The markets and Germany are shaping the new EU

German Chancellor Angela Merkel had been heavily criticized in the run-up to this week's European summit in Brussels. But on Thursday, she got what she wanted -- a change to the Lisbon Treaty allowing future measures to combat currency crises. But will it be enough?

Angela Merkel's plan has cleared the next hurdle. At the EU summit in Brussels, the European Council on Thursday agreed to anchor a permanent mechanism for potential future euro crises in the Lisbon Treaty. What had been derided in summer as a unilateral demand from Berlin has now become European consensus.

European leaders want to insert two sentences into Article 136 of the Lisbon Treaty: "The member states whose currency is the euro may establish a stability mechanism to be activated if indispensable to safeguard the stability of the euro area as a whole. The granting of financial assistance under the mechanism will be made subject to strict conditionality."

The formulation would allow Europe to save heavily indebted member states from bankruptcy even after the temporary €750 billion ($1 trillion) backstop expires in 2013. A permanent mechanism, European leaders hope, will provide lasting stability for the euro. Merkel had insisted on the treaty amendment in part to avoid a scenario in which future bailouts could be challenged in German courts.

It looks like Germany is now running the show in Europe. The sense I am getting by reading the German press is that the Germans do not want to pay for the lack of budget discipline of the other EU members.

But how can you change the Italians, the Greeks, and ...... to be responsible? Good luck Europe!

George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked second best gold timer by Timer Digest

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