Wall Street Journal
October 31, 2011
Euro-zone leaders inevitably proclaimed their latest summit deal a triumph—as they had after each of the previous 13 crisis meetings—but one wonders whether their hearts are truly in it any more. Gone is the idealism that inspired the creation of the single currency. Ask senior European policy makers today whether the euro can be saved and the answer is invariably yes—because the consequences of failing to do so are too dreadful to contemplate. German Chancellor Angela Merkel didn't exaggerate when she said 60 years of peace and prosperity in Europe are at stake.
Enthusiasm for the European Project is evaporating. If there were an easy way to exit the euro, Athens would have taken it by now, with the enthusiastic encouragement of the other 16 members. The French president, Nicolas Sarkozy, now says Greece should never have been allowed to join. The Italian prime minister, Silvio Berlusconi, last week called the euro a "strange currency" that had "convinced nobody." Parties hostile to the EU, such as Finland's True Finns, are gaining electoral support across the Continent. In Germany, 30% of voters now want the return of the deutschmark. Fear of the consequences of a euro break-up is all that is holding it together.
But is it enough? The best that can be said of last week's deal is that for the first time, euro-zone leaders did at least try to come up with a plan that addressed all the major areas of strain: Greece, the banks, the size of the bailout fund and the euro zone's future governance arrangements. Progress was made on all four fronts even if important details were lacking. At a political level, the leaders took another step toward closer integration, rather than drifting farther apart. The prospect of a disorderly Greek default was at least taken off the table—for now.
But scratch the surface and there are aspects of this deal that make a messy end to the euro crisis look more, rather than less, likely.
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