One week to save the euro

France : One way or another, this is crunch week for the euro. By the end of the EU summit on Friday, European voters and markets will know how their leaders plan to save the single currency bloc.

The outlines of a plan have begun to emerge, but details will be thrashed out over a perilous week of high-wire economic diplomacy, starting on Monday, when Germany’s Chancellor Angela Merkel comes back to Paris.

She and French President Nicolas Sarkozy have vowed to unveil proposed EU treaty changes to create what Merkel has dubbed a “European fiscal union with strict rules” and the French leader calls “true economic government.”

If the proposed reforms are seen as a credible guarantee that eurozone governments will at last bring their deficits under control, European Central Bank chief Mario Draghi has suggested “that other elements might follow”.

This has been taken as a signal the ECB might intervene to protect European banks from any credit crunch and to buy bonds to rein in soaring interest rates on government borrowing, perhaps acting in concert with the IMF.

Would that be enough to end the debt crisis and save the euro? Some expert observers think so, others fear it will be too little too late, and in any case between now and then many questions will have to be answered.

Sunday, AFP