What a mess. Last week’s meeting will surely go down in the annals of recent EU summitry as the one where the worst outcome was achieved. For that reason alone, it could be given the ‘historic’ label that leaders are so keen to bandy about.
In sum: up to 26 member states are set to forge ahead with an intergovernmental ‘Fiscal Compact’ treaty. Only Britain has refused to join.
Recriminations about the summit are already flying around. The dramatic outcome seems to have come about as a result of underestimation on both sides. British Prime Minister David Cameron underestimated the effect that his demand for a full protocol on having a veto in financial services regulation – and thus a reintroduction of a veto in the internal market – would have. The others underestimated the pressure Cameron is under to deliver to his eurosceptic backbenchers.
Late-night, lack of sleep, dynamics surely also played a role. And suddenly by 5.30am on Friday morning, the die had been cast.
French president Nicolas Sarkozy was first off the mark to brief the press. And if the outcome could be perceived as pleasing anyone (aside from Tory eurosceptics, of course), it would arguably be those in the Elysee Palace.
An intergovernmental agreement, where the legal status of the EU institutions is in flux, fits well with a French view of how the European Union should look.
For everyone else, it is difficult to see where the good is.
Britain, the EU’s third largest economy, will now legally be beyond mainstream Europe. Politically it has always been so, and prided itself on being so. But it had a seat at the table. And it had allies. It is hard to see how Cameron will be able to effectively protect ‘The City’s’ interests, as he claims to have being doing, if London is only a bit player in the EU set-up. Was this the outcome London wanted? (Tellingly, while Sarkozy rushed out to tell the press his version of events, it took Cameron about half an hour to appear).
For Germany, too, it is a poor result. Berlin had pushed for full EU treaty change. More than any other country it wants more Europe to solve the eurozone crisis. It is now stuck with what is by its own admission a “second-best” solution. Sarkozy’s interview with Le Monde, published Monday, will remind Berlin of this. “We will not delegate our economic sovereignty to others,” the president said.
A full treaty change would have been difficult to implement. And there was little appetite for it. But the scale of the process – with MEPs, MPs, and member states – could have resulted in some balancing of the ‘Fiscal Compact’ agreed on at the summit. The Compact is about discipline only. Solidarity and growth are not addressed. (And Ireland may have a referendum anyway).
So what are we left with? A fundamental change in the state of EU affairs. The 17 eurozone states are now the core of the EU. (“It should be recognized that another Europe is emerging: that of the eurozone,” Sarkozy told Le Monde). Tied to these countries are up to nine others who have pledged, pending approval by their parliaments, to get on board too. In the third tier, currently in isolation but possibly to be joined by others in future, is Britain.
All this for an inadequate deal that has once again failed to draw a line under the eurozone crisis.
#1 by Marcel on December 12, 2011 - 5:53 pm
The only way the Euro ‘crisis’ can be solved is by the dissolution of it. Because the Euro IS the crisis. It is visibly destroying our wealth, increasing the poor-rich gap, depressing lower middle class and lower wages and enriching speculators and bankers.
Cameron is the undisputed winner. If Britain will leave the EU (he should promise this, call snap elections and win in a landslide). I’ll ask my company for a transfer to our British office if that happens. Freedom seems to be closer than I dared dream just last week.
The undemocratic Eurosoviet Union is like the Titanic hitting the iceberg. Cameron is heading for the lifeboats and Sarkozy and Merkel are staying on the bridge. Europhiles all advocate staying on deck. Is this not the epitome of stupidity? Why agree to a treaty that will disproportionately hurt Britain and particularly London, and only really benefits France?
Rather to be ‘isolated’ in a lifeboat than to be ‘integrated’ into a drowning crowd.
Ask yourself, where is the EU going to get the money from to cover for Britain’s net contribution they’ll lose? France? Exactly… /sarc
And besides, Britain will not be isolated at all, ever heard of THE REST OF THE WORLD? Or the Commonwealth? Britain will no longer need Brussels’ permission to trade with the rest of the world, another big benefit.
I really shouldn’t say it, but my opinion is that anyone who wants to prop up the Euro at all and any cost should have their head examined.
#2 by Marc on December 12, 2011 - 6:28 pm
And how is the UK benefiting from the EU ? Let’s see:
1. The single market, and the fact that through EU commercial policy the UK is no longer simply subject to the trade-related decisions of the US, China, or the rest of Europe for that matter
2. The fact that by being in the EU, London is a world financial services centre, mainly because of its access to the European market (we can’t really say that sterling is a world currency to speak of, can we, and, ironically, London is the world center of Euro-denonimated trading)
3. European regional development funds, helping to lift northern UK regions outside of London out of povery (visit a beautiful location such as Bradford and see that the only infrastructure built in the past 30 years has been with EU funds)
4. Facilitating the movement of industry, trade, and employees between the UK and Europe (given that the rest of Europe is the main direction of most of the UK’s trade and economic interests also)
5. Giving the UK a slightly larger role in global affairs than would be the case without the European Union, given that the United States could not bother – righly – about the UK apart from that it occasionally gives ‘international’ legitmacy to foreign policy decisions already decided in the United States, while the ‘commonwealth’ literally spends most of its time musing about the UK economic debacle, see India)
In addition, the ‘undemocratic’ Eurosoviet Union ultimately takes decisions made by the European Parliament and European Council which is comprised of -oops- democratically elected heads of state of the European Union.
