THE SELECTION of Lucas Papademos as prime minister of the transitional government represents the last chance for Greece to secure its future in the eurozone. It may also represent one of the last stops in the 12-year eurozone journey, at least as far as the broad economic union envisaged since the earliest days of European integration is concerned.

 

 

With Italian 10-year bond yields topping the seven percent threshold reckoned to require IMF intervention, a wedge has been rammed into the fissure created by the Greek debt crisis and the Irish and Portuguese bailouts, widening the crack even further.

 

 

But a degree of domestic political sanity has, at last, been established. Such was the need for stability that, before he had even made a single public utterance, Papademos quickly became accepted both at home and abroad as the most suitable leader of a coalition government born out of bickering and disagreement.

 

 

A former governor of the Bank of Greece and ECB vice-president, Papademos is both a technocrat (requested by New Democracy leader Antonis Samaras) and well-versed in the language of EU bailouts and economic convergence (sought by George Papandreou and other party leaders).

 

 

Efforts to forge European unity have always revolved around economic integration. The European Coal and Steel Cooperation was established as a six-member union in 1951, ostensibly to prevent future war between France and Germany. Then came the fully-fledged European Economy Community, outlined in the 1957 Treaty of Rome. The single currency union was fleshed out in the Maastricht Treaty of 1992.

 

Unfortunately, as regards the eurozone, Maastricht was all flesh and no bones. The experience of economic integration has been characterised by politicians failing to understand the fundamentals of economics, and economists failing to understand the fundamentals of politics.

 

 

It is clearly not for Papademos alone to cure these ills, but, as a technocrat-cum-primeminister who has the ink of Greece’s very first euro bills under his nails, he has sound credentials to judge the country’s bailout needs. German Chancellor Angela Merkel’s office was forced to deny a report that, for some time now, German and French EU officials have been discussing - at an “intellectual” level - the possibility of a breakaway group of the financially responsible few within Europe.

 

Indeed, rather than turning its back on the euro, Germany is considering even tighter European integration through fiscal unity. And if that’s the case, Greece can scarcely hope to make the cut. Long before such considerations, however, Papademos will need to find a way to balance the needs of ratifying the October 26-27 bailout with the further austerity which that bailout will demand.

 

 

It is an unenviable task.