Summer crises are a familiar feature of European history – and of financial history. Often, addressing some technical issue was not enough to resolve a major political problem, which is true today as well, with Europe’s current crisis reflecting exactly the same mixture of elements, each requiring a very different type of solution.
The EU summit, held in Brussels last week, managed to bring about some much needed, albeit temporary, relief for the euro. Nevertheless, the region’s fundamental weaknesses remain unresolved and confidence in Europe’s periphery is now waning.
The eurozone crisis might break European leaders’ inherent resistance to compromise, collaboration, and common action. But the longer they bicker and dither, the greater the risk that what they gain in willingness will be lost to incapacity.
NEWPORT BEACH – When it comes to describing Europe’s ever-worsening crisis, metaphors abound. For some, it is five minutes to midnight; for others, Europe is a car accelerating towards the edge of a cliff. For all, a perilous existential moment is increasingly close at hand.
Here are some highlights of the deals, and unbroken deadlocks, after the first day of the EU summit in Brussels: The 20th round of emergency crisis talks led by eurozone finance ministers and regulators.
After 13 hours of talks, EU leaders yesterday agreed to step up their rescue plans, promising more help for weaker euro economies such as Spain and Italy while expediting the financial integration of the euro bloc.
Both Italy and Spain are refusing to back a 120 billion euro ($149 billion) European Union growth package, wrote numerous reports emanating from the EU Summit in Brussels on Thursday, with the two countries threatening to block “everything” unless they received immediate eurozone aid to bring down their borrowing costs.
Eurobonds will be back on the agenda as European leaders gather for a crisis summit later this week, but Germany, who has always been critical of the proposal, has once again taken the hard-line stance with Chancellor Angela Merkel declaring that Europe would not share total debt liability “as long as I live”.
If the European Union had its way, it could soon have the legal authority to rewrite the national budgets of its 27 sovereign member states, particularly for eurozone countries that fail to meet its stipulated debt and deficit targets.
European leaders will meet later this week for a two-day summit to try to resolve a crisis that has spread across the Europe since early 2010.
Tax evasion is costing the European Union around 1 trillion euros ($1.25 trillion) every year, claimed a draft statement from the European Commission that was obtained by Reuters on Monday, with regulators set to introduce multiple steps designed to curb rampant tax fraud across the region.
As the economic-policy debate in Europe and around the world shifts from fiscal austerity towards measures aimed at stimulating growth, smarter taxation will be essential to getting the balance right. That means focusing on energy and carbon taxes, which have a much less negative impact on economic activity.
Billionaire investor George Soros has warned that European leaders have a “three-month window” to save the euro, or risk the destruction of the eurozone and a “lost decade”. Describing the crisis as a banking problem and a problem of competitiveness, rather than a fiscal or debt crisis, Soros added that European leaders have failed to truly understand the nature of its economic woes.
