Leading article: Tentative progress, but Germany remains the key

That the solution to the crisis is more Europe, rather than less, should not be lost in the rhetoric

Share

After months of dithering and denial, the last week has seen a flurry of activity in the eurozone – and, for once, it has been as much among Europe's policymakers as in its gyrating stock markets. But it is today's vote in the German Bundestag that is the real gauge of whether the talk will turn to action.

The fact that there has been real progress in recent days should not be downplayed. It is absurd that it took calls for action from the likes of the US President and the head of the World Bank to impress on Europe's bickering leaders the severity of the situation. But it is gratifying that last week's desperate chorus does appear to have had some effect, and hints from the IMF meeting in Washington last weekend suggest something more than another short-term policy sticking-plaster is at last on the table.

That merely the ghost of an unconfirmed plan was enough to stabilise the markets is a measure of how much has been missing so far. The likely proposals are good ones, including writing off a higher proportion of Greece's debts and leveraging the €440bn European Financial Stability Facility (EFSF) up to €2 trillion (which should be enough both to support ailing EU debtor nations convincingly and to recapitalise the banks hit hard by the extra losses on their Greek debt). Arguably, such measures were due months ago. But it is still a relief that they are finally being considered. It also helps that this week has seen positive developments in Greece. Notwithstanding the strikes and protests, Athens cleared a major hurdle when lawmakers passed highly contentious new property taxes, clearing the way for talks about the next €8bn tranche of rescue funding.

Meanwhile, José Manuel Barroso is approaching the crisis from the other direction, setting out bold plans to resolve the issues that allowed it to happen in the first place. Alongside specific proposals – for eurobonds and a financial transactions tax – the President of the European Commission used his second annual "state of the union" speech in Strasbourg yesterday to make the case for "completing our monetary union with an economic union".

It is too easy to dismiss Mr Barroso's ambitions with a shrug of "he would say that wouldn't he". The analysis that the euro's problems spring from implementation oversights rather than fundamental flaws is right. And while deeply politically unpalatable to increasingly sceptical EU voters – not least here in Britain – the conclusion that the solution to the crisis is more Europe, rather than less, is one that should not be lost in the rhetoric of catastrophe.

So far, so good. But the advances in thinking the hitherto unthinkable still have to be translated into domestic politics. Yesterday Finland became the seventh out of the 17 eurozone parliaments to agree to tweaks to the bailout fund agreed in principle in July. But it is Germany that is the bellwether. And today's vote – on changes under which Germany's contribution to the EFSF rises from €123bn to €211bn – takes place with as many as 75 per cent of voters against it. Despite the dire predictions, it is unlikely that the German Chancellor will lose the vote altogether. What is in question is whether it will pass without relying on opposition support, an outcome that would not necessarily trigger an election but would leave Angela Merkel dangerously exposed.

Among all the inadequate responses to the crisis, perhaps the most egregious is Ms Merkel's failure to explain to her electorate that the cost of not bailing out Greece far outweighs the cost of saving it. Even if she succeeds today, the next round of EFSF changes, let alone Mr Barroso's proposals, are still to come. Progress, yes; but far from enough.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Business Development Manager / Sales - OTE £45,000

£35000 - £45000 per annum: Recruitment Genius: This company is a solutions / s...

Recruitment Genius: Sales Executive - OTE £45,000

£18000 - £45000 per annum: Recruitment Genius: A Sales Executive is required t...

Recruitment Genius: Test Development Engineer

£35000 - £40000 per annum: Recruitment Genius: Are you inspired to bring new a...

Recruitment Genius: Trainee Motor Engineer

£14000 - £18000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

Read Next
Kennedy campaign for the Lib Dems earlier this year in Bearsden  

Charles Kennedy: A brilliant man whose talents were badly needed

Baroness Williams
Nick Clegg (R) Liberal Democrat Leader and former leader Charles Kennedy MP, joined the general election campaign trail on April 8, 2010  

Charles Kennedy: The only mainstream political leader who spoke sense

Tim Farron
Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview