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Thread: EU Deal Isolates Britain

  1. #1
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    EU Deal Isolates Britain

    EU members which use the euro have agreed to a tax and budget pact to tackle the eurozone's debt crisis.

    But a German and French attempt to get all 27 EU states to back changes to the union's treaties was dropped after objections from the UK.

    Prime Minister David Cameron had insisted on an exemption for the UK from some financial regulations.

    Instead, eurozone members and others will adopt an accord with penalties for breaking deficit rules.

    The new tougher rules on spending and budgets will now be backed not by an EU treaty but by a treaty between governments. It will be quicker to set up but it may prove less rigorous, says the BBC's Europe editor Gavin Hewitt in Brussels.

    But, he says, Europe has taken a big step towards closer integration, with binding rules over tax and spending, and sanctions against countries that overspend.

    European Council President Herman Van Rompuy said the leaders of 26 countries had indicated a desire to participate, pending consultation with their parliaments.

    There is now a two-speed Europe - after this long night, the French president accepted that.

    There is, too, considerable antagonism towards Britain - it used its veto in what is seen in Brussels as Europe's hour of need.

    What is unclear is whether European institutions can be used to implement a treaty between governments.

    If EU officials are in the room, David Cameron has already laid down a marker that he expected the UK to be involved. It is all a recipe for further tussles.

    The big question is what effect all this will have on the eurozone crisis. The main impact will lie in the long-term - the agreement has little to say about the debt mountains and the absence of growth in most of Europe.

    Mr Cameron said he had not signed up to the deal because, he said, it was not in Britain's interests.

    "Those countries that sign this treaty... we wish them well because we want the eurozone to sort out its problems, to achieve that stability and growth that all of Europe - Britain included - needs," he said.

    EU leaders aim to have the pact ready to take effect by March.

    Among the measures agreed on, leaders pledged to provide more money for the International Monetary Fund (IMF) to fund bailouts.

    IMF chief Christine Lagarde welcomed the deal as "a really good step in the right direction".

    But the announcement from Brussels failed to lift the markets, which are still hoping for more intervention by the European Central Bank (ECB), and European stocks traded slightly down on Friday.

  2. #2
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    European Union leaders agree to forge new fiscal pact; Britain the only holdout

    By Anthony Faiola, Updated: Friday, December 9, 6:30 PM

    BRUSSELS — A landmark summit of the 27-nation European Union ended here Friday with both a pledge and a wedge: A pledge among nations to work toward a new treaty binding them more closely together in a pact to save the euro, and a wedge between the continent and Britain, which opted to sit it out.

    In a summit portrayed by leaders as a make-or-break moment in the decades-long march toward European unity after World War II, the outcome signaled the growing clout of Germany and a potentially wayward path for Britain.

    There were new splits to unity in the European Union Friday as 23 members agreed to an ambitious new, tighter treaty for greater union, but Britain and others stayed out. (Dec. 9)

    After marathon talks, nations unveiled a deal to quell a debt crisis that is threatening the global economy. The summit organizers announced early Friday that they had agreed to try to forge a new pact centering on strict caps on government spending and borrowing to shore up the euro’s foundations.

    But the veto by British Prime Minister David Cameron, a Conservative euro skeptic who cherishes the pound and looks askance at a heavy European hand in British affairs, underscored his nation’s long unease with relinquishing national powers to the E.U. and left London isolated in a region now moving toward deeper integration without it. His move left Britain’s Guardian newspaper asking, “Will it be Splendid Isolation, or Miserable?”

    At the same time, Cameron made life harder for a region desperately trying to unite behind a plan to subdue a debt crisis that is threatening the global economy. Without Britain on board, the 26 other E.U. nations now face potentially complicated legal obstacles to meet one of the prime objectives of a new treaty: giving fresh powers to E.U. institutions to slap automatic penalties on governments that recklessly spend and borrow.

    Leaders have tried, and repeatedly failed, to come up with grand plans to fix the region’s two-year old debt crisis, allowing troubles that began in Greece to spread to much bigger economies such as Italy and Spain. Though the pact struck Friday after an all-night round of negotiations may be the most ambitious yet, it is also the most complicated, and it runs the risk of following the other attempted fixes in unraveling

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    Analysis: Sarkozy, Draghi winners in EU rift, Cameron loses
    By Paul Taylor | Reuters – Fri, Dec 9, 2011

    BRUSSELS (Reuters) - Napoleon dreamed of it, De Gaulle fought for it, but Nicolas Sarkozy may have achieved it -- a Europe of Nations with France in the cockpit and Britain on the sidelines.
    The French president emerged as one of the big winners of a European Union summit on Friday which ended with up to 26 member states agreeing to move forward in economic integration around the euro zone, and Britain alone in staying out.
    "Of course this is not just a long-standing desire, but a long-standing goal of French politics ... because in the French tradition Britain never really belonged to the European Union, dating back to De Gaulle," said a senior EU official who attended the summit, referring to the French president's veto of British entry in 1963 and again in 1967.
    By obstructing the wish of the other EU members to amend the bloc's governing Lisbon treaty to allow closer fiscal union among the 17-nation single currency area, British Prime Minister David Cameron managed to unite Europe against him.
    He may be feted by Eurosceptics at home, but he emerged as the biggest diplomatic loser of the summit, leading his country into an isolation that all his predecessors sought to avoid.
    For centuries, a basic principle of British diplomacy was to maintain a balance of power on the European mainland forming shifting alliances with the main continental powers.
    Cameron not only failed to win a blanket veto right over EU financial services legislation. The illusion of leading a group of 10 non-euro member states like Sweden and Poland, committed to a more liberal, open economy, crumbled as his supposed allies threw in their lot with the euro zone.
    Even though Cameron said the Dutch had promised to look out for Britain's interests in the EU's single market, the City of London financial centre could be a loser in a two-speed, 26-1 Europe, given the current low political standing of banks and hedge funds.
    For German Chancellor Angela Merkel, the summit was a more ambiguous success.
    Europe's most powerful leader achieved her primary goal of anchoring strict German-style budget discipline, with automatic sanctions on deficit and debt offenders, in a new treaty, to be negotiated among the 26.
    That should calm rebels in her centre-right coalition angry at successive bailouts of euro zone weaklings in which Berlin guarantees the biggest share.
    But Merkel failed to keep the new "stability union" inside the EU treaty, due to Cameron's obduracy, making it harder to use key institutions such as the executive European Commission and the European Court of Justice to enforce fiscal rectitude.
    Furthermore, she may have lost Britain as a useful ally in balancing out French tendencies towards trade protectionism and state domination of industry, which run counter to Berlin's economic interests.

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