Reuters: It took years to launch the euro and only a few hours to create a rescue fund to try and save it.
But even as the euro’s 17 members dramatically speed up their once snail-like decision-making, they cannot move fast enough for investors and their inability to deliver a clear message is causing confusion and concern.
The euro zone’s leaders say they have moved mountains since 2009 trying to rescue indebted southern Europe from default while forcing deeper cooperation, but the pace is exasperatingly slow for bankers, investors and policymakers elsewhere in the world.
“They are moving at light speed by their own standards but it is still not fast enough,” one EU diplomat said.
For all the criticism of the EU’s tardy reaction, the EFSF rescue fund was drawn up on a piece of paper last year in four hours, according to an EU official present at its creation.
But with three main bodies producing policy across the 27 members of the European Union -- the European Parliament, the European Commission and the European Council -- as well as member countries all having their say, putting such plans into practice can take months, and previously took years.
In the smaller euro zone, decisions still often have to ratified by 17 parliaments and there is often terse debate about when to involve the 10 non-euro countries such as Britain.
The Lisbon Treaty, which enhanced the European Parliament’s powers and created a president of the European Council designed to give the EU more weight on the world stage, took a decade to come into effect in December 2009.
With the threat of contagion spreading worldwide, the United States and others are urging the euro zone to multiply the capacity of its bailout fund to protect Italy and Spain from speculative attacks at a time when EU leaders are struggling to finalise details of an agreement in July that only went some way to doing that.
Investors say there is an alarming gap between the slow, consensus-based policymaking and markets’ hunger for solutions.
“We are lost, we don’t have a framework to work within,” said one European banker. “What will they do with Greece? Will there be a default? We don’t have any clear vision,” he said.
A “big-bang” approach involving a range of dramatic measures could probably have convinced investors that there was the political will to see off market attacks.
The incremental approach that has been adopted by necessity over the past two years means that by the time one rescue scheme has been put into effect, markets are already demanding something more radical.
According to one senior diplomat in Brussels, the problem is that bold promises of support have been made before.
“But they are not matched with action,” the diplomat said.
Historical, cultural and philosophical divides between temperate northern Europe and the sun-belt of the Mediterranean also drag on decision-making.
Germany, Europe’s biggest economy and paymaster, is reluctant to help what it sees as profligate southern Europeans living beyond their means.
Traditionally pro-European integration partners such as the Netherlands are also questioning the benefits of saving Greece.
Meanwhile France, the Europe Union’s other pivotal nation that has always seen the European project as a way to enhance its standing, says politicians must save the stragglers.
That divide is feeding into policymaking even as the crisis and outside pressure pushes the euro zone to act.
Leaders are split over whether to use more of the European Central Bank’s huge resources to stand behind wayward sovereigns, which Germany, Europe’s biggest economy and paymaster, sees as politicising the bank.
The divisions appear to be wearing out EU politicians, who face the possibility of another recession as massive spending cuts backfire, shrinking growth and business confidence.
Even European Council President Herman Van Rompuy, who represents EU heads of state and is seen as a potential spokesman for the euro, failed to reassure when he spoke at the United Nations General Assembly last week.
“We will continue to do what it takes to safeguard the financial stability of the euro zone,” he said on a day when spreads between stressed Italian and benchmark German bonds -- a key measure of Italy’s ability to refinance -- widened further.
A day later, a European Central Bank governing council member became the first policymaker at the ECB to speak openly of the prospect of a Greek default. EU officials are worried the vacuum is filled by lower-level politicians whose loose comments can fuel market panic.
London’s mayor, Boris Johnson, whose country is outside the euro zone, saw fit in June to advocate that Greece should leave the euro, adding to the sense of disarray.
“There’s no one figure, no handful of politicians, who can speak and clear the air, who can quiet all the noise,” said an EU official in Brussels. “Meanwhile, you’ve got this situation where a mayor or someone comes out and says something wild, and markets take that to be policy.”