[QODLink]
Inside Story
Saving the euro
As European leaders try to keep the euro stable, we ask if Europe is facing a leadership problem or a structural crisis.
Last Modified: 08 Dec 2011 10:49

Leaders of Germany and France have come up with their new big idea to save the euro. But a leaked report ahead of a crucial EU debt summit revealed that Herman Van Rompuy, the European Council president, has proposed a fast-track "fiscal compact" that does not need a national referendum or ratification by parliaments of each eurozone country.

Germany and France want all of Europe to follow a German fiscal discipline - spending as much money as they receive in taxes, and no more. Angela Merkel, the German chancellor, believes the only way to achieve that is to enshrine the budget rules in EU treaties. That way, the EU could get tough and impose stiff penalties on countries that overdraw.

Another key issue is the role of the European Central Bank (ECB). If the ECB starts buying eurozone countries' bonds on a massive scale, it would mean a radical change in its role as it was not set up to be a lender of last resort or to be used as an EU bailout fund.

Some argue that in the longer term, greater ECB flexibility could lead to eurobonds - bonds that pool eurozone debt - which will even out the current imbalances. But for now, Merkel says eurobonds offer no solution to this crisis. Her new plan seems to involve the EU guaranteeing the debts of its member states.

As the eurozone debt summit draws near, there seems to be confusion in Europe with proposals coming in from all sides. But are any of them credible enough to resolve the current situation? Is Europe experiencing a leadership problem or a structural crisis? Can European leaders win the fight to keep the euro a stable currency?

Inside Story, with presenter Stephen Cole, discusses with guests: Ansgar Belke, the research director at the German Institute of Economic Research; Pieter Cleppe, the head of think tank Open Europe's Brussels office; and Clem Chambers, the CEO of ADVFN, Europe's largest financial website.

"We are no longer in the world of economics. We are in the world of politics, and politicians are not necessarily that great in economics. Since the balloon went up with the credit crunch and particularly now with the sovereign debt crisis, it is no longer about real economics. This is all politics. The fundamentals are [that] most of Europe is very broke, America is very broke, [the] UK is very broke, and to fix that is going to take a complete realignment."

Clem Chambers, the CEO of ADVFN

Source:
Al Jazeera
Topics in this article
People
Country
Organisation
Featured on Al Jazeera
An innovative rehabilitation programme offers Danish fighters in Syria an escape route and help without prosecution.
Street tension between radical Muslims and Holland's hard right rises, as Islamic State anxiety grows.
Take an immersive look at the challenges facing the war-torn country as US troops begin their withdrawal.
Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
Featured
Anti-government secrecy organisation struggling for relevance without Julian Assange at the helm.
After decades of overfishing, Japan is taking aim at increasing the number of bluefin tuna in the ocean.
Chinese scientists are designing a particle-smashing collider so massive it could encircle a city.
Critics say the government is going full-steam ahead on economic recovery at the expense of human rights.
Spirits are high in Scotland's 'Whisky Capital of the World' with one distillery thirsty for independence.