Commentary
Uri Dadush
{
"authors": [
"Uri Dadush"
],
"type": "other",
"centerAffiliationAll": "",
"centers": [
"Carnegie Endowment for International Peace"
],
"collections": [],
"englishNewsletterAll": "",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie Endowment for International Peace",
"programAffiliation": "",
"programs": [],
"projects": [],
"regions": [
"Western Europe",
"Germany"
],
"topics": [
"Economy"
]
}
Source: Getty
Other
The Missing EU Approach
The German position (no new money, no ECB guarantees, and no euro bonds) would place the whole burden essentially on troubled countries to reform with very little additional help from eurozone partners.
By Uri Dadush
Published on Nov 22, 2011
Are there signs of a comprehensive EU approach to the crisis?
No. The last EU summit on October 27 issued a communiqué that contained references to all the needed reforms—increased capacity of the European Financial Stability Facility (EFSF), bank recapitalization, and Greek debt restructuring. It also opened the door for longer-term reforms to the set up of the Economic and Monetary Union (EMU) that would require treaty changes.
However, the devil is in the details and there was no new money pledged for the EFSF, the bank recapitalization gave scope for banks to cut back instead of increase lending, and the Greek debt restructuring lacked crucial elements that still require negotiation. And the intention to reform EMU governance, requiring approval by parliaments across the eurozone, is not sufficiently specified or credible.
However, the devil is in the details and there was no new money pledged for the EFSF, the bank recapitalization gave scope for banks to cut back instead of increase lending, and the Greek debt restructuring lacked crucial elements that still require negotiation. And the intention to reform EMU governance, requiring approval by parliaments across the eurozone, is not sufficiently specified or credible.
Read more
The result is that very little remains of the October 27 package, which is one reason markets are so jittery, and so much has been placed in the lap of the European Central Bank (ECB). The German position (no new money, no ECB guarantees, and no euro bonds) would place the whole burden essentially on troubled countries to reform with very little additional help from eurozone partners. This is unrealistic.
About the Author
Uri Dadush
Former Senior Associate, International Economics Program
Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.
- The Labors of Tsipras
- Greece, Complacency, and the EuroIn The Media
Uri Dadush
Recent Work
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie Endowment for International Peace
- Why Korea’s President Skipped Washington for Silicon Valley and BrasíliaCommentary
Lee’s tour shows how Seoul is reorganizing its diplomacy away from Pyongyang and toward industrial networks and the geography of the compute economy.
Darcie Draudt-Véjares
- The Migration Wave That Embarrassed Morocco and Rattled EuropeCommentary
Most migrants may have left Ceuta, but the effects may linger.
Alejandro Martin Rodriguez, Sarah Yerkes
- Five Years After His Power Grab, Tunisia’s President Has Only Achieved FailureCommentary
Saied’s main accomplishment has been to destroy a decade’s worth of democratic progress.
Sarah Yerkes
- The Drone Attack on Egypt and the Widening Middle East WarCommentary
The targeting of Damietta Port appears to be more than a mere security message.
Amr Hamzawy
- The Channels of China’s Currency Promotion in Gulf MarketsCommentary
Is the Gulf moving beyond the dollar? This article examines how China is expanding the renminbi's role across Gulf markets, what that means for regional finance, and why the future of global currencies is more complex than the de-dollarization debate suggests.
Andrew Bonney
