Saturday, October 22, 2011

Telegraph: "Eurozone summit - despair and backbiting in the corridors of power"

"The ever-worsening eurozone crisis has sent relations between its leaders to an all-time low

Shell-shocked EU finance ministers meeting in Brussels on Saturday were already reeling from the worst Franco-German rift for over 20 years and a fractious failure to resolve the problems that have brought Greece, and the euro, close to the brink.

But then a new bombshell hit as a joint report by the EU and the International Monetary Fund (IMF) warned that, without a default, the Greek debt crisis alone could swallow the eurozone's entire €440 billion bailout fund - leaving nothing to spare to help the affected banks of Italy, Spain or France.

"We've got to get real.

People are talking about new defences
but with one gulp the whole €440 billion could be gone,
leaving the eurozone with no protection at all."

Jan Kees de Jager, the Dutch finance minister

Christine Lagarde, the French finance minister turned IMF chief
...issued a grim warning to her former European peers.

The IMF would no longer be willing to pick up a third of the total bill for rescuing Greece,
a contribution worth €73 billion,
unless European banks were prepared to write off 50 per cent of Greek debt.

"It was grim.

The worst mood I have ever seen, a complete mess,"

one eurozone finance minister.

Interpersonal relations between eurozone leaders have hit an all-time low,
reflecting sharp disagreements between Germany and France over using the ECB
to bailout the euro and presenting an additional obstacle
to finding a "grand solution" to Europe's debt crisis.

Nicolas Sarkozy's "two faced" personality
has been cited as a major factor in his dysfunctional relationship
with Angela Merkel.

During one-to-one, face-to-face meetings with the German Chancellor,
the French President is said to be "syrupy", "ladling on the charm",
but when her back is turned or she leaves the room, Mr Sarkozy changes tack.

...Finance ministers - including George Osborne, the Chancellor
- expressed frustration on Saturday
that their emergency meeting could take no decisions of substance
until Mrs Merkel and Mr Sarkozy had buried the hatchet.

...As well as the breakdown of the Franco-German motor,
the EU is facing a rebellion from Italy, Spain and others
over "imperious diktats" issuing from Paris or Berlin.

And to cap it all, as The Sunday Telegraph can now reveal, Herman Van Rompuy,
the EU president who is regarded by many as too close to Berlin,
angered many countries when he made confidential proposals
for the creation of a European finance ministry.

His plan, which has considerable backing from the growing body of EU bureaucrats
who see a unified EU treasury as the only solution to the problem
of countries spending more than the euro can stand,
would mean a centralised body able to override national budgets
and enforce cuts on profligate governments.

Anything like it would be the most radical step in the history of the European Union,
going further than any vision of the founding fathers
who drew the line at giving away fiscal and military sovereignty.

"People were furious,"

one diplomat from a small eurozone country.

"It is bad enough that these ideas are all dreamt up
by German or French officials.

Even worse, Van Rompuy had the arrogance to suggest
that the EU finance ministry should be based in either Frankfurt or Paris."


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