European Institute

This month is supposed to mark a turning point for the euro.  Two EU summit meetings on bolstering the euro and the eurozone will happen in Brussels -- the first this Friday March 11 and the second, more important one on March 25. This week, fresh urgency was added to the crisis and the EU’s ability to restore confidence when the markets raised the interest rates being charged Portugal for its government bonds on March 9 to an all-time high that Lisbon admits is “unsustainable” as the price of rolling over its sovereign debt.

A flurry of calls for a “no fly zone” in Libya is premature.  The idea, however appealing as a measure to deprive the Libyan leader of airpower against civilian rebels, immediately encountered objections from Western military commanders, starting with those in the U.S.

Ahead of two summit meetings this month to bolster EU economic governance and strengthen confidence in the euro, attention has focused mainly on greater fiscal discipline by member states. An alternative insight – that the most immediate danger lies in under-capitalized banks in many eurozone countries – comes from U.S. economist Barry Eichengreen, a professor at University of California, Berkeley, who has followed the single currency closely for a long time.

The most tangible international action so far in the Libyan crisis has taken the form of EU nations’ evacuation flights to lift civilians out of the strife zone and border refuges. These flights have come mainly from the UK and France, and are now supplemented by U.S. military aircraft ordered to this mission by President Obama on March 3.