Why all the fuss about the EU meeting tomorrow?The euro zone has been in a state of chassis, as Sean O'Casey might say, for almost two years, with Greece, Portugal and Ireland all having to be bailed out. Fears have grown in recent months that the region's sovereign-debt problems could spread to larger European countries, such as Italy and Spain, and the weakness of European banks has cropped up as another major cause for concern. After much dithering, two weeks ago Europe's leaders finally pledged to agree on a comprehensive plan to save the single currency. The deadline for cobbling together a deal was set for tomorrow's European Council summit in Frankfurt.
So can we please stop worrying about the euro?Sorry, not so fast. After all the hype and expectation, it seems that this could turn out to be just another lost weekend for the euro zone. Despite pressure from global leaders to strike a deal immediately, France and Germany, the countries with the zone's two largest economies, could be looking to hold a second summit next week, probably on Wednesday. The summit will still go ahead, but a "grand bargain" is thought to be off the table. Is that the sound of a can being kicked down the road we hear?
What went wrong?France and Germany are locked in a stalemate over how best to tackle the euro zone's debt crisis. At an emergency meeting earlier this week the German chancellor, Angela Merkel, and the French president, Nicolas Sarkozy, failed to close the policy gulf between them. Even the joys of fatherhood didn't seem to soften Sarkozy's cough. He was called out of the meeting to be told that his wife, Carla Bruni, had given birth to a girl, the couple's first child and Sarkozy's fourth, but, according to officials, the meeting with Merkel did not go well. Merkel and Sarkozy are scheduled to have an extra meeting in Brussels on Saturday night, but hopes have faded that any definite plan will be hammered out. Murmurings of increasingly complex and chaotic negotiations backstage aren't helping confidence levels in Europe either.
Why can't France and Germany just get along?Where to start? Several bones of contention are causing the deadlock. The thorniest issue is how best to expand Europe's bailout fund, the European Financial Stability Facility, which has already been increased to €440 billion. Merkel is resisting attempts to boost it to €2 trillion. She also opposes Sarkozy's drive to make wider use of the European Central Bank to leverage the bailout fund. The two leaders are at odds, too, over a second Greek rescue package.
How worried should we be by this game of political brinkmanship?If our esteemed Taoiseach, Enda Kenny, is to be believed, hope is not lost if EU leaders fail to resolve the debt crisis tomorrow. "There's never a last-chance saloon in politics, but obviously people would like to see this matter cleared up," he said yesterday. Kenny believes that agreement on a number of issues, including the Greek crisis, can be achieved tomorrow and that leaders who need the backing of their own parliaments to move ahead with these changes can do so on Monday or Tuesday, in time for a second summit on Wednesday. Let's hope he's right.
