Note kindly translated by Anne-Marie de Grazia

The Greek crisis, of which we can foresee that it is far from over, will have had as one of its first consequences to expose the true nature of the Eurozone, enabling the debate on the Euro itself to come to the fore.

A diktat for nothing

It is indeed becoming clear by now that the agreement wrested from Greece during the reunion of the Eurogroup and of the European Council during the tragic night of July 12th to 13th solved nothing. Not only is the so-called « agreement » revealing itself more inadequate by the hour, and unable to treat the root of the problem, but it is becoming evident that it will bring no respite [1]. Indeed, if on Monday July 20th the Greek banks will again open their doors, the operations that they will be doing will be extremely limited. Withdrawals for the population will still not be able to exceed 420 euros per week, even if this sum can be retrieved in full at once. The operations of Greek businesses will remain very limited. In fact, this situation of a penury of liquidities which has been organized by the European Central Bank is dealing a fatal blow to the Greek economy. The percentage of so-called « non-performing » loans has risen sharply since June 26th this year. The financing needs of Greek banks have gone from 7 to 10 billion euros at the end of June to 25-28 billion on July 15th and could reach the sum of 35 billion towards the middle of next week. In fact, the Greek banking system has been deliberately destroyed by the pressures exerted by the European Central Bank to an essentially political end. The amounts which will have to be granted to Greece simply to prevent the country from sinking into total chaos if it should remain in the Eurozone amount now no longer to between 82 to 86 billion euros as had been estimated on July 13th, but they are more probably in the order of 120 billion euros. The Greek debt is at present no longer “sustainable” and the agreement has done nothing to insure its sustainability [2]. Even if Mrs Merkel, Mr J-C Juncker and Mr Dijsselbloem are the « victors » over Alexis Tsipras, they are about to understand the meaning of the expression « a pyrrhic victory. »


The political cost of this crisis

But the main cost will not be economic. It is in truth political [3]. Ever more voices are rising to say so [4]. In fact, the conditions in which the terms of this real diktat have been imposed have blown apart the pretensions of the European Union of being a space of cooperation and of solidarity, devoid of conflicts. The Eurozone has revealed itself to be merely an instrument of domination wanted by Germany with the acquiescence of France. Germany will anyway, and very soon, understand the true political price of its seeming victory. It made disappear in a few days the whole capital of relative sympathy, at any rate, of respectability, which it had accumulated over several decades. It is therefore very probable that we are going to see a sharpening of conflicts inside the Eurogroup (the Eurozone) but also inside the European Union. Clearly, the German leaders have now been put before the following alternative: either they accept that the Eurozone be transformed into a transfer union, which they have been steadfastly refusing since 1999, and which they cannot accept simply from a strict accounting point of view, or they will have to organize the exit of Greece from the Eurozone, but under conditions which will lead to the implosion of the whole zone in a short delay. This is why they are desperately seeking a third way, the instauration of a two currencies system in Greece in order to pretend that the latter is still nominally part of the Eurozone. But bi-currency systems, when the country which is being submitted to them is no longer wielding control over its Central Bank, turn out to be extremely unstable.


The debate over the viability of the Euro

Moreover, whatever the various attempts made to resolve the Greek crisis, it is clear that they are opening in a particularly violent manner the debate on the viability of the Euro. It is very significant that the former chief economist of the ECB is openly raising this problem [5]. Here, too, ever more voices are being heard. It appears clearly therefore that this debate, which has been long suppressed and repressed, in now about to burst into the open. The arguments of authority which are often advanced, in France in particular, are no longer convincing. The very opening of a true debate about the economic and political costs of the Euro are a telling sign of its decomposition. Of course, blocking factors remain important, be it only because such a debate is putting in question the legitimacy of a large part of the political class in France. But said political class can now no longer veto the debate itself and, in the weeks to come, it will have to face rising criticisms. It’s the beginning of the end. There is probably nobody left but our President, Mr François Hollande, to pretend to ignore it.

[1] Galbraith J., « Greece, Europe, and the United States », Harper’s Magazine, 16 July 2015,

[2] Barro J., « The I.M.F. Is Telling Europe the Euro Doesn’t Work », The New York Times, 14 juillet 2015,

[3] As recorded by D. Tusk. See P. Spiegel « Donald Tusk interview: the annotated transcript », Financial Times, 16 July 2015,

[4] Le Point, « DSK fait encore la leçon », 18 July 2015,

[5] Interview of Otmar Issing in Corriere della Sera, 16 July 2015,


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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