When French President Nicolas Sarkozy wants to present something as a personal victory to the press, he likes to stand at the lectern, strike a pose and deliver a carefully worded statement. When he did so last Thursday, he was celebrating himself and, as he put it, the "beginnings of a European monetary fund." Sarkozy was the one who was responsible for this initiative.
German Chancellor Angela Merkel's approach to selling a success is a bit different. On Thursday, she held a piece of paper in her hands, looked at it, waved it back and forth a little. "If you want to take another look at this, I will leave it up to you to study it carefully," she said. "Various things are included, such as an exchange of bonds, for example." The listener hardly noticed that she was really talking about an involvement by banks and insurance companies in the Greek bailout. That was the part that Merkel had managed to push through.
The two press conferences were held last Thursday in Brussels after the leaders of the euro-zone countries had agreed on a new aid package for Greece. It was a joint German-French effort. Both sides had to make some concessions, but each side also managed to achieve part of its aims. Both contributed to the success of the summit. But when it was over, Sarkozy was the only one who came across as having rescued the euro.
Merkel simply isn't good at posing. During a press conference in Berlin the next day, she spoke of her "passion for Europe," a special form of passion that she believes is "quite intense." But that is debatable. Once again, Merkel failed to come up with something powerful to say for Europe. But at least she did contribute, at the technical level, to Europe's moving in the right direction, namely, toward a stronger integration of its economies.
But it is still too early to celebrate. Although the euro-zone leaders were able to buy time with their decisions, and were able to depart for their summer vacations feeling at least partly reassured, neither Greece nor the euro have been definitely rescued yet.
Ansgar Belke, an economics professor from the western German city of Essen, remains skeptical. "The resolutions (at the summit) will not put an end to the debt crisis. In fact, the risk of contagion spreading to other countries is only likely to grow," says Belke, noting that an "additional, even more substantial debt restructuring will be necessary" in the future. According to Belke, Greece is "still not on a sustainable path."
Split in the Euro Zone
And so the struggle continues. Merkel sees herself as a combatant in the battle to save the euro, a struggle that pits the governments in the euro zone against the financial markets. By staging constant attacks, the financial markets are testing the Europeans to see how long they can stick together and how strong their political will is. Merkel feels that these attacks are legitimate, and that it is up to politicians to put up a fight.
One of the battlefields in this conflict is Brussels, only 15 kilometers (nine miles) from Waterloo, where Napoleon was famously defeated in 1815. European leaders meet in the Belgian capital on a regular basis. Their problem, as even Merkel would agree, is the lack of unity among Europeans. The southern portion of the euro zone is gathering behind France. For these countries, the term "solidarity" is critical. They believe that the wealthier countries, especially the European Union's net contributors -- Germany, the Netherlands and Finland -- should be responsible for the weaker countries and help them in times of need, even if this costs them a lot of money. A European monetary fund would be one instrument for achieving this goal.
The north is gathering behind Germany. For this group, the key term is "competitiveness," a word that Merkel, in particular, keeps bringing up. According to Merkel, Germany is one of the few economies in the euro zone that is fully integrated into global markets thanks to its strong companies. In her view, these companies are exposed to tough competition. But because government spending also imposes a burden on exporters in the form of the taxes and other fees, Merkel wants to spend as little as possible on the hardships of other nations. Most recently, she fought to make sure that private creditors, namely banks and insurance companies, would participate in a new bailout package for Greece.
Germany and France, as the respective leaders of the two camps, are the countries that must agree on a policy. The other countries usually follow suit.
A familiar scene had unfolded before the Thursday summit, with Germany and France arguing over a new bailout package. On Tuesday, Merkel and Sarkozy agreed that Sarkozy would come to Berlin for the crucial negotiations.
Sarkozy arrived at the German Chancellery around 5:30 p.m. the next day. The mood was noticeably tense, according to sources who participated in the negotiations. Everyone knew that Europe needed a result, as did the rest of the world. US President Barack Obama had called the chancellor to tell her how important rescuing the euro is from the standpoint of the United States.
The two leaders and their staffs met for seven hours, until 12:30 a.m. on Thursday morning, first in the small cabinet room on the 7th floor and later in the dining room on the 9th floor.
After an hour, it became clear that nothing was possible without the participation of Jean-Claude Trichet, the head of the European Central Bank (ECB). After being called, he boarded the last flight from Frankfurt to Berlin, arriving at the Chancellery at 10:15 p.m. By then, Finance Minister Wolfgang Schäuble had also been brought in.
There was little movement on either side in the first few hours. There were arguments, but no voices were raised. Sarkozy was temperamental while Merkel remained calm. The experts did their calculations while the leaders negotiated. Other European politicians were constantly calling or being called.
A compromise began to take shape around the middle of the evening. Once the technical details had been ironed out, the dialogue turned to the political and personal aspects: Were Merkel and Sarkozy prepared to go down this road and stick it out together? Did they have enough confidence in each other?
They did, it turned out. They reached an agreement and then called European Council President Herman Van Rompuy to fill him in on the details of the compromise. A short press release was drafted, and the meeting was ended. There was no sense of celebration or euphoria, just exhaustion.
"He who controls the currency controls the country" (Keynes). This obvious fact is ignored by the clever politicians who have nothing but scorn for their electorates. A country's voters are interested above all in one [...] more...
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