Jan-Werner Müller writes about the problems of the Eurozone

Never before have the struggles among national elites been as visible to the public as they were in the early weeks of this summer, when Greece almost left – or was made to leave – the Eurozone. Never before has an assertion of national popular will, as expressed in the Greek referendum of 5 July, been flouted so thoroughly and so quickly by the enforcers of European economic orthodoxy. (There was an interval of two and a half years between the French and Dutch ‘No’ to the EU treaty in the spring of 2005 and the adoption of the Lisbon Treaty, which retained most of the constitution the French and Dutch had rejected, in December 2007.) Never before have the flaws of the Eurozone been so clearly exposed. We can expect more Greek drama before too long: the real struggle over the Eurozone – and the EU more broadly – is just beginning. If nothing else, Alexis Tsipras has demonstrated to the world that the Eurozone does not operate according to a system of rules but on the basis of ad hoc deals between national governments. The continuation of such a system risks a resurgence of the nationalism that the creation of the EU was meant to extinguish.

That the drama unfolded now, and with such flamboyant characters, could be seen as an accident. If Antonis Samaras hadn’t miscalculated at the beginning of the year and called an early election, Yanis Varoufakis would still be giving TED talks about Europeans not being morally worthy of a true federation. Samaras’s risky move wasn’t entirely out of character. Although most will remember him as the man who, after the Greek elections of 2012, became the EU’s ‘responsible adult’, dutifully administering the troika’s ‘programme’, it was Samaras who, as foreign minister in the 1990s, whipped up nationalist passions over the new Macedonian Question. Greece agreed not to obstruct Macedonia’s application to join Nato and the EU provided the country didn’t call itself Macedonia – there is a Greek region called Macedonia. (There are Greeks who claim the Eurocrisis has been staged solely to settle this question against Greek interests.)

Contrary to the way it has been characterised, in the German press in particular, Syriza’s programme was not ‘populist’ in the sense of making demagogic promises and pursuing irresponsible policies. Economists outside Greece have long argued that only growth-oriented spending would get the country back on its feet. Yet from the beginning, Tsipras combined rather modest economic demands with a high-risk political strategy – a strategy that could be described as populist – to side with the long-suffering Greeks against their enemies, internal and external. The decision to enter a coalition with the nationalist Independent Greeks (Anel) sent the strongest possible signal that Syriza’s opposition to austerity was real; To Potami (‘The River’), the new left-liberal party founded by a popular talkshow host, was seen as too accepting of troika orthodoxy. Anel is led by Christian reactionaries, racists and homophobes with a penchant for conspiracy theories (one favourite is that helicopters have sprayed the country with sedatives to make Greeks comply with austerity). The alliance alienated a good deal of European left-liberal opinion, whose anti-totalitarianism has become an anti-populism based on the fear that les extrêmes – Syriza and Anel – se touchent. Tsipras gave the defence ministry to the leader of Anel, Panos Kammenos, which made defence cuts even more difficult in a country that has the largest military budget relative to GDP in the EU (even at his very last Eurogroup meeting, Varoufakis is said to have refused a €200 million cut to the army).

Tsipras tried to build a pan-European coalition during early February, but the chances of isolating Germany were always low. Hollande couldn’t afford to go against Merkel openly (Tsipras accused her of having ‘false Protestant principles’). Renzi was more interested in trying to sell the idea that Italy had turned the corner because of him alone; he has been implementing troika-friendly structural reforms without having to be asked, and – most significant – Italy is Greece’s third largest creditor, and wants its euros back. Mariano Rajoy, the conservative Spanish prime minister, was especially determined that the Greek government should fail: he faces an election in December, and success for Syriza would have decided it in favour of Podemos, the party created virtually out of nothing two years ago by young political science professors from Madrid.

