Europe has cleared more obstacles on the road to containing its sovereign debt crisis and stabilising the euro zone.
PARIS: Europe has cleared more obstacles on the road to containing its sovereign debt crisis and stabilising the euro zone after Germany's constitutional court allowed a permanent bailout fund to go ahead and the Dutch voted for pro-European parties.
Coupled with a European Central Bank decision to buy short-term bonds of states that apply for assistance and abide by strict conditions, and with EU proposals for a single euro zone banking supervisor, Wednesday's ruling clears the way for a concerted effort to draw a line under the crisis.
However, there are still risks on the way to repairing the flawed euro construct, and Europe has yet to find a strategy to revive economic growth that would enable highly indebted states to reduce debt burdens and put the jobless back to work.
Among the bailed-out euro zone countries, Ireland is inching its way back towards the capital markets and Portugal is doggedly implementing a tough austerity programme, and has just been granted an extra year to achieve its fiscal targets.
Greece, where the crisis began, remains an exception to the general mood of cautious optimism, but talk of forcing Athens out of the euro zone has abated for now.
"If you look at the ongoing few weeks, I would say we see a light at the end of the tunnel," Finnish Europe Minister Alexander Stubb said.
He cited last week's ECB decision as well as the proposed banking union, the German court ruling and the triumph of pro-European centrists in W e dnesday's Dutch general election.
"If we get the next few weeks right we'll have turned a corner," Stubb said.
Enthusiastic market reaction after the German ruling, with Spanish and Italian bonds rallying, shares rising and the euro hitting a four-month high, showed many investors believe the euro zone is finally starting to get on top of the crisis.
The next hurdle is Spain. Prime Minister Mariano Rajoy is under pressure to apply for a limited assistance programme that would allow the rescue fund to buy Spanish bonds upon issue, and the ECB to intervene to bring down shorter-term borrowing costs, while keeping Spain in capital markets.
Rajoy took another half-step this week by saying he was considering requesting ECB support and would not object to IMF involvement in monitoring Madrid's public finances.
Whether for tactical reasons, out of national pride or fear of the political consequences, he is holding back on an application, possibly hoping he can get past October 21 regional elections and a late-October funding hump without outside aid.
Rajoy is resisting German pressure for tougher additional policy conditions to be attached to any aid programme, refusing to consider cutting pensions, a key drag on Spanish finances.
If Spain tries to tough it out, its risk premium over safe-haven German bonds could spike again as investors take fright
Coupled with a European Central Bank decision to buy short-term bonds of states that apply for assistance and abide by strict conditions, and with EU proposals for a single euro zone banking supervisor, Wednesday's ruling clears the way for a concerted effort to draw a line under the crisis.
However, there are still risks on the way to repairing the flawed euro construct, and Europe has yet to find a strategy to revive economic growth that would enable highly indebted states to reduce debt burdens and put the jobless back to work.
Among the bailed-out euro zone countries, Ireland is inching its way back towards the capital markets and Portugal is doggedly implementing a tough austerity programme, and has just been granted an extra year to achieve its fiscal targets.
Greece, where the crisis began, remains an exception to the general mood of cautious optimism, but talk of forcing Athens out of the euro zone has abated for now.
"If you look at the ongoing few weeks, I would say we see a light at the end of the tunnel," Finnish Europe Minister Alexander Stubb said.
He cited last week's ECB decision as well as the proposed banking union, the German court ruling and the triumph of pro-European centrists in W e dnesday's Dutch general election.
"If we get the next few weeks right we'll have turned a corner," Stubb said.
Enthusiastic market reaction after the German ruling, with Spanish and Italian bonds rallying, shares rising and the euro hitting a four-month high, showed many investors believe the euro zone is finally starting to get on top of the crisis.
The next hurdle is Spain. Prime Minister Mariano Rajoy is under pressure to apply for a limited assistance programme that would allow the rescue fund to buy Spanish bonds upon issue, and the ECB to intervene to bring down shorter-term borrowing costs, while keeping Spain in capital markets.
Rajoy took another half-step this week by saying he was considering requesting ECB support and would not object to IMF involvement in monitoring Madrid's public finances.
Whether for tactical reasons, out of national pride or fear of the political consequences, he is holding back on an application, possibly hoping he can get past October 21 regional elections and a late-October funding hump without outside aid.
Rajoy is resisting German pressure for tougher additional policy conditions to be attached to any aid programme, refusing to consider cutting pensions, a key drag on Spanish finances.
If Spain tries to tough it out, its risk premium over safe-haven German bonds could spike again as investors take fright
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