July 1st, 2012


Ready for the new EU?


"Not until I'm dead", those are words of Angela Merkel in response to the proposal for new common Eurobonds. It was hardly a promising remark just before the meeting on the tops of EU. But meanwhile it was met with cheers in Berlin, and wishes for a long life to the Iron lady.

In the week when Cyprus became the fifth country to officially request fiscal aid (just when Cyprus was assuming the rotational presidency of the EU), and the credit rating of several Spanish banks was degraded, and the Spanish and Italian debt interest rates kept approaching the dangerous levels, the EU leaders convened again, probably for the 19th or 20th time. And again there was just one point on the agenda: how to save the Euro. This time what was put on the table was some proposals that had been unthinkable until very recently: like bank guarantees, the creation of common debt, and a fiscal union.

So these are roughly the outlines of the future of the Eurozone. With all the huge political obstacles on the road, especially the more and more evident French-German rift, I doubt this new Eurozone will be born any time soon. Not today, not next week and probably not by the end of the year. The problem is that while looking forward to the future, the EU still doesn't know how to deal with the present. A present where Spain and Italy are shaking dangerously, Greece remains with one foot out, there's mutual suspicion and distrust between the creditors in the north and their debtors in the south. And let's not forget the recession on top of all that. In order to see the EU reborn, at least the foundations of the old one should survive, no?

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