Well, it’s December 2nd, and that means the quarterly meeting of the European Council in Brussels is now less than one week away. There is a lot depending on the outcome of this meeting; indeed, if a number of commentators are to be believed, if the Council fails to solve the European debt crisis by Friday night, the Eurozone will break up, the Euro will cease to exist, and generally Everything will be ruined Forever. However, there is good reason to take such statements with a healthy bit of scepticism, not least because we’ve heard the same thing again and again over the last six months or so from a succession of commentators, experts and investors, declaring the imminent breakup of the Eurozone with varying degrees of conviction.
Personally, I don’t entirely buy the Euro breaking up on December 12th as a likely scenario – there is far too much political investment in the concept of the Euro and its importance for the Union as a whole, and the consequences of a breakup would be much too severe for it to simply disappear from one day to the next. That said, if next week’s meeting ends without some substantial and proactive decisions having been made, that would be a very bad sign. As set out in the Treaty of the European Union (Art. 15), the Council “…shall provide the Union with the necessary impetus for its development and shall define the general political direction and priorities thereof.” If ever there was a time when impetus, direction and prioritization were needed, this is it, and if it turns out the Council – representing the Member States as a whole – is unable to provide those things, it will be yet another blow to the confidence in the European leadership that is already shaky enough as it is.
What can we actually expect to come out of the meeting, though? While the challenges to the Euro are far too deep and complex to fix in one blow, as Angela Merkel has made clear today, the ideal scenario would be a comprehensive and visionary roadmap for the next perhaps six or twelve months that lays out a process of treaty reform and introduction of financial and regulatory measures to address the strutural causes of the crisis. A much less preferable outcome would be another round of temporary and half-baked solutions to the immediate problems in the hope of calming ‘the markets’, an approach that has been tried repeatedly over the past year, and just as repeatedly turned out not to work. However, the worst-case scenario is a meeting that fails to reach a consensus altogether and ends simply with a loose statement of intent but no concrete action – that would reveal a deep crisis within the European leadership and that, if anything, could turn out to be the death blow to the Euro.