Euro crisis: Come on in, the water’s lovely…

Croatia got an invite to join the European Union party, as EU leaders cornered the under pressure Greek Prime Minister, George Papandreou, ahead of next week’s crucial Greek parliamentary vote on the latest bail-out.  Arthur Beesley in the Irish Times

FOR THE fourth time this year, EU leaders gathered in Brussels last night to plot the next step in the sovereign debt emergency. They have declared victory many times before. None is inclined to suggest they are winning now.

The mood is bleak. With Greece in the throes of political and financial crisis, French president Nicolas Sarkozy barrelled into the summit room with little enthusiasm for niceties with Taoiseach Enda Kenny.

Sarkozy took a seat alongside German chancellor Angela Merkel, his intense eyes darting around the room as they engaged in a quiet chat. It is the Franco-German duo, after all, that sets the pace and tone of Europe’s halting response to the debacle.

Another dangerous moment has been reached. Huge uncertainty surrounds the fate of a crucial vote next Tuesday in which Greek MPs will be asked to back a €78 billion austerity plan.

Despite confident signals from prime minister George Papandreou that he has an all-important majority in the bag, diplomats say the likely outcome remains too close to call.

“There is an air of desperation in Brussels”, according to the BBC Europe editor, Gavin Hewitt.

The Greek opposition leader, Antonis Samaras, says cuts are not working, that they are slowly strangling the country.

Yesterday saw an unprecedented intervention by the EU into Greek domestic politics. Mr Samaras, who was in Brussels, was put under ferocious pressure to change his views. He was a man rounded on.

Angela Merkel, the German chancellor, told him to do what was necessary to get behind the austerity package. She spoke of the Greek opposition needing to “fulfil its historic responsibilities”. One observer of the European scene said he had never seen anything like it before and it smacked of desperation.

In Greece itself the government is so anxious about the outcome of the vote that it tried to soften some of the measures. But it opened up a 3bn euro black hole in the calculations which, after discussion with EU and IMF officials in Greece, was closed.

As Gavin Hewitt goes on to say

As it stands, most economists and the markets believe Greece will default – the only question is when. Even some people close to George Papandreou believe default is better than years of austerity.

And then?  At the Telegraph blogs, Eurosceptic MEP Daniel Hannan patronises Martin Kettle in the Guardian, and warns against betting that they can’t just keep muddling on.

My best guess is that Greece will default within months, and that the monetary union will limp on – battered and cheapened, but intact. Such an outcome, after all, suits businesses in the contributor countries as well as Euro-integrationist politicians. As I’ve argued since the crisis began, the real threat to the peoples of Europe is not that the euro won’t hold together, but that it will.

And the existential crisis will remain…

For supporters of the “European Project”, the longer-term options are stark.

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