EUROPEAN DIARY: The European Commission is being sidelined by the euro zone debt crisis
IT’S RED carpet time. German chancellor Angela Merkel visits Brussels tomorrow for special meetings with the European Commission, its chief José Manuel Barroso and other luminaries. In EU terms, it’s rather like a royal visit from the supreme being.
Merkel remains a pre-eminent figure in the expanding debt crisis. Increasingly criticised abroad for moving too slowly and at home for being too generous with German largesse, she is the one who sets the pace, tone and intensity of Europe’s response.
To do this, however, she needs the support of two key allies. The first is Nicolas Sarkozy, the frenetic French president. The second is European Council president Herman Van Rompuy, who runs the assembly of EU heads of state and government.
Whenever there is a deal to be done, it falls to him to do much of the arm-twisting.
Although legions of ministers, officials and diplomats man the trenches, it is within this tight triumvirate that many of the key questions are settled.
Consider this. In the space of a few days last week, Greek prime minister George Papandreou made his way to Berlin and then Paris to make the case for more loans so his battered country could avert a crippling default. There could hardly be a more apt illustration of the power in the Franco-German compact.
Merkel and Sarkozy are quite unalike – she is as measured and methodical as he is impulsive – but theirs is a mutually reinforcing alliance of necessity. Each is under severe political pressure domestically. Sarkozy faces an election next year, Merkel the year after. Room for manoeuvre is limited.
In Sarkozy, however, Merkel has an ally with whom she can present major policy initiatives from Berlin as a fait accompli to the rest of Europe. This cuts both ways. Without Merkel, Sarkozy isn’t half as powerful in the European arena.
We saw the alliance at work a year ago at Deauville, France, when the two leaders completely upstaged an attempt by Van Rompuy to hammer out a new economic rulebook for the euro zone with finance ministers.
Van Rompuy was displeased, but he still went forth to deliver the agreement Merkel and Sarkozy wanted on modest revision of the EU treaty and a permanent new bailout fund.
We saw the alliance in its finery again in July, the night before the euro zone summit at which the second Greek bailout was agreed. Sarkozy went to Berlin for dinner with the chancellor. At about 10pm, European Central Bank chief Jean- Claude Trichet arrived in from Frankfurt, just in time for dessert.
At about midnight they phoned Van Rompuy back in Brussels with the compromise that broke months of deadlock. It fell to him to deliver the approval of all the other leaders, which he duly did.
The arrangement fell flat, however, hence the push now for a new solution to the emergency.
As EU leaders prepare to return to Brussels for yet another crunch summit in a fortnight, the expectation in diplomatic circles is that another Franco-German pact is in the works. This helps to explain Papandreou’s travels last week and a meeting next weekend between Merkel and Sarkozy.
Again, the role of Van Rompuy will be critical. Already his people are meeting officials from other member states as an embryonic “deal” takes shape to expand the bailout fund, recapitalise banks and confront again the riddle of Greece’s debt mountain. The details remain to be pinned down and the prospect of a Greek debt default still hangs in the balance.
What seems clear, however, is that the mechanism by which “EU unity” is achieved will be the same. “Van Rompuy is the only show in town,” says a senior Brussels-based diplomat. “If he did not exist we would have to invent him.”
This reflects the increasing clout of the former Belgian prime minister, who wields power more in the wings than the limelight. It can also be read as an indirect reference to the waning influence of the commission.
The debt saga has brought to the fore a string of intergovernmental arrangements operating outside the ambit of EU law. The prime exemplars here are the European Financial Stability Facility temporary bailout fund and its permanent successor, the European Stability Mechanism.
Such initiatives sideline the commission, for the oversight role it plays in schemes undertaken by way of the EU’s “community method” does not exist.
By tradition, one of the commission’s prime roles is to protect the rights of smaller states against the big countries. In the intergovernmental world, however, small countries must fend for themselves as the relative power of larger states magnifies.
This has deep resonance in the Irish context: the Franco-German onslaught against the corporate tax regime still rankles badly. For now, at least, Merkel and her ally have moved on. Ireland may be in the good books again, but the memory still lingers.
