The European Union’s 19th crisis summit was winding down when European Central Bank President Mario Draghi made an unusual request. He wanted some alone time with EU President Herman Van Rompuy to thank him for charting the path toward a shock-proof euro zone.
Only later did the significance of the blueprint sketched out at the June summit in Brussels emerge. The commitment to tighter bank supervision, budget coordination and a nebulous “political union” was instrumental in persuading Draghi that governments are putting the currency on a sounder footing, leading to yesterday’s ECB decision to buy bonds to help them get there.
Political leaders and central bankers have “fully signed up to some kind of medium-term United States of Europe,” Jim O’Neill, chairman of Goldman Sachs Asset Management, said in a Bloomberg Television interview in London yesterday. The ECB is “telling us the markets should not keep worrying about the risk of a euro breakup and we will do things to enforce that reality.”
What resulted was a microcosm of the cliffhanger politics that have marked the crisis. Merkel ordered her people to boycott a senior officials meeting, held across from the city’s best-known French fry stand, Maison Antoine, to discuss technical ways of aiding Spain and Italy. The German objection was that when the leaders are in town, no one else counts. Only when the aides trooped up the road to join the summit entourage did Germany take part.
“I’m actually quite pleased with the outcome,” Draghi said on his way out of the summit. “It showed the long-term commitment to the euro by all member states of the euro area, but also it reached tangible results in the shorter term.”
Speaking in Frankfurt, Draghi made clear that ECB’s unconditional -- and later aborted -- purchases of Spanish and Italian bonds in 2011 wouldn’t be repeated.