By Paola Subacchi

There is a sense of frustration and impotence in watching the eurozone crisis unfold. Non-Europeans cannot understand why tackling the crisis has proved so hard. On a recent trip to China a senior central banker asked me: 'Why don't you Europeans get on with it? You know what you need to do. Just do it.' In the narrative of the eurozone crisis, slow action has come to epitomise poor leadership.

The crisis -- this narrative goes -- could be dealt in a swift and credible way if leaders were capable of acting with vision and a sense of purpose. For more than two years we have seen indecisiveness, quarrelling, half-baked plans and many missed opportunities. As a result, a problematic situation that sprang from the excessive debt of some eurozone member states has become the mother of all crises. Even now, with European monetary union (EMU) dangerously close to breaking point, leaders seem unable to act in concert.

Radek Sikorski, the Polish Foreign Minister, equated leadership with action when he wrote late last year: 'I fear German power less than [its] inactivity.' Leadership is thus viewed as the necessary and sufficient quality to ensure that things get done. It is thought to generate action that is swift and effective. Lack of leadership, on the other hand, creates a cacophony of voices and the sense that nobody is in charge, sending financial markets in a spin of no confidence.

Boiling down the problems of the eurozone to a crisis of leadership offers a simple explanation. In comparison with recent history, there is an undeniable lack of charisma in today's Europe. Angela Merkel, the key to the drama, has aroused strong sentiments. Northern Europeans have praised her intransigence, while southerners have blamed her for imposing draconian measures on their countries. Nobody, however, has ever praised Merkel for leadership skills and charisma. But is leadership really the missing 'ingredient' to make a union of countries such as EMU, in which 17 member states share the same currency and monetary policy as equals, gel? Or, rather, should the key issue be one of 'restrained leadership'? After all, the EMU decision-making process involves several sovereign states, each with its own agenda and its public to which it is accountable, rather than on a single leader who drives decisions forward.

Advocating strong leadership from Germany not only runs counter to Germany's view of its role in the world, shaped by the still heavy burden of its past, but is at odds with contemporary multilateralism, of which the European monetary union is the most complex and yet very imperfect outcome.

Merkel 'on steroids' would be unacceptable to eurozone member states, as well as problematic for Germany itself. Eurozone governments show no interest in enhanced leadership by one of the member states, no matter how charismatic the leader of that government is and how effective and swift crisis resolution could be. The outcome of Greece's elections and the reaction of Spain to the prospect of a fully-fledged bailout show how countries hugely resent being managed by their peers.

The issue for Europe, therefore, is not strong leadership but streamlining the decision-making process to improve efficiency and reduce the scope for messy outcomes.

Decision-making -- and crisis-resolution -- within EMU should be made more responsive to critical situations. Communication should be improved to avoid sending conflicting messages that confuse financial markets and undermine credibility. Most of all, governments should avoid contradicting each other to score points at home. The Europeans should learn from the Chinese leadership to develop a long-term vision and act in a cohesive way.

Europe has for years been a test bed for multi-country policy co-operation. The outcome of the eurozone crisis will be decisive for the future of the world economic order.

Since the eruption of the global financial crisis in 2008, policy cooperation and multilateral dialogue, through the G20 and its technical advisers, the International Monetary Fund and the Organization for Economic Co-operation and Development, have become the key instruments to address, in a very imperfect way, the governance of global markets.

'Restrained' leadership, with several leaders around the table, has become part of global economic governance. But it may lead to an intractable situation where countries are locked into inaction. How Europe unlocks this problem of messy multilateralism will provide lessons for all.


© Global Viewpoint Network; Distributed by Tribune Media Services

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