Wednesday 17 August 2011

Eurobonds and eurozone reform rebound despite Merkel-Sarkozy summit

Chancellor Angela Merkel and president Nicolas Sarkozy can hardly have imagined that the issues of eurobonds and profound euro area reform would disappear, only because they swept them under the carpet yesterday.

After the official statements by Merkel and Sarkozy and my reactions to the proposed eurozone ”economic government”, we made a first tour of European media reactions to the Franco-German proposals.

Blogs and mainstream media contribute to our understanding of the challenges for the euro area and the European Union, beyond yesterday's announcements.

Protesilaos Stavrou

According to Protesilaos Stavrou, eurobonds are necessary, but first the European banking system needs to be cured and sovereign debt restructured: The eurobond is the only way forward – But under what conditions? (16 August 2011).

Jan Seifert

Jan Seifert invited readers to an intelligent discussion about how the eurobonds need to be constructed in order to contribute to solving the public debt crisis: How Eurobonds are the way forward (16 August 2011).

Pietro De Matteis

According to Pietro De Matteis, on the Europe Today blog (Ideas on Europe), it has become increasingly evident that there is no other durable solution for the European economy(ies) than to move towards further fiscal and budgetary integration: The Eurozone Council: are we a step closer to a European Government? (17 August 2011).

WSJ Europe

The Wall Street Journal Europe concludes that Merkel's and Sarkozy's eurozone plans stopped short of more fundamental steps toward refashioning the area into a federal entity that would issue its own debt, disappointing investors hungry for a more radical solution to the euro-zone crisis: Franco-German Proposal Disappoints (17 August 2011).

NZZ Online

Chancellor Angela Merkel has repeatedly changed course during the eurozone crisis, belatedly and too little at a time, say some. Have her initial positions been tactically aimed at reigning in profligate countries, or have later changes been signs of weakness? The coalition parties CDU-CSU and FDP are baffled. Almost paradoxically the opposition Greens and SDP are prepared to support more radical eurozone reforms, despite popular resistance, NZZ Online reports: Wenig Vertrauen in die Führung (17 August 2011).

Fabien Cazenave

Fabien Cazenave, on the Fabien l'Européen blog, writes that the summit offered stronger political signals than he had expected. He seems to think that the Ecofin Council will be marginalised, whereas I have understood that the heads of state or government want to overshadow the informal Euro Group. Anyway, the tenor of the proposals is intergovernmental, and Herman Van Rompuy will remain the captive of their decisions and non-decisions.

Are all the euro area countries really going to ratify the ”Golden Rule” of balanced budgets within a year? An EU-wide Tobin tax on financial transactions would need unaniomous approval (which could usher in an autonomous European Union budget), but do we really see the United Kingdom accepting that? The common tax rate for French and German businesses is the good news from the meeting, but we have to wait for the detailed proposals.

Cazenave ends his post by discussing some French reactions, as well as the need for parliamentary democracy: Réunion Merkel-Sarkozy : des propositions fortes, mais sont-elles les bonnes ? (17 August 2011).

Beyond Brussels

The daily digest of Beyond Brussels records that: Sarkozy-Merkel meeting failed on the markets (17 August 2011).

Ralf Grahn

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