The EU Summit: Failed Or Not?

By Chernitsa Polina

The first day of the EU summit to approve a change in the Lisbon Treaty has brought no breakthrough as the bloc`s 27 members failed to agree on the issue. The reform was vetoed by Great Britain. Meanwhile, the participants have decided to form a new fiscal union. An initiative suggested by Paris and Berlin to adopt a mechanism of excluding from the euro zone remained on paper.

French President Nicolas Sarkozy said shortly before the summit that Europe won’t be given a second chance to solve its crisis. But London thinks differently and British Prime Minister David Cameron did not sign a pact proposed by Germany to practice tough financial discipline. Mr. Cameron said he wanted legal guarantees for his country’s financial institutions. Such guarantees did not follow. Commenting on London`s decision, Mr. Sarkozy looked disappointed:

“We would prefer the reform of the EU Treaty to be approved by all 27 members but our British friends have a different approach to the issue. So, it will be an international agreement, open to any country willing to join it.”

The proposed deal includes 17 members of the euro zone. Six other members of the EU have decided to join. Apart from London, the deal was rejected by Budapest. Stockholm and Prague asked for time to consult their parliaments. Meanwhile, some economists have already described the summit as ‘failed’, but others expect new proposals to be made later on Friday. Anyway, a proposed fiscal pact shows first signs of a breakthrough in the issue, says Andrei Gritsenko, director of the Asset Management Capital company:

“I think that that this decision is 65% positive, rather than negative. Unfortunately, since the EU was created on the wave of exhilaration and success, many documents had just not been prepared. It was more a political alliance rather then an economic union. The fact that most economic laws actually aren’t working in some EU member states has led to a deadlock. Tough terms may be needed for any possible future emissions aimed at rescuing the EU economy.”

Economist Georgy Aksyonov is amazed at how EU leaders demonstrated their disagreement during a key summit.

“Each defends his own view, each pursues his own interests. But perhaps some countries should forget about their interests for a while, put them aside, while others should make concessions – a difficult but necessary decision. It looks like things aren’t that bad in Europe after all. When more problems emerge, possibly next year, then serious decisions will be made.”

In late November, European Commissioner for Economic and Financial Affairs Olli Rehn warned that the collapse of the eurozone could be unavoidable unless decisions were worked out prior to the summit. His warning left analysts wondering whether it would happen before Christmas or after New Year’s Day. Still, most economists agree that it’s not a matter of any near future, although they do not rule a smaller eurozone.