If I may add also, without being a member of the Eurozone or any tighter European fiscal union or EU ‘superstate’, the UK authorities have had a wonderful job destroying their economy all alone – which is ultimately based only on financial services by non-UK firms and consumer spending by over-indebted households – name me a major global firm based in the UK ? Siemens ?
Switzerland with nuclear weapons or a US aircraft carrier off the coast of Europe ?
#3 by Marcel on December 12, 2011 - 8:06 pm
The usual nonsensical Europhile arguments.
1. because of being in the EU, for many things Britain needs permission from Brussels to trade with the rest of the world, and much of that trade is subject to Brussels rules. If out of the EU, Britain would be far more open for the rest of the world. Fact: the EU ‘free trade zone’ in reality is a customs union.
2. London is a world financial centre but not ‘because of’ but ‘in spite of’ the EU. It is a long held Europhile dream to move the financial center from London to Strasbourg or Frankfurt. That’s what this hullabaloo is all about. France has always been jealous of the City of London’s position as a world financial centre.
3. since the UK is a net contributor, the UK can fund those projects and have money to spare.
4. Ever heard of the WTO? Or of ‘the rest of the world’? Trade is neither an EU invention nor is the undemocratic Eurosoviet Union needed for trade to exist.
5. There’s that ‘wannabe superpower’ mentality of the Eurocrats at work again. Listen, we don’t want any superpowers in Europe, we’ve had very bad experiences with the ones run from Berlin and Moscow in the previous century. Why is it so important to ‘matter’?
If a bunch of foreign politicians determine a country’s policies, then that country is no longer democratic. A demos is what makes a democracy, therefore the Eurosoviet Union isn’t one and never will be.
Oh and I repeat, who are you going to get to pay for the gap that losing Britain’s net contribution will mean for the EU? France is gonna pay more in? I think not. The EU will be better off without that net contribution? I think not. Britain will be worse off if it no longer needs Brussels for trade with the rest of the world? I think not. Trade barriers from the EU to Britain? Again, the WTO says ‘nope’.
And here are some inconvenient truths for you: of the 2001 EU 15, the 3 countries that did best economically are Britain, Denmark and Sweden. Guess what those three have in common.
And two more countries in Europe did even better than them: Switzerland and Norway. Now, what was it that those two have that the EU/Euro countries don’t have? Or is it that they DON’T have something the EU/Euro countries do have? Gee I wonder what it could be.
What makes you love the undemocratic Eurosoviet Union anyway? And what’s with the contempt for democracy, referendums and the common people? Referendums? Please! Right now, here in Netherlands too… we’d vote against the Euro, for your information.
You see, just like in the first Soviet Union, the Eurosoviet Union is also desperately lacking in public support, lacking a ‘demos’ but unfortunately not lacking a contemptuous elite. Its fall however is inevitable, just hope it won’t take 74 years like with the first Soviet Union. Because that ended up with everyone poor.
#4 by Victor on December 12, 2011 - 10:03 pm
This is the worst outcome based on what expectations?
France got intergovernmentalism and to isolate the British.
Germany got austerity, a role for the Commission and Court and went along with France in isolating the British.
The ECB will sooner or later be able to step up its bond buying. Eurobonds will come eventually.
The UK vetoed the EU financial transaction tax. France and Germany (and everyone else) get to keep it, but it won’t be possible to use it as an EU own resource (which probably suits everyone fine).
The British Conservatives appease the eurosceptics, the Liberals get to remain neutral and Labour gets to talk about UK isolation.
The Commission will get more power, but not too much. The European Parliament will have a bit more of a say. The Court will be able to intervene a little bit more.
It is interesting to see the UK talk about how the supranational Court, Commission and Parliament can’t be used by the Euro zone (plus 9), as if the British ever liked those institutions. Yet it is clear from the treaties and the jurisprudence that at least the Court can be used, at least for some purposes. From the Bangladesh aid case it would seem pretty straightforward that the Commission can also be used, also for at least some functions. (This leading case neither requires nor explicitly accepts unanimity for such a decision.)
By including the other 9 non-Euro zone countries in the agreement, the political decision makes it more palatable to use these institutions which comprise also their representatives. With the UK having a treaty opt-out, it could be argued that its nonparticipation in the agreement doesn’t take any legitimacy away from the new pact’s use of the institutions.
The agreement is actually even better than how Schengen first developed, as it already foresees its fast integration into the EU architecture, all states (except the UK) are included in one way or another, and the EU institutions will be used from the beginning.
In so many senses this is basically history redux. It is completely consistent with how the EU was formed and how it has developed.
Now we’ll see the usual talk in the UK about leaving the EU and rejoining EFTA. As if the EEA didn’t basically receive dictats from the EU as regards single market legislation, including in the financial services sector. Didn’t the British learn anything from the Icesave debacle?
