EU agreement on tough stability pact measures some way off, says Merkel

 

GERMAN CHANCELLOR Angela Merkel has conceded that the EU is some way from agreeing tough new stability-pact measures that would require European treaty changes.

She made the remark during British prime minister David Cameron’s inaugural visit to Berlin yesterday, during which existing policy differences between the two nations appeared to widen.

But the visitor from London was a welcome break for Dr Merkel from a hail of insults yesterday before the Bundestag voted to pass the euro-zone stability fund bill.

With one eye on her visitor and another on finance ministers meeting in Brussels, Dr Merkel played down her previous calls for stability-pact reform that would require treaty change and approval in an Irish referendum.

“We are at the start of this work and there is no unity at present in the euro zone about what needs to be done,” she said. “We have to stabilise things first, exchange views and at a later point say what needs to be done and how, and where we have majorities.” Mr Cameron said he was anxious for a “strong and practical partnership” with Germany, aware he irritated Dr Merkel by pulling the Tories out of the European People’s Party in the European Parliament.

But Mr Cameron wasted no time in drawing red lines on hedge fund regulation and treaty change. He said Britain supported a strong, stable euro area – destination to half of Britain’s exports – but that he would not support any treaty that “drew us further into supporting the euro area”.

“As the chancellor said, there isn’t any consensus even in the euro area that there should be a further treaty,” said Mr Cameron. Reminding his audience of Britain’s ability to veto any treaty deals, even one reached among euro-zone members, he added: “We don’t want to see a transfer of powers from Westminster to Brussels and if there was a treaty proposed, that would be subject to a referendum.” Mr Cameron said he was anxious for regulations that ensured “banks serve our economies rather than economies serve our banks”.

However he warned against clamping down on hedge funds and speculators, calling them a symptom of a deeper problem of excessive government debt. In a dig at Brussels, the British leader added that “as ordinary citizens are being asked to accept painful cuts, I don’t think Europe should be immune from that process”.

Earlier, Dr Merkel had to endure a Bundestag debate and some of the most scorching criticism of her political career.

“You have no political course, you have no goal and you don’t know where to take this country and Europe,” growled Mr Sigmar Gabriel, leader of the opposition Social Democratic Party (SPD), which abstained from the vote.

The embattled German leader came under attack, too, from within her own ranks. Bavarian governor Horst Seehofer, no friend of Dr Merkel, said in a newspaper interview that she had hesitated too long before acting on the euro-zone crisis.

At the end of a long day, with the Bill in the bag, Dr Merkel tried to rise above the fray, saying: “I regret that the opposition didn’t come good on their European responsibility but I am happy the government has delivered a clear signal for Europe and for more stability for the euro zone.” That signal was not as clear as she would have liked: within minutes, EU-critic MP Peter Gauweiler announced a constitutional challenge. “This euro-stability mechanism brings about a revolutionary shift in the legal conception of the currency union outside treaty change procedures,” he said, adding that it turns on its head the no bailout provisions of the Maastricht Treaty.