Financial Times
June 12, 2011
Last week, I promised to give further details for my end-game scenario for the eurozone crisis. My premise was that the eurozone will eventually agree another Greek loan this summer. Despite an incredible amount of noise, I still expect the European Union member states to reach a deal. They usually do.
Once they agree a debt rollover for Greece, second loan packages for Ireland and Portugal will surely follow. I argued why this would favour a closer political union in the long run – with a European treasury secretary, a centralised banking resolution policy and a eurozone bond.
So how should this be done? Let me say first how it should not be done.
In March, the European Council agreed a European stability mechanism, a permanent anti-crisis fund. The ESM is based on an inter-governmental treaty among the member states of the eurozone. In the parlance of Brussels, they went “outside the treaty”. This means that the ESM does not fall under EU law. Governments often prefer this. It is less bureaucratic and legalistic, and it secures their power.
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