Tuesday, April 29 15:17:59
Perhaps the darkest moment of the euro zone debt crisis came in the middle of 2012 when Greece stood on the brink of being forced out of currency bloc and a question mark hung over whether Cyprus would remain in if Athens left.
Two new books closely examine the tumultuous years from 2010 to 2013, but take a very different approach to describing the critical events of May-September 2012, when the long-term future of the European project was genuinely in doubt.
In the first, European Council President Herman Van Rompuy, who chairs meetings of European Union leaders and sat through crisis debates, takes an understated line, playing down any sense of chaos despite the extreme pressures.
The other book - by John Peet and Anton La Guardia of The Economist - paints a much more touch-and-go survival picture for monetary union.
Using calm language and a style that glosses over specifics, Van Rompuy describes the "moment of truth" as coming at a summit of EU leaders on June 28-29, when he pushed the heads of state to agree far-reaching measures to overhaul the monetary union.
"In the meeting itself, leaders sensed that the moment called for a qualitative breakthrough," Van Rompuy writes in "Europe in the Storm", a book that is a series of reflections on his five years as the EU's first permanent Council president.
After late-into-the-night negotiations, leaders agreed that they had to strengthen banking supervision and allow failing banks to get direct help from the euro zone's bailout fund.
"(It) marked a watershed. After more than two years of dealing with countries' problems through ad hoc fire-fighting, leaders had finally come to the realisation that we were not just facing a series of country-specific problems but a systemic crisis that required a systemic response," Van Rompuy writes.
"They rallied unanimously around the need for action for Europe as a whole. We now had a compass."
It is simply put, and perhaps with the benefit of hindsight - now that the worst of the crisis is over and the euro has survived - it seems like all it took to quell the storm.
But at the time the situation was far more tenuous, with financial markets so on edge that any wrong decision or miscommunication could have sent trading into a tailspin, shaking economies across the world, not just in Europe.
That is much more the perspective offered in Peet and La Guardia's book, "Unhappy Union: How the euro crisis and Europe can be fixed".
The authors describe intensely fragile moments, including the European Central Bank and the IMF drawing up hour-by-hour, day-by-day plans to try to manage the departure of a country from the euro zone. Similar contingency plans were developed in the European Commission and the European Council.
But so nervous was everyone about the possibility of their plans leaking that no institution shared what it was doing.
"It all made for a strange dance in the darkness," Peet and La Guardia write. "Within the Commission, staff at the economics directorate had been expressly ordered not to do any work on the response to a possible break-up, even though a discreet group of senior commissioners and officials did just that: plan for a split in the currency zone.
"For all concerned a big dilemma was how much to tell the Greek authorities about the preparations for their country's possible return to the drachma. The answer was: hardly anything at all."
As Reuters reported at the time, euro zone finance officials had even drawn up specific plans for limiting ATM withdrawals, imposing capital controls and shutting down borders if Athens did leave the currency - a distinctly more alarming state-of-play than that described in Van Rompuy's book.
But ultimately both books agree on several points, including the fact that the crisis is not over and more work needs to be done on overhauling the union's architecture if the region's banks are to be made safe and growth sustained in the long run.
And they also largely agree that rather than radical steps, EU member states are likely to soldier on laboriously in the coming years, tackling their problems in fits and starts.
Peet and La Guardia describe that as "muddling through", the unofficial policy that allowed the EU to get through the crisis. Van Rompuy, with his cautious policymaker's point-of-view, calls it "political will", checked by classic EU compromise. (Luke Baker and Jeremy Gaunt of Reuters and BusinessWorld.ie)