The European Summit of 29/30th October represents something of a come back for Angela Merkel from the May summit where she had been forced to concede to the Euros 440bn European financial stability facility to prop up Greece while insisting that it run out in 2013 and be outside treaty rules. These conditions were insufficient in terms of domestic German opinion and the CDU suffered a humiliating reverse in the North Rhine Westphalia Land Election in May 2010.
Chancellor Merkel learns from reverses , as evidenced by the way she gradually shifted her position on economic reform after the unexpectedly poor performance in the 2005 federal election. The lesson that Chancellor Merkel now drew was not that lacking a European vision she had failed to get over the value of the eurozone to Germany but that bail outs were always likely to be electorally toxic .Her answer involves not only tough rules on fiscal excesses but that there ought to be the possibility of insolvency for sinning states so that private as well as public creditors would suffer a ‘hair cut’ ,a situation which would move them to be more cautious (ECB President Trichet saw this caution as a potential danger) .The Federal Constitutional Court had not ruled the EFSF unconstitutional but Chancellor Merkel fears that any follow on arrangement would fall foul of the Federal Constitutional Court which has increasingly been the source of ‘compelling demands’(Bulmer and Paterson) in relation to German European policy .Her solution was to suggest anchoring a permanent crisis resolution mechanism in the Lisbon Treaty..
Any suggestion of treaty revision provokes alarm among member states traumatised by the Maastricht ratification process .Chancellor Merkel has therefore taken the offensive .Traditionally Germany’led from the second row’ (Joschka Fischer ) but this was not an option on this issue. Angela Merkel is known for her dogged perseverance and a great deal of effort was spent in contacting other leaders in the run up to the European Council making it clear that the twin pressures of the Federal Constitutional Court and German domestic opinion left her with no alternative. David Cameron agreed to treaty revision without the United Kingdom in return for a German commitment on EU budgetary restraint
The European Council accepted the logic of the German position and President Van Rompuy was mandated to produce a proposal by the December 2010 Council meeting.Here the new post Lisbon machinery has proved to be useful. It is easier for Van Rompuy than it would be for a national leader utilising Art 48 to craft a consensus proposal which has to be sufficiently minimal to satisfy the member states and sufficiently watertight to withstand a challenge to the Federal Constitutional Court. This is also an activity at which Chancellor Merkel excels as seen in her salvage of the Lisbon Treaty and she works together with Van Rompuy better than with President Barroso. Her proposal to withhold voting rights from sinning states was not accepted.
In the months since the May Council Chancellor Merkel has successfully defended core German values .No real concessions have been made to France on economic governance of the eurozone which would potentially weaken the ‘sound money ‘ principle and the suggestion that Germany might moderate its position as a hyper export oriented ‘extraordinary trader’(Wolfgang Hager) has been swatted aside. The casualty has been Germany’s traditional ‘european vocation’(Paterson) where no effort has been made to convince German domestic opinion of the centrality of the eurozone to Germany’s prosperity. It is clear that Chancellor Merkel does not believe that she could rely on pro European sentiment to detoxify any new ‘bail outs’ which might occur if her proposals are not accepted. The coincidence of the next Federal Election scheduled to take place a few months after the EFSF expires in 2013 weighs heavily with the Chancellor.