The Swiss press on Friday greeted with relief news of a comprehensive deal to save Greece from bankruptcy and shore up the euro zone.
With much of the fine print of the deal still to be worked out, several papers questioned whether the agreement went far enough to save both Greece, and the euro in the long term.
“After the marathon, the test,” ran the headline in French-language daily Le Temps.
“The world looked at the Brussels meeting and the Europeans lived up to expectations,” The Basler Zeitung said in an editorial.
“Is Greece and thus the whole euro zone now saved permanently? I doubt it,” said Daniel Schindler, describing the agreed €1 trillion bailout fund as simulating a false security.
“The basic problem remains the staggering debt of peripheral countries in the euro zone, particularly Greece.”
Describing the deal as a first step on the road to comprehensive reform, the Neue Zürcher Zeitung urged European Union countries to make structural changes to government spending and welfare systems to shore up their economies in the longer term.
“The euro crisis summit is another step on a long and incomplete race to reform,” the paper said.
“It has still not been finally decided if, and in what form, the European Monetary Union will continue to exist. Many cheques must still be paid, the debt is the result of irresponsibility not only in Greece but unfortunately in a large majority of states.”
The Berner Zeitung said the deal agreed with banks to write down Greek debt was the “right step” and financial institutions must take responsibility for having taken on Greek government bonds “so lightly”.
“This debt cut brings limited relief,” the paper said. “According to the forecasts, Greece is faced with a debt mountain of more than €200 billion in 2020 – because the country is constantly making more debts. Therefore it is likely that banks will soon have to write off even more from their Greek bonds”.
Germany v France
Many papers alluded to the reinforced power of German Chancellor Angela Merkel, who played a pivotal role in forcing the banks to accept a 50 per cent write down on Greek debt.
Le Temps described her as “the undisputed boss” of EU leaders, while Tribune de Genève noted the “victory of Berlin” in succeeding in bringing Paris into line with a German style of budgetary discipline.
Meanwhile, President Nicolas Sarkozy of France, who gave a one-hour interview to French public television on Thursday night following the deal, was described by Le Temps as having been “weakened in Paris and Berlin” and thus “unable to resist” claiming the credit of the successful deal for himself.
A new Europe?
With a hint of gloating, Le temps described Europe as having been “grounded” by the crisis and the final outcome after months of negotiations. It said the euro zone had been reinforced by the decision to hold bi-annual meetings on the euro which in the short term will be presided over by European Council President Herman Van Rompuy.
The Tribune de Genève said “Europe changed” during the night of Wednesday to Thursday, having made a “step towards federal government” in choosing to re-center the EU around the 17-member euro zone.
“By putting the euro cart before the federalist horse, Europe had slipped into a rut. By giving the euro a flying chance, the French-German couple have explicitly chosen federalism to get out of it,” the paper said.
The NZZ described the deal as Europe having “optimised its straight jacket” with more supervision, monitoring and coordination. It said the 17 members of the euro zone had taken significant steps towards more coherent fiscal and economic coordination.
The Euro Summit reached an agreement on 26 October on a set of measures aimed at easing tensions in the financial markets, in particular concerns about Greece’s capacity to service its debt.
Those measures include reducing Greek public debt of Greece 120% of the country’s GDP by 2020.
Private creditors have also agreed to write off 50 per cent of the Greek debt they hold.
Eurozone member states will pitch in up to €30 billion (SFr36.6 billion) to the private sector involvement package.
On top of this, the EU and the International Monetary Fund will finance a new multiannual programme for Greece, worth up to €100 billion.
The resources of the European Financial Stability Facility (EFSF) should also be increased in the future. Around €1 trillion would be available to help prevent the debt crisis from spreading further.
The EFSF currently has a lending capacity of €440 billion, with about €250 billion available once aid to Greece, Ireland and Portugal has been taken into account.