Euro stumbles as Greece ups its brinkmanship

On Wednesday, Greek Finance Minister Evangelos Venizelos accused German Finance Minister Wolfgang Schaeuble of more or less plotting to push Greece out of the euro, while Schaeuble in turn said he is tired of dumping money into a black hole. This has delayed the dispatch of the second Greek bailout, bringing Greece closer to the March deadline before it defaults.

For me, the dispute raises an interesting point about who is to blame per se for this continuing Greece debacle.

Reading around, it seems to me the EU is getting a bad rep here, with Germany especially being painted as a dictatorial monster. Is this the case? I mean – I concede that the EU is a bureaucratic nightmare, but is it dictatorial too? I wonder if there is not some reason the EU is getting tough on Greece, some explanation that is not being well publicised.

Could it be that Greece really has backtracked on all its promises in the last 18 months? Is it in fact an inefficient mess? If this is so, then I would not blame Mr. Schaeuble for wanting to secure extra guarantees. And the EU should do a better job explaining this, just to protect its own reputation.

Alternately, the EU could be frustrated with Greece because Mr. Venizelos keeps eating the bailout funds.

Rajoy Plans Labour Reforms

Turning elsewhere, the labour reforms in Spain have been getting a lot of attention this week.

The right-wing Popular Party government is planning to reduce the severance packages people receive upon leaving a job, making hiring new employees more affordable. This has resulted in widespread debate among journalists as well as public protests.

I can understand the protests, but on the other hand I do wonder what Spanish people expect Prime Minister Rajoy to do – if not this – to cut the debt. Recent polls suggest many Spaniards agree that employment reform is necessary to make Spain more competitive. What does this involve if not making hiring people less burdensome to business?

Even after the reforms, Spanish severance packages remain generous compared to those in Britain and the US after all.

Looking ahead, the euro is going to live or die according to what happens in Greece. I doubt things are quite so bad that Greece will in fact leave the euro: the feud between Mr. Venizelos and Mr. Schaeuble amounts to brinkmanship between partners, so much as I can see. I could be wrong, but I can see a deal being signed soon, helping to resuscitate the euro.