“We are all witnesses to the game.”

The Irish Times‘ Arthur Beesley reports that EU Council president, Herman Van Rompuy, was accused by MEPs of being less than honest in his account of the Council’s discussion of Frau Bundeskanzlerin’s “grand bargain”.  From the Irish Times report

MEPs criticised Mr Van Rompuy’s positive tone, one of them saying it smacked of Soviet-era propaganda. “We’re getting feedback as if everything had gone swimmingly, that wonderful results had been achieved,” said German Green Rebecca Harms.

“It’s a bit like the Politburo when things didn’t go well. In future, we should be getting hold of more honest reports which do pinpoint the problems,” she said.

Liberal group leader Guy Verhofstadt said the summit was a “disaster”, arguing many prime ministers arrived at the gathering without sight of Germany’s basic position paper. He said linking proposals of this nature to the reform of the euro zone bailout fund, the European Financial Stability Facility (EFSF), was very risky.

“The outcome of the European Council is that there is a secret deal saying that there shall only be an agreement to reinforce the EFSF if there is also an agreement on the Franco-German pact, the one is linked to the other. I am saying that is very dangerous. That is playing with matches while sitting on a haystack.”

Meanwhile, the BBC Europe editor, Gavin Hewitt, gives his take on events

What really happened was this.

It is not difficult for the 17 eurozone heads of government to sit down and agree to a bigger bail-out fund.

The figures are so vast anyway that a few hundred billion more makes little difference. It is hard for voters to determine when money from national accounts actually gets to be paid.

But voters do understand wages, taxes and retirement ages. Suddenly Europe’s leaders realised they could be held to account for these plans and that the people who hire them – the voters – might not want to become a “little more like Germany”.

So the eurozone’s heads of government are full of doubts and questions. These measures may enhance competitiveness but over what period? How long would it take for them to have any impact?

Then “economic governance” – a phrase and idea much-loved by the French – could evolve into “central planning”, widely seen as a disaster for Europe.

All of this will lead to weeks of haggling, kites being flown and warnings of the danger of not disagreeing. We are all witnesses to the game.

Germany may appear to have the best cards but it doesn’t. It could simply say that without Europe-wide reforms it won’t act as guarantor to endless bail-outs.

But its bluff would easily be called. Would Germany allow a country to go under? Most unlikely. So countries may strike a hard bargain.

Hmmm… Possibly…

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  • wee buns

    Would the Germans allow Irish banks to go under?
    No. Because we take the Euro with us if they do.
    As Constantine Gurdgiev mentions on his blog, in 1970 a strike closed Irish banks for six and a half months. Did we die? Did gangs of lawless bandits (not bankers, but worse ones) take over the streets creating unimaginable chaos? No. Interesting to read the account of how people coped by a system of trust and how the economy didn’t collapse despite 85% of cash being withdrawn from circulation.

    http://trueeconomics.blogspot.com/