The next 48 hours may change the European Union

A careful reading of the invitation letter the President of the European Council, Herman Van Rompuy, addressed yesterday to the 27 EU leaders for their 27 and 28 June 2013 meeting in Brussels reveals a lot about the European Monetary Union. This letter should be read in parallel with the announcement for today’s continuation of last Friday’s Ecofin meeting. That Council meeting lasted for 19 hours until the early hours of Saturday 22 June, leaving the group of the 27 ministers of Finance in a complete dead lock over the “Rules for Bank Recovery and Resolution”. That Ecofin council was supposed to conclude a deal about the creation of the core tool for the enactment of an effective European Banking Union namely the Bank Resolution and Recovery Mechanism. Those financial instruments are the keys for the accomplishment of EU’s Economic and Monetary Union, which gave birth to Eurozone ten years ago and now has to be repaired. Mind you this is crucial for the entire EU and not only for Eurozone. Eurozone member states will all participate, while the rest EU members may join only if they wish and accept the rules. Monetary Union European Sting writer George Pepper reported yesterday that: “The Banking Union divided deeply the entire European Union. For the first time the Ecofin Council, in a Press release issued after its meeting, made no reference at all to the most vehemently discussed item in its agenda that is the “Rules for Bank Recovery and Resolution”. The head-on confrontation was unusually strong. On the reactive side was Sweden and of course Britain”. The continuation of the inconclusive Ecofin gathering is set for this evening at 18.30 h. The importance of the issues to be discussed obliges the ministers of Finance to return to Brussels. Such crucial matters cannot be resolved in a teleconference. George Pepper described in detail what are the important questions the resumed Ecofin has to answer: ” What happens if the money of shareholders and unsecured creditors and depositors is not enough to cover the obligations of the under liquidation lender? Will there be exemptions in confiscating large depositors’ money, like pension funds? On top of that will there be a contribution of taxpayers through the country’s government budget and to what extent? It is also questionable, if there will be a contribution from a deposit guarantee scheme, despite the fact that the EU Parliament forbids that”. Whatever the answers to those key questions the ministers may agree upon it has to be sealed by the 27 EU leaders who will be converging to Brussels on tomorrow afternoon. The problem is that while the resumption of the Ecofin is set for 18.30 h today it’s quite unpredictable when it will be able to come up with a deal if any at all. On Thursday afternoon the Ecofin may still be in session. Rompuy’s letter At this point let’s return to Rompuy’s letter and try to discover the points which give away his anguish about the Economic and Monetary Union. The 27 leaders are invited for 16.00 h on Thursday and nobody could tell Rompuy if by that time there will be anything from the Ecofin council to be put before them. So he didn’t include any reference over the Monetary Union in Thursday’s agenda. However he informed the leaders that the President of the European Central Bank will be present all along their two-day meeting. His remarks would be of absolute importance if an Ecofin agreement is struck and passed on to them. According to Rompuy’s letter there will be discussion on the Monetary Union only on Friday. He states that clearly as it follows: “We will resume on Friday morning at 10.00. I will give a state of play of our work on the deepening of the Economic and Monetary Union, after which we will adopt the remainder of our conclusions, including on enlargement”. Incidentally it is obvious from this passage that the Monetary Union is of much more importance that the enlargement of the EU. This last issue doesn’t seem to bother Rompuy much and it is treated as a procedural affair. It must be noted that the President of the Council is the standard official line through which the outcome of the Ecofin council will be introduced to the leaders’ summit. That is why he says “. I will give a state of play of our work on the deepening of the Economic and Monetary Union”. All in all the next 48 hours will give everybody an indication, if the European Union will vote for more Europe or the national interests are stronger and bound to prevail.