Despite outbreaks of nationalism in many corners of the Old Continent, French President Nicolas Sarkozy and German Chancellor Angela Merkel have no other choice but to push for a political union and a federalist re-modelling of Europe, writes Georgi Gotev, senior editor of EURACTIV.
Georgi Gotev is EURACTIV's senior editor. He has many years of experience working in journalism and diplomacy.
This commentary was first published by global intelligence company Stratfor.
"The eurozone summit which took place yesterday (21 July) ended up mounting a fresh rescue package for Greece totalling €109 billion until 2014. Lower interest rates and debt buybacks by a special fund will hopefully make the country's debt burden manageable, avoid contagion in the euro zone and ultimately saving the euro and the European Union itself.
Bowing to pressure from Germany, the private sector agreed to voluntarily contribute to the new package to the tune of €37 billion.
Leaders also agreed to extend the powers of the EU's €440 billion rescue fund, the European Financial Stability Facility (EFSF), to stem a tide of further bailouts spreading to countries with the highest debt burdens – Ireland, Portugal, Spain, Italy and Belgium.
The EFSF will now be able to provide support to countries which are not yet recipients of a bailout. The facility will be able to provide loans as a precautionary measure, intervene on bond markets and even recapitalise banks.
But the summit was not only about fire fighting. Probably the most important news was announced by French President Nicolas Sarkozy, who said that by the end of the summer, he would make jointly with German Chancellor Angela Merkel 'proposals on economic government in the euro zone'.
'Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government,' Sarkozy said, calling for 'bold and ambitious' plans to create an embryonic EU finance ministry in the form of a European Monetary Fund.
In the memory of Brussels Eurocrats, France and Germany have never been more alienated from one another than they now are under Sarkozy and Merkel.
Having tried half-measures for too long, adversity has now cornered them into becoming once more 'the engine of Europe'. In spite of nationalistic outbreaks in many corners of the Old Continent, the two leaders have no other choice but to push for a political union and a federalist re-modelling of Europe.
In this perspective, the launch of a Eurobond market appears to an unavoidable step for strengthening the euro zone against any further speculative attacks, but also in order to finance much-needed major European projects, which could be compared to those of the New Deal in the USA of the 1930s.
Without a doubt such projects, which entail unpopular losses of sovereignty, would meet fierce resistance from Eurosceptics. Another problem is that such development would definitely seal a two-speed European Union, with a eurozone core and an alienated periphery.
Upcoming elections in both France and Germany make decision-making in no way easier. But who knows? Being perceived by voters as visionaries is a luxury few leaders have afforded since World War II."