What's on offer in Brussels is a fiscal union which represents different outcomes for different groups of countries. But both outcomes will be equally unpalatable for voters. In Germany, and its satellites, what's being discussed will mean vast transfers of wealth south, to support the insolvent banks and governments of the Club Med countries. For voters in these places, such as Greece, Portugal and Italy, what's on the agenda is the imposition of a new set of rules which are about to change their lives irrevocably. They will be forced to become like the north as they submit their national rights to tax and spend to outside supervision by the European Commission. Comply or be punished is the highly enticing prospect. Arriving in Brussels on Thursday, Jose Manuel Barroso, president of the European Council, said it was essential that national interests were set aside at the summit for the greater good of the single currency – a dig at David Cameron's threat to veto any EU-wide treaty rewrite that damages UK interests. But if Eurocrats such as Barroso think British national interests are proving an irritating diversion, he is fatally underestimating the power of national interests in countries from Spain to Slovakia which are about to be unleashed in the weeks and months to come as the detail of the new treaty starts to emerge. Until recently, contemplating the break-up of the single currency was thinking the unthinkable. Now those openly discussing it – just about everybody – are merely adopting a mainstream, orthodox view. Even Nicolas Sarkozy is warning that the risk of disintegration has never been greater.
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Friday, December 9, 2011
Nicolas Sarkozy is warning that the risk of disintegration has never been greater.
What's on offer in Brussels is a fiscal union which represents different outcomes for different groups of countries. But both outcomes will be equally unpalatable for voters. In Germany, and its satellites, what's being discussed will mean vast transfers of wealth south, to support the insolvent banks and governments of the Club Med countries. For voters in these places, such as Greece, Portugal and Italy, what's on the agenda is the imposition of a new set of rules which are about to change their lives irrevocably. They will be forced to become like the north as they submit their national rights to tax and spend to outside supervision by the European Commission. Comply or be punished is the highly enticing prospect. Arriving in Brussels on Thursday, Jose Manuel Barroso, president of the European Council, said it was essential that national interests were set aside at the summit for the greater good of the single currency – a dig at David Cameron's threat to veto any EU-wide treaty rewrite that damages UK interests. But if Eurocrats such as Barroso think British national interests are proving an irritating diversion, he is fatally underestimating the power of national interests in countries from Spain to Slovakia which are about to be unleashed in the weeks and months to come as the detail of the new treaty starts to emerge. Until recently, contemplating the break-up of the single currency was thinking the unthinkable. Now those openly discussing it – just about everybody – are merely adopting a mainstream, orthodox view. Even Nicolas Sarkozy is warning that the risk of disintegration has never been greater.
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10.01pm: Eurozone states should adopt a debt brake that would limit annual deficits to 0.5% of their economic output, AP reports.
A draft statement of conclusions of the summit seen by the news agency states that structural deficits can only exceed a 0.5% limit in exceptional circumstances or to counteract a recession.
The limit is stricter than the 3% deficit rule currently prescribed by EU law, although that also include debt repayments.
Final conclusions are not expected to be agreed before Friday
David Cameron was at the centre of a furious row with Nicolas Sarkozy on Thursday after Paris tried to isolate the prime minister at the EU summit by suggesting that Britain is seeking to exempt the City of London from all European regulations.
In a move dismissed by officials in Brussels as an attempt to set Britain up as the "fall guy", senior French figures said Cameron wanted an "opt out" from EU financial services regulation.
The French were said to have found themselves isolated in their attempts to limit an agreement on tough fiscal rules for the single currency just to the eurozone's 17 members.
Britain said Sarkozy was distorting the British position, which is to ensure that changes to the eurozone do not harm the City of London.
Cameron confronted Sarkozy in a joint meeting with Angela Merkel, the German chancellor, shortly before the EU's 27 leaders met for dinner to try to hammer out an agreement to underpin new fiscal integration in the eurozone.
"The prime minister was very determined and very strong in the meeting," one British source claimed. "This is going to be a very difficult discussion."
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