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Thursday 8 December 2016

Maeve Dineen: Success in this week's euro summit won't be obvious but failure will

Published 05/12/2011 | 05:00

I'M sure you are sick of reading about crucial European Union summits in this column. You are probably also sick of the hype and the last-minute breakthroughs that turn out to be anything but. Many have lost interest in the eurozone crisis at this stage and don't hold out any great hopes for this week's summit. That's understandable but it is also wrong.

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This summit is too interesting to ignore and will probably produce the breakthrough we need.

It is important because it really is the week when we will find out whether we will still have a single currency. Success won't be obvious but failure will.

If our leaders don't agree to a comprehensive set of long-, medium- and short-term solutions, we will see the present liquidity crisis in Europe's banks become so bad that all credit will dry up across the continent, triggering a catastrophic banking collapse.

I am optimistic that this won't happen. I'm also optimistic for Europe right now because I think that the agreement that is taking shape is the right compromise. The focus on treaty change is also right.

Our institutions need to be overhauled, but there is nothing fundamentally wrong with the eurozone.

Of course, individual countries have problems but by almost all normal measures of economic success -- debt, growth, inflation, currency stability, savings ratio or borrowing -- the eurozone outperforms the US and the UK.

The eurozone is not the basket case that people often assume. Yes, of course the eurozone and the decision-making process are difficult to understand.

This is a problem for the markets and for democratic accountability but it is not insurmountable.

Right now, the markets are annoyed that the European Central Bank won't act like the Federal Reserve or the Bank of England but there is something childish in assuming that all central banks must act in the same way.

The European Union is a unique project which gives large and small countries a say in the world's affairs that would be denied to an individual member.

War

It is a project that has kept the member states free from war for 66 years. It has created a currency that is accepted everywhere from Hindu Kush to the jungles of the Amazon. It is a success.

Unique institutions require new and often alien forms of governance.

New projects require courage and often involve mistakes and procrastination. Europe has lacked courage at times over the past few years and shown a penchant for procrastination, but there have also been moments of brilliance.

There will be a long road to get back on track. Here in Ireland, we will almost certainly have to give up many cherished traditions.

Like almost everybody else, I will be sad to see some disappear but I am also looking forward to seeing many cobwebs swept away.

One thing I won't miss is the tired old budget hoop-la. The parading of ministers' wives and children, the fixed grin as briefcase or compact disc is held high for the photographers, the absurdly late speech, the meaningless riposte from the poor opposition spokesmen who have had no chance to examine the proposals in detail.

The interest groups who parade through the finance minister's office in the weeks beforehand. The dull debate in the weeks afterwards.

The days are numbered for this absurd and creaking theatre and we shouldn't shed a tear.

Almost everything in today's and tomorrow's budget should have been done long ago and costed properly.

Budgets are always interesting and important at a time when every penny in our pockets is hard got, but the real action is in Europe this week. Europe's leaders could still conceivably destroy a currency. There are many forces inside and outside Europe that want to weaken Europe and ensure that the US and China control the currency markets.

They could still win the day but I doubt it.

Europe's economic fundamentals remain solid while the continent's somewhat stolid leaders are certainly no worse than the crazy Republicans who dominate the US Congress or the dictators who run China.

They don't deserve to fail for all their failings and neither does the single currency.

Irish Independent

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