Merkel's Gains in Brussels

Here's a cogent wrap-up, from The Economist's "Charlemagne's Notebook" blog, of the EU economic governance summit that ended late last week in Brussels. Among the demands presented, German Chancellor Angela Merkel argued for -- and won qualified concessions -- for a reopening of certain economic contours held in the landmark 2009 Treaty of Lisbon.

Merkel emerged as the clear winner -- and, it seems, one of the most effective national leaders in the Union.  This is certainly true when compared with Herman Van Rompuy, whom the article insinuates as a kind of EU pipsqueak, out of his depth in the EU's play-for-keeps attitude among the Continent's heavies such as Merkel, Nicolas Sarkozy and David Cameron. The blogpost's takeaway is as follows:

 “I AM on the whole quite satisfied with the decision.” With these modest words, Angela Merkel, Germany’s chancellor, rounded off a remarkable victory at the end of a bruising European summit that concluded today.

Less than a fortnight ago, members of the European Union were universally opposed to Germany’s demand to reopen the EU’s treaties to strengthen the means of maintaining fiscal discipline among members of the euro zone. But within days of winning over Nicolas Sarkozy to her cause at the Deauville summit on October 18th, she got everyone to sign up to the idea of a “limited treaty change”. By the slow-moving standards of the EU, this happened in an eye-blink. It is a testament to the authority of Mrs Merkel, as well as the power of Germany’s constitutional court in Karlsruhe.

“Everybody was very sensitive to Mrs Merkel’s persuasive arguments,” is how one national diplomat put it. “Bullying,” said another. Whether by persuasion or compulsion, Mrs Merkel secured her main objective: agreement to amend the EU treaty to allow the creation of a “permanent crisis mechanism” to resolve the debt of countries that may be hit by a Greek-style crisis in future.

This means creating a bail-out fund similar to the €750 billion IMF-backed temporary financing facility that was created in May, imposing tough conditions on any country that taps it in future and making bondholders take some of the pain of saving insolvent countries. “The burden must never again be borne simply and only by the taxpayer,” she declared." (...)

This may turn out to be a baby step toward tighter EU integration, at a time when member states can hardly maneuver otherwise -- and would hardly choose to do so in sunnier times. Once the tight belt of the recession loosens, we'll see which European country strains for more room to breathe. 

Europe the profitable?

One could do worse than to take a lesson from The Economist magazine on straddling European and American market perspectives. A recent editorial describes "Europe's dark secret" on the prevalence of free-market capitalism in Europe, with a special focus on France, bête noire of those in the US who would paint the land of May '68 as antithetical to free and unregulated market economics.

The Hexagon is indeed far more capitalist than even its center-right President Nicolas Sarkozy can admit publicly without political points lost. France's commonly-thought anemic business sensibilities have still produced goliaths like Airbus, Axa, Areva -- and those are just some A's from the French corporate alphabet... To say nothing of the tax-revenue factories (and how they are taxed) in Spain, Italy, the Netherlands, et cetera. This op-ed excerpt demonstrates the might of French and European market performance globally:

"Perhaps, however, it is time to let the French, as well as other corners of market-averse Europe, in on a dark secret. The truth is that theirs is a capitalist society. For while Europe’s leaders rail against profits and wealth, its firms stride into new markets and rack up giant profits. Spain’s Inditex dresses men and women in Zara outfits in 76 countries. Belgium’s Anheuser-Busch InBev, which makes Budweiser, is the world’s leading brewer. France boasts more Fortune 500 companies than Germany. A French company, Sodexo, is chief caterer to the American marine corps."

Such rarefied market status seems easily enviable by aspiring corporate empire-makers, whether they hail from the business-ho culture of the United States, or the more socialized (yet apparently, equally profit-minded) République.

This comes alongside new calls from Berlin and Paris in the ongoing project to build an "economic governance" model for Europe. And it seems to sketch a schizophrenic portrait of European realities just at a time when the bloc seeks unity of thinking -- and action -- on economic cooperation following the current recession's arrival in 2008. Watch this space for more on the EU's paradoxical, if not downright contradictory, economic maneuverings.