The leaders of the 27-member European Union met in Brussels on December 8 and 9 under pressure to deliver a decisive solution to Europe’s two-year-old sovereign debt crisis.
But the high-profile summit — which was billed by many as the last chance to save the euro single currency — did little to resolve the immediate crisis at hand, namely the massive debt loads of most European countries and the spiraling costs of borrowing more money to pay off those debts.
Instead, German Chancellor Angela Merkel and French President Nicolas Sarkozy (aka “Merkozy”) leveraged the crisis summit to secure a “historic” commitment from all of the 17 countries that use the euro single currency (aka “eurozone countries”) to transfer broad new economic and financial decision-making powers to unelected and unaccountable technocrats in Brussels, the administrative capital of the EU.
The new “fiscal compact” is a major step on the road to creating a single economic government in Europe. By giving Brussels more power to codify and enforce debt limits and impose central oversight of national budgets, the agreement takes the EU one step closer to consolidated and centralized fiscal authority in Europe. Among other features, the agreement also gives the European Court of Justice the right to strike down national laws that conflict with diktats issued by bureaucrats in Brussels, although EU legal experts are still unsure about how this can or will be enforced.
British Prime Minister David Cameron was the only EU leader who refused to go along with what many observers have described as an attempted European coup d’état.
Cameron vetoed the European power grab after Merkozy refused to give Britain — which uses the pound, not the euro — a written promise that the City of London would be exempt from heavy-handed EU rules and regulations that could damage its £46 billion (€54 billion; $72 billion) financial services sector.
In particular, Cameron had demanded that Britain be able to veto any usurpation of regulatory power over financial services from London to Brussels. He was especially keen on avoiding a move towards a Europe-wide financial transaction tax that would see London become a less attractive destination in which to do business.
In this context, Cameron had also insisted on measures that would prevent the eurozone countries from demanding that euro-denominated transactions be conducted in Frankfurt or Paris, something that would reduce the amount of business being done in the City of London.
Cameron’s veto will make life more complicated for Europe’s empire builders. In practical terms, rather than amending the existing Lisbon Treaty, which comprises the constitutional basis for the EU, the other 26 member countries of the EU will now have to forge a completely new “intergovernmental” treaty.