Spain, spooks and the phantom anti-euro conspirators

You know that the European Union is in trouble when Russia offers more intelligent advice on the eurozone’s debt crisis than Spain, the country that holds the EU’s rotating presidency. Dmitry Medvedev, Russia’s president, disclosed the other day that he had recommended to George Papandreou, Greece’s prime minister, that the Greek government should request assistance from the International Monetary Fund to sort out its problems.

This is exactly the course of action advocated by several non-eurozone EU countries as well as a host of distinguished economists and, dare I say it, the editorial writers of the Financial Times. As it happens, I don’t agree - if by IMF assistance we mean financial help. The IMF will be involved, along with the European Central Bank, the European Commission and eurozone finance ministers, in monitoring Greece’s public finances and providing technical aid as required.

But anything more than that strikes me as unnecessary. I take very seriously the argument that IMF financial assistance for Greece would plant suspicions in the minds of investors around the world about the long-term viability of European monetary union. If emergency aid were essential, it would not be difficult for Germany, France and other eurozone countries to provide the required amount, which is generally estimated to be about €20bn. To turn to the IMF would raise doubts that the very foundations of European monetary union were built on sand.

Be that as it may, Medvedev’s advice is much more sensible than the Spanish government’s apparent initiative to set its secret services on a hunt for conspirators in financial markets and “the Anglo-Saxon media”, who are supposedly out to destabilise the eurozone. There is probably far less to this alleged counter-espionage operation than we are led to believe. But there is little doubt that some Spanish ministers see an opportunity to deflect attention from the shortcomings of their economic policies by attacking the English-language media.

One can see how the temptation arises. When I was in Madrid last month for various events marking the start of Spain’s six-month EU presidency, José Luis Rodríguez Zapatero, Spain’s prime minister, spent an hour or so with a group of Brussels-based reporters. One of them, an English-language reporter for Reuters, put a blunt question to Zapatero: “Is Spain the next Greece?”

Boy, did he not like that. The expression on his face reminded me of William Golding’s description of Jack, the former choirboy who turns into a savage in Lord of the Flies, when he kills his first pig. Well, the question was a touch inflammatory. Spain isn’t the next Greece. It has an unemployment rate verging on 20 per cent, a yawning budget deficit and a hangover from a burst construction industry bubble. But it doesn’t suffer from Greece’s basic problem - a severe lack of credibility, accumulated over many years, with its eurozone partners and the markets.

That said, it is the responsibility of political leaders to ignore media pinpricks and get on with their job of managing the economy. Raising a hue and cry in pursuit of phantom foreign conspirators is unworthy of a serious government.

Tags: Dmitry Medvedev, Euro, European monetary union, Financial crisis, Greece, IMF, Russia, Spain, Zapatero