Last week, we had reports that China was being courted as the lender of last resort to help bail out Italy. Indeed, there is an expectation that the BRIC group of countries – Brazil, Russia, India and China – will come to Europe's rescue, It's not going to happen.
Barry Hatton at Associated Press says Beijing has another agenda. It wants to use its economic leverage to make friends who may be more forgiving in disputes over trade and human rights. It also wants to ensure doors are open for its goods and corporate investments in the European Union, its main export market. At the same time, however, Chinese economists see Europe's jittery debt markets as too big a risk. James Saft at the New York Times says that the BRICS are unlikely to bail Europe out because they see it as a futile attempt to bolster a system that can't make the decisions needed to ensure its own survival.
These bailout-shailouts aren't going to work, and neither are more austerity measures. World Bank president Robert Zoellick has warned that Europe can't count on cash-rich emerging nations like China and Brazil to come to the euro zone's aid. He says European leaders need to make fundamental decisions about the direction of the currency union. That means deciding whether or not to continue with the Euro, or see the European union break up. The only way they're going to get out of this mess is by making some hard decisions.