Richard North, 29/06/2012  

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Brussels is a bottomless pit, says Giuseppe Vita, Chairman of the leading Italian bank Unicredit. "You cannot pour cash into a colander. First the holes must be closed".

For Vita, then, the answer is the advance of political union in Europe, and Merkel is right to want to make that happen. If we had asked the German people, there it would not have been a euro. But now to believe that the Brussels mafia actually intends to save Europe is totally naive.

In fact, the "colleagues" were supposed to deliver a "roadmap" which was to reassure financial markets that the eurozone was prepared to make drastic political reforms in order to save the euro. This was the opportunity to remedy the "birth defect" of an economic and monetary union without fiscal and political union.

But, it was not to be. The Guardian describes the colleagues as "groping" for a breakthrough. And a group grope is about all they have achieved.

While affirming that it was "imperative to break the vicious circle between banks and sovereigns", in terms of substance, all they could manage was a leaden statement. They announced that the EU commission would present proposals a "single [bank] supervisory mechanism" and asked the Council to "consider" them "as a matter of urgency" by the end of the year.

When an effective single supervisory mechanism for banks in the euro area has been established, the statement went on, on the basis that it involved the ECB, the ESM could be used to recapitalise banks directly. And that is the best the "colleagues" can offer, with nothing at all before the end of the year. Yet this is hailed as a "victory" for Spain and Italy? 

Even this, we were told: "would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding".

Then, in a passage that will be quoted down the ages as a prime example of coporate-speak, the "colleagues" declared:
We affirm our strong commitment to do what is necessary to ensure the financial stability of the euro area, in particular by using the existing EFSF/ESM instruments in a flexible and efficient manner in order to stabilise markets for Member States respecting their Country Specific Recommendations and their other commitments including their respective timelines, under the European Semester, the Stability and Growth Pact and the Macroeconomic Imbalances Procedure. These conditions should be reflected in a Memorandum of Understanding. We welcome that the ECB has agreed to serve as an agent to EFSF/ESM in conducting market operations in an effective and efficient manner.
Therein lies the evidence of defeat. Faced with a "make or break" challenge, the colleagues broke. They were expected to step up to the plate with proposals for a new treaty - their "significant breakthrough". Instead, the "quartet", led by Van Rompuy, ducked the issue and delivered seven pages of vacuous waffle, followed by a retreat into corproate-speak with their statement.

Nevertheless, Barroso thinks, "it is very ambitious decision that shows once again, the commitment of the member states namely those in euro area to the irreversibility of the euro and I think this will be recognised by all".

But nothing can disguise the simple facts. The roadmap leads to a swamp, the dream of European unity ending in the fudge of frightened, inadequate men, dressed up in impenetrable corporate-speak.

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Amazingly though, in coverage verging on the surreal, the British press sees this as a "cave-in" by Germany, with the Wail, the Failygraph and The Times all offering similar narratives - completely missing the point, not showing a scintilla of understanding of the underlying issues.

But, if the British press is off the wall, it seems that the entire press corps is suffering form "summit hysteria" - a well-known clinical condition.

Many of the hacks have taken their narrative directly from Van Rompuy's oral statement – or something very similar. Thus you have the BBC reporting that, "EU leaders have agreed to use the eurozone's planned bailout fund to directly support struggling banks, without adding to government debt", only then stating that "they also agreed to set up a joint banking supervisory body for the eurozone".

What the media are not doing is linking the two and stressing that the one is conditional on the other, a lacuna which the BBC perpetuates in its follow-up report. Furthermore, the phenomenon is international: Welt has "Merkel's defeat in a historic night", claiming that the results of the Council: "might mean a turning point in crisis management" … "a clear victory for Spain's Prime Minister Mariano Rajoy".

Needless to say Welt failed to mention that Mr Rajoy's victory, "would rely on appropriate conditionality, including compliance with state aid rules, which should be institution specific, sector-specific or economy-wide and would be formalised in a Memorandum of Understanding" - and couldn't happen until 2013. Some victory! It exists only in vacuo.

Despite this, the politically naïve babies in the "market" take their lead from an ill-informed media, having not begun to look at the small print. Thus do the ill-informed lead the ignorant, not that the latter are complaining as there is always a buck to be made from collective hysteria.

As to the history books, my guess is that when historians look for an event and dates to mark the beginning of the final collapse of the European Union, it will be the European Council of 28-29 June. Then, the "colleagues" failed to do the one thing that had a chance, albeit slender, of saving their precious project – committing to a new treaty. And they blew it.

The rest is noise.


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