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Mujtaba Rahman, Eurasia Group Europe analyst, gives his take on the fate of the euro amidst the latest debt drama in Europe.
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-- costs in Spain and Italy of my goodness inching back again towards critical levels many are worried the deal is already.
Unraveling joining me now is meets Robin he's an analyst at the Eurasia group inmates' thank you very much for being here I was reading through your notes and you actually quite optimistic that -- spike -- of this.
Doom and gloom that the EU is being -- in with its debt crisis and how to get a handle on it.
You think ultimately the Euro survives and they will find the will to make it work outside what's -- based.
I mean I think if you look at the decisions eurozone leaders have taken over the course of the last two and a half years.
The direction of travel is very very clear -- they'll printing more sovereign -- More integration on the fiscal side on the -- -- side in return for greater oversight which is what Jamie Finland and others one.
The summit last week I think also indicates -- -- direction in which when you -- -- the political will to keep the system together is that why is everything down to the last minute -- Europe.
Being -- the house of preference for a very incremental strategy -- primarily driven by the designed to avoid moral -- -- If you come forward with the systemic response market discipline will fade in return not we'll take pressure off countries to take.
To undertake the necessary reforms so I think it's part of the strategy to keep market pressure on countries so -- means to -- -- necessary reforms.
I'm talking which in countries like Greece yes this small but they are so debt -- there are many people say they'll never be able to pay back everything that's been lent to them.
Is there a scenario -- -- mind where maybe you'll have.
A Euro and -- your -- life.
Situation especially for these struggling southern European economy.
It's been I don't think you have the strong Euro and -- weed killer I think essentially what you could get in the -- -- is a conversation on official sector involvement -- debt relief -- the official sector they take it had cut the ECB the creditor countries.
And not helps reduce the debt overhang and -- -- of these less competitive.
Fiscally -- member states -- -- ECB should.
Doing more of the finance minister for Spain said they should be just stepping up to the plate and pumping in as much money that is that is needed whereas Mario drug of the ECB president said today.
Up to the governments to do more.
Mean relative to the ECB's mandate they've done a tremendous amount in the context of the crisis but not a lot.
Compared to what the member states would like but again you see this game of chicken between the member states in the ECB the ECB does not take special the member states to take the necessary steps now.
-- the ECB wants to see a fiscal agent in the market doing what's necessary to drive competitiveness of these countries -- something the member station.
Do but despite all of these reassuring words special came out of the last -- summit at the -- of June.
The borrowing costs are going -- an -- again especially in Spain about 7% I mean how concerned are you about that.
I mean it's a worrying situation to Spain and its -- in particular its lead given its size but there are instruments eurozone leaders can use to help bring down costs in each of these countries.
European Financial Stability Facility the European stability mechanism these -- vehicles.
But has been -- -- way out of trouble -- -- essentially to some extent to this but it helps buy time.
While you build out -- framework on supervision on by anti union and eventually your bills and bonds which is the direction of trouble.
Very good you very optimistic that a -- -- this -- some of that if things that we've seen sentences drug on for a long time but -- from -- with the Eurasia group thank you so much appreciate your time thank you and keep the notes.
