Deja vu? EU ministers meet on Greece

May 9, 2010
Greek Finance Minister George Papaconstantinou kisses French counterpart Christine Lagarde

Greek Finance Minister George Papaconstantinou kisses French counterpart Christine Lagarde

 

How many meetings does it take for the European Union to
solve a problem? Quite a few — at least in the case of Greece’s
debt crisis
and preventing it from spreading to other euro zone
countries.

There was a definite sense of “deja vu” when the bloc’s 27
finance ministers met on Sunday to approve measures aimed at
ring-fencing Greece’s debt problems.

They were pretty much tackling the same problems as the
leaders of the 16-country euro zone had dealt with at talks on
Friday. The leaders had met to approve what Eurogroup finance
ministers agreed five days before at talks that were called to
build on agreements at a series of EU and euro zone meetings
this year.

Securing agreement among all 16 euro zone countries or all 27
EU member states has never been easy but it is particularly
hard for governments to make deals during an economic
downturn or when they face domestic opposition to a bailout
– as is true in Germany’s  case.

What has the effect of all these meetings been on financial
markets? By Sunday evening, not too much, although  IMF
and EU formal approval for a 110 euro ($148 billion) 
loan package  for Greece over three years did at least help
push up the  euro.

Previous EU action this year has failed to calm financial
markets and ended up undermining the EU’s credibility.

A statement on Feb. 11 and an agreement on March 25 did
not end the crisis. Havoc continued on financial markets
even after the euro zone-IMF deal was worked out.

There was somewhat more expectation on Sunday as the
finance ministers started discussing much larger sums than
have been announced before, but also a sense of deja vu in
the comments made by economists as talks got under way.

The econommists said they were glad the EU saw the urgent
need for an agreement but were not certain enough would
be done to appease markets.

“All in all this is good news, but it is unlikely in itself
to calm markets; it’s all too ‘slow-burner’ stuff,” said Erik
Nielsen, chief economist at Goldman Sachs.

The sums being talked about on Sunday might finally be
the kind of signal markets really want, but EU sources
also made clear talks were progressing slowly.

Perhaps another meeting or two will be needed to sort things
out.

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