Now that approval has been given for forming the European Stability Mechanism (ESM), the focus is once again on giving aid to Spain. Spain has already been promised €100 billion in aid. And it wants more favorable conditions from the European Central Bank (ECB) to keep credit costs low.
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But before they will make a commitment, Spain’s creditors want the Spanish government to take further steps to increase competitiveness and decrease its debt load.
Political leaders seem to still be caught in the three-year-old debt cycle of risking a sense of false security that will dilute efforts toward a long-term fix for the economy.
Markets gained confidence from the September 6 announcement that, with conditions attached, the ECB stood ready to come to the rescue of the Eurozone’s distressed members.
The September 12 approval by the German court to create the ESM gave a second boost. But both announcements said aid would be conditional on the receiving country’s efforts to restructure fiscally.
While Spain’s problems are the current focus, the problems in Greece are being put on hold. The coalition formed in the spring in Greece is having difficulty meeting creditor mandates for wage and pension cuts.
That means the next installment of aid to Greece is also on hold. The troika of the European Commission, the ECB, and the International Monetary Fund are expecting to hear a report on Friday, September 14 about Greece’s progress.
So it appears that, although Europe has made significant progress in resolving its debt management issues, there are significant sticking points
to actual implementation.