How many summits does it take to NOT solve the eurocrisis?
- By Uri Friedman
Uri Friedman is deputy managing editor at Foreign Policy. Before joining FP, he reported for the Christian Science Monitor, worked on corporate strategy for Atlantic Media, helped launch the Atlantic Wire, and covered international affairs for the site. A proud native of Philadelphia, Pennsylvania, he studied European history at the University of Pennsylvania and has lived in Barcelona, Spain and Geneva, Switzerland., Hillary HurdHillary Hurd is an editorial researcher at Foreign Policy.
“As a general rule, meetings make individuals perform below their capacity and skill levels,” Reid Hastie, a professor of behavioral science at the University of Chicago’s Booth School of Business, once wrote. “[P]lease, don’t just call a meeting and hope the magic happens. Take charge and take personal responsibility for meeting its objectives, whatever they are.”
It’s advice that European Union leaders would have done well to consider as they kicked off a closely watched two-day summit in Brussels on Thursday, while Italy and Spain watch their cost of borrowing soar. With France and Germany at odds about whether to address the European debt crisis by pooling eurozone debt or better integrating the region financially and politically, German Chancellor Angela Merkel has already tried to tamp down expectations for this week’s summit, which is expected to produce a stimulus package and plans for a banking union.
“There is no quick solution and no simple solution,” she warned in Berlin on Wednesday. “There is no one magic formula … with which the government debt crisis can be overcome in one go.”
The thing is, when it comes to major EU summits in Brussels, the region’s heads of state haven’t had one go — they’ve had roughly 20 since 2010 (albeit with a changing cast of characters, as 14 of the 27 EU countries have switched leaders since the debt crisis began). And if the previous crisis-management meetings are any guide, we should expect this week’s summit to be long on talk of turning points and short on game-changing results. Here’s a look at what European leaders have accomplished in their previous gatherings — and how they’ve chosen to frame those achievements.
FEB. 11, 2010
Action: European leaders discuss troubling developments in Greece, which recently announced that its debt had reached the highest level in the country’s modern history and unveiled austerity measures to slash the soaring budget deficit.
Assurances: In a joint statement, the assembled heads of state pledge to “take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole.” They call on Greece to cut spending and add that “the Greek government has not requested any financial support.”
MARCH 25, 2010
Action: Eurozone leaders work with the International Monetary Fund to create a $29 billion safety net for Greece.
Assurances: Greek Prime Minister George Papandreou boasts that the package “guarantees the protection of financial stability in the eurozone” and that “no other measures are needed” (the German press is no less effusive, with one headline screaming, “Euro crash avoided!”). But EU President Herman Van Rompuy sounds a note of caution. “We don’t view this as a miracle cure,” he says. “It is an important part of the cure, no more.”
MAY 7, 2010
Action: Shortly after bailing out Greece, eurozone leaders hammer out plans to check the spreading sovereign debt crisis. Days later, European finance ministers roll out a $1 trillion emergency package, which includes a European Financial Stability Facility (ESFS) that can provide financial assistance to troubled eurozone countries.
Assurances: French President Nicolas Sarkozy states that the “leaders of the eurozone have decided to do everything in their power to ensure the stability and unity of the currency union.”
JUNE 17, 2010
Action: European leaders adopt the Europe 2020 Strategy for long-term growth and introduce a new “European Semester” system of economic policy coordination at what one European diplomat dubs a “normal meeting” for a change.
Assurances: “We are sending a clear signal to citizens and to the markets and also to our partners: We will consolidate our budgets and reduce our debt, without strangling our economies and putting people’s well-being at risk,” European Commission President José Manuel Barroso declares in a statement
SEPT. 16, 2010
Action: In a summit overshadowed by France’s crackdown on Roma migrants, the European Council does not dwell on the debt crisis.
Assurances: In a high-minded reflection on the region’s economic governance reforms, the council issues a statement welcoming the “important progress made … on the development of a new macro-surveillance framework to monitor and correct unsustainable competitiveness divergences and imbalances in a timely manner and on the strengthening of national fiscal frameworks.”
OCT. 29, 2010
Action: European heads of state endorse new budget rules and discuss amending the EU;’s Lisbon Treaty to create a permanent system for responding to financial crises.
Assurances: “We are doing everything to ensure that there will never be a repeat of the crisis we have had,” Merkel explains. “One can already say that the euro will be strengthened.
DEC. 16, 2010
Action: A month after bailing out Ireland, European leaders agree to create a permanent European bailout fund called the European Stability Mechanism (ESM) to replace the ESFS in 2013.
