Regular readers of Agence EUROPE already have the tools at their disposal to understand and assess the results of the first European Council convened by its first permanent President, Herman Van Rompuy. As well as the summary published in our bulletin 10076, we also put out a Special Edition (no. 10076 B) that night, reporting the statements and comments of the various Heads of State and Government, which was unique in the international press. It must be stressed that: a) Angela Merkel and Nicolas Sarkozy held their press conference jointly, announcing, amongst other things, that Germany and France will have common ambitious objectives for the forthcoming French Presidency of the G20, particularly as regards the "new architecture of the financial markets", whilst stressing that both countries are committed to an improved unified European contribution; b) Jean-Claude Juncker was speaking as President of the Eurogroup delete that.
After the above-mentioned double bulletin, which remains the essential source of information for our readers, here is my attempt at a schematic presentation of the results and lessons learnt from this first informal Summit organised by the permanent President in accordance with the criteria and principles for attendance (kept to a minimum).
1. Responsibility of the Euro zone. The Member States which are not members of the Euro zone were practically sidelined from most of the work. The preliminary meeting which gave rise to the draft declaration was attended by the following, in addition to Mr Van Rompuy: the President of the Eurogroup Jean-Claude Juncker, the President of the European Commission José-Manuel Barroso, the President of the European Central Bank (ECB) Jean-Claude Trichet and the "rotating President" of the Council, José Luis Zapatero. After this there was a meeting with the Greek Prime Minister George Papandreou, which was also attended by Angela Merkel and Nicolas Sarkozy. The text which was then put before the whole European Council was then approved as it stood with no problems.
The text does not mince its words. Ensuring the stability of the euro zone is the responsibility of the members of this zone. It is in this framework that (see the following points) Greece undertook its commitments, it will be subject to rigorous supervision, the possibility of any funding from the International Monetary Fund (IMF) has been ruled out and, most importantly, support for Greece was expressed, with a view to discouraging speculation.
2. Being firm towards Greece. The "declaration" pledges support to Greece, but without indicating what form this support will take, which is justifiable for at least three reasons. The announcement of any bilateral loans from certain Member States could have: a) confirmed the impression that Greece will not be able to face up to its liquidity problems in the coming months, which would encourage speculation; b) sent Greece the wrong message, allowing it to believe that budgetary and economic efforts are not urgent and vital; c) encouraged speculation to go on to target other countries of the Euro zone considered less solid.
The language used with regard to Greece was severe. The Commission and the ECB will be keeping a very close eye on its adjustment measures (one monitoring session per month!) and additional measures have not been ruled out. Whilst promising that solidarity would be conserved, the President of the Eurogroup added that Greece suffers from a major corruption problem, that its "fiscal morale" is suspect and that it is "responsible for the situation it is in". Mr Papandreou is reported to have agreed to a limitation on the sovereignty of his country, whilst stressing that if speculation continues, "it will no longer be a matter for Greece, but the Euro zone".
3. IMF loan scenario ruled out. The Director General of the International Monetary Fund had expressed his willingness to consider funding in favour of Greece, and a number of European economists had supported this hypothesis, whilst stressing that the EU is the majority shareholder (which would mean that it would almost be Community funding) and that the IMF has a great deal of experience in this field. The Council has ruled out this possibility, clearly taking the view that it is politically vital for the Euro zone itself to take responsibility for the stability of its currency. The "declaration" which was approved mentions only the "technical" expertise of the IMF and that it could prove useful, all funding options having been ruled out. The stability of the euro zone is shared between the States which are members of it, full stop.
4. Germany not ruling out "economic governance" of Euro zone. This idea, which has been called for by Jacques Delors ever since the euro came into being, is no longer rejected on principle by Berlin. With safeguards and limitations, obviously, but recent events appear to have convinced the German government that a certain form of European economic governance is needed. Additionally, whilst stressing the need for this measure, which he clearly sees as a no-brainer (he made this central to the work of this informal Summit from the very moment of convening it), Mr Van Rompuy continued to speak in prudent terms: the day before, he made a point of stressing that the concept "could be interpreted in different ways" and, in his preparatory document, stated that what things are called is beyond the point: whether you call it economic governance or coordination of economic policies, what matters is that a common strategy exists to create more growth and more jobs. Developments to follow.
