An agreement over tightening regulation of banks in the euro zone reached in the early stages of a two-day meeting of European leaders in Brussels sparked hopes of significant reform among financial observers. Yet the European Union summit last week ended in a stalemate, with no ground plan for reforming the monetary union in sight.
German Chancellor Angela Merkel had already lowered expectations prior to the summit, declaring on Tuesday to members of her party that she did not expect a quick deal would be struck. One of the points of contention concerned a proposed Europe-wide unemployment insurance, which Ms Merkel does not wish to see instated. More broadly, commentators have argued that Germany is seeking to delay decisions on deeper political and financial integration to avoid mutualisation of Europe’s sovereign debts.
Here in Germany, even the centre-right Franfurter Allgemeine Zeitung considered this stalemate to have been “Merkel’s doing”, but argued that the German delegation’s reluctance derived in no small measure from fears that the stability pact would be undermined, and concern over the slow pace of reform in Greece. In the view of many, a limited solidarity fund should only be established if a binding fiscal reform agreement is reached with all members of the euro zone. Another current of thought does, however, support an ambitious public investment plan that would make Europe’s ailing economies more competitive internationally. Yet the latter would necessitate even greater funds and score poorly with the country’s electorate.
That the general election in Germany will still be three months away when the EU leaders meet again in June 2013 does not, commentators contend, bode well for its outcome.