European Central Bank President Mario Draghi on September 6 is expected to specify what actions the lender will take to protect troubled Italy and Spain, which as the third- and fourth-largest economies, respectively, in the eurozone represent the front-line in the battle to halt the currency union's festering debt crisis. Although the ECB has not offered details about the plan, it is expected to consist of a bond-buying program aimed at containing the countries' borrowing costs and keeping their debt burdens at a tolerable level.
For now, the plan is believed to be far from complete, and its backers will have to overcome significant political obstacles. It faces what appears to be hardening opposition in Germany, including from Chancellor Angela Merkel and Bundesbank president Jens Weidmann. Officials in Finland, Holland and several other eurozone countries also have panned the proposal, although most members of the 17-member bloc support it.
At a summit in Berlin this month, Merkel and Italian Prime Minister Mario Monti publicly clashed over the idea of the ECB purchases of Italian and Spanish debt, with Merkel saying the plan is "incompatible" with EU treaties. Although she claimed to have support from Draghi on this point, her claim was undercut when he said in a column published in a German newspaper that the ECB would need "exceptional measures" to curb the crisis and that Berlin's interpretation of the bank's mandate was too narrow.On September 12, a week after Draghi's expected announcement, Holland will hold national elections expected to provide a gauge of Dutch sentiment on the plan to aid Italy and Spain. That same day, a German constitutional court is slated to rule on whether a move to create a proposed bailout agency -- the European Stability Mechanism -- must first be put before the nation's voters.
Next month will also see the release of a report on Greece's economic reforms by the so-called "troika" -- the ECB, European Commission and International Monetary Fund. Many expect that report to conclude that Athens is unlikely to meet it fiscal targets, which would deepen questions about its continuing participation in the eurozone. Missing those targets would technically make the country ineligible for additional bailout funds. The Greek government has said that without that aid, it will run out money by the middle of October and default on its debt.