5. Attitudes and orientations of the Greek authorities. The "declaration" approved by the Summit states explicitly that: on 16 February, the Ecofin Council will adopt recommendations to be put to Greece, on the basis of the proposal of the Commission and the additional measures announced by Athens; if necessary, the Member States of the Euro zone will take determined and coordinated measures to safeguard the financial stability of the euro zone as a whole; the Greek government has not requested any financial support. Previously, Mr Papandreou had indicated that reducing the deficit by 4% this year is a commitment, adding that not only has he not requested the support of the IMF, but that he has no intention of doing so. He believes that it is possible for his country to "turn this crisis into an opportunity".
It is more than likely that his stance was aimed mainly at internal public opinion. In particular, the civil servants' trade unions have stated that the budgetary problems had not been caused by an excessive and ineffectual public service, but that the real problems were tax fraud and failure on the part of the private sector to pay social contributions. Even so, economic circles continue to state their view that the public services are inefficient and that raising the retirement age for civil servants - from 61 to 63 years - is vital, whilst acknowledging that in some cases, the tax declarations of captains of industry, businesspersons and professionals are frankly risible. The possibility of European intervention in these fields (either in the form of economic governance or of the coordination of economic policies) is no doubt what Athens wants (and it also goes some way to explaining German flexibility towards such prospects).
The scenario of Greece leaving the Euro zone has been posited by a number of observers, but according to the political decision-makers (not only Greek ones) and experts, this would create more problems than it would solve. It is true that Greece would have the option of devaluing its currency; but it would then be prey to a massive increase of imports, which, for a country which does not have any raw materials or indeed a great many products which are vital for economic activity, would rapidly cancel out the positive effects on exports. To say nothing of the practical problems of bringing its national currency back in. For these reasons, Greece's leaving the Euro has not been seriously taken into consideration.
Herman Van Rompuy reinforces his view of his role
The first experience "on the ground" of Mr Van Rompuy's view of his role and how to carry it out has probably shored up his own beliefs. Right from the outset, he has stressed his intention of never going on record with his own personal opinions, other than within inner circles; he would express only the ideas and positions of the European Council as a whole. His "silence method" won him a certain amount of criticism, particularly an all-out attack at a plenary session of the European Parliament, on which subject I have more to say, because the aggressor was not a Eurosceptic, but someone who was always been a staunch defender of an integrated and powerful Europe. I am referring to Alain Lamassoure (who, incidentally, is a member of the same political family as Mr Van Rompuy). In Strasbourg last week, he said: "Surprisingly, the first permanent President of the European Council has chosen to disappear since he was elected into office. He has made it. Nobody outside his country had heard of him two and a half months ago. They don't know much more about him now" (our translation). Mr Lamassoure's intentions were praiseworthy, because he added: "In a world turned on its head by crisis, in a continent which has lost all of its reference points, which has more than 20 million unemployed and which is threatened by an ongoing decline at the hands of the emerging powers, Europe needs a pilot, direction, ambition".
I do not believe that the objectives and hopes of Mr Van Rompuy and of Mr Lamassoure differ greatly. It is only the method which, on first sight, are at variance. Mr Van Rompuy is of the opinion that his main duty is to prepare discussions; but we have seen the weight of his preparatory documents. It is by this means that he will confirm his standing, first of all within the EU, and then at international level. I firmly believe that the informal Summit was encouraging.
As the tendency of a number of commentators and certain political figures to criticise the excessive number of Presidents (of the European Council, the rotating Council, the Commission and the Parliament), which they believe is damaging to the clarity of the Union and does not answer Mr Kissinger's quip about looking for a telephone number to speak to Europe, I do not believe that this is justified. This column will return to the subject.
(F.R.)