France and Germany said a while ago that a new treaty was needed to refound the EU. Obviously the UK wasn’t a founding member.
Still now we’ll have to see whether Labour and the Liberal Democrats defend Cameron and align with the nationalistic euroscepticism or whether they can seize the opportunity to expose the Tories for what they are against:
1) a European financial transaction tax, to help pay for the bank bailouts;
2) strong regulations of the financial sector, to prevent more crisis and contagions;
3) European coordination of labor market regulations, so there is no race to the bottom on social standards.
They should also seize this opportunity to rethink the UK´s tolerance of its territories being major centers for international tax evasion, along with the European microstates.
Meanwhile, Ireland and the Eastern Europeans will have to walk the walk as regards solidarity and commit to some harmonization of corporate taxes.
And all Euro zone states will have to move in the direction of the US, where only the federal government is allowed to run a deficit, but comes to the rescue of the members of the federation during economic crisis.
#5 by droom on December 14, 2011 - 10:19 am
And indeed what I predicted before the summit in a post to another article ons this site, is happening:
“I believe that the British rebate should be put into question. Our taxpayers’ money should be used for things other than rewarding selfish and nationalistic attitudes,” said EPP leader Joseph Daul, referring to London’s decision last week to block full-blown treaty change to tighten fiscal rules.
The Brits go back in their splendid isolation and are being driven in it by the other 26 countries (mind my words), but the taxpayers from the other 26 countries want their money back, starting with the UK-rebate. Sounds good to me, and the desired outcome for the Brits. They call that a win-win…….
#6 by Roger Helmer MEP on December 15, 2011 - 11:47 am
Can we get away from this idea that “Only Britain has refused to join”? It’s clear that a number of countries won’t join. And that the deal won’t work. Strip out the spin, and it’s just a re-heated version of the Maastricht Criteria. They didn’t work either.
#7 by Betterworld on December 17, 2011 - 11:41 pm
Yes and it was Germany that was first to drive a coach and horses through those rules, (rules written by Ireland) opening the way for all subsequent “defaults”.
The current “compact” is nothing more that a way of getting Sarkozy through the next French presidential election, it’s a manifesto he thinks he will be able to spin for long enough to get himself re-elected. It has no other function. And no shelf life beyond the second round of voting. If, in fact, it lasts that long. That’s why all the others have signed “yes, but …” contracts, with Britian too diplomatically inept to spot the expiry date on the tin.
In contrast, the Irish “yes, but …” contract is a diplomatic master stroke. It will be referred to a referendum, the wording of which will inevitably be written by Mrs Merkel (who has already told the Greeks that any referendum must be stark: “in or out of the Euro”). This is a red rag to a bull in Ireland and will be defeated, unless the unsustainable bank bailout insisted upon by the Germans (to protect the profligate German banks) is removed. Check-mate Mrs Merkel, even if she’s currently too distracted to realise the trap that has been set for her and the ECB.
I have no doubt that other “yes, but-ers” are already constructing similar traps for the blind, bumbling, dogmatic German.
Either the Euro is a collective or its not – if it is, then the subsidy that Germany is currently enjoying as a result of it’s under priced exports has to be counterbalanced by a fiscal transfer to those regions suffering from providing that subsidy.
#8 by Wim on December 19, 2011 - 2:19 pm
Sometimes it seems only a matter of time before we see German soldiers marching into Greece to prevent it from leaving the EU. Anyone who has seen the arrogance German soldiers show nowadays in Northern Kosovo knows that Germany’s lust for power has a military component too.
#9 by pete one on December 24, 2011 - 1:14 pm
Somewhat funny to read alle these comments. Obviously, many of you seem to have a worldview which is based on the political situation of the 19th century… colonialism, imperialism, nationalism and commonwealth are over. believe what you want to believe, but there is no sense for a european country to go without regional cooperation, it’s part of the future… exceptions like switzerland or norway are only exceptions, because they can – they have either a very profitable banking sector, which makes use of undermining other states’ fiscal policies and of protecting the money of dictators, or, they have some oil which is pushing the economy PLUS they were healthy economies any way. They will stay like that as long as they can… The UK might with its financial sector might also go as such an exception, but the UK economy is far from healthy… any way, the world is becoming more and more interdependent – and i mean firstly economically, and that is what the EU is about – so that regional integration in economic terms is just a logical step! war and nationalism are illogical steps, because they cost money. likewise, cooperation with your main trade partners pays off!
((as to regulations of the financial sector: they have somewhat proven to be necessary, since not even economists understand the dynamics of the financial markets, so that we face unbearable risks. it is about preventing future crises, and it is important since a crisis might split the society… have a look at the USA… and btw the financial sector does have a share in widening the gap between rich and poor… some regulation would not be the worst, especially for the uk which is apparently troubled by this problem))
#10 by yacht charter greece on May 2, 2012 - 11:15 am
I know what you mean. They discussed about important things for the entire world.
#11 by Construtora on May 15, 2012 - 4:32 pm
Good work!, i agree in discussed about important things for the entire world.