The French Question Euro Bailout

The German’s are known for being sticklers about rules. The French not so much.

But, Pierre Lellouche, France’s European minister, told the Financial Times that the bailout of Greece and the $1 trillion safety net fund, which have made it difficult for weak nations like Spain to raise money, violate the EU’s rules.

He said “It is an enormous change.It explains some of the reticence. It is expressly forbidden in the treaties by the famous no bailout clause. De facto, we have changed the treaty.” Put another way, it is illegal.What happens now may determine the future of the euro and Eurozone. One of the concerns about the bailout is that one of more nations would invoke the EU rule to pull their commitments for the fund. Most analysts thought that nation would be Germany where the bailout is immensely unpopular. Germany, because of the size of its GDP, has made the largest contribution to the cause.

Lellouche sees the contributions made by Eurozone nations as something like the formation of a financial NATO. Europe’s nations, already chafing under the notion that they need to act as one to protect the financial viability of the region, are starting to show once again that their independence as nations may trump the future of the euro. Germany has been the most skeptical about the arrangement, but the concern appears to be spreading.

There has been a debate, heated at times, that the most powerful nations in the Eurozone do not need their weaker allies. The German economy, and perhaps the French, would be better to return to using their own currencies, which would be more viable than the euro. Some economists believe otherwise. They claim that the euro protects the region by increasing its trading power with the rest of the world.

The bailout could still fail and if it does it may be because of a technicality.

Douglas A. McIntyre