Main focus of Wednesday, August 17, 2011

Economic government to save the euro

German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed economic government and a debt brake for all 17 euro countries at their meeting in Paris on Tuesday. While some commentators see the summit as pointing the way out of the debt crisis, others criticise the decision not to introduce euro bonds.

El País - Spain

It is a good sign that Germany and France have spoken out in favour of an economic government in the Eurozone, writes the left-liberal daily El País: "The initiatives agreed by German Chancellor Angela Merkel and French President Nicolas Sarkozy to deal with the recent difficulties in the Eurozone are a hopeful sign for the medium term. ... The idea of forming a council consisting of heads of state and government led initially by Van Rompuy confirms the desire to move towards stronger fiscal integration of the Eurozone countries and wards off the possibility of Germany and the richer countries splitting off. This latter option was emerging as the most feared scenario in view of the difficulties experienced by the peripheral economies. There is no better alternative to the Franco-German alliance." (17/08/2011)

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Wirtschaftswoche - Germany

If the resolutions made at the meeting between Angela Merkel and Nicolas Sarkozy are implemented they will take the Eurozone and the EU into a new phase, writes the online edition of the weekly Wirtschaftswoche: "Until now national egotism regarding economic and financial policy has been the biggest obstacle to further European integration. Such an attitude is even responsible for the tensions over the euro we are currently witnessing. If despite all this a debt brake across Europe is pushed through it would be a victory for the German culture of stability. After its dramatic experiences in the euro crisis and the vulnerable state of its triple A rating, France at least seems resolved to take the path of stability. ... In fact the meeting in Paris should smooth the ruffled feathers somewhat. Nonetheless, sceptics are right to ask just how the European debt brake is to be implemented later in the individual countries if the governments want nothing to do with it. But until then there's still a little time - and hope." (17/08/2011)

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Hospodářské noviny - Czech Republic

The meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel has produced an ambitious euro rescue plan which, however, many states reject: "Both countries are determined to continue harmonising budgetary policy regardless of the rest of the Eurozone. This confirms that there is indeed a two-speed monetary union, and it also confirms the end of the equality among its members. It's perfectly clear who calls the tune. ... Basically, Sarkozy and Merkel are backing a plan for federalisation and unification. But this plan has a rather negative reputation. If the euro is to survive there is no other option but to complement it with a common budgetary policy. Provided you ignore the fact that this plan doesn't really have the backing of the members of the Union." (17/08/2011)

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Les Echos - France

The solution to the debt crisis proposed by Nicolas Sarkozy and Angela Merkel does not foresee the introduction of euro bonds. Nevertheless such securities are the sole way out of the crisis, writes the business paper Les Echos: "Not just as a way out of the crisis, but also to further the construction of Europe and prevent it from imploding. Because the crisis the Eurozone finds itself in came about within a shaky monetary union with a common currency and autonomous budget policies. The countries that have started to falter because of their excessive public spending no longer have monetary policy options at their disposal to get back on their feet. They will be attacked as long as speculators trade their debts on the markets. And those countries that have had sound policies all along will not be spared in the ensuing crash." (17/08/2011)

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The Economist - United Kingdom

By not introducing euro bonds Merkel and Sarkozy have failed to calm the markets, the online edition of liberal business magazine The Economist writes: "After their summit, Ms Merkel and Mr Sarkozy both dismissed the calls for the issuing of common Eurobonds. Instead, said Mr Sarkozy, they had agreed to revive proposals for a tax on financial transactions, and to press for all the Eurozone countries to have balanced-budget rules written into their constitutions. The prospects of achieving either of these, in the short term at least, do not look great: they are, at best, longer-term solutions when what the euro-area crisis needs is something much more short-term. Although stockmarkets in Europe had recovered much of their earlier losses by the end of Tuesday's trading, the summit will have done little to reassure nervous investors that the Eurozone's leaders are any closer to finding a way out of the crisis." (17/08/2011)

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Die Presse - Austria

Rather than focus on the creation of a European central state we should discuss abolishing the common currency, the liberal-conservative daily Die Presse writes with an eye to the proposals tabled by Merkel and Sarkozy on Tuesday in Paris: "The European central state ... is exactly what people don't want. And they have repeatedly been promised that it will never come about. Or at least not without their approval. The Europeans are being pushed and shoved in the direction of enforced solidarity and a central state by means of a growing number of supposedly 'unavoidable' steps. ... Europe introduced a common currency without taking the necessary steps beforehand, because they weren't politically enforceable. Now the politicians are blackmailing their citizens with the words: 'Either you agree to the central state or the euro will explode.' What if it explodes anyway? Then everyone will regret not separating what never belonged together while there was still time." (17/08/2011)

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