Romano Prodi Comments on the Greek Crisis

, by Stefano Rossi, translated by Francesco Santini

All the versions of this article: [English] [italiano]

Romano Prodi Comments on the Greek Crisis

On 6th May 2010, at the Royal College Carlo Alberto in Moncalieri (Turin), the professor Romano Prodi, former President of the European Commission and former Italian Prime Minister, held a conference entitled “Does the Money follow the Power?”

Prodi started his argumentation from the Greek crisis, a small problem, which was not addressed in a timely and appropriate way. As a consequence of a growing populism and insignificant internal issues, European states did not respond to cover the Greek debt as they had done with the banks. Worthy to mention is that the Greek economy represents just 2.6 % of European GDP: less then one quarter of the German Land that prompted Merkel to postpone the aid.

Prodi argues that for sure there has been a manipulation of data, and this is a political problem, but the main problem is that European countries did not address the problem collectively and postponed the solution. Having frequent elections everywhere in Europe is changing the true meaning of democracy and gives policy makers such a short time-frame that long-term issues cannot be addressed. This problem is not only Italian but regards also countries as Germany, where the political situation is continuously unstable because of the elections in its Länder or like in the US, where the entire health care reform was endangered by an election of a republican senator in Massachusetts. Can European problems be really addressed within a time horizon of forty days? This issue puzzles Prodi, who also notices that a common dynamic in Europe is the fear for incoming people and goods. This situation helps the expansion of populism and causes the impasse that we are all experiencing. The statesman continues by arguing that nevertheless we should not resign to this situation, because democracy has also been able to make decisions for the long term. If we give up, then the economy with an authoritarian drive in the guise of the Chinese model will be perceived as increasingly attractive, for its supposable ability to look at future.

..the Problem of Greece is not the Euro...

A forward-looking proposal has been advanced by Prodi, Ciampi and Delors. They supported the establishment of a common European fund for interventions in critical situations. Prodi argues that the problem of Greek is not the Euro, but rather the lack of adequate instruments to properly manage and monitor the common currency. Speculation arrives from the US, but here in Europe can be more dangerous, because of the absence of a strong political structure. For example, in the last years Germany has accumulated a surplus in its trade balance of 200 billion Euros, not only because it was able to reach a high productivity but mainly because it exported easily to the Eurozone countries. Prodi wonders: Greek was going to bankrupt with a debt of nine billion, and Germany could not just pay for it? Prodi however believes, that the Greek case is a test for Europe to continue staying together and it is of utmost importance because Europe cannot fail; going back to the national states would be a disaster.

Europe cannot fail; going back to the national states would be a disaster.

...the world has changed...

The world has changed, adds the former Prime minister, and we cannot go back to the national dimension. After the fall of the Berlin Wall, we witnessed the end of the American unipolarism, which was supposed to last for the entire century. This decline was caused by several factors. First the United States tried to strengthen their power by resorting to the wrong strategies, such as the war in Iraq, which was supposed to last few weeks but turned out be a complete failure. Secondly, after the fall of the Berlin Wall, Russia was stupidly humiliated. Today Moscow wants to be great again and Putin, in spite of the warning of Elsin, was the only one able to realise this revival. Finally, we have witnessed the great Chinese rise, which has been particularly great in its big technological rise; in a few years, Prodi presages, the results will be upsetting. China has become more popular since the Olympic games, availed itself of the closure of G8 and thanks to its reserve of 2000 billion dollars, rightly pretends to be involved in the most important international decisions. If the tendency does not dramatically change, China is going to become greater than the US. According to Prodi, in this context it is worthy to mention that today the US has to defend themselves from at least one billion enemies: the Islamic world. China does not have to bear such a cost since it does not have such enemies. If the situation does not change, then the American economy will be outperformed. If Americans do not find a solution within the Arabic world, they will fall.

According to the expectations of the economists, in 2050 China will start stabilising in terms of the amount of its population and will reach around 40% of the global GDP. The US however, will represent 14% of it, and Europe 5%. According to Prodi, if we do not change our policy and we do not really join together, then we will vanish.

Europe has a great potential, but is unable to make real use of it.

Yet Europe is an economic giant: it managed to balance its internal poor and rich regions and has been the greatest institutional engine for state renovation. Europeans are the biggest exporters and investors, but in some parts of the world they are not present. Europe has a great potential, but is unable to make real use of it.

Afterwards, Prodi talked about the big changes brought by the election of Obama: compared to Bush, the new American president has changed everything: dialogue and multilateral attitude instead of a hegemonic policy, resort to soft power instead of mere hard power. Obama delivered wonderful speeches but then seemed unable to make decisions. Under his presidency of the United States, the country started performing again with a proactive and cooperative attitude in the middle east. The mid-term elections may cause another deadlock.

Moreover, today Asia and Brazil are facing a period of great prosperity, whereas the US is experiencing a slow recovery: national consumption is still low and the unemployment rate is not decreasing. Europe lags behind, but a European recovery can only be reached through a recovery of the European politics. lacks a common defense through a European common Army and the coordination in economic policies is still inadequate...

The biggest deficiencies currently are the lack of a common defense, through a European common army and the inadequate coordination in economic policies. It is exactly this last point that would require a slight increase of the European budget, which no state seems to be willing to yield. Prodi recalls that when he was president of the Commission he proposed a small increase of the EU budget from 1% of the national GDP to 1.14%, but not even such a small change was approved. Not even the provision of more funds for Erasmus convinced the political leaders. Regarding Erasmus, Prodi ironically adds that this project does not generate many scientists, but for sure plays a very crucial role in generating common European horizons for the young generations. Nowadays nobody relies on its political future, on Europeism, because Europe is still dominated by fears – but whoever has fears, is fated to lose.

Picture: Ritratto del Presidente del Consiglio Romano Prodi by laurentius87 on Flickr.


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