Merkel relief at 'good day for Europe'

 
Angela Merkel Chancellor Angela Merkel, speaking at the Bundestag, welcomed the ruling

Chancellor Merkel stood before the ranks of the Bundestag yesterday and declared it "a good day for Europe".

The German Constitutional Court had just given the green light for the ESM - the eurozone's permanent bailout fund - to go ahead.

So it was possible to deploy yet another weapon in fighting the eurozone crisis. The ESM - with a 500bn-euro (£400bn) war chest - will handle future bailouts.

So several obstacles that might have spooked the markets have been cleared from the path. Some European officials - who last year declared the crisis over - are hopeful once again.

It helped that the Dutch electorate, at the last moment, shied away from backing parties openly critical of the centralising power of Brussels.

The days of unbending austerity are over in Europe. Officials and leaders are operating on flexi-time.

The ECB was given the nod from Berlin to agree to buy unlimited bonds of those countries in trouble.

Portugal, unable to meet its targets, has been given more time.

If Spain applies for a full bailout there are powerful voices saying no new conditions will be necessary. The promise that help comes with "strict conditionality" may not be kept.

Greece is certainly being told it must live up to its commitments, but talk of a Greek exit from the eurozone has suddenly disappeared from political circles in Berlin. Chancellor Merkel will not sanction it.

More Europe?

Suddenly there is the glimpse of a looser monetary policy, of targets relaxed and of debt being mutualised.

Ironically the key to this is national politics. There is now just over a year until elections in Germany. Chancellor Merkel does not want the eurozone crisis to dominate the campaign. That may be wishful thinking but compromise is the word of the moment.

The eurozone crisis - as widely predicted - is being used to justify deeper integration. President Barroso is calling for "a federation of nation states". Mrs Merkel is signed up for "more Europe".

The danger in this is that Europe will turn inward, obsessed by its own structures, unleashing intense debate about the Europe of the future. President Barroso hints at treaty change by 2014.

Selling more Europe will be a difficult task when the polls suggest increasing alienation from the European project.

In the meantime there is the real economy. There are over 24m people out of work. Recession, in some countries, is deepening. Debt is still climbing, growth elusive.

In some countries, like Greece, Spain and Italy consensus is fragile. There are some green shoots: exports to countries outside Europe are increasing and some competitiveness is returning.

So "A Good Day For Europe" - perhaps. But not yet for the real economy. And that is where Europe will be judged.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 37.

    @28 cont.
    "I only mentioned A..s word because many people (not necessarily N.. supporters) simply thought in 1938 that their small country could only benefit by joining a much bigger and stronger entity."

    Hawai joined the US in 1959.

    What do You think why?

  • Comment number 36.

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

  • rate this
    -4

    Comment number 35.

    @28
    Henry Kissinger asked “Who do I call if I want to call Europe?”

    After a painful period of negotiations and referendums in the years to come the Eurozone or EU may manage to establish a democratically elected European president.

    But it may be too late for Kissinger to make use of this contact.

  • rate this
    +2

    Comment number 34.

    “If Spain applies for a full bailout there are powerful voices saying no new conditions will be necessary. The promise that help comes with "strict conditionality" may not be kept.”
    ++++



    While Der Spiegel points out that the current limit on German contributions may not necessarily be kept even with current German pertinent laws remaing unchanged.

  • rate this
    -1

    Comment number 33.

    Hewitt

    “There are over 24m people out of work.”

    Then...Give your position to some clever but unemployed bloke in the UK or elsewhere in Europe. It’s hard to do worse than you. Go on holiday.

  • rate this
    +3

    Comment number 32.

    The objection: Article 123 of the Lisbon Treaty prevents the ECB from lending to Govts. Article 123 is there to prevent ELECTED GOVTS from abusing Central Banks by ordering them to print money to finance excessive spending. That is why the ECB has to be independent from govts, but now it's worse. ECB/ESM = money completely in hands of banking sector.

  • rate this
    +2

    Comment number 31.

    Re #27

    One can only look up "equalization payments" entry in Wiki to find out that:

    "Despite considerable differences in the abilities of states to generate revenues, there is no federal program in the United States that aims explicitly at reducing the disparities in state fiscal capacity. "

    And that's why California is in trouble, while Texas isn't.

    [no transfer of fed funds to CA]

  • rate this
    -2

    Comment number 30.

    Is Hewitt as bad as the Bild ? No. He’s worse.