It’s no surprise that governments whose fortunes are riding on the philosophy of ‘no pain, no gain’ should emphasise that their democratic mandates are just as strong as Syriza’s. Merkel insisted that whatever concessions were made to Tsipras should under no circumstances constitute an incentive for Syriza-style offensives across Europe; in that sense, there was from the beginning a strategic imperative to make Syriza fail. This political constellation – not matters of style – explains why the EU’s creditors and Syriza made no headway in negotiations in the spring. But style mattered too. Never mind Varoufakis’s turned-up collar or his making a point of flying economy with his rucksack to Eurogroup meetings. As the British political scientist Chris Bickerton has observed, Varoufakis violated the etiquette of the Eurogroup – the assembled finance ministers of the Eurozone – in a deeper sense. Its members, an informal collective without any status in EU law, see themselves as focused on solving a common problem. Varoufakis annoyed everyone, not only by lecturing his fellow finance ministers on economics, but also by politicising the meetings. He seemed never quite to decide whether he was a responsible actor or an academic analyst. No other finance minister has ever used Twitter, as he did, to comment on events as if he weren’t really involved in them; no other finance minister has been constantly reachable at their private email address or granted interviews to all and sundry; no other finance minister has recorded Eurozone negotiations on a smartphone – all of this, on a charitable reading, was not self-promotion but an attempt to put pressure on the Eurogroup by influencing a European public which, alas, at this stage in its linguistic and cultural fragmentation, simply doesn’t exist. Varoufakis’s style was a break with the EU’s usual method of hammering out agreements behind closed doors, often on the understanding that, having made their compromises, the participants would go home the next day and complain to their electorates that Brussels had coerced them. Some found Varoufakis a refreshing change; others, veterans of European integration like the German finance minister, Wolfgang Schäuble, saw him as a vandal in the engine-room of the EU, where the expectation is that dirty deals can be made comfortably and in secret.

Time was not on the Greeks’ side. Tax revenues began to collapse in February, and the extent of capital flight was unprecedented – by the end, according to some estimates, a billion euros a day. Modest economic growth turned into recession: losses to the Greek economy have amounted to as much as €63 billion over the spring and summer. The referendum was a high-risk move prompted by political desperation. Syriza and Anel’s ‘No’ campaign made much of echoes of 20th-century history, such as Metaxas’s refusal of Mussolini’s request in 1940 that the Italian army be allowed to march through Greece (celebrated every October on ‘Oxi Day’). There were posters of Schäuble as a ‘neo-Nazi war criminal’, and Varoufakis accused the creditors of being ‘terrorists’.

What followed was one of the strangest weeks in recent European history. The ‘No’ vote was a great symbolic victory, but it also left a vacuum, since nobody had defined in advance what would follow from that outcome. Creditor countries reiterated that debt restructuring couldn’t simply be the result of a unilateral democratic decision by the debtors (‘Our family has voted democratically,’ a German comedian tweeted. ‘The mortgage will not be repaid. A triumph of popular will!’). It was clear at least that Varoufakis couldn’t walk back into a Eurogroup meeting to negotiate with those he had called ‘terrorists’. It was clear too that Greece couldn’t survive in the Eurozone without a deal and that Tsipras had no coherent exit plan that he could use as leverage. With the banks closed and Greece already the first EU country to have missed a payment to the IMF, Tsipras couldn’t keep the negotiations going for long.

Was the result, at the end of an unprecedented 17-hour summit, a ‘coup’, as it was immediately called on social media? Considered dispassionately (or, if you prefer, in terms of game theory), Schäuble was right to make Grexit part of the negotiations. Since the UK started to entertain the possibility of leaving the EU, talk of reversing European integration has hardly been taboo. Merkel appeared to have opened herself up to blackmail by telling the German parliament in 2011 that ‘if the euro fails, Europe fails’ – a rare occasion on which she took a clear position. Anybody with the power to make the euro fail – intentionally or not – was now in a position to make her chancellorship fail. In theory, Merkel had used the past five years to make the Eurozone failsafe, or safe, at least, from Greece: a firewall had been put in place to protect countries like Spain and Portugal and, most important, Italy in the event that another country defaulted. But the risks were still enormous, and Tsipras had every incentive to make Greece as much of a ‘systemic risk’ as possible. At the same time, Merkel had to combat resistance among her own Christian Democrats and her Northern European allies, Finland in particular, to the idea that Athens should be shown mercy one more time (as if the creditors weren’t making a profit from the whole scheme). Threatening Grexit helped quieten her critics; and increased her approval ratings in Germany (Schäuble’s are even better).

Perverse as it might seem, having Grexit on the table was good for Tsipras too. An overwhelming majority of Greeks want to stay in the Eurozone. The prime minister was forced to return to Athens with a worse deal than the one his electorate had rejected in the referendum; if he had been unable to claim that he had averted Grexit, his support at home would have collapsed. As it is, he can still live off the great Greek self-assertion of the referendum, and gain the support of almost all the parties at home – though not of his own party’s left wing. Tsipras crafted a powerful public image: he had fought to the last for ‘dignity’ and ‘democracy’ in Europe as a whole, and Podemos should now continue the struggle.

