Europe dithers as Greece vote looms

 
EU heads of state in Brussels (232 May 2012)

Europe is divided and uncertain and the euro - at least initially - has fallen to a 22-month low against the dollar.

Its leaders spoke for six hours but the decisions have been put off until another summit at the end of June. This was an informal dinner "without taboos" but Europe may not be granted the time to talk rather than act.

Greece was not formally on the agenda but it overshadowed the meeting.

The leaders pledged to do everything to keep Greece in the eurozone but as Chancellor Merkel said: "We expect them to stick to their commitments."

There was no new strategy to stop Greece leaving if it votes for candidates in the forthcoming election who oppose the austerity measures that are the condition for the bailouts.

There was an ill-defined offer to divert some EU structural funds to Athens in order to boost growth.

Quite deliberately, European leaders want the Greeks to realise they could end up outside the euro and that this prospect will give them pause for thought. There are some indications that this strategy might be working.

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For the moment the plan for eurobonds has been parked in the long grass”

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In the meantime countries are advised to make contingency plans for a Greek exit, in particular how to protect the banking sector.

In Brussels the working assumption is that Greece will remain in the eurozone but privately officials say they will have to try to make any departure orderly if it happens.

Ideas for growth

The main focus of the meeting was how to boost growth. The leaders denied that there was a choice between austerity and growth. Both, in their view, are needed. Deficits have to be reduced but growth is essential.

Some ideas have momentum behind them: using EU structural funds for infrastructure projects, expanding the single market, giving a trial run to so-called project bonds where private investment is attracted to invest in new transport links and the digital economy.

The Germans remain convinced that freeing up labour markets and easing regulations would have the biggest impact.

German Chancellor Angela Merkel (23 May 2012) The German chancellor believes eurobonds are not an instrument for growth

The new French President, Francois Hollande, did raise the issue of eurobonds - common European debt.

This would bring down the borrowing costs for the weaker countries whilst Germany would end up paying more.

Mr Hollande probably had a majority of countries supporting him - at least the Italian leader thought so.

Angela Merkel was not isolated, however. Her view is that eurobonds would remove the incentive for countries to behave responsibly. She also believes that eurobonds are not an instrument for growth.

For the moment the plan for eurobonds has been parked in the long grass.

Standing up to Berlin

This debate was "frank" although not "confrontational", said Mr Hollande.

However the Franco-German relationship that has always been the motor behind European integration is being redefined. Mr Hollande no longer wants a duopoly.

French President Francois Hollande Mr Hollande avoided a pre-summit meeting with the German chancellor

He doesn't want his relationship with Germany to be like an executive board imposing itself on others. So he avoided the pre-summit meeting with the German chancellor.

In the past Angela Merkel and Nicolas Sarkozy would meet beforehand and agree a joint position that would carry the day.

They would also work the room as a partnership. Yesterday, the French president and the German chancellor were noticeably cool.

They may warm up (it happened with President Sarkozy) but Francois Hollande is signalling that he is quite prepared to stand up to Berlin.

There is a frustration at the slow pace of all of this.

David Cameron questioned the purpose of all these meetings whilst the central questions remained unanswered: who or what at the end of the day really stands behind the single currency? And where is the rescue fund or firewall to prevent the Greek crisis spreading to Italy and Spain?

Britain's Deputy Prime Minister Nick Clegg will say in Berlin today 'the tree is falling, and we are pruning one leaf at a time".

Europe does not have time.

The banks are under pressure. Recession is deepening. Unemployment growing. Spanish Prime Minister Mariano Rajoy warned yesterday that Spain might not be able to continue with the borrowing costs at the level they are.

For the single currency and the European project these are days of uncertainty.

 
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 474.

    Yesterday it was revealed the Spanish govt told a European song contest entrant not to win because it couldn't afford to host next year's contest.Today it was revealed it would have to come up with an additional $24B to bail out another major bank.Europe's stinking rotten financial edifice is crumbling to dust before our eyes. It's something to watch, decades of lies and deceit catching up with it

  • rate this
    0

    Comment number 473.

    One of the most undemocratic ethically bankrupt organisations that has ever existed is being brought to its knees by a country that played by the same "rules" as all the other members, it just doesn't have a big enough economy to hide the debt. All of the Euro members cooked the books and none of them really gave their people a say. Heard of the expression "you reap what you sow...."?

  • rate this
    0

    Comment number 472.

    @ 448. nautonier

    Fact seems to be that you and some Greeks believe they can blackmail the EZ. That's a very risky play. As you could have learned in the recent years rules are easily broken in bright sunshine without any stealth.

    Lagarde (as French finance minister) somehow proudly declared almost all rules had been broken in respect on Greece. Therefore one more should not be the problem.

  • rate this
    0

    Comment number 471.

    PMK

    461. "The difference being - this time they got a tangible support, unlike their predecessors."

    Andropov estimated that 35 million Poles were too much to subdue.

    458. "He was not shot by a gun, but by an insane loony."

    who had ample opportunity to buy a gun...

    437. "It [the Berlin Wall] was TORN DOWN after USSR fell apart."

    The Wall was torn down in 1989; the USSR dissolved in 1991.

  • rate this
    0

    Comment number 470.

