Update 1: Here are the official Council conclusions!
Update 2:
Just to put this into perspective: 60 years and one day after the Schuman declaration, a group of 27 states (or 16 in the case of the Eurozone) has just decided, basically in one meeting, to launch a stability package that is far beyond imagination and that is designed to secure financial security of the EU member states and the stability of the Euro.
We are not talking about soft issues and week diplomatic declarations, we are talking about a huge thing with hard economic consequences. We are witnessing a European Union that has cleared entered a new stage of supranationalism with this decision.
It is fascinating, I must admit.
On hour ago, the Finance ministers of the European Union have decided to secure the Euro with 500 billion Euros.
I've watched the press conference with Commissioner Rehn and Spanish Finance Minster Salgado in the web stream and I also live-tweeted.
Here is what I understood (
The 500 billion are split into two different mechanisms. The first is a "community mechanism" based on Article 122(2) of the Treaty on the Functioning of the European Union:
"Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by natural disasters or exceptional occurrences beyond its control, the Council, on a proposal from the Commission, may grant, under certain conditions, Union financial assistance to the Member State concerned. The President of the Council shall inform the European Parliament of the decision taken."Commissioner Rehn said that this article applied because the financial stability of the European Union and the Eurozone were threatened by the present situation, and that this situation was out of the control of the member states. The 60 billion Euro under this mechanism are managed by the Commission and are quickly available if needed.
The second mechanism is called a "special purpose vehicle" and it is an intergovernmental agreement between the Eurozone member states. In case that more than the initial 60 billion were needed, another 440 billion Euro could be made available by the member states of the Eurozone. In case they were requested, it would need unanimity of the Eurogroup to get the money released and the timeframe would be similar to the mechanism established for Greece (some weeks).
The 500 billion Euro from both mechanisms could, in addition, be supported by
In addition, member states have agreed to take fiscal measures to reduce their deficits. Spain and Portugal seem to have given special promises to tackle their budgetary situation with addition measures.
Altogether, the 11 hour negotiations of the EU finance ministers seem to have lead to a comprehensive and massive packaged that should show to financial markets that the Eurozone is ready to act to secure our currency.
PS: It is also worth reading Charlemagne's blog post, especially his late-evening and night updates at the end of the text.
* Please verify with the official decision taken; I was just listening to the press conference audio stream (English version).
4 comments:
Charlemagne remark of the day: "though, I note, those evil speculators magically turn back into "international markets" when the EU wants to raise €440 billion in a short space of time" (from this post)
And, on a more serious note, do we think this is going to work? And, if so, do we think it is a good idea? (In the sense of being the least expensive and least painful solution to this problem.)
Alexandra of Europeanization fame, who is Greek I think, seems to think that the only solution is for Greece to leave the Euro. (Link.) Personally, I think she underestimates how much worse the situation in Greece could get, and would get if they left the Euro.
(Think about the crisis in Hungary and Latvia, where the economy shrunk much more drastically than the Greek one, and where unemployment is/was much higher. The kind of loss of confidence sparked by a Greek return to the Drachma would cause a crash at least as bad as the one those two countries experienced, if not worse.)
So on balance, I think this is probably a good idea, assuming it will work. (Fingers crossed...) Then again, like a good little Europhile, I don't care very much about anyone's loss of sovereignty. (Including the fact that the UK will now be stuck with 12% of the bill in case some of this € 500 bn amount disappears somewhere along the way.)
the link to the official document doesn't work
@nilleren
thanks, they have replaced the initial document and slightly changed the link. I've corrected it.
thanks! - your blog is a great resource
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