All the turmoil in the Middle East has driven Europe and its debt crisis off the front pages for now. But out of sight doesn't mean out of mind. And in terms of potential impact, the likelihood of more political upheaval in economic backwaters like Egypt or Jordan or Yemen doesn't hold a candle to the risks posed by a euro zone failure. Even the dangers of oil spikes and shortages have been vastly overstated by the fear-peddling punditry.
Fortunately, it seems increasingly likely that the euro club will survive the current crisis intact and that it will move, however slowly, to repair the competitive and fiscal imbalances that drove it to the brink of collapse in the first place.
Based on the latest trial balloons floating up from Berlin, the Germans will be coming to the table next month with a set of demands (er, proposals) that will almost certainly become enshrined in the permanent crisis rescue package some time over the next year.
In exchange for crucial financial backstopping from Berlin, each national government will first to have to accept the European Commission's proposals for reducing debt and tightening and enforcing budgetary discipline , which has been flouted by several members for years, without risk of punishment.
But the Europeans wisely also want to use this opportunity to tackle competitive and financial imbalances, which are at the root of the troubles. Among other proposals, the Germans are looking for a region-wide policy on corporate taxation, a close link between retirement ages and demographic trends, an end to any sort of inflation-indexing of wages and legislated limits on public debt.
The German demands come at a good time. The zone finally seems desperate enough for the tough medicine Berlin has long espoused. The results of a new opinion poll show that Europeans are now eager to have a German running the European Central Bank for the first time (although the German Bundesbank effectively determines euro policy anyway). If the politicians concur – which is never a safe bet in Europe – hawkish Bundesbank chief Axel Weber becomes the odds-on favourite to succeed Jean-Claude Trichet when his non-renewable term expires next October.
The poll findings showed that the French and Spanish both preferred a German to their own possible candidates. The Italians did side with their leading choice, Mario Draghi, head of the Italian central bank, but only by the narrowest of margins -- 26 per cent to 25.