The euro: a crisis that defies answers
For the seventh time this year Europe's leaders are in Brussels for a summit.
Most of the previous meetings have been marked by up-beat statements that they stand fully behind the euro and that the crisis is on the way to being solved.
In truth Europe does not yet have a convincing answer to the crisis and the financial markets know it.
Some of the energy at this summit will go towards agreeing treaty changes to the Lisbon Treaty to allow for the setting up of a permanent bail-out fund beyond 2013. Germany would like to see help to other countries in financial distress only being given "in the last resort." There may be some resistance to that.
Most countries do not want treaty changes. The pressure comes from Germany which fears that its Constitutional Court could challenge a permanent mechanism that sets in place precisely what was supposed never to happen - a bail-out fund.
So the treaty changes will be as limited as possible. There is a deep-seated fear in Brussels of having to consult the people in a referendum.
Britain's position is that the new mechanism does not apply to the UK as it is not in the eurozone. It will back the treaty changes but the government will insist that no referendum is needed as the changes do not apply to the UK.
In the draft document there is an undertaking that non-euro states do not have to get involved with the mechanism. Britain is hoping for some form of wording that makes that explicit.
But the European Stability Mechanism will come into force in 2013 and the fire is burning now. The truth is that for the weaker eurozone countries the borrowing costs on the bond markets are too high. Spain was warned yesterday that its debt could be down-graded. Belgium, too, has been shown a yellow card.
The fact is that the current medicine is not working. Greece and the Irish Republic are having to embrace severe spending cuts. No one can see where the growth will come from to pay down those debts.
The markets think the debts of Greece, Spain and Portugal are unsustainable. Next year Spain has "high-financing needs". It will have to raise 170bn euros. The markets doubt it can be done.
There is increasing resistance in Greece and Ireland to what may prove to be a "lost decade" - ten years of cutbacks.
against the latest cuts were the worst since May. In Ireland the opposition - who are most likely to win the next election - have said they feel no obligation to honour Ireland's banking debts and they may well try and renegotiate the EU/IMF loans.
There are many who say that eventually some of these debts are going to have to be restructured.
So what options do Europe's leaders have?
First, some are pushing to expand the European Financial Stability Facility, which at 440bn euros is the main bail-out fund. Some have suggested the fund should be doubled to indicate to the markets that, even if countries such as Spain or Italy needed help, Europe's pockets are deep enough.
The think-tank says that the "real amount available could actually be closer to 410bn because not all the countries that signed up to the fund will be able to contribute due to the poor health of their own public finances".
Germany, for the moment, is insisting no new funds are needed.
Second, some want a robust statement of total commitment to the euro. That has been expressed before - and only yesterday Chancellor Merkel said "we know that the euro is our collective destiny, and Europe is our collective future". But statements on their own rarely move markets.
Third, the ECB can intervene and buy government bonds. Most people see that as trying to hold the line. It is not a solution.
Fourth, there are those who believe that the countries in the firing line have to undertake radical structural reforms to make their countries more competitive.
The trouble is that Spain and Portugal have appeared as reluctant reformers. They are still - at this late hour - unveiling changes. Jean-Claude Juncker said today that Spain and Portugal needed to give more details of structural reforms to "clear up how they plan to put their own fiscal house in order".
Fifth, there are those who calling for the banks to be re-capitalised. George Soros pointed out "the bondholders of insolvent banks are being protected at the expense of taxpayers and this is unacceptable".
Others like Simon Tilford from have long argued that the only true remedy is fiscal union. However, he concedes, the "political obstacles to such a union appear insurmountable".
Ultimately he believes the euro is unlikely to crack. "EU leaders," he says "will do whatever it takes to save the euro, short of setting up a fiscal union".
In a paper entitled "" from the European Council on Foreign relations, Thomas Klau and Francois Godement set out what they see as two versions of Europe's future.
"It can continue to stumble through piecemeal reform," they argue, hoping "for the crisis to abate and... leave it to the financial markets to impose fiscal discipline and austerity measures."
The policy they argue will lead to permanent tensions and rising national resentment across the EU. The second and better choice, in their view, would entail a new grand bargain involving Germany which would agree "to endow the eurozone with a panoply of instruments giving Europe the economic and political cohesion it desperately needs to succeed in a world of rising superpowers. "
So, on the sidelines, big questions are being asked about the future of the EU. For the moment - and at this summit - the EU will give an impression of clinging on and muddling through.
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