Veritas: EU makes progress but fails to impress

This is a summit that will go down in history, French president Nicholas Sarkozy said. “We would have preferred a reform of the treaties among 27. That wasn’t possible given the position of our British friends. And so it will be through an intergovernmental treaty of 17, but open to others.”

German Chancellor Angela Merkel, ECB president Mario Draghi and other EU leaders professed themselves pleased at the result, though Polish Prime Minister Donald Tusk, asked if the euro was now safe, said: “I’m not sure.”

Despite the positive spin, this is not the result the EU leaders so desperately needed.

European president Jose Manuel Barroso said: “Very openly, we would have preferred an agreement to take a community treaty that could bind all the 27 member states, even if what we are looking for was the reinforcement of the euro area governance and some conditions specifically for the euro area.

European Council president Herman Van Rompuy said: “It is unfortunate that we missed that chance to have a full-fledged treaty change. This treaty will be open to non-euro zone countries. Except for one, all are considering participation.”

David Cameron rejected the treaty amendments after failing to secure concessions designed to protect the UK financial sector from too much regulation and punitive taxation. Sarkozy said Cameron had made ‘unacceptable’ demands, though it is equally possible that Cameron was deliberately presented with an impossible choice, effectively forcing him out.

The outcome has left the markets uncertain, and wary over the European Central Bank’s continued refusal to buy Eurozone government debt in more significant quantity. Reuters has reported that the European Central Bank is capping its weekly bond purchases €20bn, in the hope that the extra liquidity will allow banks to buy more Eurozone government debt.

Failure to agree on more substantial measures suggests that behind the satisfaction continue to lie serious disagreements between Merkel and Sarkozy over the arrangements for the ECB and the European Stability Mechanism (capped at €500bn). They have however agreed to channel €200 billion to the IMF and agreed to central bank demands to tighten anti-deficit rules.

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