BRUSSELS — Buoyed by an agreement to establish a single supervisor to watch over the biggest banks in countries that use the euro, the president of the European Commission, José Manuel Barroso, declared victory Friday over global financial markets, declaring them “totally wrong” for “seriously questioning whether the euro and indeed European integration would survive.”
Mr. Barroso’s triumphal comments, made at the end of a two-day summit meeting of the European Union’s 27 member states, could still prove premature, but they do signify a noteworthy evolution in the thinking of a Brussels bureaucracy that has long either ignored financial markets or denounced them as an alien and predatory force.
When the Greek debt crisis exploded three years ago, European officials often tended to vilify global markets and rating agencies, blaming “speculators” for the turmoil then stirring serious doubts about the long-term viability of the euro currency and even the entire “European project,” a six-decade-old venture to knit the region together through a gradual pooling of sovereignty.
As the crisis has developed, however, officials at the union’s headquarters in Brussels have stopped denouncing markets and learned instead to argue with them, presenting concrete steps to address their concerns. The banking supervisor deal, which will place about 150 of the most important banks in the 17 countries that use the euro under the supervision of the European Central Bank, is just part of a wide array of measures introduced over the last year to calm worries about the stability of Europe’s banks, government finances and, by extension, the union’s fundamental institutions.
“One of the big problems of Brussels has been that it is so remote from financial markets,” said Guntram B. Wolff, a former European Commission official who is deputy director of Bruegel, an independent economic research center in Brussels, the Belgian capital. “Now there is much more of a view of what is going on in the markets. This is a good thing.”
The traditional remoteness from, and often distaste for, financial markets, Mr. Wolff said, is largely a function of Brussels’ distance from major financial centers. The nearest is London, which for reasons of British domestic politics and fears in the city’s financial sector of meddling by the European Union, has often had testy relations with functionaries of the European Commission, the group’s main administrative and policy-making arm.
But ideology has also played a role, with many Brussels officials looking askance at what they have tended to scorn as an Anglo-Saxon preoccupation with markets, a phenomenon exemplified by the former British prime minister, Margaret Thatcher. Mrs. Thatcher is despised by many so-called Eurocrats because of her robust hostility to the organization’s goal of an “ever closer union,” a mission laid out in the 1957 Treaty of Rome, and her insistence that Europe should focus instead on building a common market for goods and services and keeping the sovereign powers of individual states intact.
“The European Parliament has many rooms named after famous Europeans, but there is no Margaret Thatcher room and there never will be one,” predicted Derk-Jan Eppink, a Dutchman elected to the parliament by voters in Belgium and vice president of the European Conservatives and Reformists Group. A member of the legislature’s budget and economic monitoring committees, Mr. Eppink said he had nonetheless noticed a sharp shift in attitudes toward markets among his colleagues and also E.U. officials since the debt crisis began shaking investors’ faith in the euro’s future.
“At the beginning of the crisis, everyone was always talking about greedy speculators and Wall Street sharks,” but such views were now “limited mainly to the hard left,” he said. “There has been a change in thinking. These markets and rating agencies are not widely seen anymore as an alien force of evil but as basically investors who don’t want to lose their money.”
“This changed over the past year,” Mr. Eppink added, when officials and politicians in Brussels “realized that many problems in the euro zone were bought on by ourselves, not by sharks and speculators.”
Carsten Brzeski, senior economist at ING Bank in Brussels, said, “It has been a steep learning curve, not just for the commission but also for markets.”
Accustomed to viewing the European Union through an American prism, many investors took fright at Europe’s fragmented and glacial decision-making process, Mr. Brzeski said. European officials, for their part, he added, often viewed the wild swings of the market, and the pain this caused as borrowing costs in Greece and Spain soared, with uncomprehending horror.
A big reason anxiety about markets has waned is that they have stayed calm in recent months, largely in response to a pledge this summer by the president of the European Central Bank, Mario Draghi, to “do whatever it takes” to defend the euro. The previous panic among investors has lifted to the point that the central bank has so far not needed to make any of the bond purchases Mr. Draghi vowed to make to shore up the debt of troubled countries.
Mr. Wolff, of the Bruegel research center, said this week’s summit meeting, far more tranquil and methodical than many previous conclaves, was an important step forward, but by no means the end of Europe’s troubles.
“There is a sense of direction at the moment, but the crisis is not over,” he said, warning that a grim economic outlook for next year, which will see much of the euro zone in recession, could upend the current optimism, especially if anger over unemployment — now at over 25 percent in Greece and Spain — leads to serious social unrest and political tumult.
