BERLIN – The European Union’s recent summit has brought about a typically European compromise on the Greek financial crisis, one that avoids the term “solution” and hides behind the idea of a “mechanism.” Whether it works will be seen in April, when Greece will have to refinance its debt once more.
German Chancellor Angela Merkel prevailed with her demand that the International Monetary Fund participate in a Greek bailout, should one be necessary. Moreover, the final decision on such a bailout will require, as before, unanimity in European bodies, meaning it will remain under German control.
French President Nicolas Sarkozy, meanwhile, secured eurozone participation in a bailout for Greece. For Germany, this would entail a payment of up to €4 billion and – anathema! – the de facto end of the bailout ban in Article 125 of the EU’s Maastricht Treaty, despite a lot of verbal juggling intended to “prove” that the agreement on Greece conforms with the ban. Sarkozy also wanted, and received, increased economic coordination within the European Council. The exclusion of members who violate the Maastricht Treaty is off the table.
In fact, aside from some additional minor points, the European Council’s resolution differs from the previous compromise in only one respect: IMF participation. If Germany needed the Fund’s involvement to save face domestically and because of a decision by its Constitutional Court, was it really necessary to wreak such unparalleled havoc in Europe just to bring that about? Everyone involved could have lived with this compromise; it was the political confrontation that preceded it that made agreement difficult. Indeed, the European confrontation Merkel initiated (shame on you if you see a connection with the upcoming German elections) has changed the EU forever.