Eurocrisis: Did Merkel Give Up Too Much In the Summit?

Econintersect: The international press is having a field day in claiming German Chancellor Angela Merkel was outmaneuvered by the Southern European heads of state.  Italian Mario Monti would not agree to the growth pact unless the high interest rates were dealt with.  Per Spiegel OnLine:

“Are you trying to take us hostage?” Danish Prime Minister Helle Thorning-Schmidt said indignantly. Then the German chancellor spoke up and said: “That’s not helpful.” It’s a sentence Angela Merkel reserves for serious situations.

The Italian prime minister should not believe that escalating the conflict would change anything, Merkel said, and pointed out: “I have to fly to Berlin at noon tomorrow for a vote in the Bundestag.” But Monti stood his ground, knowing how much leverage he had. The markets were waiting for a decision. “Go ahead and fly home on Friday, and have them vote in Germany,” he told Merkel. “I have until Sunday, and I’ll wait until you return.”

He didn’t have to wait that long. Less than 10 hours later, he had the chancellor where he wanted her. Merkel relented and rubber-stamped what she had previously rejected. “A simple act of solidarity without getting something in return would be absolutely fatal to the overall development of the euro,” she had previously insisted. For Merkel, it was the reddest of all red lines, and now she had crossed it.

Reuters opines:

By banding together in a powerful coalition to challenge Germany, the high-stakes meeting seemed to show, Mario Monti, Mariano Rajoy and Francois Hollande were able to wring major crisis-fighting concessions from a suddenly soft Angela Merkel.

But if the euro zone is still intact years from now, the marathon session in Brussels may be remembered as much for what the German leader extracted from her combative partners as for the bitter policies she was forced to swallow.

Read more:

Outfoxed by Club Med: German Dominance in Doubt after Summit Defeat

– spiegel.de

Chancellor Merkel suffered a bruising defeat at last week’s Brussels summit after the leaders of Italy, Spain and France ganged up on her. Europe’s power relations have shifted as a result. It looks like Germany will no longer be calling the shots in the EU. By SPIEGEL Staff

Continue Reading On spiegel.de »

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