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How Germany's Merkel convinced EU to change rules after the Greek crisis

Chancellor Angela Merkel of Germany, together with France's government, pushed through a tough amendment to EU finance rules today.

By Staff writer / October 29, 2010

German Chancellor Angela Merkel speaks during a media conference at an EU summit in Brussels on Friday, Oct. 29.

Yves Logghe/AP

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Paris

German diplomacy, led by Chancellor Angela Merkel, appears to have won an important victory today as European Union leaders agreed to a German-French proposal that could have brought a bitter crisis among EU states.

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Mrs. Merkel and France's Sarkozy government announced last week they sought a permanent mechanism for averting another Greek style euro-meltdown crisis. For days ahead of a two-day EU summit in Brussels, they were called “bullying” or “isolated." German media played the event as a major test for Merkel that might end embarrassingly.

But as the summit ended today with an agreement to amend the newly minted Lisbon Treaty that took eight years to pass, analysts said diplomatic pressure and argument by the Franco-German alliance appears to have been effective in forcing a change that seemed impossible last month. Precise details of the changes are expected in December in a report by EU chief Herman van Rompuy.

What Germany and France did not achieve were punitive measures – a loss of voting rights – for nations whose deficits balloon dangerously.

The Lisbon Treaty, which took effect in 2009, governs how the EU operates – including the economic responsibilities and commitments of member countries, which were severely tested by the Greek debt crisis earlier this year.

Merkel's case for stronger rules

Merkel played the agreed changes as a sensible necessity that would create stability and is good for Europe, telling reporters today: "We are doing everything to ensure that there will never be a repeat of the crisis we have had… I think it is important to create a clear culture of stability in Europe. That is the ultimate for good cohesion in the EU. Europe makes us strong, but this Europe needs rules."

The “lighter” version of the treaty change agreed to today may not require the kind of hair-pulling difficult referendum that Ireland went through last year to ratify the treaty, according to Irish prime minister Brian Cowen today.

The terms of the treaty amendment are said to be so narrow that other changes or initiatives cannot be added to it, averting in theory the concerns of leaders like Hungary’s prime minister Viktor Orban who said this week, “It is easy to open a treaty, but it is hard to close it.”

Analysts at the two-day Brussels summit said one of the more convincing arguments Germany and France made in intense lobbying is that the current Greek bailout fund that emerged in May amid a plummeting euro is set to expire in 2013.

Why Merkel gets what she wants

At home, Merkel is facing a skeptical electorate that has soured on paying the debt of other nations that are verging on default. German media have largely played Merkel’s initiative as something she had no choice in pushing both for political reasons and for German constitutional reasons.

Still, there have been some sour tastes in other European capitals over Berlin's lack of wider consultation – in a move that appears to make the sensibility of German voters the criteria for EU-wide decisions taken by the chancellor.

Yet as head of the largest and most commanding economy in the eurozone – German unemployment dipped this week to the lowest in 18 years – Merkel's influence is rising.

In its Charlemagne blog, the Economist writes today that, “whether for legal or political reasons, Mrs. Merkel needs treaty change. And these days, in Europe, what Mrs. Merkel wants Mrs. Merkel almost always gets.”

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