Is the problem a lack of Eurozone leadership?
Not really. The FT’s Gideon Rachman explains:
Over the weekend Tim Geithner, the US Treasury secretary, displayed palpable impatience with what the Americans see as a lack of political leadership in Europe. But the problem that is bedevilling the currency is not ultimately to do with leadership. It is more fundamental than that. The fact that national loyalties are much stronger than any common European loyalty means leaders are constrained in the solutions they can feasibly consider.
In most European Union countries, including Germany, the euro was introduced without securing the direct assent of voters. It was assumed that voters would learn to love their new currency, when they saw that it led to a more prosperous and powerful Europe. But now that the single currency is instead associated with pain, austerity and debt, the limits to European solidarity are clear.
So when Angela Merkel, the German chancellor, rules out “eurobonds” (debt issues backed by all nations using the euro), she is not being unimaginative or miserly. She simply knows German voters will never accept underwriting the debts of southern Europe on a permanent basis. The voters of Finland and the Netherlands – the other northern European creditor nations – are more hardline than the Germans in their rejection of this notion. Meanwhile, anger against the flinty and self-righteous northern Europeans is mounting in austerity-hit nations such as Greece, Portugal, Spain and Italy.
Awkward people, voters. A lot of pain could have been avoided if they had been properly consulted before the euro had been launched, but then that was not the Brussels way.