As if you didn’t have enough to worry about, tomorrow brings a meeting in Brussels of the leaders of the European Union. They’ll be gathering to discuss Angela Merkel’s grand bargain: succinctly described by The Economist magazine as follows: “in exchange for boosting the euro’s defences, she wants tighter economic co-ordination of the euro zone along German lines.”
Merkel is well aware that her constituents (Germans) are unimpressed with her “grand bargain.” They think it’s a bail-out for profligate and unproductive losers. That constricts her options.
Without explicit German support for laggards like Greece, Ireland, and Portugal (and probably Spain as well), however, the Eurozone will likely begin to unravel. On the other side of the grand bargain, “tighter coordination of the eurozone along German lines” is a very hard ask for many of the member EU countries.
All of which calls for an Economist editorial that analyses the situation clearly and concisely. It’s your lucky day:
Germany’s chancellor, Angela Merkel, has the future of Europe in her hands. As the biggest creditor country, Germany holds the key to resolving the euro zone’s sovereign-debt crisis. As the continent’s economic giant, it is the biggest determinant of the European Union’s direction. And right now Europe may be embarking on a path that could tilt the union away from economic liberalism, risking a split and, ultimately, even a British exit.
Mrs Merkel seems to be sleepwalking into this danger. For all her sound instincts and skills as a politician, she appears to have no vision for the EU. She has been woefully slow to get to grips with the euro zone’s troubles, largely because German voters do not want to bail out weak countries such as Greece, Ireland and potentially Portugal. And, in her efforts to assure her countrymen that she is imposing Teutonic discipline on the profligate peripherals, she is allowing the euro zone’s role in forming the EU’s economic policies to be greatly enlarged.
Two meetings this week illustrate this worrying development. A summit of 27 EU heads of government will be followed by a euro-zone summit that omits 10 of them. This might seem an arcane bit of Brussels procedure. Indeed, the British, normally the most suspicious of euro-integration, are pretending that it does not matter. But other “out” countries are up in arms. Historians may come to see this as the moment when the EU split into a dominant, corporatist euro area and a smaller, more liberal outer zone. Mrs Merkel is clever enough to realise this and dislike it, but she has not been brave enough to stop it.
Read the rest here.
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