Something like a Latin Americanisation of Southern Europe does remain a possibility, though an increasingly remote one. In this scenario, new radical-left parties with charismatic leaders would continue to confront Southern oligarchies with the aim of reshaping corrupt political systems. The founders of Podemos have studied the recent history of Venezuela, Bolivia and Ecuador; they, along with some of the major figures in Syriza, have also taken Ernesto Laclau as a philosophical guide. Laclau sought to capture the term ‘populism’ for a positive left-wing agenda, arguing that a genuinely populist force doesn’t seek just to become a majority party, but sharpens a basic antagonism between ‘the people’ and what in Spain and Italy is derided as ‘the caste’, that is, the political establishment. Such a force has the capacity to bring together citizens with different interests and identities behind one symbolic, possibly quite vague rallying cry – such as ‘Oxi’. The danger is that the notion of a homogeneous ‘people’ can also be given a nationalist, even racist spin: should Syriza or Podemos be seen to fail, right-wing populists may find the scene prepared for them.

For now at least, though, it isn’t evident that Syriza has failed. While the creditors keep insisting that a ‘nominal’ debt reduction is impossible, the issue will remain on the table and, suitably disguised, will become a reality before too long. After all, the IMF has declared Greece’s debt unsustainable, and the president of the European Central Bank, Mario Draghi, has more or less agreed (the US, which thinks the same, has tactfully stayed in the background). What’s more, Tsipras has an ally in Hollande, who instructed French bureaucrats to write the crucial Greek application for fresh funds and who is keen to present himself (not least to his own left) as the man who prevented Grexit. For a brief moment in July, as Paris and Rome rallied to the Greek cause, it seemed that Tsipras’s strategy of dividing Europe – and even breaking the link between France and Germany – had worked.

Yet during the night of the summit, as one EU insider reported, Merkel and Hollande ‘crucified’ Tsipras. No matter what he conceded, they, playing good cop/bad cop, responded that it was not enough to rebuild ‘trust’. The document that finally resulted – which is only the beginning, not of the end of the negotiation of a new programme – is on one level a symbolic defeat; more precisely, it is a semantic one: the troika is back, both as a word and in the form of personnel with access to the Greek ministries, and so is the hated term ‘memorandum’. Selling off Greek assets with the help of an institution that sounds awfully like the infamous Treuhandanstalt which liquidated East German industry after unification smacks of colonialism. And allowing the creditors to control Greek legislation makes it seem as if Greece is applying to enter the EU all over again: usually, such scrutiny is applied to countries wishing to join the Union. Candidate countries put up with it, because there is a big prize at the end. For Greece, there will be no such reward; and in Greece, it is the young who have most to lose from rule by memorandum (and who overwhelmingly voted ‘Oxi’), whereas among the EU hopefuls, it’s the teenagers and twenty-somethings who stand to gain the most.

As under Samaras, the ‘adjustments’ demanded by the troika are likely to be passed on to the most vulnerable (through VAT increases, for instance); existing institutions, such as the unions, which might help prevent future crises by co-ordinating wage bargaining, will be destroyed; and the state will remain as dysfunctional as before. Or perhaps it won’t. After all, Tsipras promised many sensible things before his triumph in January, not just an end to austerity but plans to get tough with tax evaders (according to one estimate, €60 billion from Greece are held in Swiss bank accounts; according to another study, a third of recent credit to Greece has been deposited outside the country), to cut back the privileges of the Orthodox Church and to confront the oligarchs who control much of the Greek media. Given his overwhelming support among citizens and the collapse of the conservative New Democracy, Samaras’s party, and Pasok, Tsipras has a chance to become a great reformer. He could also establish himself as a statesman, and make a lot of friends among Europe’s leaders, by resolving the Macedonian Question once and for all. Or he could opt to continue subverting the policies his government is now legally bound to implement and go down in history as a martyr to the euro.


