domenica 16 settembre 2012

eurozone warns against complacency

Friday’s first light had barely broken over Nicosia when the gathering of eurozone finance ministers was confronted with a familiar task: how to deactivate alarm bells. Yet this was a slightly different challenge – not the siren of markets or stricken sovereigns but the smoke detector standing between Jean-Claude Juncker, the eurogroup chairman, and his early morning cigarette. Alarm disconnected, a two-day session began that was – seemingly against the odds – free from screaming headlines and anxious investors. For once the eurozone had time to play with and the sense of relief was palpable. The week-old European Central Bank bond-buying pledge was still soothing markets and potentially calamitous political beartraps – from German constitutional court rulings to Dutch elections to calls for an imminent Greek eurozone exit – had been dodged. “If we can continue going this way then one has to be very optimistic,” said Mario Draghi, the ever-cautious ECB president. He even reportedly found time for a post-lunch siesta. Jacek Rostowski, Poland’s finance minister, thanked Mr Draghi for taking “the catastrophic risk off the table”. However, this was no place to relax and the warnings against complacency were as ubiquitous as the grilled halloumi cheese. Speaking over dinner, Vassos Shiarly, the Cypriot finance minister, reminded his guests of his country’s dire financial straits when he thanked the European Investment Bank for paying for the spread. Mr Draghi prefaced his optimism with a warning: “What we see now are the first signs of a more normal working, but we still have a long way to go.” Jörg Asmussen, an ECB board member, sternly told governments to waste no time and “do their homework”. Paris vainly pressed for fast action on banking union, crisis-fighting tools and extra support for Spain – fearful that “otherwise everything remains theoretical and our problems are concrete”, in the words of Pierre Moscovici, France’s finance minister. Luc Frieden, finance minister of Luxembourg, said: “It is clear a new element can come at any moment to ignite the crisis again.” But Wolfgang Schäuble, the German finance minister who celebrates his 70th birthday on Tuesday – dominated proceedings. He warned against haste but his main objective was to keep at arms length any option that would further burden German taxpayers or require Bundestag approval. So tough political decisions on cash-strapped Greece and Spain were pushed to October – giving both countries one more chance to get back on track, or at least unveil painful reforms that could help justify future leniency or aid from their creditors. There were signs Greece would be given breathing space on the stringent targets set to its €130bn bailout – reflecting the shift in political mood in Berlin against Athens leaving the eurozone. The difficult matter of how to finance the delay was left for another day.
More striking still was the heated debate on banking union, which cast serious doubt on the European Commission proposal to make the ECB the eurozone’s top banking watchdog by January 2013. The initiative was born at the height of market pressure in July, when EU leaders pledged to create a common eurozone bank supervision system that could then allow common eurozone bailouts for struggling banks. While Brussels took the urgency at face value and last week proposed a fastracked timetable, finance minister clearly felt able to voice serious second thoughts. Berlin’s reservations are well known: it wants a slower timetable, less centralisation, a focus on big banks and more thought about how it will affect the ECB. More surprising were the ferocious criticisms voiced by Sweden and Poland – non-eurozone countries that may want to opt-in to ECB supervision. The reservations are all the more significant because all 27 EU member states must approve the supervision plan. Anders Borg, Sweden’s finance minister, took almost half an hour listing his complaints in the debate. “No one was interrupting that juggernaut,” said one attendee. Brandishing a copy of the July summit conclusions, Mr Schäuble told his fellow ministers that EU leaders committed to “consider” the reform in December, not decide it. “And today we did consider it,” he later told reporters, after the fractious and inconclusive three hour debate.