After marathon talks, nations unveiled a deal to quell a debt crisis that is threatening the global economy. The summit organizers announced early Friday that they had agreed to try to forge a new pact centering on strict caps on government spending and borrowing to shore up the euro’s foundations.
But the veto by British Prime Minister David Cameron, a Conservative euro-skeptic who cherishes the pound and looks askance at a heavy European hand in British affairs, underscored his nation’s long unease with relinquishing national powers to the E.U. and left London isolated in a region now moving toward deeper integration without it. His move left Britain’s Guardian newspaper asking, “Will it be splendid isolation or miserable?”
At the same time, Cameron made life harder for a region desperately trying to unite behind a plan to subdue a debt crisis that is threatening the global economy. Without Britain on board, the 26 other E.U. nations face potentially complicated legal obstacles to meet one of the prime objectives of a new treaty: giving fresh powers to E.U. institutions to slap automatic penalties on governments that recklessly spend and borrow.
Leaders have tried, and repeatedly failed, to come up with grand plans to fix the region’s two-year-old debt crisis, allowing troubles that began in Greece to spread to much bigger economies such as Italy and Spain. Although the pact that was struck Friday, after an all-night round of negotiations, may be the most ambitious yet, it is also the most complicated, and it runs the risk of following the other attempted fixes in unraveling.
Countries must now attempt to squeeze the forging of a major European treaty — a process that in the past has taken many years — into the next three months. After that, the treaty will still need to be ratified by each nation, potentially requiring national referendums in countries such as Ireland where the outcome is far from clear.
Only Britain bluntly said no to a treaty. But Hungary, the Czech Republic and Sweden agreed to Friday’s deal at the last minute. Along with Denmark, Latvia, Poland, Lithuania, Romania and Bulgaria, they committed only to the possibility of taking part in a treaty after consulting with their national parliaments.
Perhaps the most candid assessment came from Polish Prime Minister Donald Tusk. When asked if the new pact would save the euro, he replied, “I’m not sure.”
Merkel rebuts British
Yet, the leaders of Germany and France, the anchors of the 17 nations that share the euro and the two largest economies in the European Union, hailed the accord as a “breakthrough” that would restore confidence in the euro. German Chancellor Angela Merkel declared herself indifferent to whether Britain signed or not.