July 11, 2011
For the first time since the start of the Greek debt crisis more than a year ago, the finance ministers of the euro area are ready to consider a default by Greece. They did not say so explicitly, of course, but the omissions from their statement tonight were eloquent.
Amid alarm that contagion was spreading from Greece to Italy and Spain, finance ministers held more than eight hours of crisis talks in Brussels, at the end of which they declared in a statement their “absolute commitment to safeguard financial stability in the euro area”. The new French finance minister, François Baroin, who replaces Christine Lagarde after her elevation to run the IMF, declared that ministers had rediscovered the “spirit of the spring of 2010”, when they had first rescued Greece and created a €500 billion ($635 billion) fund to help other countries.
Such rhetoric should be disregarded. It serves mainly to hide the intense disagreements that endure. The statement last night was filled with many promises, among them the pledge to do more to “improve the euro area’s systemic capacity to resist contagion risk”. But it gave few specific details or a timetable for action. This is unlikely to convince markets that the euro zone’s leaders are anywhere near resolving the crisis.
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Read the Eurogroup statement
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