International Economics

In the Eurozone, Indecision is Final



Wednesday, 05 October 2011 16:53

The FT Deutschland this week reported that Greek Prime Minister George Papandreou was considering resignation. According to one source he feels powerless, because “Greece no longer takes decisions for itself”. The story has since been denied, but if the Greek government isn’t taking the decisions, who is? Not eurozone finance ministers, it seems. On Monday they spent seven hours in a meeting only to conclude that they couldn’t yet reach a verdict on whether the next tranche of Greece’s bail-out should be released or not. This was despite earlier claims from Greece that it needed the €8bn instalment this month, to meet its financing needs.

europeancentralbankWhile the politicians prevaricate, Athens continues to descend into chaos: retired army officers angry at pension changesstorm the defence ministry; civil servants whose jobs are threatened block access to the finance ministry; and strikes and protests continue apace throughout the country. All the time it becomes increasingly clear that the austerity measures are not working. On Sunday Greece admitted it will not meet its deficit reduction targets, and its economy is expected to contract more than previously predicted. Stock markets slide day after day, with the focus currently on the bank Dexia, in trouble because of its eurozone sovereign debt exposures.

The bank, in which both the French and Belgian governments hold a stake following an earlier bail-out, passed stress tests in July, and British chancellor George Osborne has said new tests are now needed before January. It only increases fears about the state of the whole European banking sector – according to theDaily Telegraph one Brussels diplomat said Dexia could be the “canary in the coal mine”. All of which makes it even more remarkable that the only major issue resolved on Monday was satisfying Finland’s demand for collateral in exchange for new loans to Greece, in a deal that analysts said was mostly about political face-saving.

In the last few days non-eurozone countries Denmark, Sweden and the United Kingdom have had their triple-A credit ratings affirmed by Standard & Poor’s. But yesterday fellow rating agency Moody’s followed S&P in downgrading Italy by a massive three notches. It is the first time Moody’s has slashed Italy’s rating since 1993. Surely, soon, eurozone finance ministers will have to do more than just discuss leveraging the European Financial Stability Facility? And do more than merely hint at asking private sector bondholders to take a bigger hit than previously agreed in July in relation to the second Greek bail-out?

On Tuesday the President of the European Central Bank Jean-Claude Trichet made his last appearance in front of MEPs before his term ends and he is replaced by the Italian Mario Draghi. Trichet said the ECB should focus on its primary role of controlling inflation, not act as a lender of last resort. It is up to political leaders, he said, to restore investor confidence in the eurozone. That seems a forlorn hope.

Published in

About the author / 


Leave a reply

You must be logged in to post a comment.

jga bookreview

jga bookreview


jga bookreview

jga bookreview

jga bookreview

jga bookreview

jga bookreview

jga bookreview

jga bookreview


  • New Issue is Out Now!

    Vol. IV | No. V – October-November-December 2018 To Download the Magazine Click Here… CONTENTS 04-06…..World News by Furkan Sahin  08-20…..Terrorism in Syria and Beyond: An Interview with Prof. Alain Gabon by Dr. Rahman Dag 22-24…..Erdogan’s Best Shot is Still in the West by Dr. Murat Ulgul 26-30…..Raqqa vs Kobani – Terrorism vs Revolution by Dr. Rahman Dag 32-34…..Future of…

  • Domestic Politics and the Design of International Institutions

    Abstract Scholars are increasing focused on how and why states design international institutions. International relations theories have historically guided research on these institutions, but have not provided adequate insights into the theoretical bases for their design. Rationalists’ theories of domestic politics offer an alternative approach to understanding institutional design. This study utilizes the positive theory…

  • Five generations after the Balfour Declaration: How do Palestinians Resist and Engender Significant Social Change?

    How to Cite: SELLICK, P. (2018), Five generations after the Balfour Declaration: How do Palestinians Resist and Engender Significant Social Change?. Journal of Conlicft Transformation and Security, 6(2): 139–142. The context of Israeli expansion and Palestinian dispossession Over the past year, a series of anniversaries has occurred which marks the progressive dispossession and displacement of the Palestinians….

  • CESRAN International named the World’s #83 “Best Independent Think Tank”

    CESRAN International is pleased to announce that it has been named the world’s number 83 “Best Independent Think Tank”. The ranking was announced in the 2017 Global Go To Think Tank Index Report compiled by the University of Pennsylvania’s Think Tanks and Civil Societies Program (TTCSP) at the Lauder Institute. CESRAN International was also ranked 77th among the “Top Environment…

  • The Current State of AI as We Begin 2018

    Artificial intelligence (AI) states one recent article is no smarter than a six-year-old. A study that appeared last summer compared the intelligence quotient (IQ) of Google, Apple, Baidu, and Bing AI to the average human 18, 12, and 6-year-olds. The 6-year-old’s IQ was rated at 55.5 while the 12 and 18-year-olds rated 84.5 and 97.0 respectively. The end result rated…