Italian Prime Minister, Mario Monti, and ECB President, Mario Draghi, pushed Germany to give up its opposition to direct euro area aid for struggling banks. Monti further antagonised Germany by urging a roadmap to common borrowing.
Calling himself a devotee of German-style budgetary rigour, Monti told a Brussels conference yesterday that Merkel’s vision of a stable economy “risks being undermined because of lack of promptness in setting up the necessary instruments to limit the contagion”.
Draghi told a European Parliament committee in Brussels that without more aggressive action by policy-makers, the euro “is being shown now to be unsustainable unless further steps are being undertaken”.
He said it wasn’t his job to make up for the failures of policy-makers. “It’s not our duty, it’s not in our mandate” to “fill the vacuum left by the lack of action by national governments on the fiscal front”, on “the structural front, and on the governance front”, he said.
Merkel’s international isolation goes along with a state of political siege at home, after her party was routed in elections in Germany’s largest state. In office since 2005, she is one of only five euro area leaders to hold on to power since the crisis broke out.
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