EUROPEAN DIARY:Europe's leaders just about pass the currency studies test, but overall they must do better, writes ARTHUR BEESLEY
CLASS of 2010. Continuous assessment. Summer term. Subject: Currency Studies. Grade: C (for effort). Comment: extra diligence required to realise potential.
Europe’s leaders pass the test, just about, with bonus marks for their experimental efforts to avoid catastrophe. As they set forth on their summer break, however, niggling questions about their mastery of the subject remain unresolved.
German star pupil Angela Merkel remains at the top of the class, although she has appeared distracted at times and only vaguely alive to the sensitivities of the crisis. More than once she made things worse by hoisting red flags in Berlin after her lieutenant Wolfgang Schauble signed up in Brussels to special arrangements for their fellow students in Greece.
Her dithering also raised questions as to whether she really appreciates her country’s place in the grand European bargain, the benefit Germany derives from the lucrative internal market being the flip side of its financial support for the union.
Merkel confirmed her supremacy, however, by dictating terms for the rescue of Greece.
Only when she moved could everyone follow – and she moved at her own pace, losing key personnel along the way and public support too. It may have taken a phone call from Barack Obama to convince her of the need for a wider rescue net, but IMF involvement in that deal was a reflection of pressure from Merkel to involve the Washington-based organisation.
This could have implications for her French counterpart Nicolas Sarkozy, who faces a presidential election in 2012, a poll made more difficult by his plummeting popularity. Sarkozy’s potential rivals on the Socialist side include one Dominique Strauss-Kahn, the IMF managing director who is seen by many to have been the only political winner in the euro debacle.
With Strauss-Kahn increasingly visible in the battle to preserve the currency, Sarko made plenty of noise in class and jumped up and down quite frequently to grab attention. But was he truly a pivotal figure in the drama? Not really; it was Merkel who set the tone. In many respects, too, Sarkozy was outshone by his strong-willed finance minister Christine Legarde, a woman of noted directness.
Given the nature of the issues in play, there was little by way of humour in this crucible. One of the few laughs came early one morning at the end of a euro finance ministers’ meeting chaired by Jean-Claude Juncker, Luxembourg’s prime minister.
Asked why the talking went on after midnight, Juncker lived up to his reputation for offbeat humour.
“Because we’re crazy,” he said. “Madness is irrational, you can’t explain it.”
In the EU institutions it was Jean-Claude Trichet of the European Central Bank who held the initiative, even though he had ranked among the most strident opponents of IMF involvement.
As he embarked on a series of ad hoc interventions that expanded the reaches of the bank’s policy machine, it was a case of action matching words of concern. Unlike most of his classmates, Trichet seemed invigorated by the intellectual challenge posed by the crisis.
For the new boy in class, Herman Van Rompuy, it was a chaotic and bruising baptism. He was chosen for his skills as a conciliator and chairman when he was made president of the European Council.
At Van Rompuy’s first summit the no-bailout clause was ditched. At key meetings later, he suffered the indignity of being excluded by Merkel. He saw shouting matches erupt at another summit. No one in class doubts his brain power, but he has developed little by way of a public profile for his important new position. His powers of political persuasion will be put to the test next term in the search for a definitive deal on new economic governance rules.
Van Rompuy’s arrival might have dimmed the influence of European Commission president Jose Manuel Barroso. Faced with Merkel’s reluctance to help Greece, however, it was Barroso who became the chief public advocate for intervention when the narrative was defined by Berlin’s hostility. When the time came to create a bigger rescue net, EU leaders chose a largely inter-governmental solution over the plan presented by the commission.
For others, the crisis was a nightmare. Spanish premier Jose Luis Zapatero saw his country’s rotating EU presidency blighted by its own economic problems. The European obscurity of Italian premier Silvio Berlusconi was confirmed by his failure to make any mark on the debate.
Then there is the Irish scholar Brian Cowen, who frequently conveys the impression that he would rather not attend his classes in Brussels at all. It’s quite possible he believes belated success in his referendum lessons last autumn was the summit of his European effort. If his classmates ever flunk the currency test, however, Cowen would be in a right old fix.