The European Bailout Fund: A 'confidence game' eroding Europe’s democratic institutions

Europe’s leaders expect the ESM to receive 76% of its €500bn bailout funds from eurozone countries (photo: dpa)
Europe’s leaders expect the ESM to receive 76% of its €500bn bailout funds from eurozone countries (photo: dpa)

European Union leaders have created a new bailout fund – the European Stability Mechanism. Some experts see it as an attempt to give the appearance of financial stability within the union, to maintain confidence, and to prevent an acute crisis of the EU’s financial and political systems by dribbling out the pain of austerity in small doses. But though this may prevent a catastrophic collapse of Europe’s banking system in the short term, there will be a political price to pay in the long term.

THE European Union has created, by treaty, a new bailout fund known as the European Stability Mechanism (ESM) which will become operational in mid-2013. This action, though, is little more than a...

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