Veritas: The deafening silence from Brussels

Greece’s membership of the Eurozone looks more precarious by the day, and the tortuous negotiations of the last few months have come to nothing – the situation has reverted to that of mid-2011, or even worse, since some of the “lines in the sand” drawn then have now been crossed.

Eurozone members don’t want to lose Greece, and Greeks clearly don’t want to feel the full chill of surviving outside the bloc alone. Polls show that around 80% of Greeks want to keep the euro – but the same number is opposed to the budget cuts and reforms that could ensure they do.

Such an impasse always tends to require a drastic catalyst to get things moving again. Estimates of the likelihood of Greece’s exit (remember all the debate about whether it could be done in an “orderly” way) range from a frankly optimistic 30% to 100% — with a growing cluster of opinion at the top end.

Can there be a “good” exit? Greek officials have admitted that a run on the banks has started, and the ECB has begun to restrict lending to local banks. Default is again priced in to Greek bonds, and the vulture funds are gathering. It is not looking good. The point of no return may already have been passed.

However, while external observers of the region are urging action, an extraordinary degree of calm continues in European markets. In Paris, Frankfurt, Milan and Madrid, there is an overwhelming sense of resignation – that ordinary people cannot do anything to affect any outcome, even if they wanted to.

Investors are maintaining a “wait and see” attitude. Among those who can, some have gone to cash to reduce risk, others to be ready for the once-in-a-lifetime opportunities they expect the final crash to present.

Greece is covertly regarded as a lost cause by many policymakers. It is only really the risk of contagion across Europe which is galvanising the IMF and other institutions to continue to build firewalls. But who is likely to contribute funds to stem what looks like an unstoppable process?

And then there is the deafening silence from Brussels. The European Commission and its many institutions, in whose name the entire euro project is enacted, have offered their subjects precisely nothing in terms of leadership, reassurance or even explanation.

German Chancellor Angela Merkel has at least maintained a principled stand from the start, insisting, and to some extent proving, that austerity measures are the only way out of the crisis.

With a change of “core” ally forced upon her as France delivered a new anti-austerity President, she has engaged to the limited extent possible. She too is now fighting domestic battles, resulting in less focus on the larger challenge.

Has the EC oligarchy stepped in to support her? They have not. The only sound coming from Brussels is the same squawks on more regulation to fight past battles that will make the coming debacle look like a blip. The EU Commission is fiddling while fires are breaking out in Athens – and soon Madrid, Rome and Lisbon.

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