It now appears that Angela Merkel is prepared to allow the Eurozone's €750bn bail out fund to buy up the bonds of governments of countries in crisis in a serious effort to push down the cost of borrowing for Italy and Spain, thus preventing the single currency from imploding. She has opposed allowing the Eurozone to use its rescue fund (the European Financial Stability Facility or EFSF) for some years. It would be lent directly to Eurozone countries in trouble if used. Her fear was that Berlin would end up footing the bill and beneficiaries would escape the kind of strict conditions imposed on Greece, Ireland and Portugal. Now Merkel has been under considerable pressure since the financial markets pushed up borrowing costs for Spain to a level that some analysts believe are unsustainable. They are likely to see such a decision as a step in the direction of sharing troubled countries' debts across the Eurozone's 17 members. Nonetheless, it still falls short of collective loans or 'Eurobonds' that have been suggested by José Manuel Barroso, the EU commission president. Perhaps, in the longer term, closer cordination between banks and national financing will emerge, the seeds have been sowed but will they grow? If they do then the Eurozone might then grow as new members join and the pressure to have more federal fiscal controls are part of the conditions of joining.
French Finance Minister Pierre Moscovici and President François Hollande have played a remarkably low key role in the negotiations leading to this point. Before he was elected François Hollande was very emphatic on the importance of France continuing to play a major part in the € recovery and the central role of France in the EU. Where Merkel and Barroso have played a major part at the centre of the G20 meeting, Hollande appears to have been all but mute. He did, of course, mutter a few words in response to Cameron's red carpet jibe, but even then it was Labour Minister Michel Sapin who poked fun back at Cameron, which was the best thing to do. So, the € is gradually coming back to life and all imminent threats appear to be subsiding but where is France in all of this? No doubt the French press is reporting on all of this from a French perspective, but using a wider range of media in a number of countries there is scarcely mention of Pierre Moscovici or his boss François Hollande. Is this where France is going? Perhaps one might say 'going it alone'. At a time when France should be less inward looking, the signals Hollande gave out in Mexico this week almost foretell French isolationism within the EU.