The vacillation over the Euro is a classic case of “avoidance” negotiating behaviour. This kind of negotiating behaviour is not to be recommended, as it creates uncertainty and lack of confidence in whoever you are dealing with.

The Debt crisis within a number of the Eurozone is placing impossible strains on the Euro. The financial markets do not believe the various “austerity” programmes which have been created to accompany individual country bail-outs such as in Greece and Ireland. Nor do they believe that countries like Spain and Italy can avoid a default in the absence of bail-outs which the Eurozone cannot afford.

The only answer to the continued market anxiety is to engage with the problem, but the Eurozone seems to lack the political will to do so. Germany does not wish to underwrite Euro indebtedness with a blank cheque (e.g. by backing a Euro bond). Germany and France would like to utilise the current crisis to impose strict fiscal controls on the Eurozone in future so that member states don’t live beyond their means. But there seems little political will from the other states to accept this kind of political harmonisation. Even the will to engage with ratings agencies like Standard and Poor seems to be lacking – finding ways through dialogue to counter their gloomy predictions, which often spook market anxieties, would surely be a step forward.

Instead France and Germany have put the onus on the European Central Bank to sort out the problem, through interventions involving the buying of European government bonds. Nobody is convinced by this sticking-plaster solution.

When you “avoid” engaging in a necessary negotiation you frustrate the other side, they lose confidence in dealing with you, and they fantasise about all sorts of negatives which they assume can be read into your inaction. These kinds of reactions in the financial markets are just what the Eurozone wishes to avoid. If France, Germany and the other Eurozone members wish to “negotiate” peace in the financial markets then almost any kind of action would be better than doing nothing…