Following on the tradition of previous EU summits, last week’s event proved to be a letdown for those who have been hoping for the Germans and the ECB to start working on an effective solution that would give immediate gratification to the financial markets. What they got instead was a roadmap to a political long term solution based on a moderate relinquishment of sovereignty to ensure that failure to abide by the budget rules would have ‘automatic’ consequences. The problem is that such an outcome would have been great nine, six, and maybe even three months ago, but with today’s degree of scepticism, it is far from clear that these political horizons will satisfy anybody, let alone the markets, which indeed reacted negatively.
No wonder that Cameron chose to use the veto red button that is meant to be there for leverage not to be actually used. By using the veto Cameron has basically lost the leverage. Just like the US Republicans have found lawyerly ways to go around the automatic government expense reduction agreement to protect for example, defence, the EU, with Sarkozy’s leadership, will find crafty ways to go around the UK veto while at the same time marginalising his British cousins. But Cameron thought that if there is a time to be wary of more Europe, it is now! Who wants to jump into a sinking ship? This is not a good sign…