    Pmk: But we (US) should stay out of it

    I agree...but ya know when Germany, etc were trying to take over the world, everyone else banded together

    If China tried to take over the world like that, its hard to say who would band together against such

    If it was just China+Russia, I think the world including USA would stay out of it

    But I can't say I would want to see China take over Russia

  • rate this
    +1

    Comment number 469.

    Luyc: "Russia may need protection from China in future"




    I'm glad you're aware of Sino-Soviet territorial disputes [Russian occupation of Chinese Manchuria, etc.] and a military conflict at Ussuri 40+ years ago.

    But we (US) should stay out of it.

    Let China (1400 millions) and Russia (140 millions) duke it among themselves (they both have plenty of nukes for the purpose).

  • rate this
    0

    Comment number 468.

    Marg: RT

    The most disappointing thing about RT is they don't tell you anything about Russia

    Secondly, RT never says anything good about US-its too negative

    Pmk: Because China has been training many more spies in the US in the last 20 years (as "students") than Russians

    USA colleges encouraging as many foreign students as possible

    Less Americans than ever attending our colleges

  • Comment number 467.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 466.

    Pmk: this time they got a tangible support, unlike their predecessors...That support coming from the U$A

    The final crushing blow was Russia-Afghan war with Russia
    retreating from Afghanistan

    Thanks to Charlie Wilson+USA

    Today Poland is protected by EU+ NATO
    which is protected by USA

    But no one knows what will happen to Belarus

    Russia may need protection from China in future

  • rate this
    0

    Comment number 465.

    Lucy: "USA has been arresting more spies illegally selling secrets to China recently than to Russia"





    Because China has been training many more spies in the US in the last 20 years (as "students") than Russians.

    How do we know it?

    Those of them was saw the light and wanted to remain in the US as doctoral candidates/scientists eventually went to FBI and 'fessed up.

    Tough.

  • rate this
    0

    Comment number 464.

    margaqret howard: "Here in Europe we can choose to watch and read what we like.[...][
    Russia Today and Max Keiser might make a good start.'

    Your choice of information sources speaks for itself, particularly as you said, you have so many other options.


    PS. You avidly watch RT and still don't now most Russians are EUROPEANS? And where Ural Mountains are?

    [gen. Putin wastes his money.]

  • Comment number 463.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 462.

    Pmk: Jus like JFK was not shot by a rifle, but by a renegate (HLO) trained in the KGB Academy in Minsk

    Thats what they said in the movie Salt, too

    The measures used to protect the President today
    are much greater

    But you must always be on your guard for these so-called "sleeper spies"

    USA has been arresting more spies illegally selling secrets to China recently than to Russia

  • rate this
    +1

    Comment number 461.

    Re #458 cont.

    East German workers rose against the DDR regime - they were crashed.

    Hungarians rose against their Soviet-imposed regime - they were crashed.

    Poles rose against their Soviet-imposed Socialist regime, but they were no crashed and succeeded.

    The difference being - this time they got a tangible support, unlike their predecessors.

    That support coming from the U$A. Sorry!

  • rate this
    0

    Comment number 460.

    457 powermeer
    "you self-admittedly get most our your "information" re US from?"
    =
    Self-admittedly? Here in Europe we can choose to watch and read what we like.
    You obviously don't have that luxury any more or else choose not to use it. Judging by some of your countrymen here, you seem indoctrinated and unable to think for yourself.
    Russia Today and Max Keiser might make a good start.

  • rate this
    0

    Comment number 459.

    @448 nautonier
    "Greece can hold firm & get better terms or bring the entire EZ down with a big crash"

    In reality, Greece - partly due to its primary deficit - would be amongst the countries to suffer the most from such an uncontrolled crash, while the stable countries such as Germany, the Netherlands or Austria would remain comparatively unharmed.
    France would stumble, but remain standing.

  • rate this
    0

    Comment number 458.

    smroet: "Please do acknowledge that the initial initiative of relatively ordinary people can help create opportunities for others (including your 'great' Ronald Reagan - who failed miserably to ban handguns after he was shot at)."




    He was not shot by a gun, but by an insane loony.

    Jus like JFK was not shot by a rifle, but by a renegate (HLO) trained in the KGB Academy in Minsk. (cont)

  • rate this
    0

    Comment number 457.

    mh:As for your "Soviet Empire was DEFEATED in the Cold War by Ronald Reagan&U$A" - pull the other one. I suppose he was helped by Rambo and Arnie!





    Could you, just for once, margaret, supply any FACTUAL evidence instead of the propaganda from KGB gen. Putin's TV outfit, RT,
    you self-admittedly get most our your "information" re US from?

  • rate this
    0

    Comment number 456.

    Pmk: She was a popular counter-candidate

    Yulia is hard to forget b/c of that blonde braid
    It reminds me of medieval, like a fairy tale

    She is very beautiful+she made Ukraine look good

    There were several Ukrainian male students at the dorm I lived in+
    at first I asked them if they were Russian

    They weren't offended but they said, NO! We are not Russian
    We are Ukrainian

  • rate this
    0

    Comment number 455.

    450 PMK

    I do not deny the contributions of others in the final result. It is just that there was a starting point furnished by local trade union people in a communist country. Please do acknowledge that the initial initiative of relatively ordinary people can help create opportunities for others (including your 'great' Ronald Reagan - who failed miserably to ban handguns after he was shot at).

 

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