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Another Summit

30 Jan 2012
The first European Council meeting of 2012 gets underway this afternoon in Brussels, even as a general strike that began across Belgium yesterday evening serves to remind EU leaders of the social burden created by austerity measures.
 
Markets are not expecting any ‘comprehensive solution’ to emerge from the January summit, which is more an occasion for EU leaders to discuss four headline issues: treaty reform, Greek debt restructuring, strategies for growth and regional budget limits.
 
The European Council will aim to sign off on both the new fiscal treaty and the ESM treaty, with the latter agreed in principle by euro area finance ministers at last week’s Euro Group. Reports in early January indicated that a number of Member States such as Poland would join the United Kingdom in declining to sign the treaty unless changes were made, while Ireland faces the threat of a legal challenge against ratification unless a referendum is held. While it should be easy to quell the unease of the Poles and other Member States arguing over institutional provisions, what will be less resolvable would be a legal decision compelling a referendum in a euro area state and the potential consequences that a ‘No’ vote could bring.
 
The elephant in the room, however, continues to be Greece. PSI talks are expected to conclude this week, but any guarded optimism on this front was lampooned by plans, leaked in the Financial Times over the weekend, that Germany has proposed to place Greece's public finances under the control of an EU budget tsar of sorts as a condition for receiving its next aid tranche – an idea that was first floated by Dutch PM Mark Rutte back in September last year. The idea was immediately rejected by Greek finance minister Evangelos Venizelos, who reminded Greece’s EU partners that “anyone who puts a nation before the dilemma of ‘economic assistance or national dignity’ ignores some key historical lessons”, which puts things mildly.
 
The European Council will also discuss a French-German proposal on how to rekindle growth across the EU. The weapon of choice seems to be taxes, according to a report on a pre-summit draft: energy taxes, financial transaction taxes (undoubtedly touching on President Sarkozy’s decision to forge ahead with adopting a unilateral FTT) and – unhappily for Ireland – a common consolidated corporate tax base. Whether these proposals turn out to be concrete and meaningful initiatives and not wishy-washy aspirations such as the Euro Plus Pact (which also contained a reference to CCCTB) is a question high on the minds of the eurozone periphery.
 

 

This content forms part of the E View project, which is part-funded by DG Communication of the European Parliament. 

 


As an independent forum, the Institute does not express any opinions of its own. The views expressed in the article are the sole responsibility of the author.


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