"The Pact for the Euro"

The latest version of the German-French "competitiveness" pact to save the euro, does not seem to convince the Economist´s columnist Charlemagne:

Yet to get this, Mrs Merkel has struck a Faustian bargain with France’s Nicolas Sarkozy. He does not care for her economic medicine, but wants a euro-zone “economic government” to restore lost French influence (one senior Eurocrat remarks that France needs Germany to disguise its weakness, and Germany needs France to disguise its strength). But as the pact is made more palatable to others, it may get less appealing to Mrs Merkel. And that may make her even more reluctant to open her purse.

The danger is that the pact may make the crisis worse. In the short term, a less-than-grand bargain could trigger a new bout of market nerves. In the longer term the pact may lead not to competitiveness but to divisiveness. What to do? Mr Tusk and others might end up joining the pact, if only to preserve the single market—Europe’s biggest competitive advantage.

Read the entire column here.