After a 13-hour-long war of nerves, german chancellor angela merkel (CDU) relented in brussel on friday and accommodated the euro worriers. Some partner countries were in a "very complicated situation" because they had to pay high interest rates on their bonds, merkel defended the decision against criticism from home.
The summit decided that crisis countries will be able to access the euro bailout fund more easily in the future – and will have to meet fewer conditions in the process. The ESM rescue fund is also to be able to grant direct aid to banks from highly indebted countries under certain conditions. This will then also relieve the burden on their national budgets. All 27 eu countries agreed on a 120 billion euro growth package to boost the crippled economy. Almost half of it comes from the EU budget.
Agreement reached after a turbulent night session. The countries of spain and italy, which are under pressure from the financial markets, are playing high stakes. The chancellor accommodated her opponents, italy’s prime minister mario monti and spain’s prime minister mariano rajoy. On another point, merkel remained firm: after her clear no, common bonds (eurobonds) do not appear in the summit communique. The chancellor defended the decisions: "we have remained true to our philosophy of no performance without counterperformance". France’s president francois hollande, on the other hand, continues to see eurobonds as a prospect.
Eurogroup head jean-claude juncker expressed satisfaction with summit outcome. "This is not about blackmail, it’s not about winners, defeated, winners, losers, we’re making a joint effort here."Chancellor merkel also drew a positive balance: "it was an intensive council that decided a lot."
The decisions of the brussels summit on bank aid are hotly disputed in the berlin coalition government. Asked whether direct financial aid from the euro bailout fund ESM to ailing banks in affected states was covered by the draft for the bundestag, merkel said: "yes, 100 percent."She reaffirmed that any changes to the ESM must be approved by the bundestag.
In berlin this evening, the bundestag and bundesrat were scheduled to vote on the crisis fund ESM and the fiscal compact. A two-thirds majority is sought for both votes – which is why the opposition had to be involved.
The "leaders" also agreed to deepen the euro preservation union in the long term. There should be a concrete roadmap by the end of the year; as early as october, eu summit head herman van rompuy wants to present a first balance sheet. "This is an important breakthrough," the belgian said.
In view of the worsening euro crisis, a reform project is being pushed ahead under high pressure: european banking supervision. It should be placed with the european central bank (ECB), which would thereby gain in power. Merkel spoke of a "super supervisory authority" for europe’s banks. ECB chief mario draghi said the ECB will "take on tasks in this supervision".
The long-term reform of the fiscal union also includes a so-called fiscal union, in which members will have to give up some of their sovereign rights over their budgets in order to allow central control by the EU. In germany, van rompuy’s proposals were sharply criticized in some quarters.
According to the summit declaration, the heads of government also agreed to make flexible use of the existing instruments of the EFSF and ESM aid funds to provide emergency aid to countries such as italy and spain. The main issue is the purchase of government bonds. "We reaffirm that it is crucial to break the vicious circle between banks and sovereign bonds," the statement reads.
Countries with good budgetary management can receive support from the EFSF and ESM bailout funds from the summer onwards – without additional austerity programs – in order to calm the financial markets. All they have to do is follow the budget recommendations of the EU commission. Details to be discussed by euro finance ministers on 9. July set.
The ESM crisis fund is to be allowed to provide direct support to banks in the future. Until now this was not possible according to the ESM treaty, but the money should be transferred to the government of the respective country. This would increase the debt of the states, which is why italy and spain protested against it.
France’s president hollande expects to introduce a financial tax before the end of the year. After the failure of a group effort involving all 27 EU member states, at least nine countries, including germany, france and austria, are now leading the way in a small group.
The summit also decided that the european patent court will be headquartered in paris. Subsidiaries will be located in munich and london. The office in london will deal with administrative matters, and jurisdiction will be divided among the three locations according to subject matter, EU diplomats explained.