Eurozone bailout dream

Eurozone’s vision for collectivity gets a shot in the arm. The agreement to create a bailout fund for member states and to coordinate their economic policies is a milestone achievement. Perhaps, true to the essence of sharing their sovereignty, it was not an easy decision to make, especially taking into account the reservations expressed by London and an unbecoming attitude of economies of the fringes such as Portugal.

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Published: Sun 27 Mar 2011, 11:07 PM

Last updated: Mon 6 Apr 2015, 6:57 PM

This deal in Brussels on Saturday is likely to provide the 27-member geo-economic-cum-political union with a cushion to fend off debt crisis and stand strong in case of bankruptcy fears. The ‘comprehensive package of economic measures’ will further the Union’s policies in the realms of pension, taxation and non-developmental spending, thus integrating the region’s social policy in a renewed sense of commonality.

Berlin needs to be complimented for leading from the front. Europe’s growth engine has rightly diagnosed the prescription of staying safe in tumultuous times, as the United States, Japan and the developing economies were slow in responding to the crisis. Moreover, the failure of austerity drives worldwide in the wake of slump in production and spending has brought additional responsibilities on governments busy in striking a balance between demand and supply, and also ensuring the fact that budget constraints are met without opting for long-term borrowings. Yet, the pact to funnel in money for a regional fund is quite promising. The proposed 700 billion euro fund, mandating each member to pour in 80 billion euros of hard cash in five equal installments will, at least, dole out the regional markets from liquidity crunch, inevitably coordinating their trade surpluses and reserve funds. This is a promising development at times when tension is evident between bankrollers and the bailed-out states of the European Union. The precautions that the EU has taken from the Wall Street fiasco are worth emulating. After successfully taming the wild banks and streamlining the international donors, the union is making efforts to get member countries huge borrowings come down. The battle to safeguard the euro is yet far from being won. Germany’s desire to see the target of keeping government deficits to below three per cent of GDP is in need of being realised. The pledge in Brussels has to see the light of the day.


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