Hollande: Europe reorientated; Merkel: Nothing’s changed

Chancellor Merkel has just finished her press conference putting the best possible gloss on her concessions here in the early hours of the morning. She’s been accused of a “180 degree turn” by the SPD opposition in Berlin. She said she wanted “to avoid the impression that we are bidding farewell to conditionality.”

Moments later in the room next door, President Hollande said: “A decision was taken to fully use those (existing bail-out) tools without requiring additional adjustments from those states…”. He was asked (words to the effect) if he’d been in the same meeting as Chancellor Merkel. He said the communiqué was clear about the reduced conditionality – “the communiqué has not been challenged this morning or over lunch”.

Chancellor Merkel wanted to counter the view that sending bail-out money direct to Spanish banks and buying bonds from the Italian government amounted to letting those countries get round fresh austerity requirements. It most certainly does, but she emphasised those countries would be held to existing targets and there might be some timetable imposition. But it is a challenge to see it as anything other than a relaxation of the terms of trade between the wealthier north and hard-pressed south of Europe.

President Hollande said Chancellor Merkel could, hand on heart, go back to Germany and say she hadn’t broken her mandate because she hadn’t invented any new tools in Eurozone business, merely used existing tools like the EFSF and ESM. He acknowledged that “Spain and Italy applied some pressure” on Germany overnight.

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