Portugal and even Italy? And what about the Ireland, whose economy was the first to run into the sand? The Irish have imposed far more stringent cuts on government spending than have the Greeks. If Athens is treated more liberally than Dublin, the Irish will have good cause to grumble.
In the end, can the strongest euro zone economies, the Germans, French and Dutch really afford to sustain the delinquent and faltering state finances of others? The fundamental contradictions in the single currency, whereby individual governments can exert power without overall responsibility to the euro zone bloc, now look more glaring than ever. They are thrown into sharper relief because, when the rules for adoption of the euro were drafted, the possibility of any country dropping out was deliberately ignored.
On the cards, therefore, must be proposals that will deprive euro zone countries of the ability to act independently, certainly on their debt and very likely by extension on the fixing of their budgets. It will start merely as consultation but logic suggests compulsion will not be far behind.
A victory for openness
THE Independent on Wednesday commented on the victory for Binyam Mohamed at the Appeal Court, saying in part:
It was a bit rich for the British foreign secretary to tell the Commons Tuesday that the victory for Binyam Mohamed at the Appeal Court demonstrated that the justice system “worked”. If we are not mistaken, it was David Miliband who had insisted on pursuing the case to this point, and he did so in order to prevent the very outcome that the judges facilitated Tuesday. The system worked, and thank goodness it did, but it worked to the benefit of Mohamed and, more generally, the cause of openness and government accountability.
Lawyers for Miliband had fought tooth and nail to prevent these paragraphs seeing the light of day. Disclosure, they argued, risked jeopardizing the UK’s prized intelligence cooperation with the United States, under which shared information remains confidential.
In ruling that the paragraphs describing Mohamed’s treatment in secret prisons should be disclosed, the court said that, in principle, “a real risk of serious damage to national security, of whatever degree, should not automatically trump a public interest in open justice...”. In other words, no government could cite national security as a catch-all to keep inconvenient information confidential, even if that information had been obtained under a sharing arrangement of which confidentiality was a condition.
The government’s case raised several further questions. Were fears for the future of intelligence-sharing with the US really at the heart of it — especially after President Obama ordered the declassification of many documents relating to the mistreatment of terrorist suspects? Or was that argument a cover for something else — something, perhaps, like not wanting anyone to find out how much the British government really knew about the treatment of Mohamed (and perhaps others, too).
The nub of this is that British ministers and the security services have always insisted that they were at no time complicit in torture. What has now emerged is that, torture or not, the treatment meted out to Binyam Mohamed at the hands of the CIA breached British undertakings going back more than 30 years, and — crucially — British officials knew that.
