Another emergency summit to save the eurozone

Chancellor Angela Merkel spoke to the lower house of German Parliament on Friday morning about Europe’s economy, one day after her French counterpart, President Nicolas Sarkozy, gave a speech about the eurozone crisis in Toulon in southern France.

The two will now meet in Paris on Monday afternoon to try to transform their individual declarations into joint propositions – most notably on the issue of revisions to the EU treaty. The strategy the two hatch in their meeting is expected to be unveiled at the summit of European leaders to take place in Brussels on December 8 and 9.

Despite attempts to project an image of a united Franco-German front, the talks between Sarkozy and Merkel are likely to be a series of negotiations; differences regarding how to handle the crisis persist between the two European powers, a fact that was reinforced by the divergent points of view articulated in the leaders’ speeches.

“Their speeches indicated no change in their positions,” explained Iain Begg, a European economy specialist at the London School of Economics, adding that “Nicolas Sarkozy seems to have accepted that Angela Merkel is assuming the role of European leader in this crisis.”

The French president has therefore ceded ground on a matter that is important to him: the role of the European Central Bank in the management of sovereign debt. Sarkozy certainly still wants the ECB to intervene more actively in the markets to buy back the debt of weaker European economies, but he emphasised on Thursday that the institution “should be independent” – precisely the argument that has been repeated by Merkel to oppose the French position.

Bad omen for Brussels

On Friday, Merkel maintained her initial stance, repeating that the ECB’s only mandate was maintaining “stability of the currency”, or fighting inflation. Nevertheless, she suggested that she could understand the arguments in favour of greater intervention on the part of the ECB, “implying that she would not be opposed to the ECB continuing to occasionally buy back debt”, Begg noted. Merkel moreover specified that she “would not comment on the ECB’s decisions”.

If the matter of the ECB’s role seems far from being settled, despite a few concessions from each side, the two leaders both urged reform of European financial institutions. Sarkozy called for “a new European treaty”, while Merkel deemed a fiscal union “imminent”.

In Begg’s opinion, making a revision of European treaties a joint Franco-German priority was a worrying move. “You can’t do that within a few weeks, whereas the current eurozone crisis requires, above all, immediate solutions,” he said. “By discussing longer-term solutions, Sarkozy and Merkel are avoiding making decisions on questions to which the markets are awaiting real answers.”

In other words, the upcoming Brussels summit risks ending up a failure, and no one knows how many more failures the eurozone can endure before collapsing entirely.