While I don't normally quote ideologoues from conservative thinktanks, this bit of history highlighted in The Business Spectator caught my eye - it seems the Greeks quite enjoy milking a monetary union - Unravelling the Greek basket case.

You may agree or disagree with Georg Wilhelm Friedrich Hegel’s deterministic world view, but it is hard to argue with the philosopher’s grim assessment of governments’ ability to learn: “What experience and history teach is this — that nations and governments have never learned anything from history, or acted upon any lessons they might have drawn from it.”

Since these words were written 180 years ago Europe’s dealings with Greece have proved Hegel right time and again. Greece is not a country with temporary economic, fiscal and monetary problems. It is a permanent basket case. Despite this, Europe has never found a way to deal with it.

Since Greece gained independence from Turkey after its war of independence (1821-29), the country has been plagued by recurrent budget crises, frequent state defaults and long periods of being cut off from international capital markets. There was no shortage of attempts to put Greece on a more stable trajectory by integrating it into international monetary arrangements. And yet they all failed eventually.

The first attempt to give modern Greece a convertible silver currency was in 1828. It was suspended only four years later when the budget deficit was so high that the government resorted to printing paper money to pay for the ongoing conflict with Turkey. A return to the silver standard began a few years later but the Greek government continued to borrow heavily from the central bank for its expenditure – hardly a sustainable fiscal arrangement.

After more tumultuous years with yet another departure from silver to paper and back, Greece in 1867 sought refuge in the Latin Monetary Union, one of the forerunners of today’s euro currency.

Effectively, LMU was a gold and silver-backed monetary union with the French franc at the centre, and Greece hoped to benefit from the monetary stability it offered. Being part of a big monetary union with many other European nations also gave it access to deeper capital markets.

From a Greek point of view, it was perfectly understandable why they were so keen to join the club. The only question is why the other members of LMU admitted Greece despite its poor economic structures.

Not even observers closer to the historic events could see the point of Greek membership. In his ‘History of the Latin Monetary Union’ report, University of Chicago economist Henry Parker Willis summed it up nicely, and it is worth quoting at length:

“It is hard to see why the admission of Greece to the Latin Union should have been desired or allowed by that body. In no sense was she a desirable member of the league. Economically unsound, convulsed by political struggles, and financially rotten, her condition was pitiable. Struggling with a burden of debt, Greece was also endeavouring to maintain in circulation a large amount of inconvertible paper. She was not territorially a desirable adjunct to the Latin Union, and her commercial and financial importance was small. Nevertheless her nominal admission was secured, and we may credit the obscure political influences … with being able to effect what economic and financial considerations could not. Certainly it would be hard to understand on what other grounds her membership was attained.”

Replace ‘Latin Union’ with ‘European Monetary Union’ and the paragraph quoted above could have been published today. In fact, it was published in 1901. Already back then, Willis came to the conclusion that monetary union in Europe did not work, which again sounds like a prophecy of things to come:

“The Latin Union as an experiment in international monetary action has proved a failure. Its history serves merely to throw some light upon the difficulties which are likely to be encountered in any international attempt to regulate monetary systems in common. From whatever point of view the Latin Union is studied, it will be seen that it has resulted only in loss to the countries involved.”

One of LMU’s problems was Greece. The country had introduced paper money that was only valid domestically and it also reduced the gold and silver content of its coins in violation of international agreements. No wonder that other LMU members became increasingly frustrated by Greece’s refusal to play by the rules.

The Swiss ambassador to Paris allegedly once complained that monetary union with Greece was an ‘unhappy marriage’ from which there was no easy escape. Eventually, however, the other LMU countries lost patience and ordered Greek coins retired in 1908. Effectively, they kicked Greece out of the union because they were fed up with it.

Greece then had to readjust its monetary policy and managed to return to LMU in 1910 under a gold standard, but by then the LMU was already fragile. Four years later, the union was effectively abandoned at the start of World War I and formally dissolved in 1927.

After LMU, Greece’s monetary history remained a roller-coaster. The drachma devalued and became pegged to the sterling in 1928. It devalued again before being pegged to the US dollar in 1953. In 1975 it was floated and devalued immediately, followed by big devaluations in 1983 and 1985. Only in preparation for the euro did the Bank of Greece eventually announce a ‘hard drachma’ policy in 1995, but its entry into the European Exchange Rate Mechanism required yet another devaluation.

