Geoffrey Hosking, Emeritus Professor of Russian History at UCL’s School of Slavonic and East European Studies, gives his view of what went wrong before and during the Greek crisis, and of the challenges that now lie ahead. To him the problem is centrally one of a lack of trust.
The Greek crisis goes back a long way, and at several stages demonstrated the dangers of a loss of trust.
The epic began with the creation of the euro, which was set up without several of the trust-generating stabilisers of national currencies: a common fiscal policy, a central ministry of finance and a central bank empowered to act as a lender of last resort. Without these essentials, the euro lacked the full and credible commitment of all its members, an essential prerequisite of mutual trust. A member nation could no longer cope with serious crises by devaluing its currency, yet no provision was made for a solidarity fund (the euro equivalent of the IMF) to deal with crises collectively.