“It’s done,” confirmed Portugal’s Finance Minister Mario Centeno, currently chairman of the Eurogroup. “With our solidarity it was successful,” said his German colleague Olaf Scholz, and Commission President Jean-Claude Juncker stated that “Europe should be proud of its common currency”.

With such collective self-praise the eurozone leaders recently celebrated the end of their crisis programme for over-indebted Greece (it ended August 20). In Athens, Greek Prime Minister Alexis Tsipras even wore exceptionally a special tie to celebrate the “historic event”.

But the staging was all bluff. In truth, there is nothing to celebrate.

On the contrary: Greece is economically ruined and has no chance of escaping the dictates of its creditors. Against the warning of the experts in the International Monetary Fund, the terms forced government spending to be cut by a third in just four years, thus causing the most severe recession that any country has ever experienced in peacetime. This left one fifth of the population unemployed, drove 300,000 Greeks abroad and increased debt to 180 percent of economic output.

But instead of allowing a new start with a debt cut, the lenders have simply postponed repayment and have committed the Greek state to generate a revenue surplus of 2.2 percent of economic output for another 42 years – an absurdly unrealistic idea in the opinion of all independent experts.

Even more serious than the negligence that led to Greece’s impoverishment is another failure: the governments of the eurozone have not eliminated the root cause of the crisis. Europe’s monetary union is still threatened with collapse, and even more so today than when the crisis began eight years ago.

The reason for this is a fundamental contradiction in the constitution of the euro: the 19 participating countries share one currency, but they manage their national budgets separately and each pursue their respective national economic policies. Moreover, the European Central Bank does not automatically serve as a “credit or lender of last resort”, which keeps the state budget liquid in the event of a crisis, as is customary worldwide. As a result, there is still no common budget and no common, democratically elected government of the eurozone. The EU thus is lacking the absolutely necessary institution to represent the common good of the monetary union as a whole and design a policy that is shared by the citizens of all the member countries.

At the heart of this misconstruction is Article 125.1 of the EU Treaty. It says that “The Union is not liable for the obligations of central governments,” and this also applies to the member states among themselves. At the same time, the founders of the euro pledged to limit the national debt to 60 percent and the annual deficit to three percent of economic output.

Above all, this “non-assistance bailout clause” was intended to reassure Germany’s conservative voters. There was also the hope that the common rules would compensate for the lack of a joint government. But it was this clause that sowed the seed of the now imminent decay. For the construct creates the harmful illusion among citizens that the monetary union is feasible without a loss of power for the national governments, when in reality, the opposite happens.

The counterproductive nature of this is clearly demonstrated by comparing how the US deals with public debt.

The public budgets of the United States are in the red at 105 percent of the annual economic output. That’s a lot, yet no one fears that the US government will not honour even one of the issued bonds. Not only does it have the tax sovereignty to generate the necessary income, the Federal Reserve also guarantees all payments.

This makes US bonds the epitome of a safe investment – even if the president is a mess. In contrast the eurozone as a whole is much less indebted – by 86 percent of its gross domestic product and should not even have a debt problem. But because euro countries operate on the capital market individually, banks and funds can speculate against the more heavily indebted euro countries by pushing up the interest rates for renewing government bonds so high that the warning about bankruptcy becomes a self-fulfilling prophecy.

This is exactly what happened in the spring of 2010 in Greece, and shortly afterwards in Ireland, Portugal and Spain. A default by one of these countries would have caused Europe’s banks to collapse again, only two years after the Lehman crash, because they were so heavily invested in these countries.

That is why the leaders of eurozone countries, led by German Chancellor Angela Merkel, once again decided to save the banks by guaranteeing the governments concerned more than 400 billion euros in emergency loans to pay off the creditors.

But they didn’t admit that to voters.

After all, the first bank bailout had already cost around a trillion euros of public money. That is why Merkel and her colleagues declared the bail-out as “solidarity” and “salvation”, and, despite the joint responsibility of all euro governments, burdened the crisis states alone with the entire burden of the loans – a fatal mistake.

Without any public consultation, and without even asking the European Parliament, the eurozone then was yet given a form of government: – the “Eurogroup” of finance ministers – from the member states of the monetary union.

