ANALYSIS:Core strands of Van Rompuy's long-term euro-zone plan have been shelved
Do EU leaders think they have the debt saga beaten? No. But pressure for urgent action to tackle the malaise is easing as some of the heat comes out of the crisis.
Thus we had the spectacle of European Council president Herman Van Rompuy presenting a long-term plan for the euro zone to the leaders on Thursday night, core strands of which they promptly shelved.
Never mind that it was the leaders themselves who asked for the blueprint in the first place. The summit conclusions noted that Van Rompuy had produced a specific, time-bound road map towards “genuine” economic and monetary union. The leaders settled on a road map for the next six months but no more than that.
Removed from the conclusions was Van Rompuy’s call for a further progressive pooling of economic sovereignty after 2014 and, possibly, changes to the EU treaties.
Convenient for Kenny
This was politically convenient for Taoiseach Enda Kenny, as was the removal of a reference to enhanced co-ordination in taxation policy. Anything of that nature is troublesome for Dublin.
Importantly, however, EU leaders resolved to discuss the creation of a common European bank resolution mechanism next year, which would be funded by financial sector contributions.
Implicitly, they have accepted the principle that public funding would be used first for this purpose before being recouped from levies on the financial industry. There could yet be an opening here in terms of Ireland’s bank rescue, but the debate is at an early stage.
The great irony of the summit is that treaty change talk since the summer came from Berlin. The slowdown is marked compared with German chancellor Angela Merkel’s urgency over the fiscal treaty a year ago. “You know me, I do things thoroughly and in a considered fashion,” she said.
All very well, but it was European Central Bank president Mario Draghi himself who implored the leaders to reinforce the euro when the ECB moved to buy sovereign bonds again. Calm returned to debt markets but now talk of deeper integration has been postponed for years.
If all of this proves the truism that Europe moves only when forced to, questions remain. Before the summit there was some discussion on what Draghi would make of it. Will he still hold the “big bazooka” if the leaders skid off reform row?
There is no evidence that the ECB is going to walk off the pitch. Yet Draghi’s deputy, Vitor Constancio, warned yesterday that the euro zone situation “is still very fragile”.
Positions reserved
As another year of turmoil ends, everyone’s position is reserved. Merkel awaits elections next September. British prime minister David Cameron sees an opportunity to reframe Britain’s EU ties in the move towards deeper euro zone integration. Spanish prime minister Mariano Rajoy maintains that Spain doesn’t need a full-blown bailout but stops short of ruling it out altogether. Mario Monti faces pressure to run for election as Italian premier.
As the Taoiseach prepares to take charge of the EU rotating presidency in January, he remains on the hunt for an elusive debt relief deal.
