Euro-zone summit ends in stalemate, again

PUBLISHED : Sunday, 16 December, 2012, 12:00am
UPDATED : Sunday, 16 December, 2012, 5:10am

European leaders wound up their final summit of 2012 in much the same manner as they started the year - playing for time, crossing their fingers, hoping the worst is behind them.

In the almost three years since the Greek drama erupted in February 2010 and spread quickly around the euro-zone fringes, the leaders have never quite managed to get ahead of the curve.

Last week's summit in Brussels repeated the pattern. It was supposed to lay out a grand plan and timetable for reforming and stabilising the euro regime through a battery of federalising political and fiscal moves. In the event, the documents from the EU council president, Herman van Rompuy, were shredded amid more clashes over fundamentals between Berlin and Paris, while an even more ambitious blueprint from European Commission president Jose Manuel Barroso was simply ignored.

Van Rompuy, who has had a very bad month, was told to come back next year with a better, more modest plan. The mood was darkened further by German Chancellor Angela Merkel dismissing claims that the worst was over for the euro zone and stressing that the bloc faced two years of painful reforms, slow growth and high unemployment.

"The changes we are going through are very difficult and painful," she said. "We have tough times ahead of us."

Despite the stalemate, leaders concluded their summit keen to list achievements. A year ago Greece's days in the euro looked numbered. Last week it got €34.4 billion (HK$349 billion) in bailout funds, albeit six months late. There will be no departure from the euro soon.

The bailout fund, the European stability mechanism, an embryonic European monetary fund, is up and running. There is agreement it can be used to rescue failing banks without adding to government debt, though there is no deal on whether, and when, to do that.