EU Summit : "Historic" €uro-Area Governance (€AG) is born, "faster"+ larger than expected !

*Brussels/EU Summit/Angelo Marcopolo/- French President Sarkozy, speaking to those few happy Journalists in Brussels, including "EuroFora", who had bravely resisted a sleepless Night, up to 5 o'clock in the early Morning of next day, after an endless working "Diner" from Thursday to Friday, (in addition, as far as we're concerned, to 3 Long Trips from Strasbourg to Paris and Marseille, and from Marseille to Brussels, in order to follow all relevant Top Developments, from the Elysee palace Sarkozy-Merkel Summit which revealed the Franco-German proposals for €urozone's Future, up to EPP's Bi-Annual Congress in Marseille where were launched the 1st calls and Debates among MEPs and Heads of State/Government, running fast straight back to Brussels' EU/€urozone Summit for final official Decisions), apparently tired, but always active and even Enthousiastic this time, stressed that that the decided "Structural Changes" of €uro-Area's Governance, in addition to the Short-term Financial Measures, will be "FASTER" than initially scheduled :

- Agreeing that " an (Inter-Governemental) Agreement, without (EU) Treaty Modification, (as it was finally decided in Brussels by 26 EU Countries due to the UK's refusal : See infra) goes Faster", Sarkozy noted that "that's precisely why I wanted that from the start".

- "We (the Franco-German, couple) both wanted ... to make Structural Reforms and show that we have learned the Lesson of the Crisis", he reminded. - But, "a Treaty Modification with 27 (member Countries) exists. It's a procedure. It means Constitutional changes. EU Parliament. 4 or 5 Referenda", (i.e. a rahe cumbersome procedure) he reminded. - On the contrary, "if we want an Inter-Governemental agreement, it means that we are in a Strategy of a similar kind to Shengen and/or to EFSM, that is to say, more Light-weight" (less heavy), he observed.

 

    - "This is a Summit which will mark History, because the Decisions which were taken ar extremely Heavy, and are going to Definitively Change the way €urozone works, EU's own functioning, while it's also a Good omen to see that there are at least 23 EU Countries which have already decided to adopt this (New) InterGovernemental Agreement", he stressed. Indeed, "this was accepted by (all) the 17 (€urozone Member Countries), plus all those (Non-€urozone EU Members) who want to join us", (i.e. practically 23 or 26 European Countries), he reminded.

     - "We achieved a Major Breakthrough towards a Stable €uro-Area, which will be developed further", "we succeeded into laying a more Stable Foundation", "a Treaty expression of a Stability Union", stressed from the outset German Chancellor Angie Merkel, speaking later at a Press Conference.

- Decisions taken "make it very clear that we are very Determined", and that "we want to learn from Errors of the Past", Merkel added.

- "We also received Wide Support by non-€urozone, EU Member Countries", the German Chancellor noted with interest, anouncing also that, "in the Drafting of that Treary, we shall include Observers from the EU Parliament".
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    - "We (€urozone+) adopted all the content of the Franco-German Letter", so that "all the Measures" it predicts .. in order to Strengthen   €urozone, will be in the (official) Conclusions", Sarkozy anounced from the outset.

- "This contains some extremely Important things, such as, f.ex. : "

+ "A crystal-clear and definite Refusal  of the PSI, i.e. to Drop any restructuration of Private Debt, as we want to mark even in the (New) Treaty" : Among the "most Impotant Decisions that we took, is, f.ex. also the Exclusion of any kind of use of PSI, i.e. of restructuring a Private Debt : Every Eurozone Coutry, was committed, from now on, to refund its Debt", Sarkozy made it clear from the start. Thus, "Deauville's deal corresponded to a precise moment", when "the only problem we had was that of Greece, i.e. a Country which had a Debt of 220 Billions € that it couldn't pay back". So, "Deauville's deal served to settle the problem of Greece". But, now, "Greece's problem has been settled", Sarkozy observed optimistically. In consequence, "Deauville's deal doesn't exist no more", because "we can't compare Italy or Spain, not even Portugal, with Greece", (where the Real Cause of the Debt Crisis was both much Earlier than Accession to the €uro, and more Political, i.e. a 1999-2000 deal on exchanging Turkey's controversial and unpopular EU bid with Greece's too early €urozone entry, even before it makes necessary Reforms, benefiting  Electoral aims of former "Socialist" Governments  : See "EuroFora"s full Analysis with Facts on that issue in previous NewsReports).

