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WSJ: Trichet's Voice Is Drowned Out in Rescue Effort

Author: Brian Blackstone
April 13, 2010

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As the EU struggles with Greece's debt woes Jean-Claude Trichet, an architect of the European monetary union, finds himself sidelined and ignored, writes Brian Blackstone in the Wall Street Journal.

Jean-Claude Trichet, an architect of European monetary union, has found himself in an unfamiliar place as Europe confronts its biggest fiscal crisis in decades: the sidelines.

As Europe has struggled to cope with Greece's debt troubles, culminating in Sunday's agreement on a potential aid package, Mr. Trichet's efforts to shape the response largely failed.

On key issues, ranging from his opposition to International Monetary Fund involvement in a bailout to his call for governments to speak with a unified voice, Mr. Trichet appeared out of sync with euro-zone capitals, and his advice often went unheeded.

"The problem now is he's in charge of an institution which is supposed to be the guardian of the euro, but a lot of the decisions that are going to affect the future of the single currency are out of his hands," says Philip Whyte, senior research fellow at the Centre for European Reform, a pro-European think tank based in London.

Mr. Trichet's lack of influence over the response to a crisis central to the stability of the euro and Europe's economic future could weaken the office of ECB president and prompt broader questions about the ECB's ability to effectively respond to future flareups, analysts say.

The ECB declined to comment.

Many countries in the euro zone are still feeling the economic pain of the recession and politicians, especially in Germany, proved reluctant to follow Mr. Trichet's calls for a swift and decisive response to the debt crisis, a step that would have entailed sending billions in taxpayer money to Athens. That prospect has eroded popular support for the EU and the common currency in places like Germany. It has also exposed the continued deep divisions in Europe between advocates of closer economic and political integration and those who believe member states should preserve their sovereignty.

Some analysts say that instead of weakening the ECB, the Greek crisis is simply clarifying its role in Europe's financial infrastructure. Mr. Trichet's difficulties as he nears the end of his term in October 2011 may be a cautionary lesson for his successor to focus on monetary policy without getting drawn into matters over which the ECB has no control.

Because the single currency was set up with a central bank but no equivalent body for fiscal policy, Mr. Trichet had effectively become the face of not just monetary policy but all things economic in Europe. Now, spurred by the Greece turmoil, euro-zone governments have taken a stronger hand in fiscal matters.

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