FRANCE:PRESIDENT NICOLAS Sarkozy of France hailed "a summit that will go down in history" after EU leaders struck a deal Paris sees as fulfilling some of its major aims.
After 10 hours of talks that ran into the early hours of yesterday, all 17 euro zone states and nine of the 10 outsiders resolved to draft a new agreement alongside the EU treaty.
Giving a greater role to the euro group, where France’s voice is amplified, has been one of Mr Sarkozy’s strategic aims since the crisis began. He and German chancellor Angela Merkel made clear in advance of the Brussels talks that a deal among the EU27 was their preference, but the UK’s decision to sideline itself served French interests. Many suspect it was France’s desired outcome.
“This is a summit that will go down in history,” a visibly buoyed Mr Sarkozy told an early morning press conference. “We would have preferred a reform of the treaties among 27. That wasn’t possible given the position of our British friends. And so it will be through an intergovernmental treaty of 17, but open to others.”
Mr Cameron’s demands for exemptions on financial services regulations, laid down at a 30-minute pre-summit meeting with Mr Sarkozy and Dr Merkel on Thursday evening, in effect excluded Britain from the deal. This worked to France’s advantage more than Germany’s, which sees Britain as a fiscally prudent ally in budget debates between rigorous northerners and the southern “Club Med”.
In discussions over how to balance power between the EU institutions and national governments, France has been a firm advocate of states’ control. It guards its budget sovereignty closely and traditionally regards any augmenting of the European Commission’s power with suspicion.
In yesterday’s deal, France conceded that the commission would have more involvement in co-ordinating and overseeing member states’ budgetary policies, but by securing a strengthening of the euro group as a decision-making forum – it will have its own secretariat and will meet monthly – Mr Sarkozy will be able to resist accusations from the French opposition that he caved in to Dr Merkel and gave away too much power.
In a front page editorial yesterday, Le Mondesaid Britain's move to distance itself from further European integration was the logical outcome, given that it had never fully believed in the dynamic of closer union.
“An ambiguity has been removed. Fundamentally, the British . . . were only ever interested in one thing: the single market. They have always been indifferent, if not hostile, to the rest of the project,” the paper said.
France didn’t get its way on a number of central issues, however. Last week it was forced to abandon its hope for German concessions on the principle of jointly issued eurobonds.
It will also be dismayed by the failure to boost the firepower of the euro zone rescue fund. The French government fears for its triple-A credit rating, which is considered the most vulnerable of the six top-rated governments in the single currency area, and had pushed for a stronger firewall to stem further contagion.
The Brussels accord will see the European Central Bank take over the running of the current rescue fund, the European Financial Stability Facility, and its successor the European Stability Mechanism, but French hopes that euro zone leaders could explicitly encourage the ECB to become a lender of last resort – an idea endorsed publicly by Mr Sarkozy last month - were rebuffed by Dr Merkel.
Similarly, a proposal to give the rescue fund a banking licence, thereby opening up a funding channel from the ECB, was dropped in the face of implacable German opposition.
Mr Sarkozy will also know that the immediate problems facing France and the euro zone more widely will take a lot more time to resolve. A reminder came in a statement from rating agency Moody’s yesterday morning in which it downgraded the debt of France’s three largest banks.
The three banks – BNP Paribas, Société Générale and Crédit Agricole – are heavily exposed to Greek and Italian debt, and that exposure adds to the French state’s own vulnerability.
French officials in Brussels might have had some reasons to smile this weekend, but their inboxes will be full of familiar problems when they return to work on Monday.
