The Telegraph reports Euro summit rocked by row over veto plan
Hours before leaders arrived in Brussels , the Finnish parliament ruled that treaty changes proposed for the European Stability Mechanism (ESM) were �unconstitutional�.Easily Predictable
The summit was further put at risk with news that after failing stress tests, European banks need to raise �115bn (�98bn) in fresh capital to satisfy regulators.
Finland�s grand committee said decisions made by the ESM � the eurozone�s permanent bail-out fund set for launch in 2012 � had to remain unanimous, and not changed to the �qualified majority� that French president Nicolas Sarkozy and German chancellor Angela Merkel have agreed.
The Finns are backed by the Netherlands, which fears proposals to withdraw veto powers from the ESM is an erosion of democracy and would make it vulnerable to funding bail-outs without recourse. Meanwhile, the Irish want to block plans for the �convergence and harmonisation� of the eurozone�s �corporate tax base�.
The rebellion is a serious threat to German and French plans to sign treaty changes today along the lines laid out in their joint letter on Wednesday. In it, the leaders said they hoped all 27 European Union countries would sign.
Mr Cameron has demanded that two legal "protocols" to protect City and to preserve EU single market are inserted in any new EU treaty.
The draft British text does not create any new opt-outs but seeks to protect Britain's financial sector from a tide of EU legislation.
Jean-Claude Juncker, head of the Eurogroup bloc of finance ministers of eurozone states, said he would �not accept� summit diversions about what �the UK will not do what all the others have to do�.
However, Mrs Merkel and Mr Sarkozy have urged agreement from the 17 eurozone nations. Mr Sarkozy said: �If we do not reach a deal, there will be no second chance.�
This is exactly what one should expect to happen when two arrogant fools (Merkel and Sarkozy), think they can sit in a corner and decide the fate of 27 nations or even 17 of them.
I wrote about this on Wednesday in Merkozy Dog-and-Pony Show is Nothing but Fleas; Immense Arrogance, Loose Cannons, No Credibility
Merkozy Dog-and-Pony Show is Nothing but Fleas
As with grand plans for the EFSF, still not finalized, the Merkozy plan has morphed into nothing but budget rules that the EMU will not be able to enforce because Sarkozy would not cede fiscal control to the EU. Merkel will not accept Eurobonds, because she can't, by German supreme court ruling.
By any reasonable standard, the Merkozy dog-and-pony show is in reality neither dog nor pony but rather all fleas.
Immense Arrogance
Reader Andrea emails ...
Hi Mish,EU leaders were fearing Cameron would sink the agreement. Instead, we have an appropriate yet unexpected (by EU officials, not me) decision by Finland, the Netherlands, and Ireland.
My comment (and I think I am not alone in Europe): This is a Franco-German agreement drawn and agreed between France and Germany without any involvement or contribution of any kind at any level of the other 25 countries.
Why the hell should the other 25 countries (parliaments or people) approve that?
Irritation, even rage against the Franco-German tandem deciding for everybody is mounting quite fast in other European countries.
The odds to get this plan approved are basically 0.
Best regards,
AC
As an aside, Cameron's correct move should have been to stand up to the Merkozy nonsense without bargaining. Instead he was willing to sell the rest of Europe down the river as long as he got UK exclusions he wanted. What a wimp.
Bear in mind, they will probably work out yet another watered-down compromise to top the already watered-down flea-ridden Merkozy compromise. If so, it may still be up to Cameron to prove he is a wimp. I suspect he will do just that if given the chance.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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