Issue of the week: Europe’s latest crisis fix

The latest deal to solve the euro zone’s debt crisis has probably saved the common currency for now, but there is “less to it than meets the eye,” said Steven Erlanger and Liz Alderman in The New York Times. Last week’s agreement to create a fiscal union, involving the 17 European Union member countries that use the euro and as many as nine of the 10 that don’t, will allow the EU to oversee national budgets and impose strict limits on deficits and spending. The market’s reaction was initially positive, but as it became clear that it could be weeks or months before the pact is finalized, borrowing costs in the euro zone again began to rise.

No wonder, said Wolfgang Münchau in the Financial Times. This latest move does “nothing whatsoever” to resolve the euro zone’s immediate problems. The proposed treaty-within-a-treaty is little more than “legal gimmickry,” and it won’t restore the loss of market confidence that’s exacerbating the debt crisis. More fiscal discipline is all well and good, said Bloomberg​.com in an editorial. But Europe’s leaders “mostly ignored the crisis around them” when they decided to concentrate entirely on long-term budget cuts, which could stifle growth and condemn some countries to years of painful recession.

Still, closer economic ties are “an important step,” said John Cassidy in New​Yorker.com. The “outlines of a long-term solution are coming into view.” The European Central Bank has long said it needs to see more economic discipline in heavily indebted countries like Italy and Spain before it steps in with much-needed rescue measures. After last week’s promises, that may now happen. The euro zone still faces a “long, hard grind,” but its leaders have “made more progress than many give them credit for.”

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

We’re witnessing the Merkelization of Europe, said Paul Hockenos in ForeignPolicy.com. With the fate of the euro in her hands, German Chancellor Angela Merkel has successfully imposed her Teutonic vision of how countries should be run on everyone else, whether it is good for them or not—and mostly it’s not. We’ll look back on this summit as the moment when Germany emerged as the “undisputed, pre-eminent power” on the Continent, said Ian Traynor in the London Guardian. The solution it has imposed is “a joyless union of penalties, punishments, disciplines, and seething resentments.” That will certainly yield a decade of austerity, but we don’t yet know if it will save the euro.