Greece’s unsustainable debt levels have provoked a crisis of investor confidence along with a European identity crisis. A deliberately vague pledge of support for Greece issued by European Union leaders meeting in Brussels Thursday only served to cause the euro to decline in value, while spotlighting the EU’s debilitating ambivalence about the proper balance between unity and national sovereignty.
If there is a bright spot to the debt woes Greece shares with Portugal, Spain, Italy, and Ireland, it is that market pressure may now force Germany, France, and other big EU states to put their money where their mouths have been. Voters in the more frugal nations resent having to bail out improvident neighbors, but if European leaders want to preserve a sound euro and make the EU a true major power, they must be willing to ante up credits or loan guarantees for Greece and, if need be, for other struggling debtor countries in the euro zone.
European elites have for too long deceived themselves into believing they can have their cake and eat it too. National governments go on pursuing their own foreign policies even after last year’s adoption of an EU constitution establishing an empowered EU president and a foreign policy chief. And each country insists on setting its own fiscal policies, refusing to cede that portion of sovereignty that would have to be sacrificed for the sake of a common EU fiscal discipline. Rescuing Greece is the price the EU must pay to save itself.