09 December 2011
While the European central bank lowered the key interest rate to one percent and consequently gave their permission for inflation in the Eurozone to rise, debates are ongoing about different ways out of the Euro dilemma: The Franco-German duo of Chancellor Merkel and Prime Minister Sarkozy wanted to introduce a “debt brake” on a contractual basis and automatic sanctions for Member States in debt. At the same time, critics were discussing this strong Franco-German axis - the “Merkozy” alliance, - not all Member States and decision-makers agreed upon their propositions. This morning at around 6 a.m. local time, the first round of talks finished and first agreements were presented in the Council conclusions. A commitment was struck to support the International Monetary Fund (IMF) with an additional amount of 200 billion Euros to help EU Member States in difficulty. In addition, it was agreed that the European Financial Stability Facility (EFSF) should be replaced by its successor, the European Stability Mechanism (ESM), already in 2012.
Still, the 27 people that were seated at the Council’s dinner table came with very different mandates to this summit. It is now official that debates need to continue in a reduced setting of the 17 Eurozone members. The head of the Eurozone, Jean-Claude Juncker, stated already yesterday that he does not see any danger in striving for a separate agreement of the Euro-countries. Some member states, as for example the United Kingdom and Hungary, have clearly confirmed that they do not have a mandate for fundamental negotiations, such as Treaty changes etcetera. Especially Britain seemed to be more and more isolated during last night’s talks, as David Cameron vetoed a revision of the Lisbon Treaty. It also means that the European Union is moving more and more towards the concept of a “two-speed Europe” that many consider a fallback for EU integration.
An additional worrying momentum was the fact that not all of the European banks passed the so-called “stress tests” that were created in order to check whether the European banking system was stabilizing. It is clear once again that fundamental problems of the European Union are surfacing in view of crisis: In order to create a sufficient safety net for the Euro and the European economies, a change of the Treaties would be necessary. At yesterday’s meeting of the European People’s Party in Marseille, French Prime Minister Sarkozy pleaded for more solidarity, discipline and control in the Eurozone. However, it is clear that this crisis with all its complexity cannot be solved with one big and final bang such as the ongoing summit.
Once more, European decision-makers need to prove that the EU is strong and willing enough to reach for a compromise rather than to strive for nationally-centered solutions. Treaty changes might be one of the solutions that need to be taken into account now and in the long run. In the meantime, Europe is hoping for some reassuring measures that will lead the way out of the crisis scenario. It remains to be seen if any new constructive solutions will be found in today’s second round of negotiations.
Anne K. Steven is based in Brussels and covers news on general European Affairs and EU energy policy in particular. She holds a tri-national MA degree in cross-cultural communication and cooperation from Saarland University in Germany, Metz University in France, and Luxemburg University in Luxemburg. Anne recently completed a second master’s in European Public Affairs at Maastricht University (Netherlands) while taking part in the European Commission’s trainee program at the directorate general for Energy. She is now working at a political consultancy in Brussels.