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Euro Zone Crisis: No More Merkozy At Day 1 of Summit

Euro Zone Crisis: No More Merkozy At Day 1 of Summit

 

The first day of the euro zone summit in Brussels has already exposed tensions and even “acrimony” among European leaders, who are more “at odds than ever before in the 30-month crisis.”

The division was especially apparent in the positions taken by the leaders of France and of Germany, recently elected socialist president François Hollande and Chancellor Angela Merkel. For the first two years of the crisis, France under former President Nicholas Sarkozy worked in such close coordination with Germany’s Merkel as to give rise to the term “Merkozy.”

As the summit opened, Hollande made a “new plea for EU solidarity” and spoke of the need to “find rapid solutions for those countries facing pressure from the market, despite having made huge efforts to balance their budgets,” a pointed reference to Italy and Spain. Italy has the second-highest debt load in the euro zone, at 120.1 percent of its gross domestic product. Spain, with wide-scale unemployment and fast-collapsing real estate values, needs a €100 billion bailout for its banks.

Both Italy and Spain have urged the euro zone bloc to allow for steps that would reduce the two countries’ interest rates. Their insistence that discussion of short-term measures take precedence at the summit has delayed approval of a 120 billion-euro ($149 billion) growth pact. Hollande, who had championed the growth pact and is now aligning himself with Italian Prime Minister Mario Monti and Spanish Prime Minister Mariano, has also put France’s endorsement of a deficit-control treaty supported by Germany on hold.

European Union President Herman Van Rompuy struck a conciliatory tone, saying that “Two countries feel very strongly about reaching an agreement on long and short-term measures.”

With pressure from all around the globe on Europe to take “decisive steps” to address the crisis, after overnight meetings ending in the early hours of Friday, European leaders agreed to use the continent’s permanent bailout fund, the European Financial Stability Facility, to recapitalize struggling banks and to create a joint banking supervisory body. In the long term, they also agreed to work to form a “tighter union.

In response to European leaders agreeing to let go of the condition that emergency loans to Spanish banks give preferred creditor status to their governments, the euro surged 1.5 percent early on Friday, its largest intraday advance since November.

 

Previous Care2 Coverage

Euro Zone Crisis: Why Put a Dog “In Charge of the Sausages”?

Euro Zone Crisis: A Plan For the (Sort Of) United States of the Euro?

Euro Zone Crisis: Bailouts For Spain, Cyprus; Health Woes For Greek Officials

 

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Photo by Eoghan OLionnain

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8 comments

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7:08PM PDT on Jun 29, 2012

Good to see France and Germany agree in principle to differentiate short-term and long-term solutions. Critical to react now to the emergency but to have balanced budgets as a long-term goal. After that statement the Euro went up slightly.

Will be interesting how Hollande and Merkel work together. Hope it's more like FDR/Churchill than Mitterand/Thatcher. Nous verrons.

12:06PM PDT on Jun 29, 2012

that's okay, they weren't helping anything anyway

6:41AM PDT on Jun 29, 2012

A Europa e a sua crise os paises com as suas dividas sobranas ainda vão que criar mais medidas de austeridade eu francamente não sei onde é que as economias do Eurogrupo vão aguentar as taxas do desemprego altas Eu também culpo os banqueiros e também o sistema politico de alguns paises do eurogrupo

6:21AM PDT on Jun 29, 2012

I am agree with Berny P.

4:11AM PDT on Jun 29, 2012

thanks for the info

4:03AM PDT on Jun 29, 2012

Merkel + Hollande = Merde

1:37AM PDT on Jun 29, 2012

Well it appears that Merkozy is no more since François Hollande has assumed the helm in France and is going in a different direction. There was more conciliation and progress towards getting better banking supervision and trying to get countries on a better footing. Clearly the Merkozy austerity, austerity, austerity solution was not working.

12:57AM PDT on Jun 29, 2012

My family fought in 2 world wars with great lost and sacrifices.

I remember my father telling me...I am 64 now....that ...what Germany could not get with fighting they will get it economicly....and look now....this is exactly what Merkel is doing.....by the time she agree to growth...the euro zone will be destroyed and many many peoples life a nightmare.

The people who cause this the greedy bankers are litteraly getting away with murder.

The culture of banking..of cheating..of fraude...of doing anything to make money...of greed..of big bonuses no matter what...was there...is still there...and very little is been done about it.

Take the boss of banks ..hand cuffs through their offices.with publicity...to jail...make them responsible....and this will stop...

once boss of banks will no that they are responsible for what is happening in their bank the attitude, the culture will change...
believe me....top bankers do not like been responsible or have their photos handcuffs in news papers.

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