Eurozone leaders enjoy 'good week' while it lasts

Eurozone leaders had a "good week" with a vital German court decision and Dutch elections going their way, even if bailouts for Greece and Spain remain up in the air. On the back of a decision by the European Central Bank to ease pressures on bond markets, finance ministers could tackle difficult issues including treaty obstacles to a banking union. While recession and unemployment cast shadows over debt crisis-fighting efforts on the streets in Madrid and Lisbon, where marchers demonstrated Saturday, and in Barcelona, where a million called for Catalonia's independence earlier in the week, at the very top the feeling is one of breathing easier. German Chancellor Angela Merkel and Italian premier Mario Monti hailed what they called "a good week for Europe and the euro," Merkel's spokesman Steffen Seibert said after the pair spoke by telephone on Friday. The German Constitutional Court's green light for Europe's blocked bailout fund was the main factor for them, alongside a vote won by Dutch Prime Minister and staunch ally Mark Rutte, despite concessions to far-right voters. European Central Bank President Mario Draghi said things were falling into "the right place" after the announcement of potentially unlimited buying of eurozone government bonds on sell-on markets under bailout-like conditions. The Greek bailout, however, will likely only become clearer come an October 18-19 summit of EU leaders in Brussels. Greek Prime Minister Antonis Samaras is close to winning a two-year extension to meet fiscal pledges, and a liquidity boost from the ECB, in exchange for a new austerity package worth 11.7 billion euros ($15 billion) to avoid leaving the eurozone. "We are talking about an extension to 2016," he told the Wall Street Journal. New figures are also due soon from Spain on financing needs at its banks, although it has yet to be established how Madrid can avoid a full sovereign bailout after the 100-billion-euro deal agreed in June for loans to recapitalise its banks. Overall, markets have responded positively, turning their focus elsewhere, although analysts remain prudent. The decisions by the ECB, the German court and Dutch voters "have diminished the risk of short-term negative scenarios for the eurozone," according to Amsterdam-based ING. However, they have their doubts that the "good week" extends far below the surface. Italy and France also suffer from a lack of competitiveness, Greek debt has not become any more sustainable and all the data suggests that the most successful European economies have already been dragged down by the turbulence in the eurozone periphery. Harder-line Capital Economics of London saw "bolstered hopes" of a "turning point", but sneered that "September could yet prove to be another false dawn," and held to their longstanding line that "Greece's bail-out will probably collapse, resulting in it leaving the eurozone." The birth-pains of banking union serve as a reminder that political dangers lurk behind crisis resolution efforts. Even snail-pace progress on eurozone integration is too fast for some, and powerful voices in London are furious at the direction of travel. Former Conservative premier John Major told the Daily Telegraph at the weekend that a two-speed Europe could formally be upon us, with a December summit due to tackle treaty changes needed to anchor future integration offering a possible tipping-point. "There is a bargain to be struck," Major said, in advice clearly directed at Prime Minister David Cameron. "If an inner core (the eurozone) can radically alter its relationship with the EU as a whole, then non-core members may feel free to do the same," Major said. "I believe they should."