Successful economic stabilization programs require coordinated fiscal, monetary and structural policies. But the current state of affairs in the euro area is such that this basic axiom of economic policy is unlikely to be met anytime soon.
Half of the monetary union (i.e., France, Italy and Spain) shows serious backsliding from earlier politically and socially flammable efforts to conform to the German diktat of austerity policies, or its oxymoronic sequel of "austerity growth models."
France (one-fifth of the euro area) is leading this group of backsliders. Its budget deficit this year is expected to exceed the last year's shortfall of 3.9 percent of GDP. French security and military operations at home, in the Middle East and in North and Central Africa are likely to widen the budget gap toward 5 percent of GDP.
But ever eager to outmaneuver their stern Teutonic lecturers, the French recently got the euro area's (tacit?) agreement that the "security pact" should replace Germany's much-maligned "stability pact." That implies that any public spending related to security and military operations should not be counted toward the monetary union's (a.k.a Maastricht's) budget deficit rules.
It appears that the French extracted that concession because the Germans, along with other euro area members, were not eager to join France in fighting the Islamic State in the Middle East and Africa.