'We Only Have One Shot' How the Euro Rescue Package Came Together

Within a single weekend, European leaders agreed to a massive and historically unique 750 billion euro rescue package for Europe's beleaguered currency. SPIEGEL has reconstructed the dramatic events, which saw traditional rivalries emerge between EU leaders, who ultimately found a compromise. By SPIEGEL Staff.

European Commission

FRIDAY, MAY 7

Berlin, Chancellery, 9:30 a.m.

By all indications, it promises to be a quiet day. In the morning the German parliament, the Bundestag, is scheduled to ratify a bill approving Germany's share of the Greek bailout package, which will provide the battered countries with loan guarantees, and in the afternoon the chancellor is expected to appear at a campaign event in Düsseldorf, where an important state election is taking place in North Rhine-Westphalia. Nevertheless, the markets are strangely nervous. The yield on 10-year Greek government bonds rises within a short period of time, and the EURIBOR, the rate at which banks lend money to each other, is also starting to climb.

Jens Weidmann, the chancellor's senior economic advisor, is paying close attention to the rate changes. Like everyone who watches the markets closely, Weidmann knows that the rate fluctuations are a sign of more serious problems to come. He writes a short memo and sends it to the chancellor.

Berlin, the federal parliament, the Bundestag, 10 a.m.

The debate over financial assistance for Greece is scheduled to begin in three hours, but it is clear to everyone that rejecting the legislation is not an option. "We must defend the common European currency in its entirety," says Finance Minister Wolfgang Schäuble, speaking for the government. "In doing so, we are also defending the European project."

His words are met with enthusiastic applause. Afterwards, Chancellor Angela Merkel says privately that Schäuble's speech demonstrated to her, once again, how important it is to support him as finance minister, despite his health problems. The Bundestag ratifies the bill in a vote of 391 to 72, and the members, pleased with their achievement, say their goodbyes for the weekend.

Frankfurt, the German central bank, the Bundesbank, in the morning

A memorandum titled "Current Market Developments," which has provided senior officials at Germany's central bank, the Bundesbank, with daily updates on market conditions since the Greek debt crisis began, notes: "Substantial gains in federal bonds due to ongoing flight into safe investments. Losses in European stock markets due to growing concerns about the periphery of the euro."

Brussels, European Commission, in the morning

European Commission President José Manuel Barroso calls Merkel to discuss a "worrisome development in the markets" that he has noticed. Barroso and Merkel agree that the solution that was put together for Greece will apparently not be enough to bring lasting calm to the markets. The two politicians agree to discuss more extensive proposals at a summit meeting in Brussels scheduled for that evening. At this point, no one has mentioned any concrete amounts or timetables yet.

Berlin, Finance Ministry, 2 p.m.

At the request of United States Treasury Secretary Timothy Geithner, the finance ministers of the seven largest industrialized nations agree to hold a teleconference. Schäuble joins the meeting from his office in Berlin. Geithner also reports that the markets are becoming more and more nervous, and he urges his European counterparts to do whatever they can to support the euro. A day earlier, the Dow Jones suddenly dropped by 1,000 points, supposedly the result of a glitch caused by transposed numbers, but the causes are still unclear.

When Schäuble briefs Merkel after the meeting, the chancellor has just spoken with Italian Prime Minister Silvio Berlusconi and EU Council President Herman Van Rompuy. "Things are coming to a head," says the chancellor. Merkel's flight is rescheduled to depart an hour earlier than planned, now that the chancellor is in a bigger hurry to get to Brussels.

Brussels, Justus Lipsius Building, headquarters of the Council of the European Union, 3 p.m.

French President Nicolas Sarkozy is the first head of state to arrive in the Belgian capital for the special meeting. After having attended a memorial service in Neuilly-sur-Seine for police officers killed in the line of duty that morning, Sarkozy quickly changes his suit before heading to the office of the French delegation to prepare for the crisis summit.

Sarkozy takes advantage of the time he has left before Merkel's plane lands to engage in a quick round of shuttle diplomacy. He meets privately with Portuguese Prime Minister José Sócrates, Berlusconi and Spanish Prime Minister José Luis Rodríguez Zapatero, one after the other, to tell them about the "French plan," which he intends to present to the larger group that evening. The Frenchman has long fought for a uniform European financial and economic policy that would finally put an end to the competition among countries when it comes to taxation and social security contributions. Only a few weeks ago, French Finance Minister Christine Lagarde accused Germany of being too competitive, arguing that this competitiveness comes at the expense of weaker member nations, but her comments were met with little more than amusement in Berlin.

The euro crisis now gives Sarkozy an opportunity to push forward with his agenda. The French plan calls for the issuance of a European bond, for which all euro countries would be liable. The introduction of Euro bonds would mean that there would no longer be any differences in interest rates in the euro zone and, therefore, no penalties for countries that investors believe are less responsible in running their economies.

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