To which I am tempted to reply, "Another such victory and we are undone." This is, frankly, preposterous: all that Sarkozy has accomplished is to bind the Eurozone to constitutionally inscribed austerity. So Europe will embark on a lost decade, while the markets may--emphasize the conditional--choose not to precipitate the bad equilibrium for fear that this would at last provoke the ECB to act and wipe out the first intrepid speculators. If death by slow strangulation rather than a bullet in the back of the head is victory, then, indeed, France has won, and Germany too. "The Constitution is not a suicide pact," Justice Holmes famously said, but Merkel and Sarkozy have done their best to ensure that the Eurozone treaty is just that. Forgive them, Keynes, they know not what they do.
But especially for France, on the brink of losing its AAA credit rating and now the junior partner to Germany, this is a famous political victory. President Nicolas Sarkozy had long favoured the creation of a smaller, "core" euro zone, without the awkward British, Scandinavians and eastern Europeans that generally pursue more liberal, market-oriented policies. And he has wanted the core run on an inter-governmental basis, ie by leaders rather than by supranational European institutions. This would allow France, and Mr Sarkozy in particular, to maximise its impact.
Mr Sarkozy made substantial progress on both fronts. The president tried not to gloat when he emerged at 5am to explain that an agreement endorsed by all 27 members of the EU had proved impossible because of British obstruction. “You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised,” declared the French president.
Friday, December 9, 2011
A Victory for France?
The Economist thinks France scored a victory in Brussels: