Angela merkel

Angela Merkel’s nerves about Britain’s future in the EU

The Prime Minister and Angela Merkel spoke last night on the phone to discuss the European Council meeting later this week. Downing Street said the pair ‘agreed that further work is needed before agreement can be reached’ on banking union, which is a coded acknowledgement that David Cameron is concerned the current proposals are not in Britain’s interest and do not currently protect the single market and that he will push for greater compromise when leaders meet. This is all part of the Prime Minister’s big Europe week. He has a Cabinet meeting this morning, and as its members are increasingly piling pressure on Cameron for a referendum on Britain’s

The EU wins the Nobel Peace Prize

Today is not April the first; but the European Union has indeed won the Nobel Peace Prize. It is a bizarre decision given what is going on in Europe right now. Watching the reaction of the Greek crowd to Angela Merkel on her visit there this week, it was hard not to worry that the European project was now a threat to peace and stability on the continent. To be sure, France and Germany have not gone to war again since 1945. But to chalk that up solely to the European Union is a profound misreading of history. I suspect that the decision to award the prize to the European

Whitehall’s mistake over BAE and EADS

There have been some sharp responses to the demise of the proposed BAE EADS merger. My personal favourite is John Redwood’s pithy: ‘Several of you wrote in expressing dismay at the proposed tie up between BAE and the Franco German civil aviation company. I did not write about it, as I assumed it would be an impossible deal to execute. The documentation was very voluminous, so I did not bother to read it. The politics were always likely to bring it down, so there was no need to analyse the business, economic and strategic issues.’ There seems to be little surprise that the deal collapsed. Most commentators welcome the failure, despite the commercial

Whatever it takes to save the euro

In case you were in any doubt about how committed eurozone leaders are to the survival of the single currency, Angela Merkel has put out another statement on doing ‘everything possible to protect the eurozone’, this time with Italian Prime Minister Mario Monti. The pair had a phone conversation on Sunday and their remarks follow the joint statement released by Merkel and François Hollande on Friday, and Mario Draghi’s announcement last Thursday that the European Central Bank would do ‘whatever it takes’ to protect the euro. The markets are looking forward to something decisive later today as US Treasury Secretary Tim Geithner arrives in Europe to meet German finance minister

Joining Harriet Harman’s feminist club

If feminism is ‘a creed of women’s solidarity’, do you pick and choose about which women you’re in solidarity with? In the case of Harriet Harman, the answer is, well obviously. If you’re a Tory you can’t really join in the creed. In an interview with Total Politics magazine she was incredulous at the notion that the Home Secretary, Theresa May describes herself as a feminist. ‘If you’re actually political, you can’t be a Conservative and a feminist,’ she said. So there you have it. But why? Because it’s ‘all about equality and fairness’. ‘Ultimately, delivering for women in this country – in equality, childcare, helping with the elderly, maternity

Europe’s illusory deal

After Merkel’s decision to allow Eurozone funds to be used to bail out Spanish and Italian banks, the press tomorrow may declare – yet again – that some kind of breakthrough has been reached and that the Teutonic queen of austerity has been forced down from her throne. But, as ever with the Euro summits, there is less – far less – than meets the eye. Here’s my take:  1. Growth pact. Any pact representing no more than 0.0096 per cent of Eurozone GDP is hardly going to have a discernible effect, so let’s not pretend otherwise. 2. About those no-strings bailouts. It seems countries can access bailout funds without

Isabel Hardman

Angela’s anguish on ESM vote

This all feels rather miserably familiar. Eurozone leaders come to a dawn agreement about resolving the crisis. Markets react positively. The leaders appear on podiums to congratulate one another and themselves on reaching said dawn agreement. By lunchtime, something rather awkward has happened. Angela Merkel, perhaps inspired by George Osborne, had done a U-turn in agreeing to use eurozone bailout funds to support Italy and Spain, but did she have the authority to do so? In Germany, ahead of a vote in the Bundestag to approve the European Stability Mechanism bailout fund and new budget rules, the largest opposition party, the SPD, has called an emergency meeting of the budget

Isabel Hardman

Italy and Spain put Merkel in the corner

It took them 13 hours, but eurozone leaders have finally agreed to use bailout funds to recapitalise banks directly. The deal, which was reached at 4am (David Cameron had gone to bed at 1am because this is a eurozone, not EU matter), involved Germany giving in to the demands of Italy and Spain. You can read the statement from the euro area leaders here, but essentially what it says is that the refinancing will not take place until a single banking supervisor is set up, to be run by the European Central Bank. This was originally going to be a long-term project, but leaders have now set a deadline of

Of technocrats and democrats

A former European leader was a guest at a private dinner in London recently. It was a polite and reverential occasion, but conversation grew lighter as Sauternes gave way to port. What, he was asked, is the most effective form of government? Easy, he replied, look at Europe: technocrats know best and they can ignore short-sighted voters. A battle between technocracy and democracy has broken out in Europe, as democratic Germany and technocratic Italy disagree over the next step in the euro-crisis. Last week’s G20 summit promised progress; Germany agreed to use EU bailout funds to reduce Spanish and Italian borrowing costs. It was hoped that this might inaugerate the

A turning point in Greece? Think again

Things in Greece could have been worse after yesterday’s election, but that fact can’t be hailed as a ‘turning point’. Assuming that Greek political leaders form a coalition and push ahead with EU-mandated reforms, which is a very likely outcome given that Greece may only have enough cash in its coffers to soldier on for another month, any such government will inevitably include parties that completely disagree on how to resolve the crisis. The only glue would be the fear of economic catastrophe. This uneasy government would be ill-suited to withstand pressure from Syriza and the rest, who will spare no effort in blaming it for the inevitable economic pain.

The morning after the night before

This morning’s front pages are devoted to Greece, and the consensus is that the result of yesterday’s election amounts to little more than a stay of execution for Greece and the euro. At the time of writing, markets have responded to the news positively; but, fundamentally, nothing appears to have changed, so expect further turmoil. The formation of a Greek government is the foremost problem. James explained last night that the pro-bailout party New Democracy is unlikely to form a coalition with the centre-left PASOK party, which had indicated that it would only join a coalition that included radical leftists Syriza. This impasse persists for the moment, but there is

Cameron defies increasingly isolated Merkel

‘No’ used to be the French prerogative in matters of European integration. Charles de Gaulle made a late career out of it. But perhaps the title is passing to Britain. David Cameron indicated yesterday that he would veto any EU banking treaty that did not safeguard the City, as James said he would. Meanwhile, George Osborne joined Cameron in recognising that a European banking union, under design by ECB president Mario Draghi, is necessary if the euro is to survive. Angela Merkel agreed, saying that the answer to the present crisis was more Europe everywhere, only at a pace that suits weary German taxpayers. This sedate approach is becoming unsustainable.

Merkel heads to the G8

I doubt that Angela Merkel is looking forward to the G8 summit very much. It will mostly consist of the other world leaders telling her to give ground on austerity. But I suspect that Merkel won’t budge much, if at all. She clearly believes that the Greeks can be whipped into line by telling them that the election is really a referendum on euro membership. Hence both her suggestion of a simultaneous referendum on election-day and her backing for the European Central Bank cutting off support to Greek banks which shows that while there’s no formal mechanism for ejecting a country from the single currency there are ways of doing

Cameron vents his euro frustration

David Cameron’s speech today is a sign of his frustration with the eurozone. Numbers 10 and 11 are increasingly irritated by how eurozone leaders are refusing to accept the logic of their project. What Downing Street is keen to avoid is another wasted year as Angela Merkel gears up for her reelection campaign. So, intriguingly, we see Britain throwing her weight behind Hollande’s support for project bonds. Cameron also uses the speech to again back eurobonds, which Merkel is firmly opposed to as she knows that this would mean Germany effectively standing behind everyone else’s debt. I can’t see a resolution to this crisis coming anytime soon, though. The economics

The staring contest over Greece

Now that negotiations have broken down in Athens, and there will be another election, we face the prospect of an almighty staring contest. On one side, the Eurocracy, who will be urging Greek political parties — and particularly the left-wing coalition Syriza, which is ahead in the polls at the moment — to soften their anti-austerity stance. On the other, the Greek politicians, who might be hoping that the eurozone relents to some extent, and allows the cuts to be decelerated. The question is: who will blink first? As it stands, it’s difficult to come up with an answer. The leader of Syriza, Alexis Tsipras, is unlikely to blink over

Greece is still the word

Remember when Europe’s leaders were basically saying, ‘Don’t worry, it’s all sorted’? Remember when they were putting out communiqués that started ‘The euro continues to rest on solid fundamentals’? No doubt they’ll do so again, but those past shows of certainty still look kinda funny this morning. Despite some last-minute concessionary efforts by Europe’s beancounters, it still appears that Greece’s main parties will be unable to form a coalition, and are heading for another election. And we know what that could mean: victory for the left-wing Syriza coalition, a severe swing against austerity, Greece’s exit from the euro, etc. etc. Were Greece to leave the currency, two questions would present

Can Merkel and Hollande meet in the middle?

This afternoon, it’s even clearer that the French and Greek elections are a significant moment in the life of the Eurozone. It’s not just the nervous market reaction to yesterday’s results, but also the way how the supranational debate has now changed. More so than ever, there are now two clear oppositional fronts. On one side, broadly speaking, are those who say that austerity is a prerequisite for growth. On the other, those who say that austerity must be relaxed for growth to arrive. It’s a situation dripping with black humour. When David Cameron kept Britain out of Europe’s fiscal pact a few months ago, it was portrayed as a

Will Germany let Greece stay in the euro?

The German government is split on the biggest policy question of the day, according to the FT’s German edition. As Open Europe points out, the paper has a senior member of the CDU/CSU group in the Bundestag saying that finance minister Wolfgang Schäuble ‘supports the bankruptcy of Greece, Merkel wants to strictly avoid it… It goes back and forth, which is not very helpful.’ If true, this is a remarkable story. The British Foreign Office has been convinced since the beginning of the year that the Germans are keen to kick the Greeks out of the euro. Their conversations with the Germans have convinced them that Berlin believes that the

Greece is still the word ahead of today’s eurosummit

How about this for a claim by Nicolas Sarkozy, made in a TV appearance yesterday? ‘Europe is no longer at the edge of the cliff.’ It’s quite some statement, so let’s hear it again: ‘Europe is no longer at the edge of the cliff.’ Of course, Sarkozy has reasons for saying it beyond mere pre-electoral braggadocio: the rates paid on Italian and Spanish 10-year bonds have generally been falling since the the beginning of the year; the euro has been making some tentative progress against other currencies; and so on. But it still constrasts heavily with much else that is being said around the eurozone. Only last week, Angela Merkel

Dave in Davos

Reading Cameron’s speech to the suits in Davos, one thing stands out: he’s in no mood to stop ‘lecturing’ the eurozone, as Nicolas Sarkozy would put it. The whole thing is saturated with firm advice for our European brethren, from generalities such as ‘Tinkering here and there and hoping we’ll drift to a solution simply won’t cut it any more,’ to specific policies that the Continent should introduce so that it can ‘recover its dynamism’. He even found space to attack the ‘madness’ of a Tobin tax, as well as to hawk the coalition’s deficit-reduction plan. It’s the sort of advice that could, of course, put Cameron further at odds