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EU Summit: Closer To A “United States Of Europe”?

  • June 30th, 2012
  • Posted by EUEditor

eu-symbol-coins21.jpgAnother move by the leaders of the European Union to get under control the tussle with heavy indebtedness and recession … this time with a strong commitment to a future union with common budgets.

The summit of the heads of government of the 27 EU states, at Brussels 28-29.6.12, determined to extend the use of guarantee funds, set up to assist governments under stress, to also recapitalise banks.

The governments of both Italy and Spain had sought relief as financial markets reacted to their indebtedness, and credit ratings agencies down-graded the status of banks.

The banking system in Spain was hardest hit in that process, because of the exposure of its financial institurions to debt coming through from the bursting of the real estate bubble in that country.

At Brussels, the 16 members of the Eurozone, countries using the Euro currency, agreed on the move to support banks from the so-called European stabilisation fund.

The full summit of 27 moved on the theme of “more Europe”, agreeing to start a process of treaty-making, to expand the powers of the EU.

That would see a fiscal union, with the member states forfeiting some individual sovereignity, to participate in joint sovereignity, and common budget-making.

The plan, likely to take well over a decade to complete, will provide firewalls against events like the current crisis, where individual members could run up unmanageable debt – pulling the others in with them.

The German Chancellor, Angela Merkel, had gone into the summit offering resistance to heavier use of guarantee funds.

Her centre-right government had opposed the application of the new Greek government for substantial easing of the austerity measures required in return for assistance.

The recently-elected Socialist Party President of France, Francois Hollande, was backing a more liberal approach and concerted action against the debt problem.

In the end the President of the Euroepan Council, heading the summit, Herman Van Rompuy, declared the outcome to be a breakthrough set to have long-term impacts.

“You can’t summarise this in winners and losers”, he said.

BBC, London, “Europe agrees on bank recapitalisation”, 29.6.12.…, (29.6.12).

Reuters, London, “Comments from the Europan leaders’ summit”, 29.6.12. …, (29.6.12).