EurActiv has an article on a proposal for the EU to shift to 100% renewable energy - 100% renewables 'feasible by 2050', EU told.

The EU could cut its emissions by more than 90% by 2050 by moving to produce all its energy from renewable sources, according to the European Renewable Energy Council (EREC), an industry group.

In a report published on Thursday (14 April), it said the environmental and social benefits would outweigh the required investments.

The report provides a roadmap to 2050 for different renewable technologies, arguing that 100% renewables is both economically feasible and environmentally desirable.

EREC predicts the largest increase to take place in renewable electricity, driven by wind and photovoltaic (PV) solar, with its share of total energy demand rising from 10% in 2020 to 18% in 2030 and 41% by 2050. It also expects the renewable heating and cooling market from biomass, solar thermal and geothermal applications to take off quickly, comprising 21% of the EU’s total energy consumption in 2030 and 45% in 2050.

Transport will remain the biggest challenge for renewable energies, according to EREC. But as conversion technologies for biofuels and electric vehicles enter the market on a large scale after 2020, it expects the share of renewable transport fuels in Europe's energy consumption to increase from 3% in 2020 to 10% in 2050.

EREC stressed that the technologies required to achieve a 100% renewables scenario are already available and it is simply a matter of finding the political will to make it happen.

The IHT reports that the European Union is rethinking its support for expanded biofuel production in the face of the backlash against rising food prices.

Signaling a major retrenchment, European Union legislators on Monday proposed ratcheting back an ambitious target to raise Europe's use of biofuels.

At the same time, a new report for the British government cast fresh doubt on using fuels from crops in the fight against climate change.

Until recently, European governments had sought to lead the rest of the world, setting a target for 10 percent of transportation fuels to be derived from biofuels by 2020. But the allure has dimmed amid growing evidence that the kind of targets proposed by the EU are contributing to deforestation and helping force up food prices.

"I think when we will look back we will say this was the beginning of a turning point for Europe on biofuels," said Juan Delgado, a research fellow specializing in energy and climate change expert at Breugel, a research organization in Brussels. "It will be very difficult now for Europe to stick by its targets."

In the United States, an energy bill passed last year required that 36 billion gallons of biofuels be produced annually by 2022. But criticism is gaining ground there, too, with calls to end tax breaks for corn ethanol and other measures to stop so much American corn - about one-fourth of the crop - being used for biofuels.

Over the past 18 months, studies have shown that the current generation of biofuels reliant on crops like canola, corn and soybeans helps drive up food prices by using agricultural land, aggravates deforestation and may be worse for the climate than conventional oil once the cost of production and transport are taken into account. The majority of biofuels produced in the world today are extracted from corn in the United States, sugar in Brazil, and both grain and oil-seed crops in Europe.

Those findings now are pushing Europe into an about-face on biofuels that has gained momentum in recent days. "The political tide in Europe is now turning against biofuels, said Adrian Bebb, an agrofuels coordinator with Friends of the Earth Europe.

Business Green Blog has a look at Shell's sabre ratting at the EU about being warned it might have to pay for emissions permits in future (Heaven forbid - what sort of pollution tax makes the polluter pay ?).

It is easy to understand Shell's nervousness over the EU's plans, because ultimately they are designed to eradicate its oil-based business model. The whole point of the polluter pays principle is to accelerate the development of low carbon technologies and business models and wean us off of fossil fuels. Shell is part of a dying industry, it is just that it has no intention of going quietly.

What Europe's politicians and business leaders need to remember is that while many firms may threaten to leave as a result of the EU's climate change plans few actually will, particularly if the games of international diplomacy currently being played ensure that there is no competitive advantage for them to gain by doing so.

Moreover, where those firms that fail to adapt do end up declining - we're looking at you Shell - it is worth remembering that the jobs that are lost will be largely replaced by the emerging clean tech industry. It is worth noting that as Shell threatens to take jobs overseas the German government is reporting that by 2030 its renewables sector will be as big as its car industry.

Managing the decline of an industry, and the job losses and economic pain that go with it, is one of the ultimate tests of a politician's skill and strength and it looks like leaders across Europe are about to get tested.

How well they perform will determine both the entire bloc's credibility as a leader in the fight against climate change and all our chances of transitioning to a low carbon economy.

We can only hope they realise this and tell Shell and its supporters precisely what they can do with their rattling sabres.