++ "The Institutionalisation of €uroArea's Governance (€AG), to the Level of Heads of State/Government, which will meet "Regularly", while we also proposed "each Month" during the Crisis"

+++ "The possibility to take Decisions in the €uroArea Fund with a Majority of 85%", (instead of Unanimously, as in he Past)", etc.
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+ Short-term Measures :
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+ Meanwhile, "We decided to study in 8 Days the possibility of Strenghening our Contribution to the IMF for 200 Billions €" (270 Billions $), Sarkozy replied to a question if €urozone + Countries had scheduled to give a Loan to the IMF to support the weaker Eurozone Countries. In addition, "we are looking forward to Parallel Contributions from the International Community", added an €uro-Area Summit's statement, reminding the latest, November 2011 "G-20" Summit's decisions at Cannes, (See "EuroFora"s NewsReports from and on Cannes' G20 Summit).

+ Moreover, the "European Stability Mechanism", which was scheduled for 2013, will be set up (1 Year earlier) on 2012", and "tomorrow" (Friday) morning we shall decide on its immediate Funding, he added in reply to questions.
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+ Significantly, for the 1st time, ECB's new Governor, Mario Draghi was invited to participate to Brussels' EU Summit, the same day that he made important anouncements in a Press Conference in Francfurt, including ECB's decision to lower -25 points its Interest Rates for a period of 3 Years, i.e. allowing f;ex. Banks to get Money with only 1% of interests, (f.ex. in order to buy States' Bonds, which have higher rates, allowing to make a fair gain.

- "ECB's Decision is very Important, and I'm sure that .. many Observers will understand soon what is really going on", stressed later Sarkozy : - "For the 1st time in its History, the ECB decided, in addition to Lowering its Interest Rates for he 2nd time in a row, also to give Loans for 3 years to Banks, without Limits, at an extremely Low Rate : 1% for European Banks". This practically means, f.ex. that a State as Italy or Spain, which is now obliged by Markets to borrow with a rate of 6 or 7%, may ask from Italian Banks to Fund a Part of its Debt in clearly Lower Interest Rates", he observed.

+ +Moreover, ECB will manage €uroArea's main Financial Tools, such as the European Fund for Financial Stability (EFFS) and the permanent European Stability Mechanism (ESM) , Sarkozy anounced in reply to questions, with "a great Satisfaction", because this "will reinforce Trust in this EU Fund"

                                                                                                                                                                                                                                                                                                                                                                                Meanwhile, Heads of State/Government agreed to apply "Strasbourg's case-law", as Sarkozy noted, reminding the Trilateral France - Germany - Italy Summit, (See "Eurofora"s Newsreports from the spot), according to which, "we don't comment on what ECB should do, or not do".

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Naturally, all this was added to the well known Measures on National Budgets' "Golden Rules", on Automatic Sanctions in case of violations, €-Monitorng, etc., according to the Franco-German proposals revealed from Monday evening in the Paris' Merkel - Sarkozy bilateral Summit (See "EuroFora"s NewsReports from Elysée palace).

Indeed,  €uro-Area's Governance (€AG) was born, between Thursday Night and early Friday Morning, long before Christmas, and the "Baby" looks much bigger than initially thought :

Its GeoPolitical "Weight" may reach up to .. 26 EU Member Countries, with the only certain auto-exclusion of the UK, while its Financial "Teeth" are due to grow Faster and cut Sharper, since the entry into force of new Financial Mechanism was advanced 1 Year earlier (2012 instead of 2013), decision-making mechanisms were made easier, strengthened by parallel independent moves from the ECB, as well as Legally Binding Rules, but also by creating a "Regular"  series of Heads of State/Government's €AG Summits at he Horizon.
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    According to the Official "Statement by the €uro-Area Heads of State or Government", (issued here since 6 o'clock in the early morning of Friday), the 17+ core European Countries "agreed to Move towards a Stronger Economic Union", by launching a Double "Action in 2 Directions" : A) "Strengthening Economic Policy Coordination" in particular with "a new Fiscal Compact", and B) by "Developing our (Financial) Stabilization Tools to face Shortèterm Challenges".

