Many might reasonably see a glass standing half full: the heads of state of the 17 euro countries have, it seems, made significant progress at their crisis summit in Brussels. By all accounts, the rescue of Greece will now involve private creditors – as insisted on by Angela Merkel, who prevailed over the opposition of the French government and, in particular, that of the European Central Bank.
It’s a remarkable success for the Chancellor. Progress, it seems, has also been made in Brussels in other, highly significant details. Measured against what one might have expected just a few days ago, the summit has turned out to be a pleasant surprise.
In fact, the glass is half empty. The aim of the summit was to calm the fears that the crisis would spread to more and more countries. Whether this has been achieved is debatable.
And the fundamental problem of the euro crisis – that Greece can no longer service its public debt from its own resources – is still there. The announced restructuring is far too limited to restore Greece's ability to pay. The country will remain hooked up to the drip-feed of its euro partners.
The guarantees for the freshly issued, long-running Greek government bonds – guarantees to be backed by the European rescue fund – also have the character of a permanent subsidy. Seen this way, the Brussels meeting is one more step towards a transfer union. The interest rates that lenders are demanding for purchases of German government bonds promptly rose yesterday.
Anyone who calls for a conclusive, liberating blow to put an end to the crisis is accused of being unworldly. Politics can’t be simplified to that level, the argument goes; as with other complex problems – such as the reform of social systems – only a gradual approach is feasible.
That argument, however, misunderstands the nature of the euro crisis. Every pause for breath gained by Europe’s policy in this affair comes at a high price. For the problems are getting even bigger in the meantime, and at a dramatic pace.
If a radical solution to the problem of Greece had been found in spring 2010, Portugal at the least might never have had to come running for shelter. The supposedly pragmatic approach to do only what was absolutely necessary, however, has meant that Greece's debt mountain is now even staggeringly higher than it was a year ago – and now even a country like Italy has become a candidate for a debt crisis.
The piecemeal policy of little steps has been tried out for a year and a half. Europe cannot afford another such a year and a half.
Translated from the German by Anton Baer
ECB comes out the winner
The European Central Bank has lost a battle but won the war, writes Handelsblatt. Now that the responsible policymakers have bolstered the means for rescuing Greece and beefed up the powers of the rescue mechanism, the EU “has stepped in much more firmly to help Athens. This is exactly what the ECB has always wanted, having often been left alone in the fight to keep an indebted country from bankruptcy by buying up its bonds." Ultimately, says Handelsblatt, “the politicians have lifted a load from the ECB. Now it can focus on monetary policy and leave fiscal policy to the finance ministers. For this, the ECB may well admit a minor defeat."