Wednesday, 7 December 2011

Merkozy euro proposals face EU members and Standard & Poor's

Even if the web is overflowing with reports and comments on the Merkozy proposals, there is cause to record the primary sources from the last two days.


Paris

The German chancellor Angela Merkel met the French president Nicolas Sarkozy at the Elysée Palace in Paris Monday, 5 December 2011. The Elysée web pages offer a video recording of the press conference (with French voice-over for Merkel) and a French transcript on the same page:

Conférence de presse conjointe : Mme Angela Merkel et M. Nicolas Sarkozy

The detailed proposals will be presented in a letter to president Herman Van Rompuy Wednesday, and subsequently published. They want a new Treaty, preferably among the 27, but between the 17 eurozone countries and open for others if needed, Sarkozy said before outlining the six proposals to be detailed in the letter.

Sarkozy sees that Franco-German unity leads towards a Europe of governments. Eurobonds are no solution to the problems.

According to Merkel, mandatory (golden) budget balance rules are needed, which can be verified by the Court of Justice of the European Union in order to make the governments respect their engagements regarding the stability and growth pact. The desired changes cannot be made without Treaty change.

Merkel described the monthly Euro Summits as thematic meetings dedicated to growth issues - labour law, innovation, development of infrastructure – in a spirit of convergence and competitiveness.

The leaders want clarity in principle during the European Council Thursday and Friday, and the conclusion of the Treaty amendments in March 2012.

The leaders dedicated a joint statement to the credit rating agency Standard and Poor's (in French and English):

Communiqué conjoint franco-allemand


Berlin

The German chancellery offers a web page with the six proposals outlined:

Strategie zur Überwindung der Staatsschuldenkrise

Germany has now reinstated ”economic government” (Wirtschaftsregierung) to describe the monthly Euro Summits.

The German transcript of the joint press conference:

Pressestatements von Bundeskanzlerin Angela Merkel und dem französischen Staatspräsidenten Nicolas Sarkozy (5 December 2011)

The recent German government policy statement:

Regierungserklärung: Ziele und Leitlinien für den Europäischen Rat (2 December 2011)

The technical decision of the eurozone finance ministers to expand the the European Financial Stability Facility (EFSF) through leverage:

EFSF: Maximierung beschlossen (30 November 2011)


Brussels

The president of the European Council and of the Euro Summits, Herman Van Rompuy, has invited the heads of state or government. His invitation letter 6 December 2011, a day after the meeting between Merkel and Sarkozy, refers to draft conclusions prepared on the basis of his interim report, unpublished.


Intergovernmental Europe

Above we saw the state of main sources for the public, news reports and opinion: an outline of the unfinished the Franco-German proposals and the unpublished interim report by Van Rompuy.

Intergovernmental Europe remains true to its role as an underachiever with regard to democratic rule, good governance and transparency at the European level. The citizens of the EU are promised even more intergovernmentalism in the future, instead of credible, accountable and democratic government.


Standard & Poor's

However, one essential piece we have to add is the flurry of negative assessments from the credit rating agency Standard & Poor's between 5 and 6 December 2011 for eurozone sovereign debt and the EFSF. Since there are several announcements and new developments are possible, I link to the thematic page:

European Sovereign Ratings and Related Material

For those in a hurry the synthesis announcement offers the main picture. It promises a review based on the upcoming European Council 8 to 9 December 2011, with possible downgrades of one notch for the strongest governments and eventually two for the rest:

Standard & Poor's Puts Ratings On Eurozone Sovereigns On CreditWatch With Negative Implications (5 December 2011)

***

I have put the eurozone on democracy watch, with negative implications.



Ralf Grahn