Thursday, June 02, 2005

The EU soap opera continues

According to the Financial Times Europe (is) in turmoil after Dutch “No”

“The constitution is in a deep coma and it may not come out,” said one EU official.

And then there is the falling €uro which the FT reports upon as follows:

Underlying nervousness about the euro, financial markets reacted negatively to German media reports that Germany's central bank and finance ministry had discussed the danger of the eurozone breaking up. The Bundesbank dismissed such speculation as “absurd”. But researchers at the Bundestag the lower house of parliament have compiled a report stating European economic and monetary union is not irreversible.

The unpublished report, requested by Peter Gauweiler, an opposition MP, and obtained by the Financial Times, says that member states are entitled to leave the eurozone in case of serious breaches of the Maastricht Treaty by other members, but only after all conflict-resolution procedures available under EU law have been exhausted.
For more on the above see also -

Euro sinks further after break-up talks

The Guardian

... and some excellent discussion over at A Fistful of Euros

The FT’s Editorial Vive la différence suggests that it may be the bond markets that are the only way to bring back some much needed discipline to the Eurozone.

Meanwhile it looks as if the ratification agony may continue -
Jean-Claude Juncker - “We want the other member states to have the opportunity to tackle the same debate,”

The official line was trotted out across Europe's capitals. Gerhard Schröder, German chancellor, said: “I am convinced the ratification must continue.” Meanwhile Jacques Chirac, French president, seemed keen for other leaders to share his pain, pointing out that 14 countries had still not given their verdict on the constitution.

“While 11 countries have already come to a decision, it is the responsibility of all the other member states of the Union to have their say,” Mr Chirac's office said. Mr Juncker is desperately trying to hold that line until the EU summit of June 16-17, when leaders can express their true feelings behind closed doors.

More @ Leaders say the show must go on
The same report suggests there is ecstasy across the Atlantic at what is happening in the EU
In Washington, behind the Bush administration's public declarations that it favours “a strong Europe”, there is widespread relief and considerable satisfaction that the French and Dutch people voted No and, in particular, that Mr Chirac has been humbled.

US officials deny that President George W. Bush and his cabinet were opposed to the proposed treaty. But neither do they say that they supported it, arguing that this was an internal European issue that the US should not meddle in.

There was also a keen delight in seeing Mr Chirac taken down a notch, a split developing between France and Germany, and a favour done to Tony Blair, the UK prime minister and closest US ally.
The European Council meeting on 16-17 June will probably be a very blunt discussion; more like a meeting of squabbling fish wives than a meeting of heads of governments.