This euro deal is a recipe for revolution

According to Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, the 130-billion euro bail-out agreed early yesterday “provides a comprehensive blueprint for putting the public finances and the economy of Greece back on a sustainable footing, and hence for safeguarding financial stability in the eurozone”. That statement is wrong on every count. It is not a comprehensive blueprint; it is a sticking plaster. It is not sustainable; sooner, rather than later, Greece will be back asking for more. And it will not safeguard financial stability in the longer term. The eurozone’s own debt stability report warns of the strong possibility that it will have to stump up another 245 billion euros for Greece by the end of the decade.

Perhaps George Osborne had little option politically but to welcome the deal as “good for Britain”, on the grounds that resolving the crisis would help the UK economy. But only a starry-eyed optimist would believe that this shabby deal will do anything other than buy a little time. And far from creating stability, it threatens the opposite. The irony will not be lost on people that yesterday’s deal means the birthplace of democracy is being stripped of its sovereignty. Commissars from Brussels and the IMF will be installed in the Greek finance ministry to run the country’s economy. The Greek parliament has been ordered to amend the country’s constitution to impose a statutory obligation on the government to give debt-servicing payments priority over all other public spending. Put simply, the Greeks are being forced by people over whom they have no democratic control to pay their taxes to overseas creditors. Will the Greek people stomach this for long? We doubt it. This is a recipe not for stability, but for revolution.

The brutal settlement is designed to spare the blushes of the Euro-elite who simply refuse to contemplate any withdrawal from the currency union. Yet it is only by leaving it and implementing a competitive devaluation that Greece can possibly save itself. In contrast, the austerity measures imposed yesterday threaten to do such damage to the Greek economy that its debts will actually increase. And, far from this country being able to stand on the sidelines thanking our lucky stars that we are not in the euro, we face heavy collateral damage. As Mr Osborne never tires of pointing out, the health or otherwise of the eurozone economies has a direct impact on our prospects. In addition, the fact that the IMF will be contributing 23 billion euros to the new bail-out will leave this country directly liable for a share of that payment. European nations will pay a terrible price for Brussels’s arrogance, and none more so than Greece.