Five days to save the euro / buy the euro some months?
After the Merkel/Sarkozy press conference we have an outline of the Brussels deal and you get the impression that Germany has pretty well got its way over France. The other 25 members now wade in with varying degrees of animosity and authority. There is talking over dinner on Thursday and into Friday afternoon in Brussels and much before that.
The fundamentals of the deal these two are putting to their partners (through Herman van Rompuy) on Wednesday are that the 3 per cent budget deficit rule (sound familiar? It was in Maastricht) will now be controlled by “balanced budget” rules to be enshrined in national laws and by pretty much automatic fines which could go into billions of euros.
The Germans did ditch their requirement that the European Court of Justice would police the whole thing but that improves the chances of getting a quickie treaty through with 17 not 27 signatures because the ECJ is enshrined in treaties of the 27.
President Sarkozy and Chancellor Merkel made it pretty clear that they would not be hanging around to wait for the 10 “outs” to join in – the French President even spoke of being ready to “frogmarch” this measure (force marchee) on Friday because of the urgency of change.
Both leaders said eurobonds were not the answer but somewhere, down the line, there will be greater mutualising or pooling of debt if the eurozone members take their punishment.
The ECB’s Draghi last week talked about the importance of sequencing, implying that if you give Germany what it wants now you will eventually get what you want, trust me (it reminded me of interminable talks in Stormont where the official position of Republicans was “no decommissioning” and for some time they wouldn’t even discuss it … but under the right conditions the Republican leadership believed it could bring its “activists” with it and lose the guns.)
Germany would need to decommission an entire mindset and post-war value system and is clearly not ready even to talk about that in public right now.
Gary’s take on life in the Westminster village and beyond is on Twitter: @GaryGibbonBlog