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If Angela Merkel, Germany's chancellor, gets her way – and she has many political triumphs to her name over the past 18 months – this new treaty, combined with the six-pack, will change mindsets and actions in both European and national institutions.
Its requirement for balanced budgets to be enshrined in national constitutions (or their equivalent) will certainly alter the framing of budgetary debates in most Member States. It is meant to encourage national parliaments to take ownership of, and a big share of responsibility for, sustaining eurozone governance. Wriggle room, of which there was plenty under the old Stability and Growth Pact, has been cut back savagely, with a great deal more ex ante monitoring and co-ordination of fiscal policies, while surveillance will be close up and intimate.
For the moment, the financial markets seem to like the look of all this. Yields on Italian debt are well down and could fall farther if Merkel drops her opposition to giving the bail-out mechanisms more firepower. But she is the daughter of a Lutheran pastor and sensitive to the frailty of human nature. She is inclined to fear that the bigger the firewall against debt default, the more tempting it will be for governments to relax efforts to pursue a virtuous management of debt and deficits.
So the Union has not arrived at a turning point in resolving its debt crisis. True, a Greek default would no longer shake its foundations. And economic recession in the south and minimal growth in the north, while distressing, will not be terminal for the single currency. But the tendency of Member State politics to encourage deviant behaviour will continue to threaten the euro. Not even the searing dangers of a collapse of the eurozone last year were enough to hurry governments along the path of fiscal rectitude.
The Union has never done instant political transformations, and it is not about to start now. But the euro will not survive too many annual reports highlighting failures to apply fiscal and other economic policy recommendations. And last week's treaty will not be much help: its main provisions cannot be enforced by the European Court of Justice.
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