Assurances: “We are ready to do everything that is necessary to ensure the financial stability of the euro area,” Barroso declares. European officials promise to unveil a “comprehensive package” to resolve the eurozone debt crisis once and for all in March.
FEB. 4, 2011
Action: European leaders clash over a pact supported by France and Germany to strengthen the competitiveness of weaker eurozone countries as part of a larger effort to expand the region’s bailout fund.
Assurances: The outlook in the eurozone “has substantially improved,” Van Rompuy observes. “The decisions taken last year … are clearly paying off. However, we are aware that there is still a lot of homework to do. It is not a time for complacency; we will learn lessons from the crisis.”
MARCH 12, 2011
Assurances: “The most important thing of this summit was that Europe developed the necessary measures for a systemic approach,” notes Portugal’s then Prime Minister José Sócrates. “All the countries, including Portugal, have done their share and assumed their commitments.”
MARCH 25, 2011
Action: A political crisis in Portugal, which will ultimately result in a bailout for the country, prevents European officials from unveiling a package that meets market expectations. Officials delay increasing the European rescue fund but do strike deals on how to fund the ESM and better coordinate economic policy.
Assurances: “We adopted today a comprehensive package of measures which should allow us to turn the corner of the financial crisis and continue our path towards sustainable growth,” the European Council says in a statement.
JUNE 24, 2011
Action: EU leaders approve a second bailout package for Greece on the condition that it implement new austerity measures.
Assurances: Barroso, the European Commission president, says there is “a real will of the member states to do what is necessary” while European Parliament President Jerzy Buzek waxes poetic about the predicament confronting the region’s heads of state. “We are like Odysseus, who must sail between the Scylla of mistrustful financial markets and the Charybdis of growing discontent amongst the population,” he explains, adding that Europe is headed toward a safe harbor.
JULY 21, 2011
Action: European leaders agree to reduce Greece’s debt burden and grant new powers to the EFSF rescue fund.
Assurances: “We improved Greek debt sustainability, we took measures to stop the risk of contagion and finally we committed to improve the eurozone’s crisis management,” Van Rompuy announces after the meeting. “When European leaders say that we will do ‘everything what is required’ to save the eurozone, it is very simple: We mean it,” he adds.
OCT. 23, 2011
Action: European leaders move closer to agreements on bank recapitalization and on how to use the region’s bailout fund to prevent bond market contagion, during a meeting that produces heated exchanges between Sarkozy and British Prime Minister David Cameron.
Assurances: Van Rompuy, who had previously pledged that the EU would “finalize our comprehensive strategy on the euro area sovereign debt crisis” at meeting, says those decisions will now have to be made at the next summit.
OCT. 26, 2011
Action: In a marathon 11-hour negotiating session, European leaders reach an agreement to reduce Greece’s debt (by asking private sector investors to accept 50 percent losses on Greek bond holdings), recapitalize banks, and strengthen Europe’s bailout fund.
Assurances: “The summit allowed us to adopt the components of a global response, of an ambitious response, of a credible response to the crisis,” Sarkozy proclaims. Merkel is equally triumphant. “We Europeans showed that we are able to reach the correct conclusions,” she says. “We found agreement on a complete package.”
DEC. 9, 2011
Action: Most EU countries adopt an intergovernmental “fiscal compact” that includes mandatory penalties for states that exceed deficit targets, with Britain refusing to take part.
Assurances: “The stability union, the fiscal union will be developed step-by-step in the next years,” Merkel remarks, “but the breakthrough has been achieved.”
JAN. 30, 2012
Action: European leaders approve the fiscal compact and the eurozone’s permanent rescue fund.
Assurances: European Central Bank President Mario Draghi greets the fiscal agreement as “the first step towards a fiscal union,” adding that “it certainly will strengthen confidence in the euro area.”
MARCH 2, 2012
Action: European leaders sign the fiscal compact but delay a decision about beefing up Europe’s financial firewall.
Assurances: “I think we are turning the page,” Sarkozy asserts. “We are in the midst of exiting this crisis.” The EU’s closing statement includes 24 mentions of the word “growth” and only one mention of the word “crisis,” according to Der Spiegel.
MAY 23, 2012
Action: European leaders urge Greece to stay committed to austerity and remain in the eurozone, while new French President François Hollande, a Socialist who campaigned on a pro-growth agenda, makes his first appearance at the meetings and expresses support for Eurobonds.
Assurances: “Nothing will be decided today,” Merkel explains. “It’s an exchange of opinions and then a final agenda at the end of June.”
Despite their rosy pronouncements at the end of these summits, European leaders have often said that resolving the debt crisis is a marathon, not a sprint. But even marathons end eventually. Europe’s inexhaustible capacity for self-delusion, it seems, may never run out.