Though what amounts to a confidence vote is still pending in the German parliament as we speak, it looks like Angela Merkel was forced into a bank bailout plan via a unified stand from other EU powers. Here’s an excerpt from a report by the Guardian‘s Ian Traynor:
European leaders have pulled back from the brink of disastrous failure in their attempts to rescue the euro, throwing a lifeline to the weakest links in the eurozone by agreeing to shore up struggling banks directly, remove disadvantages for private creditors and move quickly towards a new supervisory regime for banks.
David Cameron said on Friday: “The countries of the eurozone did take some important steps forward last night. There’s still important work to do.”
Amid bad-tempered talks that continued through the night, Italy and Spain stunned the Germans by blocking progress on an overall deal at a two-day EU summit in Brussels until they obtained guarantees that the eurozone would act to cut the soaring costs of their borrowing.
The tough negotiations were deadlocked for hours, prompting the departure from the summit after midnight of the 10 non-euro countries, including Britain, leaving the eurozone leaders to fight it out.
After 14 hours of wrangling, they emerged with a three-point statement rewriting the rules for the eurozone’s new bailout regime in a way likely to soften the draconian terms that have accompanied the rescue programmes for Greece, Portugal, and Ireland over the past two years.
Global market reaction to the deal was initially very positive, but that may just be because summit expectations were especially low. Meanwhile, Merkel returns to Germany to make the argument that she may have lost a battle in the EU crisis, but she and Germany are still in charge and, as Traynor suggests, will win the “war” over the eventual shape and structure of the EU.