Dan White: €750bn plan is final roll of the dice for leaders to save euro
THIS weekend's euro rescue package represents Europe's last roll of the dice. With the markets smelling blood, the €750bn earmarked by EU leaders to prop up the single currency was the very least that was required to save the euro.
By the end of last week it was clear that the financial markets had lost faith in the euro. Unless Europe's leaders put their money where their mouths were over the weekend, the 11-year old single currency would have come to an abrupt end.
After almost six months of dithering and with their backs to the wall, Europe's leaders finally showed that they were serious about saving the euro.
The sheer scale of the €750bn rescue package, which will be available to all Eurozone countries either experiencing problems servicing their debts or which come under speculative attack, is certainly impressive.
The EU Commission is contributing €60bn with EU member countries chipping in a further €440bn, with €250bn coming from the IMF.
But will it work? At the same time as EU leaders were putting the final touches to the euro rescue deal, the results were coming in from the local election in the German state of North Rhine-Westphalia.
As expected, Chancellor Angela Merkel's Christian Democrats were thrashed and have now lost their majority in the German upper house, the Bundesrat.
The German local election results will reinforce fears that Germany will be unable to deliver on the bargain apparently struck this weekend.
Ever since the original Greek financial crisis first erupted last December, EU leaders have seemingly struck deals only for them to unravel later when Germany objected to the small print.
Will something similar happen this time? With her Bundesrat majority gone, Merkel is a hugely diminished figure. At the very least this weekend's local election results will encourage her domestic opponents to intensify their efforts to block the creation of a pan-European treasury.
Which, whether they have realised it or not, is what Europe's leaders have signed up to this weekend.
With the ECB now authorised to buy the bonds of Eurozone countries that get into financial difficulties, the economic policies of member countries will be subjected to far closer scrutiny than they were up to now.
What will the reaction of European governments and voters be once this realisation dawns?
In Germany the rescue package will almost certainly be appealed to that country's Constitutional Court on the grounds that it breaches the original "no bailout" clause agreed when the Eurozone was established at the beginning of 1999.
Further complicating matters has been the virtually complete breakdown in relations between the EU's two largest economies, France and Germany. While France favours a more interventionist policy to save the euro, Germany, which will end up footing most of the bill, is far less keen.
All of which means that there may be less to this weekend's rescue package than meets the eye. While the initial reaction of the foreign exchange markets was broadly favourable, investors will be anxious to examine the proposals in detail.
What is now clear is that the moment of truth has arrived for the euro.
After last week's rout of the euro on the foreign exchange markets it was clearly a case of put up or shut for Europe's leaders.
The first indications are that Europe's leaders have finally decided to put up. But will it be enough to save the euro? Only time will tell.
However, having already given it their best shot, Europe's leaders won't get a second chance.