Eurozone under pressure to find solution to the debt crisis | Europe| News and current affairs from around the continent | DW | 13.10.2011
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Europe

Eurozone under pressure to find solution to the debt crisis

In the wake of the fall of the Slovak government, the EU has postponed a crucial summit while Germany and France are hard at work to find a solution to the debt crisis.

dominoes

Which eurozone government will be the next to fall?

An emergency summit of the European Union has been postponed by six days to October 23, giving German Chancellor Angela Merkel and French President Nicolas Sarkozy the necessary time to develop a comprehensive coordinated approach to the debt crisis in Europe, in cooperation with EU President Herman Van Rompuy.

The crisis is clearly putting solidarity within the 17-nation currency zone and the EU to the test.

Whatever master plan the leaders come up with will be difficult to realize: ever since the finance and debt crisis took hold of Europe, there have been leadership changes in seven of the 17 eurozone countries.

Elections are coming up in three more states - including Slovakia, where the ruling coalition fell after parliament in Bratislava earlier this week rejected the first proposal to ratify a deal to bolster the eurozone emergency fund.

Political turmoil

Italy is also looking at a confidence vote in Silvio Berlusconi's government. Sarkozy has lost his majority in the senate, just months ahead of presidential elections in France.

In Germany, the government coalition is at odds over the euro crisis. Belgium is ruled by an interim government, the Netherlands by a minority government. Only four eurozone member states can boast a truly stable government: Luxembourg, Austria, Estonia and Malta.

It takes just one glance at the political map of eurozone countries to realize the difficulties of pushing through bailout fund deals when EU summits are attended by ever-changing ranks of government leaders.

chart on changes in government

Britain is not a eurozone member, but it is a large EU state that has seen a change in government

Who will lead the zone out of the crisis?

Europe is waiting for someone to pick up the reins.

But, according to Udo Bullmann, a financial expert for the Social Democrats in the European Parliament in Brussels, there are few true leadership figures in Europe with the courage to stand up and say, "I'm going to make an unpopular but necessary decision, I'm going to make this move so that I can say I did my best to secure a better future for everyone."

There's not a single politician who would do that, Bullmann told Deutsche Welle. "That's why it appears as if Europe may fail in its historic mission if we don't watch out."

The president of the EU Commission, Jose Manuel Barroso, shares the concerns over the present lack of leadership in Europe. "Only through European renewal can we build confidence in our common capacity to act," he said, urging closer economic cooperation among the 17 eurozone member states.

Merkel and Sarkozy

Both Germany and France have AAA ratings

But the eurozone nations that have managed to avoid being downgraded by the credit rating agencies are strictly opposed to jointly shouldering debt or introducing eurozone bonds.

Germany, the Netherlands, Austria, Finland, Luxembourg and France can't be the paymasters for the other states, said Markus Ferber, a financial expert in the European Parliament.

"Solidarity is no financial one-way street from north to south."

Solidarity has its limits

There can only be solidarity if countries in southern Europe introduce reforms and are willing to improve their competitiveness, Ferber told Deutsche Welle. Creating a permanent transfer union with money flowing from the north to the south is no perspective for the future, he said.

But others, like Richard Sulik, Slovakia's speaker of parliament, have made it clear that poor nations should not have to bail out states that are relatively better off. Greece is broke and has itself to blame, he told German television.

"Where is the solidarity if you tell a Slovak senior citizen, 'We're going to increase your value-added tax so pensioners in Greece can still receive their 1,200 euro ($1,650) pension! That is perverted solidarity and has nothing in common with real solidarity."

Infografik Die Ratings der 17 Euro-Staaten Englisch

In view of rising discontent across Europe over the EU's handling of the debt crisis, Germany's EU parliamentarian Ferber has called for more democratic control, saying the German chancellor and the French president should not meet behind closed doors.

"That's where people's displeasure comes from: decisions that hugely affect entire countries are taken by a select few. There is no legitimacy or control in the run-up to such meetings," he said.

Coordinated approach

Observers predict the proposals to keep the eurozone up and running will include writing off Greek debt, stabilizing European banks and emergency funding ample enough for Italy and Spain.

But in the end, a closer look at the Lisbon Treaty might also become necessary. "If we realize that the currency union and the eurozone do not work in the current form, amending the Lisbon Treaty should not be taboo," Merkel has said. "Just because it was difficult to come to an agreement on the treaty doesn't mean we can't make any changes for the next 30 years."

Handing Brussels more authority could spell the end to Merkel's fractious coalition government - the latest in a string of eurozone governments broken by the that debt crisis.

Author: Bernd Riegert / db
Editor: Martin Kuebler

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