A new reality or a powerful scarecrow to push forward some new ‘principles’ within the EU?
You can sense the alarm in today’s comments by European Council President Herman Van Rompuy. He called it a “survival crisis“.
He urged: “We must all work together in order to survive with the eurozone, because if we do not survive with the eurozone, we will not survive with the EU.”
It is, of course, a debatable point. But this was a threat: that the Irish debt crisis could bring down the whole EU. This stark message was intended to scare states and leaders into coming up with answers.
In Germany, Angela Merkel too has been playing on fears.
The German chancellor said: “I’m telling you, everything is at stake. If the euro fails, then Europe will fail. And with it fails the idea of European values and unity.”
It is hard to know whether Mrs Merkel believes this to be literally true.
But her intention was also clear: to rattle those within her own party and elsewhere in Germany who are in increasing numbers beginning to question the point of the European Union.
The focus of the current crisis remains Ireland.
What is happening is that Ireland is being told to accept some kind of rescue for the good of the euro. That is one option, but it would amount to Ireland surrendering financial independence. “There’s no reason why we should trigger an IMF or an EU-type bail-out,” said the Irish Europe Minister, Dick Roche. Ministers genuinely believe they have a strategy that can work. They want time to deliver their budget on 7 December.
Now in these fractious times all kinds of people are insisting they are not putting pressure on the Irish. The European Commission, for one, says its hands are clean.
Fingers point at the European Central Bank (ECB). They deny it too. Only the Portuguese and the Spanish are openly leaning on Dublin.
The Portuguese say they are suffering from higher borrowing costs because of doubts over Irish debt. They say they might be pushed into asking for a bail-out. The Spanish Treasury Secretary, Carlos Ocana, pressed Ireland to come to a resolution quickly to end market uncertainty.
The biggest concern is the domino effects – that Portugal won’t be able to raise sufficient funds because of the cost of borrowing. If Portugal had to be bailed out the markets might question whether Spain could service its own debt, considering it has almost zero growth. The EU’s bail-out mechanism may be able to handle the debts of Greece, Ireland and Portugal, but Spain would be altogether a different matter.