Europe might have taken a major step over the last week towards forging a comprehensive anti-crisis framework for dealing with the debt-hit eurozone. But a slew of tough decisions on holding the 17-member currency bloc together still looms.
Wednesday's ruling by Germany's top court approving key planks of
Europe's euro rescue plan - including the new $644-billion-dollar (500-billion-euro) European Stability Mechanism bailout fund (ESM)- helped to build on the momentum following last Thursday's move by the European Central Bank to launch a new bond-buying plan.
"Within less than a week, the eurozone has finally received its long sought-after impressive bazooka," said ING Bank economist Carsten Brzeski.
"Now that the monetary and legal authorities have done their part, the destiny of the eurozone is now exclusively in the hands of governments," he said.
But while the moves by the ECB and the court will give governments across the currency bloc more time to press on with their tough round
of fiscal austerity, both analysts and political leaders have also been quick to point out that this is not the end of the crisis.
"We have not yet overcome this crisis, but we have made the first steps," German Chancellor Angela Merkel told parliament following the
court's announcement.
Taken together - the Federal Constitutional Court's backing for the ESM and the fiscal compact on budget discipline, plus the ECB's bond-buying programme - the steps show Europe has in place a strategy
for dealing with the crisis that combines long-term fundamental reforms with short-term emergency measures.
But the court ruling also raises the risk that other nations, which have signed on to the ESM might object to the court's insistence that the German parliament has to be informed about the
bailout fund's plans.
This could be seen in parts of the eurozone as giving the region's biggest economy special privileges.
In addition, the fiercely independent ECB might also resent the court "reserving the right" to review whether the Frankurt-based bank's bond-buying programme breaches a rule against the ECB lending
to governments.
Of more immediate concern, however, are the decisions European leaders have to reach in the coming weeks on a series of critical issues aimed at further stabilizing the currency bloc and heading off the threat of a fresh crisis engulfing the region.
This includes whether to agree to a second bailout instalment for heavily indebted Greece.
At the same time, the leaders might face further decisions on additional help to shore up Spain, which has now emerged at the centre of concerns about the debt crisis.
In interviews with two Finnish newspapers Wednesday, Spanish Prime Minister Mariano Rajoy again rejected suggestions that Madrid would be forced to tap the euro rescue funds - the ESM and the existing
European Financial Stability Facility (EFSF) - to ensure it meets its
financial commitments.
But he declined to rule out that Spain might consider activating
the ECB's bond-buying programme by applying to the funds for
assistance. Madrid also set out details of its rescue plans for
Spain's troubled banking sector.
That said, a measure of calm has emerged on financial markets in
recent weeks in the wake of the announcement of the bond-purchasing
programme.
This has also come against the backdrop of a concerted effort by
European leaders and top officials to alter the relentlessly negative
tone surrounding the eurozone and to emphasize the progress that has
been made in tackling the crisis, which is now three years old.
Spearheading these moves has been Merkel, who has in the past few
weeks praised Italy and Spain for the reforms they have undertaken to
their state finances, while insisting that Greece should remain a
member of the eurozone.
But the chancellor is also concerned about minimizing the
political risks from the eurozone crisis as she begins to prepare for
national elections expected in September 2013.
