EU summit: All but two leaders sign fiscal treaty

[hellheaven1987]

All but two of the EU's 27 leaders have signed a new treaty to enforce budget discipline within the bloc.

The "fiscal compact" aims to prevent the 17 eurozone states running up huge debts like those which sparked the Greek, Irish and Portuguese bailouts.

To take effect, the pact must be ratified by 12 eurozone states.

UK Prime Minister David Cameron, who with the Czechs refused to sign, said the summit had accepted his ideas for cutting red tape and boosting growth.

On Thursday he had complained that his ideas, contained in a joint letter signed by 12 EU leaders, were being ignored.

But after the talks he said "our letter really did become the agenda for this meeting... We now have a plan that we must stick to in the months ahead".

The newly reappointed President of the European Council, Herman Van Rompuy, said the British proposals were being taken seriously and he had sought to redraft the summit's conclusions accordingly.
Continue reading the main story
Fiscal compact

Critics argue that the fiscal treaty is mainly a political gesture aimed at reassuring taxpayers in Germany, the eurozone's dominant economy, where there is reluctance to pay for further eurozone bailouts.

German Chancellor Angela Merkel described it as a "great leap", a first step towards stability and political union.

Germany is reluctant to increase the size of the permanent rescue fund, the European Stability Mechanism (ESM), which comes into force on 1 July.

The leaders put off until the end of March a decision on its size. There are calls to combine the 250bn euros (£209bn; $333bn) left in the temporary bailout fund - the EFSF - with the 500bn-euro ESM.

Source

It is quite funny to see Cameron tries to maintain the position of UK in EU despite British government wants to against the mainstream of EU decision. Why don't UK just quit EU at all?

[Kanaric]

I wish they would quit the EU and solidify their status as a US boot slave.

[Adar]

It is quite funny to see Cameron tries to maintain the position of UK in EU despite British government wants to against the mainstream of EU decision. Why don't UK just quit EU at all?

Because he support free trade without causing economic disasters by tying divergent economies together.

[Nikitn]

How does this have anything to do with free trade or tying economies together? It's just a measure to stop budget deficits.

Why did the UK and Czech republic disapprove of this?

[PointOfViewGun]

Source

It is quite funny to see Cameron tries to maintain the position of UK in EU despite British government wants to against the mainstream of EU decision. Why don't UK just quit EU at all?

Do we know why the Czechs rejected it?

[spanish_emperor]

Do we know why the Czechs rejected it?

Maybe Czech government is trying to suck up to Britain?

[PointOfViewGun]

Maybe Czech government is trying to suck up to Britain?

There is nothing in the proposition that could be bad for Czech Republic?

[hellheaven1987]

Do we know why the Czechs rejected it?

Czech Republic has been fighting against a more centralized EU for a long time. The first time I heard about their anti-EU attitude could date back to 2004~05, so they have been playing as bad boy in EU even before this crisis. I guess the current relation between Czech Republic and UK is much similar to Prussia and Britain during Seven Years War - nobody like them in mainland, so they form a joint-alliance together. For the reasons why Czech Republic against a centralized EU? That probably because their industrial development is much more healthier than most East Europe, hence probably has more capitals to withstand this crisis alone without outside help.

[removeduser_4536284751384]

Do we know why the Czechs rejected it?

Vaclav Klaus is very Euroskeptic. He does this with every treaty.

[Derbiean]

The Czech prime minister who met with his British counterpart David Cameron ahead of the EU summit, made it clear that in its present form the treaty was disadvantageous for the Czech Republic in enforcing conditions and fines without allowing the country, which in not a eurozone member, to actively participate in all euro zone summits.

http://www.radio.cz/en/news

[PointOfViewGun]

Then the question remains, why do all the other states agreed to sign? Some of these states are severely damaged due to their inability to follow independent economic policies. Last time I checked Latvia lost a quarter of it's GDP.

[hellheaven1987]

Then the question remains, why do all the other states agreed to sign? Some of these states are severely damaged due to their inability to follow independent economic policies. Last time I checked Latvia lost a quarter of it's GDP.

Because it allows access of more easy-loan, which in term can be used to invest their own economy. That is from the view of economic principles however, the reality is that free trade results their primary industries been outcompeted by bigger EU members - means France and Germany. Furthermore, those small states, even without free trade, has little chance to compete against super state such as US and Russia. The result? Those small states have little choice but to choose either specialize in certain tertiary industry (take a long time of investment, none of them have this resource and time now), or play dirty trick to prevent foreign goods occupy their own domestic market (such as high tariff, but such move is illegal now according to WTO). The ultimate fate is that small state has no independent place, economically or politically, in near future - super states simply have abundant resource to outcompete those small states and force them bankrupt, and small states only can survive if they play as the satellite of super states, much like what we had during 19th Century.

[PointOfViewGun]

Because it allows access of more easy-loan, which in term can be used to invest their own economy. That is from the view of economic principles however, the reality is that free trade results their primary industries been outcompeted by bigger EU members - means France and Germany. Furthermore, those small states, even without free trade, has little chance to compete against super state such as US and Russia. The result? Those small states have little choice but to choose either specialize in certain tertiary industry (take a long time of investment, none of them have this resource and time now), or play dirty trick to prevent foreign goods occupy their own domestic market (such as high tariff, but such move is illegal now according to WTO). The ultimate fate is that small state has no independent place, economically or politically, in near future - super states simply have abundant resource to outcompete those small states and force them bankrupt, and small states only can survive if they play as the satellite of super states, much like what we had during 19th Century.

