GERMANY'S CHANCELLOR Angela Merkel. ARCHIVE
The Dutch challenge
Marc Rutte, the Dutch prime minister, is in a similar position to Merkel. He will face charges at home that, having previously taken a hard line on public finances, he has given in to pressure from Italy and Spain.
Rutte denied that he had made a U-turn. “We have negotiated extremely hard,” he said. There would he said be “strict conditionality” attached to any help for Spain and Italy.
The countries of the southern eurozone would have to help themselves, he said.
Asked what the Netherlands had got in return for softening its stance on banking recapitalisation, he pointed to the creation of “much stronger supervision” of banks.
Like Merkel, he said that the creation of a European banking supervisor was an important advance.
He also claimed victory in seeing off the idea of Eurobonds – “a dreadful idea”. He said it was good to break the vicious cycle between banks' debts and governments' debts, which meant that if a government re-capitalised its banks, then the public debt suffered.
He stressed that it was in the Netherlands' interest to see a solution to the problems of the southern eurozone.
Rutte's performance at the summit will be subject to the fierce scrutiny of an election campaign. Early elections are expected in the Netherlands in September, because after Rutte's government lost the support of the right-wing Freedom Party (PVV) in April that he was forced to submit his resignation.
A non-eurozone view
The UK's prime minister, David Cameron, described this as a “long and pain-staking summit” that had resulted in the members of the eurozone following “the remorseless logic of currency union”. “I believe that all the countries now realise how much more needs to be done”, he said.
Asked whether the deal amounted to the “big bazooka” that he has previously called for, he said that the conclusions were “significant” and offered some elements of a big bazooka. Questions about the seniority of debt – who should be repaid first – were as important because they were “clearly hampering Spain's situation”. Similarly, “the idea of directly recapitalising the banks” was significant. “The principle here is that you need institutions that absolutely stand behind” a currency union.
Asked whether the concessions made by Angela Merkel represented a “defeat” for the German chancellor, he said: “I don't think we should see it that way.” “I don't see this as a face-off between Germany and Italy. Angela Merkel is being asked to do something that is very difficult. We have to show some understanding of the difficult political decisions that others are having to make.”
He repeated that he will not allow British taxpayers to guarantee eurozone banks, saying that he had forced an “entire section” of the original draft to be dropped “because it implied that a banking union might apply to the entire 27 [member states], not just the 17” members of the eurozone. He said that there was also a second reason why the UK could not sign up to a banking union: the creation of a single supervisor, in the form of the European Central Bank (ECB). However, he described the granting of supervisory powers to the ECB as “a good outcome” for the eurozone. Asked whether the creation of a banking union would also result in the emergence of a bloc that would outvote the UK on financial matters, he emphasised the EU leaders commitment “to protect the integrity of the single market”, though he said that “permanent vigilance” would be required.
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