The single currency has been saved; according to European Council President, Herman Van Rompuy, the euro has proved itself to be an irreversible financial and political project. At the habitually dubbed ‘marathon’ discussions, EU leaders talked long into the early hours of 29 June, cautiously putting in place the beginnings of a banking union.
The European Stability Mechanism (ESM), which is due to get going in July, will be used to recapitalise failing banks and stabilise bond markets. The ability of the ESM to fund banks without impacting on national debts will, says Van Rompuy, break the “vicious circle” between banks and governments.
Italy and Spain, seen as the culprits for allowing the talks to drag on as long as they did after Mario Monti and Mariano Rajoy stalled support for a growth pact, eventually got something of what they wanted after it was agreed that the bailout fund can be used to lower both country’s borrowing costs.
Monti said he was satisfied with the outcome of the deal, and said that if Italy was indeed to ask for assistance under the ESM, it would not amount to the same situation as Greece, Ireland or Portugal. He said that the Troika will not be visiting Rome any time soon. Also looking satisfied, as noted by the national press, was Rajoy, finally getting what he has wanted for a long time, direct recapitalisation by a European fund.
The French financial newspaper, Les Echos, also noted the show of strength by both governments, calling it ‘le coup de force de l’Italie et L’ Espagne’, but, oddly, the German press had a different interpretation. According to Sûddeutsche, the ‘government agrees on immediate measures for Spain and Italy’. Such, seemingly, is the magnamity of Berlin.
Following the ESM breakthrough, the Irish Prime Minister, Enda Kenny, was in a hyperbolic mood, saying that the meeting represented a “seismic shift” in European policy. The deal is expected to bring with it some alleviation of the terms of the Irish bailout.
Elsewhere, there were the usual squabbles, between growth and austerity countries, Eurozone and non-eurozone members and France and Germany. This time there was even the added attraction of Victor Ponta and Traian Basescu, which may have accounted for the over-abundance of Romanian journalists (prompting one Council official to suggest they “are only here to watch the fight”), and which led to one or two highly contorted press conference questions.
Herman Van Rompuy’s first press conference of the night, delayed long after it should have taken place, was badly-timed; coming as it did minutes before the conclusion of the European Championship semi-final football match between Germany and Italy (to which we can add to the list of spats). Unfortunately for him, the match was being shown in the press bar, as a broadcast of his own event went unnoticed. It wasn’t long before video footage of the interested spectators (interested in the match, that is) was doing the rounds on the internet, in a way that recalled the former Liverpool manager, Bill Shankly’s famous quip that “some people believe football is a matter of life and death...I can assure you it is much, much more important than that”.
As the euro was being preserved in one room, in another life (and death) was being celebrated in all its combative, partisan glory.