The year that just ended was rather nasty to the European Union and the New Year 2016 won’t be any better. The economic, financial and political problems culminated to the migration crisis in the second half of 2015, with Greece implicated in more than one of the abovementioned predicaments. The lagged reaction of Brussels to problems was limited to organizing successive European Councils, where the 28 EU leaders found that they cannot agree on those burning issues.
When very rarely the 28 said they agree, their conclusions were infested with the same deadlocks as the ones supposed to be tackling. It’s very characteristic that the July solution of the Greek mess just deferred the problem. The anorexia of Athens for reforms and the giant debts are always there. The same is true for the immigration issue. Even the winter has failed to arrest the flows of people to the Aegean islands. As for the ‘success story’ of the European Banking Union, it comes down to the all powerful Single Resolution Board becoming operational as of 1 January 2016.
The all powerful Board
The Board will be able to decide on its own which Eurozone bank is to close down and which to be rescued. However, an unconvincing decision on such an important subject may lead to uncharted waters. The reason is that this ‘awkward’ body doesn’t belong to the regular EU services, is not accountable to any elected authority and consequently might be inclined to arbitrariness.
Undoubtedly, the New Year has inherited a number of serious problems, topped by the disastrous Balkan Route being still trailed by Asians and Africans, heading for the northern affluent EU countries and destabilizing them politically. Next in the list of troubles is the Banking Union. This new entity will now be seen by everybody to openly take care only of the super big banks, thus enraging the average hard working European, making him or her prone to vote for Eurosceptic and anti European parties.
Last but not least, comes the Greek volcano which may erupt again at any time. A Grexit and a wild bankruptcy of this Eurozone member state are still not out of question. Incidentally, Greece is central also in the migration stalemate, with the tens of thousands of refugees and immigrants being blocked in the miserable country. Let’s take one thing at a time.
The Balkan Route is always there
At the end of 2015, on 30 December a video conference was held between the contact points (official representatives) nominated after the Western Balkans Route Leaders’ Meeting of 25 October. According to a Commission Press release aired on 30 December, “The objective was to follow up on the agreement reached at the meeting and set out in the Leaders’ Statement”. All three main points discussed and decided during this conference were directly addressed to Greece, as if nobody else had any obligation to fulfill.
The three key points are presented here below, starting with what Frontex (the EU external border management agency) had to say. It went like, “Frontex informed the group of the launch on 28 December of the new operation “Poseidon Rapid Intervention” with the deployment of 293 officers and 15 vessels to the Greek islands. An additional 200 officers are expected to be deployed by mid-January. Over 100 of the officers currently deployed are supporting with registration and identification”. Mind you that what really Brussels wants is to sidestep the Greek authorities in managing the country’s borders, accusing Athens for all the problems the migration tsunami caused for Europe. Such an open breach of sovereignty though may create more internal political problems that the European are supposed to solve.
Obliged to accommodate thousands
On the other hand, the UN’s refugee agency (UNHCR) “provided an update on the progress of the delivery of the 20,000 reception places which will be provided via voucher scheme with selected implementing partners in Greece as part of the 50,000 additional reception places to be provided. 1000 places should be made available by end 2015 and an additional 3000 by mid-January 2016”. To be noted that Greece is the only Balkan country having undertaken the obligation to accommodate tens of thousands of refugees and immigrants. In this way, Greece risks to become a stock house for thousands of immigrants and refugees, because the Balkan Route can be blocked by FYROM or some other country of the peninsula.
On the last and third point “the Former Yugoslav Republic of Macedonia provided (to the conference) updates on the strengthening of the management of the external land border and the deployment of border guards from other States at the border with Greece”. Translating all that into plain English it means that everybody pointed a finger to Greece, as if this EU member state is responsible for all the woes the immigrant and refugee tsunami has caused to Europe.
Paying the price of indecisiveness
In any case, taking into account the proven inability of Athens to deal with the immigration problem, the EU is bound to continue facing the results of its overall indecisiveness in 2016. Not to say anything about the economic dire straits Greece is in, a reality that may connect the migration with the financial question, thus creating an explosive mix. They say that adding one political problem to another doesn’t make two problems. The synergy may lead to an unpredictable aggregation. Not to forget that Eurozone has to confront an escalating problem of one trillion euro of bad bank loans, which has to be dealt with. Greece is again leader in this predicament. A possible joint flare-up of the two plights may lead to a new Armageddon.
Finally, regarding the Single Resolution Mechanism (SRM), it became fully operational on 1 January 2016. The SRM is meant to implement the EU-wide Bank Recovery and Resolution Directive (BRRD) in the euro area. This piece of EU legislation does exactly what its name tells. It foresees the resolution or the rescue of a Eurozone bank, if and when a case or cases appear. According to it, it will be the Single Resolution Board (SRB) almost single-handedly to decide all that. Every other EU body, including the European Central Bank is of secondary importance in this affair. It’s also a striking fact that the Board is accountable to no elected body.
No political thinking?
In this case too Brussels has not realized that a time might come, when this Board can demolish the whole EU edifice by itself. Imagine a case of a major Italian or Greek bank been resolved after the Board decides so based exclusively on financial reasoning and charging the resolution costs to share holders, lenders and finally the depositors. Such a case may drive hundreds of thousands to the streets of Athens or Rome with unpredictable and devastating political consequences. No wonder then if and why the already strong Eurosceptic and anti-EU political forces all over Europe gain momentum – probably right so – with unpredictable results.
In conclusion, the EU starts the New Year 2016 with potentially explosive material in its hands, in case the Board acts on a banking problem without an eye on the political background. Unfortunately Germany, the driving force behind the financial orthodoxy, suffers of political short-sightedness. All that may mean a non benevolent New Year this year for us all, not forgetting that apart from the dangerous Single Resolution Board, the Greek volcano and the migration crisis may explode at any moment and possibly simultaneously.