What an EU shambles! Last Sunday, Greece voted against austerity. This weekend, the Greek left-wing government has put up a deal that accepts an austerity package but at a huge financial cost to EU members. There are rumours that the meeting of all 28 country leaders has been cancelled but the Eurozone members are still to meet. With Germany and France at loggerheads and Finland threatening to veto any deal, it is not just a major shambles but the antithesis of what European integration was always supposed to mean.
The simple truth is that Greece should never have been allowed to join the EU to start with. Neither should quite a few other member countries. It is utterly obvious that you cannot shackle together countries with hugely different economies unless you also shackle together their political and fiscal decision making. It would be pointless to allow bicycles and minis to join in a F1 race; you would not allow an eight-stone teenager to go into the boxing ring with a professional heavyweight; you would not expect a railway train to be made up of carriages with different track widths. It was madness to harness into a single currency countries with vastly different economic profiles, from first world to third world. It was never going to work without joining up political and fiscal decision making.
So, hard as the decision may be, Greece has to exit the euro zone and, probably the EU. It will be better off once it has come through the immediate trauma with a devalued drachma providing some relief once it has been implemented. There will be pain for many creditors but there will be considerable pain for Greek residents who are not to blame directly for their predicament although many of them have quietly enjoyed the lack of financial discipline that has characterised the Greek economy. This means the EU and I suppose that includes the UK will have to provide immediate humanitarian aid to get the Greeks through the immediate drama. What the EU should not do is to approve a fudge that will allow Greece to limp along within the Eurozone and with a burden of debt it cannot hope to repay and inevitably bring the country back to crisis point within a short time.