Brussels at pains to sustain crisis-fighting momentum
By Luke Baker
BRUSSELS (Reuters) - It has been 11 days since the European Central Bank announced it was prepared to buy the debt of struggling euro zone countries in unlimited amounts to help bring down their borrowing costs.
In that time, the euro has gained nearly 4 percent against the dollar, the broadest European stock index is up nearly the same amount and yields on Spanish and Italian 10-year bonds have fallen by more than a percentage point.
A degree of optimism has taken root thanks to the ECB's promise of intervention as well as a decision by Germany's top court to approve Berlin's participation in the euro zone's permanent bailout fund, and a sense of progress towards a euro-zone 'banking union'.
But as anyone who has followed the debt crisis for the past 2-1/2 years knows, the proof of the pudding is in the eating. And in this case, no matter how desirable the dessert, it contains a mixture of ingredients that are already proving unpalatable for those tucking in.
Euro zone leaders have squandered the opportunities offered by previous lulls in the crisis and there is no guarantee that they won't find a way of doing the same again.
"There's less panic, but that doesn't mean there's any complacency," said one EU diplomat, while acknowledging that the risk of leaders sitting back or relaxing was not negligible.
"We have to avoid a repetition of the situation where we allow one good decision to lead everyone else not to take other decisions that would improve the situation further."
The first problem is Spain. While the country has admitted that its banks need help and up to 100 billion euros has been set aside to support the sector, Madrid remains reluctant to sign up to any broader or stricter bailout program. Continued...