Who will confront Germany in Brussels?


When we came here in December, it was 26 against one, with Britain facing public opprobrium for standing in the way of agreement. Now it is 26 against one, with Germany insisting that its views prevail on austerity and the bail-out funds, but all the other countries too frightened of the economic crisis to criticise - or to do so out loud at any rate.

So what happened to Britain's stand in defence of the 'UK national interest' and in particular the City?

Now David Cameron is ready to withdraw his earlier objections to allowing the EU's institutions - such as the European Court - being used to enforce budgetary discipline, and to agree 'on the nod' to the intergovernmental treaty between the other 26 members.

British officials insist that the language of this draft agreement has been adjusted to accommodate British sensitivities about the single market and its workings in relation to the financial sector. Others here suggest there has been no change of substance, and the Cameron government has simply had to ditch the confrontational negotiating tactics that it attempted late last year.

Arriving at the summit today, Mr Cameron insisted that the priority was jobs and growth. Downing Street suggests that there needs to be swift agreement on strengthening bail-out funds. Evidently they regard charming Chancellor Angela Merkel as an important part of this.

Britain now argues it should, "not be awkward for the sake of it", when the main aim is persuading Germany to underwrite bigger financial reserves as soon as possible. Officials are worried that with continuing disagreements over Greece's austerity package, eurozone contagion could spread to Italy and the EU will not have the funds to deal with such an emergency.

Other European countries though are expressing concerns about Mrs Merkel's austerity formula and the effect it will have on economies like Spain or Italy. With youth unemployment reaching horrendous scales, they want economic stimulus and quickly.

Germany remains wedded to keeping Europe's purse strings tight, even if, at this summit it has agreed to language about "smart austerity". Mrs Merkel also cites domestic political constraints for her refusal to go along with a rapid and substantial strengthening of stability funds.

One seasoned observer here comments that this meeting will, "not tackle the two most important issues", facing the EU at the moment: namely the need for this quick boost to the bail-out funds and the stalemate with Greece over the implementation of its austerity plan. German suggestions, tabled before the weekend - that an EU overseer be sent to Greece to enforce budgetary discipline - have, meanwhile, been dropped.

So who will confront Germany now in its pursuit of policies that much of the rest of Europe consider misguided? Nicolas Sarkozy wants to play the role of best friend, and his people even suggested yesterday that his relationship with Mrs Merkel was so close that she would be campaigning with him in the upcoming French elections.

What about Mr Cameron? After December's high drama, he is now determined to be a member of the non-awkward squad, publicly at least. The Dutch? One insider suggests they disagree with Germany on some of these issues but consider the case needs to be made by one of the EU's big players.

Increasingly, those critical of Germany are looking to Mario Monti, the Italian PM recently installed as a kind of poster-boy for the Franco-German austerity project. Many believe that his status as a reformer blessed in office by Mrs Merkel, but whose country is anxious for more stimulus, might just give him the status to challenge her view of the future.

Mark Urban, Diplomatic and defence editor, Newsnight Article written by Mark Urban Mark Urban Diplomatic and defence editor, BBC Newsnight

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  • rate this

    Comment number 1.

    Monti is the only one of the 26 who can stand up to Merkel. Let's face it, it has to be a big player within the EZ. Britain isn't part of that club, so Cameron has no real influence with them. But let's not forget the extra-EU players such as the IMF which is becoming increasingly strident in calling for stimulus. That might carry the most weight. Or maybe Greece will just flip everyone the bird.

  • rate this

    Comment number 2.

    Does Germany need confrontation? It's 26:1, with Germany insisting its views prevail on austerity & bail-out funds. Merkel has been staunch; but her position is increasingly isolated (IMF & ECB piling pressure to raise the ESM limit to 750B euros). I don't think Merkel needs confrontation; she has too much financial acumen. Germany has done a lot; Merkel is cautious.

  • rate this

    Comment number 3.

    What happened to Britain's stand in defence of 'UK national interest' and in particular its Financial HUB? Cameron is preparing U-Turn to allow EU's institutions - such as EU Court - to enforce budgetary discipline, & his head is nodding re intergovernmental treaty between other 26 members. Insisting language has been adjusted to accommodate British concerns. Really?

  • rate this

    Comment number 4.

    Cameron insisted new priority - jobs & growth. What is Downing Street talking about: agreement on strengthening bail-out funds. Has Britain not had enough of this? Britain argues main aim is persuading GERMANY underwrite bigger financial reserves ASAP. I see: as long as Britain does not have to foot the financial consequences, it will push for Germany to do it. We love you Merkel!

  • rate this

    Comment number 5.

    Issues facing EU:
    1. need for "QUICK" boost to the bail-out funds (I disagree. This is the way US does things, not the EU) &
    2. stalemate with Greece over the implementation of its austerity plan (Greece could very well be correct.).
    The EU is slow & plodding, but point to me where it has gone seriously wrong. Slow & plodding is what you do with economic/financial adjustments/innovations.


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