SUNDAY’S Greek drama kicks off what may be the most volatile and uncertain fortnight in more than half a century of European Union, peaking in a crucial Brussels summit later in the month.
The election, revolving around whether Greece will do what it takes to stay in the euro, is the climax to more than two years of upheaval in Europe, posing questions about the political will and calibre of EU leaders and whether the single currency can survive. There is little sign of an answer. In Berlin, by far the most powerful of EU capitals, it is said that Europe’s leaders are still not asking the right questions. If they appear at a loss for a persuasive response, it is not for want of meeting, talking and arguing.
The key EU leaders will spend the next two days in Mexico at the G20 summit preoccupied with the Greek fallout, the Spanish emergency, the prospects for Italy, and even whether President François Hollande’s France is on the cusp of a rude awakening. Germany’s finance minister, Wolfgang Schauble, will confer with his French, Italian and Spanish counterparts to prepare a summit in Rome on Friday of the leaders of the four countries ahead of the Brussels summit on June 28-29.
David Cameron and his finance minister George Osborne will be in the invidious position of both urging eurozone leaders to press ahead with the “remorseless logic” of monetary union by pooling sovereignty, liability and powers in a “banking union” presaging a “fiscal union”, while insisting that the UK and the London financial sector be quarantined, unaffected by any new EU powers and the prospect of the European Central Bank in Frankfurt gaining strong new regulatory authority over Europe’s banks.
However, it is hard to see how a stiff new regime can work well if Europe’s biggest banking centre, London, is not involved. German officials describe the British position as “schizophrenic”.
The bank quandary has the makings of a major UK-EU bust-up. The notions being discussed are to have a new European resolution regime to shore up dodgy banks, funded by a bank levy to spare taxpayers from bailing out the mismanaged, to use the new eurozone bailout fund for direct recapitalisation of banks (opposed by Berlin, urged by Paris), and to have a eurozone deposit guarantee scheme, meaning pooled guarantees for savers’ nest-eggs. Germany, again, opposes this. — The Guardian, London
