EU ‘Crisis’ Summit: Low Expectations Ahead Of Thursday Meeting

By Svetla Dimitrova

For the leaders of the 27 EU nations gathering on Thursday (June 28th), the main focus will be on ways to stabilise the economy hit by the deepening crisis in the eurozone. The prevailing expectations are for heated debate on some issues and no new breakthrough.

But there should be some good news for Montenegro: ministers are expected to endorse a decision approved by the Union’s European affairs ministers on Tuesday to begin membership talks.

The summit is taking place just days before Cyprus assumes the rotating EU presidency from Denmark on July 1st and less than two weeks after the repeat parliamentary elections in Greece and the formation of a new government there.

Cyprus will begin its first six-month term at the chairmanship roughly a week after becoming the fifth eurozone country to seek emergency funding for its ailing banks. It made the request on Monday, just hours after Spain, the fourth-largest economy in the euro area, formally applied for help for its banking sector.

Greece’s new Prime Minister, Antonis Samaras, whose country has already signed two bailout agreements since May 2010, will not attend the meeting in Brussels due to health problems, nor will Yannis Stournaras, his second finance minister in less than a week.

Athens, which is hoping to talk its international lenders into easing the terms of its second, 130-billion-euro rescue package, is expected to send a delegation headed by President Karolos Papoulias and including outgoing Finance Minister George Zanias.

Germany has made clear its opposition to giving Greece any breathing space, with Finance Minister Wolfgang Schaeuble urging Greek authorities — in an interview published on Sunday — to focus on meeting the country’s reform commitments.

“The most important task facing new Prime Minister Samaras is to enact the programme agreed upon quickly and without further delay instead of asking how much more others can do for Greece,” he told Bild am Sonntag.

Chancellor Angela Merkel of Germany has also repeatedly voiced strong opposition to the joint issuance of eurobonds as a short-term measure for resolving the debt crisis in the area, describing the idea this week as “economically wrong and counterproductive”. The idea is supported by a number of eurozone members, including France, Italy and Spain.

According to her, a deeper fiscal and political integration, which implies ceding more powers to EU institutions, is the best response to the ongoing crisis in the 17-nation eurozone. She also insists that there is need for strengthening Brussels’s control over fiscal discipline around Europe.

France and Italy, however, seem disinclined to relinquish national sovereignty to Brussels.

“For a genuine economic and monetary union to be established, I think that we need a banking union, a fiscal union and further steps towards a political union,” European Commission President Jose Manuel Barroso said in a speech Tuesday.

Backing Germany’s stance, he stressed that the idea of a fiscal union implies “much more than just eurobonds.”

“It also means more co-ordination in taxation policy and a much stronger European approach to budgetary matters at national and European level,” Barroso said.

Meanwhile, European Council President Herman Van Rompuy released a seven-page report that “sets out a vision for the future” of the economic union, defining steps for strengthening the eurozone and thwarting new crises. The ten-year plan calls for integrated financial, budgetary and economic policy frameworks.

“In a medium-term perspective, the issuance of common debt could be explored as an element of such a fiscal union and subject to progress on fiscal integration,” read the document, sent to EU leaders ahead of Thursday’s summit. It contained several other proposals, including the possibility of vetoing annual national budgets.