    Anouncing "a ReinForced Architecture for Economic and Monetary Union", the €uro-Area Summit stressed from the outset that "alongside the Single Currency", a Strong Economic Pillar is indispensable", which "will rest on an Enhanced Governance", in order "to foster Fiscal Discipline and Deeper Integration in the Internal Market, as well as Stronger Growth, enhanced Competitiveness and Social Cohesion", i.e. aims obviously much larger and deeper than a simple currency...

    - "This will require a New Deal between €uro-Area Member States, to be enshrined in common, Ambitious Rules that translate their Strong Political Commitment into a New legal Framework", the official Statement adds, endorsing almost all the initial Franco-German proposals with a few, comparatively minor changes (See "EuroFora"s NewsReport from Monday's Sarkozy-Merkel Summit at Elysée palace in Paris).

    + Moreover, "we agree to make more active use of Enhanced Cooperation (allowed for the 1st time by EU Lisbon Treaty), on Matters which are Essential for the Smooth Functioning of the €uro-Area, without undermining the Internal Market", the Summit added.

    - In particuar, "we are committed to working towards a Common Economic Policy", for which, "a Procedure will be established to ensure that All Major Economic Policy Reforms planned by €uro-Area Member States will be Discussed and Coordinated at the Level of the €uro-Area", Heads of State/Government anounced.

    => For this purpose, "€uro-Area Governance will be reinforced", and, "in particular, Regular €uro Summits will be held, at least twive a year", while, at present, "during (at least)  the (Global Financial) Crisis", according to the relevant Franco-German Letter reminded by President Sarkozy, €AG's Summits should be even "Monthly", (i.e. working at a similar pace to that of EU Commission and/or EU Parliament)..

    With the only exception of the Short-term Measures, all these Structural €uro-Area Decisions will be "adopted through an InterGovernemental Agreement to be signed in March (2012), or (even) at an Earlier Date", the official Statement concludes.
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Large impact
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    Marking a much larger than initially expected impact, the €uro'Area's Statement anounces offiicially that, in addition to all the 17 €urozone Countries, it's also other EU Members such as "Denmark, Bulgaria, Latvia, Lithuania, Poland and Romania" who "indicated their Intention to Join in the process", while "the Heads of State/Government of the Czech Republic and Sweden are Consulting their Parliaments", as well as Hungary, which joined them later-on.

    => The move resulted in a total agreement "by 17 + 7 + probably 2 others" Countries, (i.e. around 26, i.e. all EU Members with he only exception of the UK alone), according to the Formula used by EU Parliament's President, Polish mainstream MEP Jerzy Buzek.  "At least 23", may become Members, and other 3 informed us that they want, beforehand, to consult their Parliaments, added later-on EU Commission's President Jose Barroso. Initially it was only the UK and Hungary which stayed outside, but afterwards Hungarian Prime Minister Victor Orban reportedly joined the position of 2 other Countries which seem Positive in principle; but want to consult first their Parliament and/or their Coalition : Sweden and Czech Republic, while 6 other Non-€urozone EU Members joined together with the 17 €uroarea Countries , (i.e. in total 23 + 3 = 26), which "wish to become part of the (New) InterGovernemental Agreement"

=> "Once the've consulted their Parliaments, they said that they will be on our {€urozone's) side",  the German Chancellor noted.

>>> This can be practically done "by implementing a Part or the whole" of €urozone's stricter Integration Standards and Rules, Merkel declared, (i.e. giving a Reply which apparently satisfied also Hungarian Prime Minister Victor Orban, convincing him to turn his Central and Historically Symbolic Country for European Unification both in the 18th and the 20th Century*, towards the €uroArea, by replying to his main question about whether Non-€urozone countries should be obliged to apply all those Rules immediately or after they succeed to reach an adequate level of economic Integration within the EAG).
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Meanwhile, speaking on the New Institutional framework of €uroArea's Governance (EAG), German Chancellor Merkel observed that "this is a Process which practicaly includes not only one but several EU Summits", as she said, showing the need for "Regular" €urozone Summits.

