European crisis summit no. 7,362 gets underway

Yep - European leaders are convening on Brussels for yet more wrangling over a new treaty. But will anything happen?

by Emma Haslett
Last Updated: 06 Nov 2012
If MT had a pound for every crisis summit European leaders had attended over the last 12 months, it would be... well, less skint than we are at the moment, anyway. And this morning, they’re at yet another, this time in Brussels, where the new European treaty (which the UK opted out of last month) will be under scrutiny once again. Jobs and growth will be at the top of the agenda – but as always with these things, what happens outside of the conference room is likely to be more significant: unofficial issues include leaked German proposals about sending a bureaucrat in to run Greece, Nicolas Sarkozy’s Tobin tax – and who deserves to be in the room in the first place…

Number one issue on the agenda is Europe’s 23 million unemployed people, who are, say some leaders, at risk if mandatory austerity measures are introduced as part of the new European budget treaty. Thus, the European Commissioner pointed out that anything that is brought in will have to be ‘smart’, and will require much closer co-ordination between the 17 countries signed up to the euro. So far, so obvious. It's even rumoured Britain would nod a new fiscal treaty through, for fear of being seen as the baddy.

Simmering under the surface, though, will be tensions over Greece, and the hangover from last week’s talks on dealing with its ever-burgeoning debt. While the country desperately needs a(nother) €130bn bailout, its creditors are bickering. On one side of the negotiations is the European Central Bank, which still insists the Greeks pay back their €40bn debt in full – on the other are a raft of private investors, who have been asked to accept a 50% writedown on their Greek bonds. Which is a bitter pill for anyone to swallow.

Whatever the outcome of that (we were promised a deal over the weekend, but nothing seems to have budged), the Germans managed to make things even more fractious over the weekend, with the leak of a proposal to put an EU budget commissioner in charge of Greek finances. As German finance minister Wolfgang Schaeuble pointed out, only ‘radical’ changes will solve the Greek debt crisis – but the Greeks aren’t happy with that particular proposal. Facing a generation of German budget approval, who would blame Greece for defaulting?

Alongside that is Nicolas Sarkozy’s decision to finally bite the bullet and introduce a 0.1% tax on financial transactions. Originally mooted as part of the new European treaty (Angela Merkel is behind it, David Cameron isn’t), the tax is part of a new package of austerity measures to be implemented in August. From a British point of view, it’ll be interesting to see whether, as David Cameron argues, such a move sparks an exodus of financial institutions or not…

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