Summit discussions between European Union and
eurozone leaders ended with no winners or losers Friday, EU President
Herman Van Rompuy insisted, after a clash was resolved between Italy
and Spain on one side, and Germany on the other.
Madrid secured a change in the terms of an upcoming eurozone-funded bank rescue, while Rome obtained a "mechanism" to reduce the borrowing costs of countries that are cleaning up their economies, but still face market pressure.
"It was a tough negotiation, it took hours - certainly yesterday - and you can't summarize this in winners and losers," Van Rompuy said, referring to discussions that dragged until 4:30 am (0230 GMT) on Friday.
German Chancellor Angela Merkel, who was under pressure to maintain a tough position in order to secure parliamentary approval for eurozone reforms later Friday, maintained that she "stayed true to (Germany's) philosophy - no benefit without a trade-off."
French President Francois Hollande, who is less aligned with Germany than his predecessor Nicolas Sarkozy, refuted suggestions that Merkel had been forced into a policy retreat.
"Mrs Merkel can go before her parliament and say 'I did not change the rules, I did not go beyond my mandate'," he said.
Analysts pointed out that help to Spain and Italy would have strings attached. For example, Madrid will not be allowed to channel eurozone loans directly into banks, avoiding an increase in its public debt, until a eurozone bank supervision scheme is agreed.
"We have to keep in mind that all these things, to be credible, should be accompanied by strict conditionality. This is essential," European Central Bank (ECB) President Mario Draghi warned.
"There is nothing for free," Van Rompuy added.
Joint supervision is one plank of a eurozone banking union, along with deposit guarantees and schemes to wind up failed banks. No progress was recorded on those fronts, which would require more solid nations such as Germany to underwrite the banking systems of weaker peers.
The summit decisions represented an "important unblocking of a psycological and policy deadlock," said Italian Prime Minister Mario Monti, insisting that the bond-buying mechanism was not specifically for Italy, and indicating that his government had no immediate plans to use it.
Monti and Merkel gave conflicting signals on whether countries applying for bond-yield relief would have to accept extra austerity scrutiny from the EU and the International Monetary Fund. Eurozone finance ministers are to discuss this at a meeting on July 9.
Merkel avoided questions on whether she felt cornered by Monti. Along with Spanish Prime Minister Mariano Rajoy, he blocked an EU economic stimulus plan worth 120 billion euros (161 billion dollars) to secure concessions.
The so-called "compact for growth and jobs" includes little new spending, aside from 10 billion euros for the European Investment Bank and a pilot project bond initiative to finance infrastructure. Most resources are to come from reorienting existing EU regional aid.
Leaders also broke a 30-year deadlock on creating a European-wide patent scheme. In recent months it had been held back by a row between France, Germany and Britain on who should host the court that will adjudicate on patent litigations.
Paris will have "the main seat," but it will be flanked by two technical sections, "one in London and another one in Munich," said Danish Prime Minister Helle Thorning-Schmidt, whose country helped seal the deal as the holder of the EU presidency.
One squabble that could not be resolved was on the presidency of the Eurogroup panel of eurozone finance ministers, which was expected to be entrusted once again to Luxembourg Prime Minister Jean-Claude Juncker, albeit for only a short extension.
Van Rompuy said the decision was postponed because Merkel had to leave early to attend the German parliament debate to ratify a eurozone rescue fund and budget discipline pact.
But Juncker said he would only agree to stay on in the job - after saying he wanted to quit - if fellow Luxembourger Yves Mersch was promoted to the six-member board of the ECB as a return favour. Mersch is one of the bank's 23 governing counsellors.
"I am not stupider than the others. First I need to have the confirmation that Mr Mersch will be a part of the executive board for several years. And then I will be ready to go on for six months," Juncker said.
Most Popular Stories
- Steven Sotloff Beheading Video Claimed by Islamic State
- Apple Planning to Launch Mobile Wallet
- Fantasy Football Gambling Industry Facing Increased Legal Scrutiny
- Challenge to Texas Voter ID Begins
- Men Are the Big Winners in the Jobs Recovery
- Durant Spurns Under Armour to Return to Nike
- Netflix Unveils New Way to Share Picks
- Auto Industry Going Back to Bad Habits
- Construction Spending Staged Strong Rebound in July
- Celebrities Vow Revenge on Hackers Who Posted Photos