Spiegel har en glimrende artikelserie i 3 dele og Euroes storhed og fald. Her fra 2. del

Prior to the euro, Greece had shown little interest in the international bond market. The country was simply too small and economically too underdeveloped to play much of a role. But in 1999, the Socialist government in Athens established a “Public Debt Management Agency,” naming Christoforos Sardelis as its director. Sardelis, an economist, had taught in Stockholm during Greece’s military dictatorship. Now he headed a staff of two or three dozen employees.

For the first time, the Greeks tried to convince foreign investors to buy larger volumes of debt with longer maturities. The message was: Buy an attractive security from the European Union.

He worked all of Europe, speaking with every fund, Sardelis recalls. Today, he is 61 and a member of the board of directors of Ethniki, Greece’s largest private insurance company. “Our task was to obtain money in the best possible way,” he recalls.

Greece was soon selling packages of bonds worth upwards of €5 billion at government auctions, says Sardelis. Starting in 2001, there was “enormous demand from all over Europe,” as well as from Japan and Singapore, he says. Things were going so well that Sardelis was even able to lure experts away from Deutsche Bank. Greece was in vogue. In reality, the Greeks were auctioning off their own future, without even noticing. They saw joining the euro as their goal, even though it was only a beginning.

In the spring of 2003, rates on Greek bonds were only 0.09 percentage points above comparable German bonds. In plain terms, this meant that the markets at the time felt that Greece, with its economy based on olives, yogurt, shipbuilding and tourism, was just as creditworthy as highly industrialized Germany, the world’s top exporter at the time. Why? Because both countries now had the same currency. And because the markets — as Andreas Schmitz, the head of the Association of German Banks, explained in a recent interview with the German weekly newspaper Die Zeit — never believed in the so-called “no-bailout” clause of the Maastricht Treaty, a clause that was designed to prevent euro-zone countries from being liable for the debts of other members.

According to Schmitz, the markets were confident that “in an emergency, the strong countries would support the weak ones,” a view based on European politicians’ lax treatment of their own rules early in the game. Those who bought Greek bonds on a large scale at the time were betting that Europe’s statesmen would break their rules if a crisis came along.

Sardelis claims that he had recognized the looming problems and warned against them. Today, he describes a mood characterized by the ever-increasing “illusion that the monetary union could solve our problems.” But instead of pushing for serious reforms of Greek government finances, the Greeks simply “relapsed into old mentalities.” Instead of saving being promoted, obtaining “as much money as possible” was encouraged.

Germany Undermines the Treaty

In 2002, the German government had other things on its mind than examining Greece’s public finances. It was having troubles of its own, with the European Commission threatening to send a warning to Berlin. Germany was expected to borrow more than had been forecast, thereby exceeding the allowed 3 percent of GDP limit for its budget deficit. The result was not, however, an example of German fiscal discipline and exemplary adherence to European rules, but a two-year battle by the Schröder administration against the slap on the wrist from Brussels.

Few within the European Commission openly criticized the loosening of the Maastricht rules. And the Germans, together with the French — both facing the threat of an excessive debt procedure — were too busy undermining the Maastricht Treaty. The two countries, determined not to submit to sanctions, managed to secure a majority in the EU’s Council of Economic and Finance Ministers to cancel the European Commission’s sanction procedure. It was a serious breach of the rules whose consequences would only become apparent later.

The German-French initiative effectively did away with the Stability and Growth Pact, which the Germans had forced their partners to sign. The consequences were fatal. If the two biggest economies in the euro zone weren’t abiding by the rules, why should anyone else?

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