Post-Summit Policy Briefing

17 December 2012

Last June’s meeting of EU leaders had raised high hopes for what the December summit may achieve, but in the event expectations were low ahead of this summit: and in fact its outcome was even more disappointing than expected, said Janis A. Emmanouilidis, Senior Policy Analyst at the European Policy Centre.

Leaders failed to draw up a detailed roadmap towards Genuine Economic and Monetary Union (GEMU) and postponed long-term decisions in that regard, Emmanouilidis lamented.

Emmanouilidis said there was no agreement at the summit with regard to a long-term roadmap towards GEMU. Instead, member-state leaders asked Van Rompuy and Commission President José Manuel Barroso to come up with a roadmap in time for the June 2013 summit on four specific issues. These were:

  • Ex ante coordination of major national economic policy reforms.
  • The social dimension of EMU (Economic and Monetary Union).
  • The feasibility and modalities of mutually-agreed contracts for competitiveness and growth.
  • ‘Solidarity mechanisms’ to enhance efforts made by member states that enter into contractual arrangements.

He drew two main conclusions from last week’s summit:

  1. The markets remain calm, so the prospects for the euro’s future look much better than they once did: but we’re not out of the woods yet – particularly as there is still no clear roadmap to address the structural failings of EMU.
  2. The traditional Franco-German axis of EU integration isn’t working. The summit showed that Van Rompuy and Barroso are somewhat caught in the middle, faced with the impossible task of pleasing both German Chancellor Angela Merkel and French President François Hollande at once.

“I don’t think the crisis is over. We still haven’t found a long-term solution for Greece,” said Fabian Zuleeg, Chief Economist at the European Policy Centre.

Greece’s debt burden is far higher than it will ever be able to pay and its creditors will have no option but to accept that fact sooner or later. Meanwhile, the feeling is growing in Germany and elsewhere that Greece has received enough help now, Zuleeg warned.     

In their response to the crisis, EU leaders are not doing enough to boost growth and employment, he said. Over time, the acceptability of the changes that are being made in terms of closer economic union will wane if this lack of growth continues, potentially leading to the further rise of political extremism, he cautioned.

“We’re not doing enough on the long-term aspects of GEMU. And there’s virtually no democratic back-up. We’re doing nothing to address imbalances between eurozone members, and there are wide differences between them in terms of consumption,” Zuleeg said.