یورو Collapse: What Is the Real Risk?

Twice in the course of a month, Frau Merkel pulled her weight and got what she wanted from everyone in the EU. It happened first, at the end of 2011, after the یورو Summit of 8 and 9 December, when she succeeded in imposing her rules of the game to the whole of Europe: strict fiscal discipline and austerity. Growth that had been a French and Italian concern was firmly put on the back burner. Even firewalls to defend Euro-government in distress (including additional funds to the International Monetary Fund and the European Financial Stability Mechanism) took second place.

Moreover there was a short-lived moment of euphoria. The media made a show of the 26 countries pulling together around Merkel’s disciplinarian cure for the Euro. While one major member of the Union – the UK – opted out with a flourish. Cameron claimed he vetoed Merkel’s proposed amendments to the Treaties of the European Union to “protect the interests of the City”. Of course the City is important for the UK: it accounts for 10% of national product. But the City begged to differ and several bankers publicly complained that they risked losing markets in Europe.

Regardless of what City bankers had to say, the British bulldog found itself out of the European ring. The British generally rejoiced, the media trumpeted that Britain would build a Europe outside the Euro. Conservatives crowed and welcomed Cameron as their new hero.

At the recent European Summit held on 30 January the scene was repeated, with Frau Merkel once again calling all the shots. This time 25 governments agreed to move ahead with strict budgetary discipline rules. Handing over stray governments to the Judge’s rules at the European Court of Justice. 25? Yes, once again, the UK pulled out and this time it was followed by the Czech Republic. The Germans didn’t mind – actually nobody minded because the Czechs were deemed unimportant by everyone and the UK’s position was nothing new.

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