Financial Times
October 20, 2011
Tim Geithner, the US Treasury secretary, observed in Paris last weekend that “when France and Germany agree on a plan together and decide to act, big things are possible”. In this way he gave voice to the hope, though perhaps not the firm conviction, of economic policymakers around the world that Paris and Berlin would waste no more time in devising a comprehensive solution to the European debt emergency.
Hopes that Sunday’s summit of eurozone leaders would produce such a solution are now in tatters. The important decisions will have to wait until a second meeting on Wednesday. Nicolas Sarkozy’s fruitless dash to Frankfurt for talks with Angela Merkel on Wednesday suggests that the two capitals are further apart than before. But Mr Geithner was right to pinpoint Germany and France as the central actors in the drama.
One might have expected that as the eurozone expanded to 17 member states today from 11 at its birth in 1999, the importance of bilateral Franco-German initiatives would be diluted. But the sovereign debt and banking sector crises have put paid to that. With Italy and Spain, the area’s third and fourth-largest economies, locked in a desperate battle with the bond markets, the burden of responsibility rests squarely on the shoulders of Berlin and Paris.
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