It appears as though the death of the euro has been avoided.
European leaders agreed to take measures to stabilize the faltering euro and restore confidence in the union in a key meeting held in Brussels late last week. German Chancellor Angela Merkel described the agreement as producing a “very, very important result.” French President Nicolas Sarkozy went even further declaring, “This was a summit that will go down in history.”
But while there is hope that the European leaders have identified policies and practices to address the crisis, it is important to note that the 27 EU members did not adopt the treaty unanimously. British Prime Minister David Cameron refused to sign the agreement, leaving Great Britain on the outside with Berlin uniting Europe under its control and setting the stage for a fractured relationship in the European Union.
Why did Britain opt not to sign the treaty? According to Cameron, "What was on offer is not in Britain's interest so I didn't agree to it.” Take a look at the conditions of the treaty and one can understand his perspective. European Union President Herman Von Rompuy indicated the euro zone, along with other EU countries, will contribute up to $268 billion in extra resources to the IMF. The money would be used to help European countries in financial crises – countries such as Italy and Spain.
Other stipulations require “automatic consequences” for countries whose public deficit exceeds 3% of the GDP and tighter rules to be enshrined into countries’ constitutions. But as Cameron points out, “[Britain] is not in the euro.” In that regard, Cameron is right. A treaty of this nature “could affect their national sovereignty.”
Sure, in today’s global economy a country’s well-being is directly influenced by the health of another’s fiscal policy. As Swedish Prime Minister Fredrik Reinfeldt stated, “If the euro zone has problems these become also Swedish problems.” Sweden is a member of the EU but not the eurozone.
From another perspective, however, this is highly dangerous. An effort to regulate the economies of 27 countries under the same rules seems rather far-fetched, especially considering the diversity of resources and cultures. Ultimately, I’m not sure it is feasible. In the end, there will be those countries that fail to maintain fiscal responsibility that will serve as an albatross to those with stronger economic systems and institutions.
This appears to be Cameron’s point of view. “We’re not in the euro and I’m glad we’re not in the euro,” stated Cameron. “We’re never going to join the euro and we’re never going to give up this kind of sovereignty that these countries are having to give up.”
In 1946, after years of conflict and bloodshed in Europe, Winston Churchill called for a “kind of United States of Europe.” In 1991, with the drafting of the Maastricht Treaty, the European Union was created. Twenty years to the day after the drafting of the treaty, a new agreement has been reached. And a rift has been revealed.
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