The euro's future will be decided at the summit that began today in Europe. Most leaders believe that the solution to the euro crisis is to accelerate political and economic integration, and this message can be found in meeting preparation documents.
Still, an agreement will be difficult to reach because the attempt to create unity buts up against the interest of some member states, especially because the crisis has deepened the gap between the North and the South of the continent.
Everyone has found reasons to increase unity in Europe, and up until now, mixed messages have been passed among EU leaders. And it's not the same message that Merkel, Rajoy, Hollande or Monti have delivered to their respective countrymen. They typically just say what their voters want to hear instead of what they really know must be done. The tendency to soften or toughen the message, according to what suits the occasion, has increased confusions. The risk of a major train wreck is imminent. Spain and Italy need immediate answers. Rajoy is saying that Spain cannot sustain current interest rate levels past autumn, and Monti was able to pass a light labor reform at the last minute despite heavy resistance in Italy.
France and Germany are firmly committed to their nationalist positions, which go against greater unity. Hollande has not exercised the control that Merkel requires for sovereignty, and the German chancellor is not giving one inch. If a solution to the sovereign debt problem cannot be found, then Spain and Italy are facing a full bailout. At that point, the recession would spread to other countries and in less than a year we could witness the end of the euro.
