Give credit where credit is due. In November a minority of agitated European politicians, aghast at the turmoil on government bond markets, were questioning if the eurozone would survive intact beyond Christmas. Now there is no such sense of panic. The ocean is far from calm and more storms lie ahead. But Europe’s policymakers have at least ensured that the good ship Monetary Union will not capsize in the near future.

Several factors have contributed to stabilising the eurozone over the past three months. First, Mario Draghi, the European Central Bank president, introduced a programme of large-scale cheap credit for banks. This reduced stress in Europe’s financial system and lowered borrowing costs for governments. It is noteworthy that the ECB felt no need last week to buy sovereign bonds on the secondary market.

Second, the replacement of the feckless Silvio Berlusconi with the reformist Mario Monti as Italy’s prime minister calmed investors’ fears that the debt crisis would engulf the eurozone’s third biggest economy and trigger the euro’s demise. Mr Monti is showing much courage in confronting Italy’s domestic economic rigidities. He is also improving the quality of debate at European level, by spelling out the need to balance austerity with economic growth and strengthen the eurozone’s permanent rescue fund.

Third, negotiators on all sides showed common sense in striking a deal in the early hours of Tuesday to restructure Greece’s debt, extend fresh loans and avert a disorderly default. Everyone made compromises, from private sector bondholders to the northern European governments which are under pressure from their electorates not to be gulled into pouring money into a bottomless Greek pit.

Political leaders in Athens also made substantial concessions. To be sure, they are anything but flavour of the month in Berlin and Brussels. But they have accepted deeply unpopular restraints on Greece’s financial sovereignty with no precedent in a European Union member-state since the 1957 Treaty of Rome.

From a German perspective, it might be argued that the eurozone’s prospects have brightened in the opening months of 2012 because of a fourth factor: the progress made in hardwiring strict rules on fiscal discipline into the laws or even the constitutions of all 17 euro area countries.

Thoughtful policymakers elsewhere in Europe do not entirely buy the German argument that irresponsible or inept national housekeeping was the original sin of monetary union, committed almost instantly after the euro’s 1999 launch. By and large, however, these policymakers are prudently keeping their opinions to themselves and signing up to the tighter fiscal rules. They appreciate that no solution to the crisis is possible without German leadership and cash.

Yet the covenant on fiscal controls, so sacred in German eyes, does not command a secure place in the eurozone’s tabernacle. In this respect the most important trail to follow over the next three months will be France’s presidential and legislative elections.

Opinion polls predict a victory for François Hollande, the Socialist party’s candidate for the Elysée palace. He says, if elected, he will seek to renegotiate the fiscal pact because it places too little emphasis on economic growth.

Mr Hollande would probably have less room for manoeuvre to change the accord than he is encouraging French voters to believe. Nonetheless it is easy to see why Angela Merkel, Germany’s chancellor, sees Nicolas Sarkozy as a safer bet and is explicitly throwing her support behind the incumbent centre-right president.

One hitch is that Mr Sarkozy declared last week that, if re-elected, he would put the eurozone’s fiscal accord to a referendum. Modern French history suggests the outcome of such a plebiscite would not be assured.

When French voters were asked in 1992 to approve the EU’s Maastricht treaty, the agreement that set out Europe’s path to monetary union, they did so by a whisker: 51 to 49 per cent. But in 2005 French voters rejected the EU’s draft constitutional treaty.

In France, no less than in Greece, political conditions over the coming months will determine Europe’s ability to keep the crisis under control.

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