Whatever happens in Greece, it doesn’t alter the fact that the Eurozone suffers from deep structural problems. Contrary to Germany’s wishful thinking, it doesn’t work as a rule-based system. But it is also incapable of doing politics in such a way as to avoid pitting nation against nation. The underlying economic and financial problems are by now well known. Frankfurt’s one-size-fits-none monetary policy led to a credit binge in Southern Europe and Ireland during the first ten years of monetary union. The promise had been that the euro economies would converge; instead, North and South drifted apart. Since most of the borrowing was private, none of the alarms set up by the Stability and Growth Pact of 1998 – which focused on public debt – were set off; indeed, it was France and Germany, at that time ‘the sick man of Europe’, which violated prohibitions on public borrowing. Jacques Chirac and Gerhard Schröder conspired to soften the relevant regulations as necessary.

In 2009, a new Pasok government revealed that its predecessor had been hiding big deficits. Private investors started to panic about whether they’d get their money back; banks used the money with which they had been bailed out to bet on Grexit. Initially, Merkel and Sarkozy forced investors to swallow their losses in what analysts have described as the biggest debt write-down in Europe since the war. It seemed possible, in late 2011, that other Southern states might go the same way; the euro teetered on the brink of disaster. In the end, Merkel decided that the way to resolve the crisis was to flood Europe with money, shift the credit risks from banks to taxpayers (thereby setting the course for confrontations between one European citizenry and another) and beef up the European Commission’s powers to control the budgets of EU member states.

The idea that ‘market forces’ would bring about convergence within the Eurozone has effectively been abandoned. In its place is a strange mixture of French and German ideas about how Europe – and states in general – should work. The German government, legalistic as ever, insists that the constitutions of Eurozone countries state the need for a balanced budget and wants to empower national courts to enforce this. As everyone – at any rate the Swabian housewife once invoked by Merkel – knows, these rules are just common sense: debt is bad; if it must be taken on, it must also be paid back in full. But as any macroeconomist will tell you, the EU is not a giant household; pretending that it is denies, not least, the interdependence of states, which is exactly what the founders of European integration sought to promote.

In fact, what appear to be firm rules in practice leave a lot of wiggle-room. The French way of giving discretion to executive agencies prevails. Brussels is supposed to scrutinise national budgets every autumn, an intricate process involving ‘scoreboards’ of economic indicators, ‘alert mechanisms’ and ‘corrective action plans’ – an unprecedented intrusion into national politics aimed at identifying and minimising ‘macroeconomic imbalances’ early on. Yet as the political scientist Fritz Scharpf has pointed out, none of the imbalances that could be identified by the European Commission are directly under the control of national governments, with the exception of public sector debt. What’s more, hardly anyone has ever fully complied with the main indicators: only four countries – two of which, Sweden and Denmark, aren’t even in the Eurozone – have managed not to break the rules; everyone else invokes ‘exceptional circumstances’, a phrase found in the 2012 Fiscal Compact. The procedures presented to ‘the markets’ as strict fiscal governance actually empower what Scharpf calls a ‘legally and politically unconstrained expertocracy’ which, although it may operate on the basis of neoliberal policy ideas, is nonetheless a central authority trying to comprehend, control and ultimately plan vastly different economies in a way that would have been anathema to a godfather of neoliberalism like Hayek.

Had this regime been in place during the boom times in Spain and Ireland, it wouldn’t have enabled the European Commission or the two countries’ governments to prevent the dramatic rise in unit labour costs. The Commission would also have been powerless to increase domestic demand in Germany in recent years; in any case, it has consistently disregarded Germany’s imbalances – which is to say, its major surpluses.

The technocratic talk of ‘necessary adjustments’ draws a veil over the political choices that have resulted in the burden of austerity being shifted onto the most vulnerable. To readers of the Frankfurter Allgemeine Zeitung the mantra that without pain (austerity) there will be no gain (structural reform) makes perfect (neoliberal) sense. Yet as Michael Mitsopoulos and Theodore Pelagidis have argued, the troika’s strategy for Greece got things exactly the wrong way round. It has focused on labour costs, when labour costs in Greece are among the lowest in Europe; the country’s regulatory and administrative costs, by contrast, are the highest in Europe. Squeezing workers over the last five years has merely had the effect of further eroding Greece’s tax base; even as the government produced surplus after surplus, the country’s debt to GDP ratio increased because output was falling so fast. Meanwhile, France and Italy, despite poor numbers on borrowing and overall debt last year, were let off the hook by the Commission.

