It seems Chancellor Angela Merkel made some concessions regarding the banking union and of using of bailout funds.
1. Would you also describe it as concessions?
2. Would you say that the current summit was another step forward to further political integration of the EU or not, and why?
Kaisa Korhonen, Researcher in the European Union Research Programme, The Finnish Institute of International Affairs
Chancellor Merkel among other European leaders, who have been against increasing mutual responsibility either over the banking sector or sovereign debts, have been making concessions last night. If you read this official statement , there are especially three points that I would see as concessions from the previous line of thinking:
1) the ESM will have “the possibility to inject funds into banks directly”,
2) “Spain’s bank recapitalisation would begin under current rules, i.e. funds are provided by the EFSF until the ESM becomes available. It will then be transferred to the ESM without gaining seniority status.”
3) “EFSF/ESM funds can be used flexibly to buy bonds for Member States”
So putting these three aspects together, it’s clear that the Eurozone member states will share ever more responsibility and risks.
2. I would see last night’s decisions as one among many steps towards a banking and fiscal union, but politically, this decision might even cause further differentiation certainly between the Eurozone and non-Eurozone countries, but perhaps also within the Eurozone, because the national ratification might become a complicated process.
Nicholas Startin, Senior Lecturer in French and European Politics, University of West England, Bristol
1. Angela Merkel has inevitably had to give some ground over bailout funds and a Banking Union faced with pressure from the Franco, Spanish, Italian triumvirate as well as the IMF and the ECB. There are signs that the tide is turning with regard to the Austerity versus investment debate. This will please many citizens across the EU but Merkel will struggle to portray this positively to the German press and public, where many will view it not only as a u-turn but also as more evidence that Germany is ‘carrying the can’ financially for the Eurozone as a whole.”
2. It is difficult to assess what the long-term implications of this summit will be with regard to the future of the EU in political terms. Many in the British press, for instance,will portray it as further evidence of the march towards political integration. However, with key, strategic, economic decisions still being sanctionned by national leaders and finance ministers at the level of the European Council, we are in reality a long way from the political integration of Europe.
Kerry E. Howell, Professor, Director of Research, School of Management, University of Plymouth
Compromise or concessions are a necessary aspect of EU membership and Germany like all Member States at some point or another makes compromises (self interest and common interest become obscured). Banks will be aided directy but a European wide competent authority or financial regulator could be considered a pre-cursor for further fiscal and political union. Political and fiscal union could be perceived as the outcome of the European integration and Europeanisation process. The Sapir Report (2003) indicated that re-structuring of policy-making procedures and identified the on going discrepancies between intergovernmental and supranational perspectives of the EU. The basis of the report’s argument was that the formulation of policy-making should be both European and national. Indeed, the report touched on central problems relating to diversity and integration that the EU has experienced since its inception. However, required changes were not forthcoming; in certain quarters it has always been recognised that monetary union is at best difficult if not impossible without further tranference of sovereignty and the realisation of closer fiscal and political union.
Miguel Otero-Iglesias, Assistant Professor in International Political Economy, ESSCA – School of Management, Centre for European Integration
1. I don’t think the Germans have given too much. It will all be conditional on the ECB being the main banking supervisor and on conditions that the ESM will impose under the unanimity rule.
2. On whether this is a step forward, yes, for me the most important think is that ECB becomes the main supervisor. This is a first step toward a banking union. My question is whether Germany will let the ECB regulate their Landes banken. If they do, then they show that they are serious about genuine political union.
Anthony Zito, Reader in Politics, School of GPS, Newcastle University
1. Yes it was a concession as the bailout funds and therefore the contributing countries are left more exposed by the potential use of these funds. In particular the decision to drop the preferred creditor status means that public and private creditors are sharing the same amount of risk. On the other hand, having given this concession, the German negotiators will try and shape it to their terms.
2. It is a very small step towards increased political union, but not in material terms. Nothing seems to be settled. Nevertheless, the political symbolic impact of keeping the richer creditor member states and the debt vulnerable states together in economic and political integration is strengthened by the concessions.
Filed under: EU politics, Europe, Politics Tagged: | Angela Merkel, Anthony Zito, EU, Europe, European Union, Eurozone, Germany, Kaisa Korhonen, Kerry E. Howell, Miguel Otero-Iglesias, Nicholas Startin