15 July 2011
On Friday, July 15, heads of state and leaders of EU governments were due to hold an urgent meeting to discuss possible responses to the crisis in the eurozone. It was the wish of European Council President Herman Van Rompuy, who has been trying since his appointment to establish himself as the host of this prestigious Areopagus. Alas, Europe’s leaders, with Angela Merkel at their head, have turned down the invitation, demonstrating their inability to act against what increasingly looks like a threat to the very existence of the European Union as we know it.
The wider situation has been grasped: Greece is nearing bankruptcy, despite belt-tightening and the money from the EU and the IMF; the Portuguese and Irish sovereign debts have been downgraded to “junk" by the rating agencies; and Italy is being forced, practically with a knife to her throat, to adopt a plan to cut 40 billion euros in spending. In response, the 17 states of the eurozone, as well as the European Central Bank and the Commission, are arguing over the strategy to adopt. “Owing to a lack of political leadership, squabbles over the conditions for the banking sector’s participation in the new aid package to Greece are leading nowhere. However, dear ministers, this is like nursing a cold when it’s cancer that’s the threat," lamented Le Monde after the last unsuccessful meeting of finance ministers.
Our leaders are, however working under mitigating circumstances – but those circumstances give even more reason for concern. The first, as Die Zeit explains, is that they must choose between, on one hand, domestic political pressure not to finance clearly useless bailouts that burden the people without troubling the banks – and, on the other, a financial sector that imposes its own rhythm, undermines states, and yet retains a strong argument: that its money is indispensable for financing state debts.
The second comes from across the Atlantic. On July 14 Standard & Poor's threatened to downgrade the credit rating of the United States. In Washington, Obama has so far failed to end the budget standoff with the Republicans. The financial crisis shaking Europe is thus threatening to undermine America, which would just worsen the situation on our continent further. US officials, however, don’t seem any more up to the task than the Europeans.
Whether indecisive, incompetent or simply paralysed by this challenge and the feeling of no longer being in control of the destiny of their countries, EU leaders must show determination. But it would take a very clever leader to show us the right way forward.