OK, insert standard comment about more bad news from Europe here. Although this one’s more of the Ed Wood, so-bad-it’s-funny variety.
One of the centrepieces of the December 9 Brussels summit — the one where David Cameron picked up his toys and went home, only for the rest of the kids to politely ignore him — was European leaders’ announcement that they were topping up the bailout funds via the IMF to the tune of €200 billion. Moreover, other countries were invited to chip in as well.
As the fabled “bazooka” — a fund big enough to assure markets that even if everything goes wrong, there’s enough money to stabilise what needs stabilising — the European Financial Stability Facility, and its replacement (after a transitional period), the European Stability Mechanism, hasn’t exactly impressed markets. Europe needs a trillion-plus weapon. So bumping the €500 billion EFSF/ESM up by another €200 billion was inadequate in the first place, in the absence of someone else — the Chinese, most particularly — opening their chequebooks in a big way.
Problem is, overnight European finance ministers met and knocked a quarter off the €200 billion anyway.
The main problem was that the €200 billion was only ever €150 billion from the eurozone plus a hope that non-eurozone countries and most particularly the British would chip in the other €50 billion.
No can do, the British confirmed overnight. They’d already flagged a reluctance to give more of their increased IMF allocation specifically for bailing out the eurozone. The Cameron government can go up to £40 billion in IMF contributions without having to go back to parliament for further approval, and flagged at the recent G20 its willingness to contribute more to the IMF (unlike Tony Abbott and Joe Hockey here). But at last night’s meeting, UK Chancellor George Osborne told his European colleagues they wouldn’t be chipping in any more directly for the eurozone bailout, leaving ministers to produce a statement with the downward-revised figure tucked away in the third paragraph.
“The United Kingdom has indicated that it will define its contribution early in the new year in the framework of the G20,” the statement said, by way of explanation.
On the plus side, Sweden, Denmark, Poland and the Czech Republic all said they’d chip in. But it’s not enough.
Other countries’ hands have stayed in their pockets, too. The Russians confirmed they’d chip in €10 billion. But the Chinese have yet to express interest in helping out.
Like previous summits, the Brussels outcome is unravelling as the weeks pass and it becomes clear the communique was cooked up from equal parts hope, good intentions and expectations someone else will help sort out Europe’s mess.