As with a dirigiste Commission, so with the European Central Bank. In theory, the ECB was to be the German Bundesbank, only more so: the most politically independent central bank on the face of the earth, whose statutes, as the economist Erik Jones has pointed out, are also the hardest to change. Its singular mandate has been ‘price stability’, and only Frankfurt is empowered to define what exactly that means. Mario Draghi promised in July 2012 to do ‘whatever it takes’ to save the common currency; it isn’t always mentioned that he added the words ‘within our mandate’, as he almost always does. ‘Quantitative easing’ has now begun – the ECB is set to purchase €60 billion of assets every month until at least September 2016 – but criticisms are coming from every angle. Some doubt that it will be enough; German sceptics, including inside the governing council of the ECB, say the whole thing is unnecessary; and others accuse Draghi, whatever he says, of no longer acting ‘within our mandate’. Once more, where there are supposed to be rules, in fact there is a lot of room for discretion – and the outcome of power struggles inside the ECB is unpredictable.


The problem is not that this room for discretion exists: sometimes governments have to do what they have to do. The real issue is the lack of any democratic basis for decisions affecting the lives of millions of people. When the European Community was mainly in the business of creating and regulating a common market, there were serious concerns (tabloid talk of Brussels dictating the shape of cucumbers aside) that decisions taken by the European Court of Justice – not an ordinary court, but one whose role was to push integration forward – could undermine social protections deemed to stand in the way of a unified market. But the EU always offered enough money to compensate or at least mollify losers: the European cohesion funds hugely benefited the deindustrialising North of England, for instance. While Europe habitually promised more than it could deliver (nobody cares to remember the wildly exaggerated growth figures predicted after the completion of the single market in the 1990s, or the ill-fated Lisbon Agenda to make Europe the most competitive region in the world), ‘ever closer union’ could plausibly be presented as a positive-sum game. In the jargon of political science, the EU could rely on ‘output legitimacy’: everyone was better off, even if only a few felt they had any real ‘input’. Today, however, the way the ‘output’ is determined doesn’t conform to anything resembling the rule of law, and the EU affects an aspect of modern parliamentary democracies – budget-making – in ways that are unpredictable and can’t be ascribed to democratic will, whether national or putatively pan-European.

When challenged on these grounds, European elites tend to fall back on the boilerplate justification for ever closer union (still occasionally invoked by Merkel): integration has brought peace to Europe. But the euro is now a source of discord, as both nominal winners and losers feel they are at the mercy of Brussels: the Greeks complain they have been occupied; the Germans that they’re being blackmailed. Brussels itself has on paper become more powerful, but has de facto taken the back seat in a car driven by German neoliberals. Across Europe, people’s trust in the EU has declined dramatically, even if many people still trust Brussels more than their own government. But where can they voice their discontent? The problem with the EU is not that citizens are unrepresented. In fact they are doubly represented, in the European Parliament and by their national governments in the European Council. Rather, as the late Peter Mair insistently pointed out, the problem is that it is impossible to identify anything like a ‘legitimate opposition’. The European Parliament has plenty of parties that do not so much provide opposition in the EU as to the EU – but it is not the business of these protest parties to offer anything like an alternative government.

Jyrki Katainen, the Finnish vice president of the European Commission in charge of jobs, growth, investment and competitiveness, was widely lambasted for his remark in response to Syriza’s victory at the polls that ‘we don’t change our policy according to elections.’ But in one sense he was just being faithful to the institution: an individual member state cannot change anything except by leaving. Most important, as long as crises are managed by the European Council or the Eurogroup, democracy will be pitted against democracy, with politicians in charge who care only about their own national electorates. And the more Europeans understand that the EU has become precisely what it wasn’t meant to be – a machine for creating conflict among nations – the more likely it is that discontent will be articulated in the language of identity politics, not economic policies. Ukip supplies the perfect example: Nigel Farage et al don’t actually talk all that much about the EU; instead, they talk about migration and English identity. The inevitable outcome of the growth in identity politics is further to diminish the capacity of the EU for collective action. As the German sociologist Claus Offe puts it, the Eurozone has turned into a trap of Europeans’ own devising; and the longer the trap remains shut, the weaker the potential political forces for change become. Who will make the case for cross-national solidarity against Germany’s biggest tabloid, Bild, when it portrays Merkel as Bismarck and admonishes her to remain tough with ‘the Greeks’, or against Varoufakis when he calls the results of the summit a new ‘Versailles’?

