Reuters
July 22, 2011
Angela Merkel lifted a weight from Europe's shoulders by agreeing to a new Greek bailout, but Germans may feel her apparent victory in making bank contribute is outweighed by having ceded more power to Brussels.
The German chancellor had sparked a euro sell-off two days before Thursday's crisis summit by warning the outcome would not be "spectacular" -- the kind of prudence that has given her a reputation for dragging her feet on Europe's debt woes.
In the event, her pre-summit huddle with France's Nicolas Sarkozy and the head of the European Central Bank enabled a far-reaching deal. While it is likely to trigger the euro zone's first sovereign default, it also provides new powers to stop contagion spreading to bigger economies like Italy.
Some of her conservative German constituents hailed France's acceptance of Merkel's insistence that private creditors share the cost of a second Greek bailout as "a formidable success."
"In terms of what was expected in recent days, the summit is a pleasant surprise," said conservative daily Die Welt. But it went on to say that "actually the glass is half empty" as the summit's effectiveness at stopping contagion was "questionable."
The Financial Times Deutschland took a similar line, saying Merkel had scored a success by getting the French to accept that private creditors should contribute, but noting that Greece's debt problems were far from over.
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