Eurozone crisis - Failure is not an option for summit

THURSDAY’S emergency summit of eurozone leaders needs to be decisive and effective.

It may be a tad early to describe the high-stakes meeting as a last throw of the dice to save the euro as it is, but the summit is certainly not premature. For too long national governments and European bodies, especially the European Central Bank, have prevaricated, reacting too slowly to the evolving crisis and allowing markets and their very specific self-interests to dominate events.

Last week’s downgrading by ratings agency Moody’s of Ireland’s debt to junk status was just the last in a long line of unhelpful events that might have been prevented by more decisive action at national and EU level.

The summit must agree measures that match in magnitude and intent the escalating crisis in Italy and possibly even in Spain. The consequences of failure are so very grim that it is hard to think of measures that can be discounted if they might encourage some stability across the euro zone and in markets across the world.

Our great difficulties, and even those of Greece, have reshaped many lives, but an Italian crisis — or one in Spain — would be seismic and threaten the unity that has underpinned the peace enjoyed by most of Europe since 1945. It would threaten the common purpose that has made the EU such a positive project, especially for this country. It is not an exaggeration to say that we have enjoyed a century’s progress in infrastructure, the development of agriculture, education and social legislation in the four decades since we joined what was then the European Economic Community. This would simply not have happened without European support.

Thursday’s summit must, in as much as any political initiative can be in the face of seemingly insatiable market forces, take real steps to re-establish the kind of economic stability we all need.

European Council president Herman Van Rompuy wants divided eurozone leaders to agree a unified position on the involvement of private creditors in a second international bailout for Greece. As Spanish and Italian borrowing costs reach levels not seen since the establishment of the euro 12 years ago, confusion and national self-interest conspire to create great uncertainty and danger. The scale of the crisis demands a unified approach, even if that means some domestic discomfort for politicians facing their electorate in the near future.

Finance Minister Michael Noonan will go to the summit realising that our difficulties will not be the primary focus of attention. He will also realise that the Government has promised not to raise income tax, cut social welfare or cut public sector pay until 2014, even though something around €4 billion must be cut from public expenditure before the end of the year. Already these commitments seem impossible.

Unless the summit is at least a moderate success the economic independence of Europe’s supplicant nations will be compromised even further. In that event those three promises would be over-ridden by international voices no matter how committed our Government remained to delivering them.

High stakes indeed.