    “If Spain applies for a full bailout there are powerful voices saying no new conditions will be necessary. The promise that help comes with "strict conditionality" may not be kept.”

    Sources ?

    None. Just BS.

    Go on holiday Hewitt. Then start covering the UK. Or … Better … Stay on holiday.

  • rate this
    0

    Comment number 29.

    As I watched the "Shadow" (Goldman), I wondered:
    1. why no satipulations - like lending the money to Greeks, who are currently paying 18% to the bond markets to get money. No strings = banks decide to pay bonuses with the money, or shift it all the money to tax havens: That's all fine!
    Q. Why not lend to Greek Govt directly, or Portuguese Govt, or the Italian Govt?
    Bit loosey-Goosey this!

  • rate this
    +2

    Comment number 28.

    austriacus

    I only mentioned A..s word because many people (not necessarily N.. supporters) simply thought in 1938 that their small country could only benefit by joining a much bigger and stronger entity. With no possible minuses and negative consequences in the future.

    Please note, that many present-day eurosceptics are former euroenthusiasts who thought they were joining smthg different.

  • rate this
    -1

    Comment number 27.

    24.powermeerkat
    Moderators I hope you will permit me to to correct this blatant untruth.

    "However, you must know that Federal government doesn't support failing US states which are fully responsible for their own finances."

    This is nonsense Federal Fiscal Transfers having been used to shift money via Federal Government Taxes from rich states to poorer states for years.

  • rate this
    +2

    Comment number 26.

    Re #20.strontiumdog, cont.

    Dutch election results are not significant. Public opinion can change on the dime (remember the Dutch voting against EU Constitution?)

    Similarly in Germany. Many Germans are unhappy with Merkel and her policies. But tolerate her not seeing a valid alternative on the other side (SPD/Gruens). At this point.

    But nobody knows what they'll do 13 months from now.

  • rate this
    0

    Comment number 25.

    EU countries morphing into a Federation; I think I may like this idea, except for the "shadow". Last November, former Goldman exec Mario Draghi replaced Trichet as Head of ECB. Draghi did for the banks what the ECB has refused to do for its member govts - pour money on them at very cheap rates: 489B euros to European Banks for 3 yrs.
    But I found myself watching the "Shadow".

  • rate this
    +1

    Comment number 24.

    Re #20 strontiumdog.

    Many Americans were unhappy about bailouts of big banks and companies which should have been allowed to fail.

    However, you must know that Federal government doesn't support failing US states which are fully responsible for their own finances.
    [cf. California's fiscal crisis]. Nor is any US state obligated to aid any other state (e.g. Texas-CA) for the same reason.

  • rate this
    0

    Comment number 23.

    @16 hi PMK

    As You know, I am always glad to exchange views with You ( not that Your or my view would change..)
    I can characterize my attitude towards the US by citing Jules Verne,
    the Moon Voyage:
    Michel Ardan says: “I admire you as much as I do not understand you.”

    Please avoid mentioning the "Anschluss", I think there is no merit in comparing it to the actual events in the EU.

  • rate this
    0

    Comment number 22.

    18 Whistlling

    "It is a typically meaningless snippet of junk polling"

    Quite agree - junk polling is a quick opinion former for the masses.

    They should add 'polling' to the saying: "There are lies, damned lies and statistics."

  • rate this
    -2

    Comment number 21.

    Portugal has been given more time:
    Negative comments from the Eurosceptics ( like the folly of a bottomless barrel...)

    If Greece is given more time: see above

    If Greece is not given more time:
    Negative comments from the Eurosceptics ( like ignoring the hardship of the Greek people...)

  • rate this
    +1

    Comment number 20.

    PMK,

    the Dutch had the chance yesterday to vote against the EU and all the polls suggested they would, but when push came to shove they blinked and voted by a landslide pro EU. Should the EU follow the US model and federalize so that failing states can be supported by Federal fiscal transfers? How do Americans feel about that when in happens in the US? Do they just accept it or grumble?

  • rate this
    -1

    Comment number 19.

    7.Tiw2011
    No I don't believe you and I notice that you conveniently leave out any references as to where we might check out your statement.

  • rate this
    +2

    Comment number 18.

    14 Given that Sweden does not actually use the Euro you can interpret the results of this poll however you wish, because you can answer the question truthfully if you believe the Euro a bad idea or a good one i.e. yes it has been bad because it damaged the economy or yes it has been bad because we are not in it and that has damaged the economy. It is a typically meaningless snippet of junk polling

 

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