I don't think the future of small states is that bleak. There are many options for them to pursue. Exploit local resources, tourism, higher education, and so on. It might be easier for larger states to develop various industries but it's not impossible for smaller states. It might be illegal to have high tariffs on imports but it's not illegal to tax it from the public and it doesn't stop from foreign goods dominating the local market. Turkey is an example. The government taxes the fields that are dominated by foreign goods through VAT, SCT and additional label costs but those fields are still dominated by foreign goods due to lack of options. So, a product that is 180 dollars in U.S.A. is a 180 euros in Europe and my company sells it for 240 euros in Turkey. So, high taxes wouldn't help even a small state. Anyways, I feel much optimistic about small states. If they an manage to stay out of regional conflicts I believe they can be very successful.

[Adar]

It is also worth noting that Sweden signed the treaty but are not forced to comply with any of the regulations set by the treaty and I think that Denmark made a similar deal.

The rationale behind the treaty is simple:

For rich countries
Other EU members fail at budget management, therefore we create a new stability pact (like we were supposed to have until France and Germany broke it...).

For poor countries
The rich EU nations refuse to give us money unless we make a silly promise.

[Nikitn]

Because it allows access of more easy-loan, which in term can be used to invest their own economy. That is from the view of economic principles however, the reality is that free trade results their primary industries been outcompeted by bigger EU members - means France and Germany. Furthermore, those small states, even without free trade, has little chance to compete against super state such as US and Russia. The result? Those small states have little choice but to choose either specialize in certain tertiary industry (take a long time of investment, none of them have this resource and time now), or play dirty trick to prevent foreign goods occupy their own domestic market (such as high tariff, but such move is illegal now according to WTO). The ultimate fate is that small state has no independent place, economically or politically, in near future - super states simply have abundant resource to outcompete those small states and force them bankrupt, and small states only can survive if they play as the satellite of super states, much like what we had during 19th Century.

Nonsense, because of free trade and no tariffs it isn't particularly harder for, say Latvian, industry to gain access to German natural resources (or products, like fertilizers). Furthermore, the poorer economies have much more competitive wages than the richer ones. As a matter of fact, this is exactly what is happening. Secondary industries are being outsourced to these countries, which tertiary ones are being developed in the richer countries. Opposite of what you're saying.

But how does any of that have to do with this treaty? It's completely irrelevant. WTO rules have been in effect for many years, and there is no tariffs allowed between EU countries anyway.

This treaty is about stopping mass-spending for political gains by politicians from repeating itself. That's it. Now, why did the UK and Czech republic disapprove of this?

I don't think either the British nor the Czechs need support when they can print money and devalue their own currency if they were going to go bankrupt.

And of course devaluing ones currency is always a good thing..

[General Brittanicus]

Source

It is quite funny to see Cameron tries to maintain the position of UK in EU despite British government wants to against the mainstream of EU decision. Why don't UK just quit EU at all?

If we left the EU who would you be able to blame all your own mistakes and problems on? And also in case you didn't notice the czech republic also refused to sign.

[karo]

I think it is really easy those two country refuse to sign it then they will also not receive any support from the EU when things go wrong. And this fiscal treaty should have been signed two years ago.

[Musthavename]

I think it is really easy those two country refuse to sign it then they will also not receive any support from the EU when things go wrong. And this fiscal treaty should have been signed two years ago.

I don't think either the British nor the Czechs need support when they can print money and devalue their own currency if they were going to go bankrupt.

[magpie]

Now my way of thinking on this inter-government fiscal treaty, Maybe I am wrong?

The treaty is not an official E.U. treaty as all member states would have to ratify it. Therefore it has no binding legal status under the E.U. rules.
So its a eurozone pact or club within the E.U. with its own set of rules and regulations. Now I am fairly sure that the club cannot apply official E.U. sanctions on any member state under this agreement.
So fines for countries that break the treaty rules cannot have any legal status under E.U. law.
The fiscal treaty member,s will have to set up their own lending agency outside of the E.U. as a whole, Which treaty members who follow the clubs rules will get access to.

This does not preclude states that are E.U. members from getting official E.U. aid under the E.U. budget.
However one could expect to see pressure applied from the treaty club on E.U. budget/policy decisions and through its E.U. parliment member,s when ratifying E.U. rules and future law making.
In some ways the E.U. has been hijacked by the eurozone power broker,s?

[Thorn777]

Mexico was thinking the same thing since they got only 1/10 of American workers. But then again you had these Chinese getting 2/5 of Mexican workers. Good thing they got fertilizer cheaper though since they had to do without troughout its history, but sadly the US agribusiness broke up the thousands of small farmers and all agricultural activity surrounding it. Oh the wonders of free trade...look at the country now.

Well they all can go the Estonian route and go Celtic-Tiger X10. Find that niche you know. Since the ever mounting accumulated capital still offers good niche opportunities. Now if all of them would just go that way we could get real competition here as well. Like subsidizing them letterboxes, shine them up for free etc.