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The Silent Death of Eurozone Governance

BRUSSELS – Sometimes the most important thing that happens is what doesn’t happen – or, to paraphrase Sherlock Holmes, it’s the dog that doesn’t bark in the night. The lack of response to the European Commission’s non-enforcement in Spain and Portugal of the terms of the Stability and Growth Pact (SGP) is one of those times.

According to SGP rules, the Commission should have proposed a fine to be levied on Spain and Portugal for overshooting their fiscal deficit targets by a wide margin. The fine would have been largely symbolic, but the Commission seems to have decided that the symbolism wasn’t worth it.

And it was not only the Commission that chose not to bark; the rest of Europe remained silent as well. Not even Germany, the European Union’s leading austerity watchdog, perked up. In fact, there have been reports that German Finance Minister Wolfgang Schäuble lobbied several commissioners not to impose fines on Spain or Portugal. The German financial press, which often criticizes the European Commission for being too lax, barely registered the decision.

What explains the silence?