EU summit raises fears of ‘two-speed’ Europe

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As the 27 EU heads of state and government agreed in principle on a scheme to reacapitalise Europe’s banks, a series of meetings between non-eurozone countries underscored the concern that plans afoot for the autumn to create new institutions to tackle the debt crisis could split countries in two camps. EU SUMMIT LIVE!

In the margin of the EU summit, one meeting gathered seven non-eurozone members, excluding Denmark, Sweden and the UK, while another one included  delegates from all ten non-eurozone countries.

Fringe meetings held before the Council summit

The first meeting, comprising mainly Eastern European countries, focused on issues relating to cohesion policy, and particularly addressed the fear that the eurozone rescue package may involve the use of structural EU funds to help refuel battered economies, such as Italy and Greece, without any pay-off for the eastern member states.

Sources told EURACTIV that the second full meeting focused specifically on the proposal to examine the possibilities for a treaty change spelled out in Sunday’s (23 October) summit conclusions.

“We all have similar concerns in relation to what might happen as a result of the creation of further fiscal consolidation of the eurozone. This might involve a new kind of ministry or commissioner to supervise eurozone issue more centrally,” said a source from the non-eurozone countries.

The source added that although such a new ‘ministry’ might be necessary, “we need to ensure that the idea can work effectively within the wider EU 27, without impinging on the EU’s broader decision making powers.”

In addition to these bi-lateral pre-summit meetings, the UK held separate talks with Sweden, Denmark and the Czech Republic, touching on the same topics dealt in the earlier 10-member non-eurozone meeting.

The bilaterals were conducted by senior dilomats, except for the post-summit bi-laterals, which were held by heads of state and government.

Determined to avoid creating a bloc of non-eurozone countries

Speaking after attending both meetings, a diplomatic source told EURACTIV that non-eurozone countries agreed on many issues, even though there are still some differences.

“One thing we all agreed was that we should not in any way look to create a ‘bloc’ of non-eurozone member states,” the source added.

The diplomat talked against creating separate blocs and added that since the chief fear of these countries was that the eurozone members themselves may develop into a separate ‘bloc’ forwarding its own interests, it would be particularly dangerous for the non-eurozone countries to do the same.

Meanwhile tensions remained evident during the EU summit, described afterwards by Polish Prime Minister as a heated debate.

Cameron expressed the hope that the eurozone countries would resolve the outstanding issue of the European Financial Stability Fund (EFSF) by whatever means necessary, and keep all options open, a formulation interpreted to mean that the option of using ECB cash to leverage the EFSF should be considered.

French officials briefed that if Cameron wanted to be involved in the EFSF rescue, it was always open to the British to contribute to the rescue fund.

The Ukrainian Foundation for Democracy 'People First' said "A probability of creating two-speed Europe where Ukraine will at most be able to expect joining the Eastern European camp of the EU members beyond the euro zone is especially dangerous."

 

"It will certainly be favorable to Russian politicians in their struggle for the sympathy of Ukrainians and realisation of their national interests," it said, adding that the EU's internal divisions would also discourage Ukrainian bureaucrats from implementing European reforms.

Preparations should be made for European treaty change according to the conclusions from today's (23 October) EU summit, following a lengthy dispute over the relative powers of the eurozone and wider EU 27 countries.

German Chancellor Angela Merkel has argued in favour of a treaty change to help enforce fiscal rules to avoid another debt crisis in the euro zone.

Merkel favours clauses enabling eurozone countries failing to keep their national debt within a 3% cap of gross domestic product to be liable to court censure under EU law.

She also wants to explore the idea of having a dedicated European Commissioner in charge of enforcing budget discipline, another scheme that might require treaty change. Sarkozy is said to be supporting to the idea.

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