But this body is only informal, it is not elected EU-wide and not accountable to all EU citizens at the same time. There are not even publicly available minutes of its meetings. Instead, the ministers and their authorised bureaucrats execute the right of the strongest in a democracy-free area: the creditors against the debtors and the countries with an economic surplus against those with a deficit.

This imbalance in power is also the source of the determination of the entire monetary union to follow an unsustainable economic model – one in which all member states should follow the German model of lower wages, increased exports and reduced government spending. But that only worked in Germany’s crisis years because the other euro states did not adopt this model, and – supported by loans from Germany – fuelled the German economy with their imports.

Applied to the entire Union, however, this leads to a race to the bottom and forces weaker countries into stagnation due to a lack of demand. At the same time, the German government has already received more than 100 billion euros only in interest savings as a result of capital flight from the Mediterranean countries and interest income from emergency loans. An end to this destructive development is not in sight. Instead of bringing the “peoples of Europe” together in an “ever closer union” as agreed, monetary union in its present form divides its members into winners and losers.

This makes Italy in particular is a political time bomb for the euro. For ten years, interrupted for only the two years after the banking crisis, the government stuck rigidly to the deficit rule. But this led to a lack of funds for much-needed investment in education, technology and infrastructure, without which the country is falling further and further behind – and the EU is unable to offer effective aid due to a lack of a sufficient budget. No wonder then, that the citizens rebelled against the perceived dictate from Berlin and elected the unpredictable rebels of the five-star movement and the right-wing radical Lega Party into government.

The sociologist and mentor of European integration, Jürgen Habermas, recognises in this the pattern for the whole of Europe. “The tangible disappointment is that the EU, in its current state, lacks the capacity to act to counteract the growing social inequality within and between member states that is the underlying cause of political regression,” he stated.

“Right-wing populism” is “primarily due to the widespread perception that the EU lacks the political will to become capable of action.”

But the way back is blocked. The single currency has already pushed economic integration too far.

Thousands of companies can only deliver across borders because there is – no currency risk. To this end, millions of cross-border contracts based on payment in euros have been agreed. This is accompanied by claims on banks and funds in trillions. Their value would, in one fell swoop, be in dispute if the debtors suddenly wanted to pay in another currency.

“A dissolution of the monetary union would indeed lead Europe into an economic war,” predicts the Austrian economist Stephan Schulmeister. No one would win, everyone would become poorer together, and that would “release an anger that would be directed above all against Germany”.

A “Euro Union capable of action would be the only conceivable force against further destruction of our much-cited social model,” warns Habermas. For this the EU must be “equipped with skills and budget resources for intervention against the further divergence of the member states,” he demanded. Only in this way could “the economically and politically strongest members redeem the broken promise of the common currency for convergent economic developments.”

And for a few months last year, it looked like this vision might come true. With Emmanuel Macron in France, a president stepped onto the European stage as had never happened before. For the first time, a leading EU politician acknowledged that the lack of democracy and the lack of an effective central authority threatened the European project. Many citizens had turned away from European unification “because they were not heard,” he said. Therefore, “Europeans must have the courage to rediscover the path of democracy” and “not with technocrats” negotiating contracts “secretly in the back room”.

Like Habermas, he called for a Eurozone budget of “several percent of economic output,” a multiple of the current EU budget, so that it can counter future economic crises on its own. This would require a European Finance Minister and a Parliament of the eurozone “to establish democratic accountability,” he said, confessing with revolutionary honesty the anti-democratic nature of the current Euro regime.

But as captivating as Macron’s campaign was for “the re-founding” of Europe, so as narrow-minded were German Chancellor Merkel and her Social Democratic co-regents, who rejected all his plans so as in order not to deprive their voters of the poisonous illusion of national self-determination that in reality no longer exists.

They only want to support an additional budget for investments of a symbolic size. Worse still, at the latest EU summit, Merkel and her supporters even insisted that the euro area’s crisis management should continue to be the responsibility of the unelected technocrats of the Euro-loan Fund ESM, which who are not accountable to any parliament. Nothing is to change in the constitution of the Euro.

“The continuation of the status quo is synonymous with the dissolution of the euro within ten years,” warned Macron in January 2017.

As things currently stand, it looks like he may well be right.

This article has been translated from the original German version which was published in Der Tagesspiegel: Warum die Griechenland-Rettung den Euro nicht gerettet hat

See also Investigate Europe: Emmanuel Macron and the German disease