Walker's World: It's now Merkel's Europe

By MARTIN WALKER, UPI Editor Emeritus

WASHINGTON, Oct. 28 (UPI) -- Like the dog in Sherlock Holmes that failed to bark in the night, the significant event of the latest European summit was what didn't happen. It didn't concentrate on American bugging of the phones and emails of European leaders.

Instead, the summit deepened the impression that Germany can get what it wants in Europe and block what it dislikes. German Chancellor Angela Merkel secured one important agreement that will reinforce Germany's determination to make more profligate economies agree to discipline their budget deficits.


And she made it clear that German and the other nation-states will decide who runs Europe, not the voters.

The first of these Merkel priorities was expected. She secured agreement in principle from the other 27 heads of national governments that budget discipline would be secured by binding contracts. Merkel is determined that Germany should never again be forced to bail out those of its European partners, like Greece, whose budget deficits have risen so far out of control that they risk bankruptcy.


The details of this new system of contracts have yet to be defined, along with the penalties for breaking such contracts. But the iron hand of budget orthodoxy is steadily extending its control over Europe. The member states will have their annual budgets scrutinized by the European Commission in Brussels (with German government bean-counters doubtless looking over the commission's shoulder). Once approved, the budgets will be set in contractual stone.

"Work will be carried forward to strengthen economic policy coordination, with the objective of taking decisions in December on the main features of contractual arrangements and of associated solidarity mechanisms," said the final summit document.

Like many other of Merkel's initiatives, this is designed to appease German voters and may not work in practice. A sudden shock in global markets, like the Lehman Brothers bankruptcy, could throw out most budgets and some form of accommodation would have to follow. Still, it sounds decisive.

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Merkel's second initiative at the summit was to pull the rug out from under those Euro-federalists who want to give the commission political legitimacy by having a Europe-wide election for the next commission president.

The political classes have been urging this for some time, as a way to reconnect the skeptical European public with the European institutions lie parliament and commission. Indeed one of the politicians, German Social Democrat Martin Schulz, current president of the Parliament, is visibly campaigning already to be the candidate of the center-left and Luxembourg Prime Minister Jean-Claude Juncker is being promoted as his center-right alternative.


It now looks as if Merkel won't let this happen, for several reasons. First, giving the commission president the political legitimacy of an election would reduce the influence over the commission of a big nation-state like Germany. Second, it would end the current system under which the president and other key commission posts are decided by horse-trading among the heads of government.

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The third reason is the most important. The commission is Europe's civil service, supposed by be the politically impartial defender of the European rules and ideals and of the smaller nation states whose influence has been steadily eroded. Making the commission president an elected politician would mean it no longer spoke for Europe as a whole, but for a political position. And if Schulz won, the commission would be headed by one of Merkel's adversaries.

"I don't see any automatic relationship between top candidates and the filling of posts," said Merkel, thus sending a torpedo into the plan to establish a precedent by sending the candidate of the party grouping with the most votes in the parliament elections in May next year straight to the commission leadership.

"The treaty says that it (the election) should be taken into account," she said, stressing that the net omission leadership would be proposed by the heads of government and only then ratified by a vote in Parliament.


These were important developments, illuminating the fiscal and political conservatism that Merkel is imposing on the European institutions. And while most observers thought that the summit would be dominated by embarrassing revelations of Merkel's phone being tapped by the U.S. National Security Agency, the reverse happened.

First, expectations that the U.S.-EU free trade negotiations would be suspended proved wide of the mark. Second, even stronger expectations were dashed that the bugging scandal would lead Europe to retaliate against U.S.-based Internet giants like Google by imposing tougher privacy and data protection rules. (The U.S. tech giants are believed to have trapdoors in their software that allows the NSA to gain access to data in their servers.)

Two people ensured that this didn't happen: Merkel, by not raising the issue of her own phone, and Britain's David Cameron, who persuaded the summit to delay action for a year, while assessing the financial impact of "huge, extra burdens" on the companies concerned.

Since the European Parliament had already backed tougher privacy rules, and proposed fines of 5 percent of a company annual global revenues, this again reminded the parliament and the bureaucrats of Brussels that the national government remain ultimately in charge. And Merkel made it clear she wants Europe governance to stay that way.


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