Brussels, 12/12/2011 (Agence Europe) - In an interview published on Tuesday 13 December with French newspaper Le Monde, French President Nicolas Sarkozy said that the European summit of 8-9 December was a decisive step in European integration, putting the conditions in place for bouncing back and getting out of the crisis, without any loss of sovereignty. The line taken by Standard & Poor's, however, is that further summits will be needed before Europe solves the debt crisis…
Now the summit is over, has the danger of Europe disintegrating sidelined? Sarkozy said much as he would like to say that it has been totally sidelined, he preferred not to comment, but everything that was humanly possible has been done.
Did the agreement made at the summit cover all aspects of the crisis? Sarkozy said it responded firstly by setting up genuine economic governance and the fact that responsibility for this was now in the hands of heads of state was clearly a democratic step forward compared with the previous set-up, when everything was organised around the European Central Bank and the European Commission and its stability and growth pact. He said things were now clearer for the European Commission, which is responsible for ensuring respect of the EU treaties and the application of sanctions. He said that Angela Merkel had agreed that the European Court of Justice would not be allowed to penalise excessive deficits as a matter of course or prevent over-spending by member states. It does not have the powers for this, or the legitimacy to cancel a budget that's been voted in by a national parliament, explained Sarkozy.
He added that the real question was Europe's competitiveness and how to ensure more robust, sustained, growth. He said that key issues had to be discussed in the eurozone, like industrial matters, trade policy, the labour market and research.
Surely the other countries would bring up taxation, the civil service and the pension system in France? Of course, said the French president, the EU is based on mutual compromise in the interests of all.
Does this amount to a transfer of sovereignty? No, replied Sarkozy, economic sovereignty was not being handed over. It was a matter of democratically elected governments sharing sovereignty and it strengthened sovereignty if one exercised it with one's friends, allies and partners. He repeated that not one area of new powers was being handed over to any supranational body.
ESM. The European Council decided at the summit to increase European solidarity by setting up a genuine European monetary fund, called the “European Stability Mechanism” (ESM). This will be a fund to help eurozone countries finding it difficult to roll over their debt on the money markets. The fund will be up and running in July 2012 and will make decisions by an 85% qualified majority, rather than unanimously in order to avoid a small minority being able to veto decisions and preventing the other countries from making progress. The ESM will have €80 billion in capital, to enable it (after leveraging) to lend up to €500bn. Sarkozy said that the leaders would decide in March whether €80bn was enough. Over the next ten days, they had agreed to negotiate with the non-European members of the International Monetary Fund a boosting of the IMF's resources, which would also boost the eurozone clout in the event of crisis. He said the eurozone was prepared to provide up to €200 billion in new funding, explaining that never before had the eurozone been so ambitious in its solidarity. He explained that it was the ECB that would run the ESM, which would give the fund greater credibility and effectiveness. Sarkozy said that the two key bodies would have to work together with full confidence in order to ensure financial stability.
ECB. Nicolas Sarkozy hoped the ECB would act to support economic growth and help remove the unfounded fears about public debt. He said he trusted the ECB to decide on the scale of its intervention in the future.
Belt-tightening. Another area of the agreement is the introduction of financial discipline, with automatic penalties being decided by reverse majority. In the past, a qualified majority vote was required at the Council of Ministers before the European Commission could sanction a country that was breaking the rules, but that no longer applies. Sarkozy explained that they had not gone for totally automatic sanctions because it was possible for a country's debt to overshoot the limits in a particular year while otherwise being at the right level. A member state might have to bail out a bank or public company in a particular year, for example, for which it would have to increase its public debt, and it should not be punished for that. The same abuses as were seen in the past will not be tolerated, however. The times of allowing European countries to spend beyond their means are over.
What comes next? Sarkozy said that over the next fortnight, the legal content of the agreement would be drawn up in order to sign a treaty in March 2012.
Franco-German axis. The outcome of the Brussels summit was due to the Franco-German compromise because the two countries had been moving in each other's direction since the beginning of the crisis. After all, who would have imagined, two years ago, that the EU partners would rally round the idea of economic governance organised around the heads of state? Or that they would agree to set up a European monetary fund in the form of the European Stability Mechanism? They were both French ideas, explained Sarkozy, and the German chancellor, whom he admired, had moved towards them with pragmatism and intelligence.
The United Kingdom. Sarkozy said that everyone had done what they could to get the English to join the agreement, but there were now clearly two different Europes - one that wants more solidarity among its members, along with regulation, and another that appreciates the logic of the single market and nothing else. (LC/transl.fl)