Dangerous delays in shoring up the euro

The meeting of the EU's economy ministers at Wroclaw, in Poland, saw the acceptance of some novel, though not original, premises on the debt crisis and the recession. The first and most important consisted in following the International Monetary Fund (IMF) line that European banks need an intensive recapitalization program to enable them not only to cope with the public debts of Greece, Portugal and Ireland, but also to fulfill their obligation to channel a flow of loans to foster recovery in countries such as France, Italy and Spain.

To accept, only now and after the continued failures of stress tests, that the EU banking system needs an injection of fresh capital to fill the gaps opened by the (now chronic) debt crisis, is an unacceptable delay even by EU bureaucracy's standards. Yet delay has been the norm in a euro zone battered by financial hurricanes. It is not exactly reassuring that, amid a persistent national-debt crisis afflicting several major euro-zone countries, informal meetings are being held that do no more than put off the solution of these serious problems to the coming months. The remedies for the anguished situation of Greece, one of the causes of the periodic convulsions suffered by the debt and stock markets, were announced in May of last year, then ratified in July, leaving the specifics for September (with market quotations in general free fall in all EU markets, and risk premiums at record heights). And now they are again being left for October. The strict conditions imposed by German orthodoxy are arousing fears that the input of EU aid, indispensable if Athens is to weather a genuine crisis of survival, will drag its feet endlessly amid the red tape of supervision and bureaucracy, while the country's hospitals are already facing difficulties of supply. This policy of delay and indecision is dangerous and frustrating.

Timothy Geithner's presence in Wroclaw has nothing routine about it. The US Treasury secretary has seen the urgency of solving the Greek problem (an urgency not felt, it seems, in Berlin, Paris or Brussels), and the need to equip the EU with a single Treasury - an agency capable, so to speak, of rapid troubleshooting, and of making decisions at moments of peak speculative pressure. The numerous Councils of Finance Ministers held since 2008 should have served precisely to plan greater fiscal coordination throughout the euro zone and, at the same time, to organize a budgetary homogenization with a single Treasury, possessed of functions far broader than the present European Central Bank (ECB).

But time has been wasted, and is still being wasted. The salvation of monetary unity is still being subordinated to electoral interests in Germany, and to the disjointed moves of France. Piecemeal austerity measures are not yielding the desired results. They do not convince the creditors, despite being implemented to calm their nerves. Do France and Germany have an investment-stimulus plan for the peripheral countries, or do they consider that cutbacks alone will liquidate deficit and debt, while fostering recovery?