Pax Europaea


Seriously concerned with the country’s financial situation, Ismail asked for British help in fiscal reform. Britain responded by sending Steven Cave, a member of Parliament, to investigate. Cave judged Egypt to be solvent on the basis of its resources and said that all the country needed to get back on its feet was time and the proper servicing of the debts. Cave recommended the establishment of a control commission over Egypt’s finances to approve all future loans. European creditors, however, would not allow Egypt time. […] During the summer, an international conference of the European powers met in Istanbul, but no agreement was reached. The Ottoman sultan Abdul Hamid boycotted the conference and refused to send troops to Egypt. Eventually, Britain decided to act alone. The French withdrew their naval squadron from Alexandria, and in July 1882, the British fleet began bombarding Alexandria.


Officials from the European Commission and the European Central Bank are on standby for a “monitoring visit” to Athens as soon as they receive word from Greek authorities outlining how they intend to get a grip on public debt. […] Greece has no easy way out. As an EMU member it cannot devalue to regain competitiveness lost during its boom, even though foreign tourists are defecting to cheaper Turkey. A deflation policy may be self-defeating if it causes the real burden of public debt to rise further. The nightmare scenario will occur if the ECB starts raising rates just as Greece slides deeper into slump.


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