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Merkel rams through EU financial crisis reforms

The Local · 29 Oct 2010, 09:28

Published: 29 Oct 2010 09:28 GMT+02:00

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“I can say on behalf of Germany that we pushed through our essential points,” the chancellor said, adding that the talks which ended at 1:30 am had been “hard and extensive.”

The European Union's 27 leaders successfully agreed on long-term budgetary mechanisms for member countries in financial crisis at the summit, she said.

“All were in agreement that for this a limited revision of the (Lisbon) treaty will be necessary,” she added, adding that there would no longer be any bailouts for countries in distress. “The crisis mechanism is valid only in case that the stability of the euro as a whole is in danger.”

The changes to the treaty will mean swifter and harder measures against EU countries that exceed their deficit limits, and comes by in large in reaction to the recent financial problems in Greece.

In the future, private creditors including banks will have to shoulder part of any sovereign debt crisis to ensure taxpayers aren't left with the entire cost.

Merkel was reportedly the central figure in the negotiations, taking a hard line on Germany's demands. However, she failed to push through the suspension of voting rights for those EU countries failing to fulfil their financial commitments.

"Merkel became quite emotional during the debate about voting rights," said one EU diplomat.

But by abandoning that demand, the chancellor was able to convince other EU leaders to back her other priorities.

EU President Herman Van Rompuy has now been tasked with preparing for a "light" treaty change before a "final" decision at a December summit. The changes would be implemented by mid-2013 when the €750-million rescue package created following the Greek debt crisis runs out.

Merkel, along with French President Nicolas Sarkozy, faced heated criticism from smaller countries for pushing the tough reforms, with high-profile EU figures saying the pair had opened a "Pandora's Box" of problems.

Story continues below…

Luxembourg Foreign Minister Jean Asselborn also warned of "a risk that we will be plunged back into months and years of navel-gazing."

Many EU countries also disliked the idea of simply signing off on a "diktat" by Berlin and Paris.


The Local (news@thelocal.de)

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Your comments about this article

13:18 October 29, 2010 by maxbrando
The Euro and EU will still collapse in several years. The deadbeats from the south will never reform.
14:06 October 29, 2010 by dbert4
@maxbrando - yeah right, the € will collapse....right after the £ and $
14:44 October 29, 2010 by basske
Is it just me or what is with the photo chosen for this article -- was it the only one available or is there a definite slant against Merkel?
15:33 October 29, 2010 by tallady
The real teeth in these reforms was the loss of voting rights. That was dropped. The countries out side of Germany,France and England would be foolish to go along with the proposal to take away their voting rights. A few of the western countries are already poised to fail the guide lines involving deficit spending along with many of the new members,.
18:01 October 29, 2010 by mikekoi
England, that is Britain could not give a fig about the voting rights as the criteria do not apply to countries outside of the Euro. Have you not noticed the £ is still their currency? Any future instability will be due to cutting the deficit too rapidly. No other reason.
20:27 October 29, 2010 by maxbrando
The U.S.A. and england both have the power to print, or restrain the printing of money. Except for Sweden and England none of the other individual EU countries do. They are not in charge of their own fate, unlike England and the U. S. By the by, the U.S.A. is not going to bail Europe out again. The next time the Russians get you.
08:54 October 30, 2010 by storymann
mikekoi..voting rights are a concern to England...they want to be counted when and if any changes are made to rules and regulations ,not just currency policy..
09:25 October 30, 2010 by tallady
mikekoi,,My mistake ,about England

Now the British position is that the UK is not in the euro and that any treaty change would not apply to it. Under Protocol 15 of the Lisbon Treaty Britain has an opt-out from any sanctions. And this is David Cameron's key card. If sanctions don't apply then there is no need to call a referendum, as no powers would be ceded to Brussels.
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