By Peter Wilding
The sense of gloom is increasing on the continent. Several papers publish disillusioned comments on the expected outcome of this summit. Le Monde compares the crisis to a plumbing problem with the Eurozone 17 merely filling the gaps, when they should be redoing the whole installation. Les Echos is even more pessimistic, as the leader column wonders whether this new summit is doomed even before it has started. Libération goes further, wondering if it’s not already too late to solve the euro crisis. EP President Martin Schulz warned that it is wrong to overburden each Council with expectations for historic decisions. “We must be realistic: there are great differences. We will not resolve the debt crisis today and tomorrow,” he said. The Guardian Economics Editoral ‘Eurozone summit: Germany v Italy, Spain and France’ delivers another pessimistic analysis, writing the summit will fail because Germany will not give the rest of the Big Four what they want: financial aid without any political terms
German strength or weakness?
China Daily believes this summit will end in disarray if France and Germany don’t manage to break the deadlock in their relationship, in other words finding a common ground between financial solidarity and closer political integration. El Pais agrees, saying Germany and France have to put forward a convincing agreement today, especially on recapitalisations. Le Figaro seems to believe in a possible breakthrough, pointing out that while Germany still holds much of its prestige and influence, it now has to cope with a strengthened – if more or less tacit – alliance between the Southern Europe countries. The Guardian follows along the same line, believing that although Germany is the hegemonic power today, it is using that power to push Europe deeper into recession by hampering growth and competitiveness. The paper advocated lowering taxes and raising wages so that other member states could have an easier time exporting to Germany. The Daily Telegraph however points out Germany is merely defending its national sovereignty, all the more with an elections coming up next year.
Ms Merkel stressed that she is afraid the summit will only focus on the problem of state debt, but FAZ doubts Ms Merkel’s defiance on pooling debts “as long as she lives”, on the simple premise that this does not comply with her demands for more political integration. However, Ms Merkel seems to be willing for a compromise. “There can be common debt only when there is sufficient control,” she said in a speech at the Bundestag on Wednesday. Deutschlandfunk believes she will eventually have to compromise. She edges closer all the time, especially after her approval of the billion package for infrastructure funding and President François Hollande’s growth rhetoric. But step by step doesn’t please the IHT which criticises the stubbornness of the German Chancellor, believing her current line of conduct could be eventually swerved by the rise – and the possible future successes – of populist parties.
Closer union or not?
According to Süddeutsche Zeitung, The “visionary concept” of the four heads of European Council, European Commission, ECB and Eurogroup will probably not survive tonight because there is no popular political buy-in. Kauppalehti’s Päivi Isotalus writes in a column that Europe is at a crossroads – does it dare take a leap into closer union or will it let the less-than-optimal currency union crumble.
In an article in Il Sole 24 Ore, EC President José Manuel Barroso says that every leader and every country have commitments to a new cooperation, with major solidarity and responsibility. With the gang of four plan on the table, EC Vice-President Viviane Reding, in an opinion-piece in Libération, The Malta Times, Ara and Gazeta Wyborcza, has called on EU member states to at least implement a banking union at the EU summit. According to her, “exiting the crisis requires a stronger and more united European Union.” Such a banking union, she writes, should be backed by the full faith and credit given jointly by the euro area governments and, one day, by a European Finance Ministry. European Commissioner for the Internal Market Michel Barnier stresses in interviews with iTélé and Le Monde that a banking union is the first step towards a deeper economic and political integration. President of the European Council Herman Van Rompuy also adds his voice to the chorus calling for more integration through a banking union, a fiscal union and an economic union. “I do expect to reach a common understanding amongst us on the way forward for” economic and monetary union, The Wall Street Journal notes.
Does it matter?
All this is a step forward but is unlikely to offer much solace to markets, World Bank President Robert Zoellick tells The Times. Mr Zoellick warns that a project meant to bring the Continent together is creating an increasing number of fissures and fault lines, citing bailout fatigue among some Germans and calls in the Netherlands for integration to be stopped. Far from being the blueprint for banking union Herman Van Rompuy’s report is seen as barely a discussion opener in Finland (Turun Sanomat), and is criticised by Sweden’s Minister for Financial Markets Peter Norman (Dagens Industri). In Bulgaria, Governor of the Bulgarian National Bank Ivan Iskrov stated on Wednesday (24 Chasa Daily) that the country was not meant to be in the EU banking union, while in Poland European Budget Commissioner Lewandowski told Rzeczpospolita that the proposals for a banking and fiscal union would force Warsaw to make a strategic decision. As to Czech Prime Minister Petr Nečas and the Czech Central Bank, they have negative stance on banking and fiscal union. The report on the future of the economic and monetary union presented by Herman Van Rompuy, José Manuel Barroso, Jean-Claude Juncker and Mario Draghi does not say if the banking union must involve the 27 EU member states or only eurozone countries.
For UK politics the eurozone crisis will bring the deluge. So says constitutional expert Vernon Bogdanor – David Cameron’s tutor at Oxford University – in the Guardian. He draws attention to Chancellor Merkel’s remarks that “liability and control need to be in balance.” But, he says, political union:
“will not be acceptable….unless the executive is democratically accountable. She has proposed that in future the president of the European Council be directly elected. That is unlikely to happen for some time. But a genuine union would still mean that a member state could be outvoted on its budgetary policy – the centre-left in France, for example, would have to accept that it could be outvoted by the centre-right majority in the other eurozone countries. That is even more unlikely.”
Bogdanor says that Germany has replaced the US under Bretton Woods as the “economically hegemonic power” in Europe. “But it is using that power to push Europe deeper into recession…..a self-defeating policy.” He adds that “German taxpayers do not want to be hegemons”.
Following today’s story in the FT that Hague’s focus on EU power audit boosts eurosceptics it is revealed that Foreign Secretary William Hague plans to launch a comprehensive audit of the impact of EU law on Britain this summer, an exercise that could drive a Conservative drive to repatriate powers from Brussels. More details are expected soon, according to government officials. Contentious issues flagged for examination include justice and policing, employment and social laws, financial services and regional policy. Deputy PM Nick Clegg has yet to sign off on the scope and timing of the exercise. It may not be a coincidence that this announcement (predicted by Nucleus) comes on the same day that on the EU referendum: 100 Tory MPs back call for vote having signed a letter calling on David Cameron to prepare legislation committing the UK to an EU referendum after the next election.
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