The list of accomplishments this latest European Union summit was supposed to deliver was long: The euro zone was to receive a substantial push forward with a decisive redesign of the currency union's architecture. There was even to be a new convention to rapidly adjust EU treaties to the realities of the changes occurring in the euro zone.
As recently as November, Chancellor Angela Merkel announced in a speech before the European Parliament that the December summit would establish an "ambitious timeline" for the next two to three years.
Yet by the time the 27 heads of state and government arrived in Brussels on Thursday evening, such ambition had been forgotten. It could be pre-Christmas exhaustion that got the better of the EU leaders, but enthusiasm for reform was nowhere to be found. One after another, they insisted that they would merely hold nonbinding talks about the deepening of the currency union. "A relaxed round on the future of the EU," is how Finnish Prime Minister Jyrki Katainen called it.
After nine hours of talks, the summit agreed on a five-page paper that, while called a "roadmap," is little more than a vague outline for the next six months. Indeed, the most concrete date mentioned is June 2013 -- by then, European Council President Herman Van Rompuy is to have worked out a solid timeline for the establishment of closer fiscal policy coordination among euro-zone member states. He is also to examine how bilateral reform treaties between the European Commission and individual common currency members could look in order to make reforms recommended by Brussels more binding. The creation of a fund -- referred to vaguely as "solidarity mechanisms" at the insistence of Germany -- that could be used to reward those countries serious about reform is also to be examined.
At the behest of European Central Bank (ECB) head Mario Draghi, the EU leaders spoke in detail about methods for winding down struggling banks. Such a mechanism is a crucial element of the bank supervisory regime euro-zone finance ministers agreed to early on Thursday morning ahead of the summit, Draghi insisted.
The summit's closing statement reflects that importance. The document will request that the European Commission prepare a law to govern the process for winding down stricken banks -- with the goal of passing it through European Parliament before the current legislative term ends in 2014. Merkel is insisting that the process be designed in such a way that European taxpayers are not stuck with any bill for closing down bad banks. Instead, it is to be financed via contributions from the financial sector.
When it comes to the recapitalization of banks, however, taxpayer money will play a role in the future. As soon as the new banking oversight authority is established within the ECB, wobbly banks will be able to apply for assistance directly from the European Stability Mechanism (ESM), the euro-zone bailout fund. Until now, only national governments could apply for ESM aid. Still, it will likely take until 2014 before the procedure has been put in place. Euro-zone member states are to begin examining operational details in the coming months.
Such is the vague agenda between now and next summer. All other questions relating to currency union reform, such as that of a separate euro-zone budget as well as various models for joint debt liability, were deferred. The detailed, long-term reform plans worked out by European Commission President José Manuel Barroso and European Council President Herman Van Rompuy in recent weeks went unmentioned.
Indeed, it seemed that European leaders were eager to slow down after the frenetic pace of reform set in recent months. It had been an extremely busy year, Merkel said almost apologetically.
And she is not wrong. In the future, 2012 might well be seen as the year in which the euro zone finally managed to see the light at the end of the euro-crisis tunnel. The permanent bailout fund ESM became operational, the ECB jumped in as a powerful defender of the common currency by pledging unlimited purchases of sovereign bonds from struggling euro-zone member states and the bloc also agreed to a bank supervisory regime. The EU even won the Nobel Peace Prize.
'The Next Stop'
Even financial market investors, long the canaries in the euro-crisis coal mine, seem impressed. Interest rates on sovereign bonds issued by many crisis-stricken countries in the currency union have fallen to a manageable level and the situations in Spain and Italy appear to be largely under control for the time being.
Still, dangers continue to lurk. The euro crisis isn't over yet, as Merkel herself said earlier this week -- and it could return at any moment. Nevertheless, European leaders seem to no longer feel an imperative for immediate action. And Merkel, for her part, is facing an election year in 2013, making her even less willing than normal to take bold new steps toward European reform.
All of which means that Barroso's long-term plan for a deepening of the currency union has been put on ice and will remain there for some time. A separate budget for the euro zone, centrally coordinated tax policies and unified labor market rules -- all of that has been left for later. Even a convention on possible changes to EU treaties likely won't take place until after the European parliamentary elections in 2014.
Merkel said that European leaders had made it clear to Barroso and Van Rompuy that more deference must be paid to the individual member states. She was less than pleased that Germany's proposal for offering temporary assistance to reforming euro-zone states was transformed in the Barroso/Van Rompuy paper into a plan for a euro-zone budget to soften the effects of economic shock. She was careful to point out that the solidarity fund currently under discussion will be worth just 10 to 20 billion -- and not more.
In other words, European leaders prefer to continue taking the euro crisis one step at a time. "This is not a roadmap that outlines the entire route," said one German government source. "It merely identifies the next stop."