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Debora L. Spar Headshot

Cautions From Corfu

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In 1986, and again on a trip in 1993, my husband's relatives were reveling in a prosperity that only years ago would have seemed unimaginable. Nico, the son of a tailor and some-time olive farmer, parlayed an English-language tutoring business into a full-fledged school, then a grocery store, and one of the island's first new car dealerships. Spiros, once a small-time mechanical engineer, had become a master contractor, outfitting the McMansions springing up along the coast with rotisserie spits and Jacuzzi tubs. Yianni, the village baker, had a string of fancy shops and a factory outside of town. Lovingly, the nouveau riche of Corfu jostled my poor father-in-law, who had left the island in 1960 to work as an immigrant, underpaid tailor, and who lacked the foresight to see that his family's barren and sandy land would some day be a mecca for sun-starved European vacationers.

When we returned to Corfu in 1998, however, the riches had already started, subtly, to evaporate. Nico's store and dealership had gone bankrupt, victims to the larger, better capitalized businesses that flocked to Greece in the wake of 1992. Yianni's bakeries had shrunk, pushing him back to the original shop. Entangled by debt, Spiros and his wife had fled the country. By 2004, all of my family's friends had lost the trappings of wealth -- the houses, the cars, the pride -- they displayed on my first visits. Today, they are destitute. Nico's ex-wife sells decorated stones outside a monastery. Yianni painted houses in Toronto until his death last year. And my father-in-law is the wise one.

The story of my friends is the tragedy of Greece, a tragedy, like many, based on faith and love and hubris. In the late 1940s a small group of brilliant Europeans, each scarred by the horrors of World War II, conceived a plan to save Europe by uniting it. Only by joining the nations together, they reasoned, and only in particular by welding Germany's interests and future to those of Britain and France, could an apocalypse be prevented. It was a noble plan, and wholly unrealistic, given the centuries' old enmity that defined the Continent's great powers. So for the decades the Europeanists scratched feebly at their plans, crafting formal collaborations (the European Coal and Steel Community; the European Atomic Energy Community) with no major political effect. But then, sometime in the early 1980s, a younger generation hit upon a masterstroke. Rather than fighting for the political unification of Europe, they cast the project as an economic plan -- a bold and ambitious leap, not to the European Community, but to the Common Market. Not to peace per se, but to prosperity; to the free flow of goods and services across what would instantly become the world's biggest market. Quickly, greedily, the corporations clambered on board. Because what Dutch company wouldn't prefer 370 million European customers to just 14 million Dutch ones? What Italian company wouldn't want to ship its product directly to London, rather than through the multiple border patrols along the way? Once the vision was set and sold, the hungry ones -- the Nicos and Yiannis across the continent -- scrambled to join in; to embrace a common market, a common currency, and what everyone wholly believed would be a more prosperous future.

And, for a while, it was. Between 1992 (the year when the European Union was formally established) and 2006, real per capita gross domestic product in Europe grew at a compound annual growth rate of just under 2 percent. In Greece, it grew at 3 percent, funding Nico's grocery shop, Yianni's bakery, and a raft of far more exuberant and extravagant purposes. But when the financial crisis hit in 2008 and growth contracted, the promised prosperity disappeared, leaving bare what was always true. Greece had never met the basic economic requirements of the euro zone. Its tax base was structurally far less than its government expenditures. And its people never intended to trade their national sovereignty for financial gain.

Years ago, when I used to teach about the European Union at Harvard Business School, I always began my classes with the same assertion. "The Europeans," I would state, "have embarked upon one of the greatest political experiments the world has ever known. They are trying, through peaceful means, to merge some of the most powerful nations on earth. This has never been done before." Then we would discuss the how's and why's of Europe, the ways in which the state-not-yet-a-state was governed; the economic hope that was blinding its inhabitants to the noble, messy, quixotic goal that sat still at its core.

The European Union was a utopian ideal, forged from war with the goal of peace. It was sold as an economic program, though, and bought as such by millions of Europeans who saw their future in the little cluster of 12 gold stars on a band of blue. These fortunes, alas, have now evaporated, and Europe must decide whether to accept the political bargain that was always there -- the loss of national sovereignty implicit in union -- or whether, more dangerously again, to try to go it alone.