By Alexa van Sickle, Assistant Editor
Klaus Regling, head of the European Union’s bailout fund, says the EU is moving in the right direction after its debt crisis, but that Greece’s future in the eurozone depends on its progress in meeting the terms of its bailout.
Speaking at the fifth IISS Fullerton lecture in Singapore, Regling, the CEO of the European Financial Stability Facility (EFSF), was cautiously optimistic about the future of the euro and of the EU. Regling said structural reforms and action taken by EU governments to address the sovereign debt crisis were beginning to show signs of success: ‘Ireland shows now a current account surplus after sizable deficits in earlier years, Spain is getting very close to a current account balance [and] Greece and Portugal have reduced their current account deficits by two thirds,’ he said. Read the rest of this entry »
European Commission President Jose Manuel Barroso – who defiantly told the G20 meeting yesterday that American capitalism was to blame for the eurozone crisis – wouldn’t agree. However, as talks continue to form a government in Greece and Spain has been forced to delay an audit of banks amid fears that a bailout could top €100 billion, our Director for Geo-economics and Strategy Sanjaya Baru argues in his column this week for the Indian Express that ‘at the core of the financial crisis in Europe there is a leadership crisis’.
The EU has struggled to articulate ‘an idea of Europe’ and so to offer continent-wide solutions to continent wide problems, Baru says. ‘The challenge for the EU is to find its Ambedkar’ he suggests, referring to B.R. Ambdekar, the jurist and social reformer who spearheaded the drafting of the Indian Constitution.
The collapse of the euro was not inevitable, IISS Council Chairman Professor François Heisbourg said during a recent speech at the IISS-US. However, it would require effort, wisdom and luck to rescue it. In a presentation on the prospective collapse of the euro and its strategic consequences, Professor Heisbourg suggested three possible resolutions to the euro crisis: ‘hiving out’, ‘breaking up’ or ‘blending in’.
By Alexander Nicoll, Director of Editorial
Step by step, the eurozone debt crisis is being dealt with. During the market hysteria of the second half of 2011, the very survival of the euro as a common currency seemed to be in doubt. That is not being questioned today. The €130bn bailout deal reached in all-night talks by Greece, its fellow eurozone members, the International Monetary Fund and private creditors is one more step towards stability.
For months, it seemed that governments were fumbling in the face of the crisis that was engulfing them. If Italy and Spain had been forced to join Greece, Ireland and Portugal in needing rescue finance, then the consequences for the euro and Europe would have been severe. But, as the IISS wrote in a recent Strategic Comment, a combination of measures has eased the tensions: changes of government in Greece, Italy and Spain; a ‘fiscal compact’ agreed by 25 European Union members, holding the promise of greater harmony in economic policies; and the European Central Bank’s injection of unlimited three-year finance into the banking system.