Europe in for a rough autumn ride

France and Germany fastened their seat belts and decided to set up a joint policymaking body that should formulate common responses to the challenges ahead. That is good news because without substantial coordination between the two biggest players inside the EU, the eurozone has no chance of moving forward. What are the events to look forward to in the next couple of weeks?

· The European Central Bank (ECB) is expected to announce shortly that it wants to buy up sovereign bonds from struggling economies such as Spain and Italy in order to limit these countries' borrowing costs. In Germany there is strong resistance to these plans from bankers and politicians. They claim that intervention in the bond markets goes beyond the ECB's mandate and would amount to, as Bundesbank President Jens Weidman put it in Der Spiegel, “state financing via the printing press.” Chancellor Angela Merkel has not clearly spoken out on the ECB plans yet, but everybody is curious how the new French-German task force will square the views of Berlin and Paris on this highly controversial issue.

An alternative for ECB action would be to beef up the powers of the newly created EU bailout fund, the European Stability Mechanism (ESM) that has powers to intervene in the bond market written into its mandate. The problem is that the status of the ESM is still subject to legal debate, which leads us to the second important date on Europe's autumn agenda.

· Sept. 12 is an important day for the EU for two reasons. First, the German Constitutional Court will rule on whether the ESM is compatible with the country's constitution. Several plaintiffs representing almost the entire political spectrum think it is not and have taken the case to court. According to eminent economist Hans-Werner Sinn, “Most observers believe that the court is unlikely to oppose the ESM treaty, though many expect the judges to demand certain amendments or to ask Germany's president to make his signature subject to certain qualifications.” If Sinn is right, it will take at least a few more months for the ESM to be able to start its activities. Such a delay would, to put it mildly, not create the kind of confidence in the financial markets that the eurozone is desperately looking for. On that same day, Dutch voters will go to the polls and elect a new parliament. At the moment, two parties are clearly ahead in the opinion polls: the Eurosceptic Socialist Party and the Liberal Party of Prime Minister Mark Rutte, who has made it clear that he is against all proposals that give more powers to European institutions. That does not bode well for any plan to give the ESM a more prominent role. Nor does this Dutch intransigence make it very likely that at the end of this year Merkel will get her way on drafting a new EU treaty. The German chancellor is of the opinion, and in my view correctly so, that the EU needs a new legal base to allow European institutions to monitor and, if necessary, correct the budgets of the member states.

· Finally, there is of course Greece. Officially, no decision will be made until mid October, when the EU leaders meet. Specialists of the European Commission, the ECB and the International Monetary Fund (IMF) will spend the entire month of September auditing the books in Athens. On the basis of their report, the EU will have to make up its mind. Will the Greek government be able to convince their colleagues that the austerity measures are solid as a rock and therefore EU assistance should continue and Greece can stay in the eurozone? Or will the EU leaders conclude that, unfortunately, Greece is a lost cause. All over Europe plans are being made in case a Greek exit becomes inevitable. The uncomfortable conclusion of all these scenarios is that nobody really knows for sure what will happen next. Many fear that after a Grexit EU member states will see even less money repaid than if they would negotiate a reasonable debt restructuring and keep Greece in the euro.

One bit of advice for all those in Turkey who think that all of this does not matter to Turkey because the Turkish economy is robust enough and will not be influenced by a paralyzed ECB, a divided EU or a Grexit: dream on.