Even faced with a dire financial crisis and a looming recession, European leaders are balking at signing off on a plan that would address -- marginally at best -- some of the problems facing the euro-zone.
Eurozone leaders were struggling on Tuesday to reach agreement on a much-anticipated deal to reverse their spiralling debt crisis amid mounting signals a definitive agreement would not be reached at a key summit on Wednesday night.
According to officials briefed on deliberations, talks between European government negotiators and representatives of Greek bondholders remained inconclusive, putting at risk one of the three key pillars of a deal: a final resolution on Greece's second bail-out.
A draft of the summit communiqué circulated to national capitals late on Tuesday and described to the FT does not include any wording on a completed deal on Greek bondholder haircuts, and instead refers only to a second bail-out being concluded sometime in the future. No timetable is mentioned.
In addition, a separate "draft terms and conditions" paper on a second key pillar in the deal - beefing up the eurozone's €440bn rescue fund - makes clear that leaders will be unable to attach a figure to how much firepower the leveraged fund will have. "A more precise number on the extent of leverage can only be determined after contacts with potential investors," the draft states.
The draft communiqué suggests final details of the overhauled €440bn fund, formally known as the European financial stability facility, may not be concluded until eurozone finance ministers meet again. Their next scheduled meeting is not until November 7.
Read between the lines here and the depressing fact emerges that even with the leadership of France and Germany, the rest of the euro zone is refusing to go along with admittedly, painful medicine.
Private bondholders of Greek debt are refusing to accept the 60% haircut being demanded by the IMF and ECB. Of course, governments could take a bigger hit themselves to lessen the shock of bondholders losing 60 cents on the dollar of their investments. But that just isn't in the cards and the last offer from the bondholders was a little over 40% cut - far short of what's needed to save Greece from default.
And it's not surprising that member states are balking at beefing up the EFSF fund. The Dutch parliament, for instance, has made it clear they will not vote for any more "half-measures." They want the crisis fully addressed and 440 bn euros - even if leveraged up to 1 or 2 trillion - would not be enough if Greek default led to a dominoe effect throughout southern europe.
After high hopes going into the week that a plan could be agreed to, euro zone members have fallen back into quarrelling and refusing to act as one. This is a recipe for disaster sooner rather than later.