Friday, 28 October 2011










By Tom Fairless

So close, yet so far. That sums up the view of German commentators on Friday of the European Union’s deal to stem the euro-zone debt crisis.

Many commentators said that European leaders had again failed to address core issues, such as the lack of competitiveness in some euro-zone countries. Some were concerned that a two-speed Europe dominated by strong euro-zone members, particularly Germany, was emerging. Such a development into rich and poor Europeans would fuel anti-euro sentiment and make it even harder to resolve the structural weaknesses that are at the root of Europe’s debt crisis.

Though an important step, the decisions in Brussels don’t yet amount to a permanent solution because too many details remain open, particularly how to solve “the chronic growth and structural weaknesses of indebted states,” wrote the business daily Handelsblatt. European leaders have delayed this question but won’t be able to avoid it. Unless the imbalances between euro-zone economies are addressed, another debt crisis will hit in five years at the latest.

The conservative Frankfurter Allgemeine Zeitung said whoever thinks the debt crisis has passed its peak is “massively mistaken”. The decisions made at the EU summit mark a turning point in the crisis, but it is unlikely that “politicians have built the necessary firewall” against contagion.

The center-left Süddeutsche Zeitung is concerned that the crisis has also sharpened the division between euro zone and non-euro zone states, which have been marginalized. Great Britain has slid into European “meaninglessness”.

The Munich-based daily warns that Germany can’t lead Europe alone; it must bring new dynamism to the debate on treaty changes, and help stop Europe from drifting apart into “important and unimportant states”.

The 50% haircut on Greek bonds is a “milestone,” wrote the conservative daily Die Welt, because it recognizes that, for the first time in the history of the currency union, a euro-zone state is bankrupt. Without it, Greece’s economy would never have been able to recover.

In contrast to the German government’s official view, many commentators conceded that the European Central Bank would have to continue buying bonds to prop up weakened euro-zone members or they urged the bank to continue to do so.

“The panic could soon be over” if new ECB chief Mario Draghi declares the central bank ready to step in if the euro-zone’s leveraged rescue fund isn’t large enough, wrote the business daily Financial Times Deutschland. “Just do it, Mister Draghi.”

The EU summit decisions will “accentuate the euro crisis instead of solving it,” wrote the leftist daily Die Tageszeitung. Even the enormously enlarged EFSF won’t be big enough because the crisis has “eaten into the core of the euro-zone”.

Posted by Britannia Radio at 17:32