Is a different EU possible? In theory, there is a scenario in which European elites simply throw in the towel, admit that the euro was a mistake and that, as it turns out, hardly anyone wants an ‘ever closer union’. In a democracy, it should not be a problem to repudiate a failed policy; democrats pride themselves on the fact that they, unlike authoritarians, can own up to and correct their mistakes. Yet many European politicians, Merkel above all, seem to have so little confidence in European integration that they think one reversal will be fatal to the whole project. On a more practical level, no one can predict the costs of the dissolution of the euro (or the level of technical difficulty: as Offe points out, 153 exchange rates would have to be fixed at the same time). In any case, there is no majority for calling it quits in any of the euro-states.

What then are the alternatives to undoing the euro altogether? One is to start by admitting that the EU, and the euro, is a political enterprise. This is something that Europe’s leaders have preferred to disavow. The founders of the EU tried to carry out ‘integration by stealth’: seemingly apolitical technical regulations were put in place to lock nation-states into a common polity. Even today, Europe’s leaders go out of their way to claim that their decisions are not politically motivated. The Greek crisis has shown, once and for all, that the Brussels regime – what Merkel in 2011 called ‘market-conforming democracy’ – is a profoundly political project. Merkel and her colleagues should own up to this. There have long been calls for a common economic policy – what is often called ‘political union’ or common ‘economic governance’ – in the Eurozone. Instead of clinging to the fantasy of an apolitical union based on unchangeable rules that aren’t observed in practice, the countries of the Eurozone have to find ways to make their policy seem legitimate in the eyes of their peoples. Thomas Piketty has suggested that a separate Eurozone parliament be convened to do so; Hollande echoed this proposal with the call for a special ‘Euro-Chamber’ in the European Parliament. On the German side, Schäuble has suggested creating a ‘European finance minister’. Politically, Schäuble is one of the few remaining Herzenseuropäer, a political son of Helmut Kohl, the last German statesman to put Europe (or at least France) first. He is much more willing to increase supranational power than Merkel, who is content that ‘economic governance’ continue to be carried out by national governments in secret conclave.

The proposition, often heard, that a political union would mean the co-ordination of economic policies is typical Euro-speak, obscuring the hard questions. Is France ready to cede its sovereignty in economic affairs? Will Germany relent on the need for a rules-based regime and allow some executive discretion, as the French prefer? Would an elected Euro-Chamber make any real difference to ‘economic governance’? And where would a political union leave the rest of Europe? Hollande speaks of an ‘avant-garde’; Schäuble keeps proposing a ‘core Europe’, or Kerneuropa, which by definition leaves a periphery of European countries either unwilling or unable to follow the rules, or unwilling to accept a centralised political authority.

An expressed wish for more supranational policies and politics was behind the attempt to present last year’s elections to the European Parliament as a means to select a president of the Commission with a distinct political agenda. Yet the Commission still has little room for independent action, except to police national budgets. Jean-Claude Juncker, who got the job, began by hinting at policies for investment and growth, but has had to face the fact that the EU as such lacks fiscal capacity. The prospect of Brussels raising its own taxes – on corporations or financial transactions in the Eurozone, for instance – is no doubt a nightmare for Eurosceptics, but it is the most plausible way to address the imbalances that will continue to emerge in a heterogeneous currency union (just as imbalances in the US are ultimately dealt with by federal fiscal policy, not by economic micro-management in Washington or rugged individualists’ readiness to pack up and go where the jobs are).

As the economist Dani Rodrik has pointed out, Europeans cannot have integration, democracy and national sovereignty all at the same time; it is sovereignty, as traditionally understood, that will need to give. Otherwise, we will continue to see such desperate assertions of sovereignty as the Greek referendum, which may temporarily restore a sense of dignity, but do nothing to deliver more democracy. It is no accident that Tsipras’s symbolic bid for sovereignty was applauded most loudly by the far right in Strasbourg. Marine Le Pen and Nigel Farage must be delighted by this pan-European morality play, which demonstrates to their electorates that the EU is an arena for the humiliation of nations. ‘A European problem requires a European solution,’ Tsipras said in his speech to the European Parliament following the referendum. But the holding of national referendums on EU policy is not a European solution. It may be possible to regain democracy at the supranational level; but sovereignty can only be retained at the price of doing away with the EU altogether and shutting the door to the international economy.

As things stand, the most plausible outcome remains full integration for creditor nations, and a long depression for debtors. Greece could still be forced out; only after the US federal government let some states go bust in the 1840s did its fiscal regime become credible. Things don’t have to end with a bang. The EU could slowly fragment, leading to resentment all round.