+ In fact, the "Breakthrough" anounced by Merkel and the "Historic" change hailed by Sarkozy might be, potentially, even more Important than initially thought : It's not the 1st nor the last time that "parents" may give life to a bigger and differend "Baby" than !they  believed... :

- Already, the transfert of Monetary powers from States to the ECB, had notoriously deprived them of one of the most important tools for Keynesianist policies, pointing, instead, towards Frankfurt, to the point that a precursory, landmark, Historic debate in EU Parlliament in Strasbourg on Europe and the World, with the participation of all main actors, including even of UNO's Secretarry General, had warned, as early as since 1995, that this would incite the People to demonstrate to the Streets asking for Economic policy powers to be transfered to EU level.

+ But now, with the "Golden Rule" provision, "Automatic Sanctions" (unless a "Qualified Majority" is opposed), etc., (See earlier "EuroFora"s NewsReports), even the last remaining States' power for any Keynisianist policy, i.e. that which traditionally may use the Public Debt as a tool for Economic Revival in cycles of low activity, is also, indirectly, transfered to the ECB's level.

=> That's precisely why it becomes, now, of outmost importance to ensure a fully-fledged Democratic Legitimity, and Direct chanels of exchanges of views and interaction with EU Citizens, to the EuroZone Institutions which will, sooner than expected, have also to assume the big Responsibility to start exercicing, in fact, €uroArea's Economic policy.

- Here comes the meaning of the initial Franco-German proposal to establish even "Monthly" €uroArea Summits with Heads of State/Government, (See "EuroFora"s NewsReport from Paris, ELysée palace Bilateral Summit Sarkozy-Merkel, last Monday). Indeed, as Sarkozy initially highlighted in his earier, popular speech at Toulon, on "Refounding Europe", as things stand, the main Democratic, Political and Popular dimension of EU's executive is, in fact, that which can pass through itts "InterGovernemental" aspects, i.e. EU Council, which can cooperate with EU Parliament's elected MEPs  in order to choose, use and monitor various other EU bodies, which, at least for the time being, have only Indirect contacts with EU Citizens, and, therefore, cannot represent Populations to which they are even not proportional, (f.ex. 1 EU Commissioner for Portugal, but also only 1 from Germany,  + etc).. This Franco-German move was, afterwards, futrther explained also by French Prime Minister Fillon, in his inaugural address to the European People's  Party's  (ChristianDemocrats') 2011 Congress in Marseille, where he stressed the need for "a Europe with more Rigour and more Solidarity, to be also more Democratic", i.e. by "taking (its) Decisions by responsible Politicians, democratically elected", as he said, (See our NewsReport from the spot, with Fillon's statements to Journalists in Marseille's EPP Congress, including "EuroFora"). And another interesting touch was added there also by the new Minister for EU Affairs, Leonneti, who stressed the need for EU Council, Governments, EU Parliament and National Parliaments to cooperate together in Direct interaction with the People, in order to avoid abuses of Populism, by being genuinenly and seriously Popular, close to EU Citizens' concerns. I.e. almost as a normal Democratic Government which holds collective meetings regularly.

[By an Historic coincidence, 10 Years are completed now, at this Winter 2011, since a precursor Franco-German Summit at Blaesheim, near Strasbourg, just a Decade ago, in the Winter of 2001, as a fist reaction also to a 12/1999 EU Summit's decision at Helsinki on the controversial and unpopular Turkey's EU bid, (which notoriously blocked EU Constitution's adoption by provoking 2 "No" to EuroReferenda, but wasn't even cited, this time, by the 2011 EU Summit's conclusions on "Enlargement", except only from a critical denunciation of Turkey's "threats" against the EU Council's 2012 rotating Presidency, placed under the Heading "Other issues" together with Syria and Iran.. :  See relevant "EuroFora"s NewsReport)].