Financial Times
July 22, 2011
Midway through Thursday’s save-the-euro summit in Brussels, European officials distributed a draft communiqué that spoke of a “European Marshall Plan” for Greece. When the summit ended, this grandiloquent phrase had been quietly dropped from the final text. It was a prudent decision. Just as the 17-nation eurozone is not instantly establishing a full-blown fiscal union to complement its common currency, so Greece’s European Union partners are not planning a recovery programme comparable to the 1948-51 Marshall Plan for western Europe.
Eurozone leaders nevertheless have pulled off quite a feat. For the first time since May 2010, they delivered a positive surprise by striking a deal that went further than many financial market participants had anticipated. For this Angela Merkel, Germany’s chancellor, deserves credit. On Tuesday she lowered expectations, saying the summit would not produce a “spectacular event”. As it emerged the leaders had achieved rather a lot, the markets celebrated: share prices soared, up went the euro and down went Italian and Spanish government bond yields.
Of course, this will not end Europe’s sovereign debt and banking crises. It may only be a matter of months before Europe’s financial firefighters reach for their hoses again. But that is not the point.
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