Published June 29, 2012
BERLIN – Victor or vanquished: Merkel's stances ahead of the EU summit and what was decided.
Idea: Allowing a central authority or Europe's bailout fund to rescue banks directly rather than provide loans to governments to then help banks.
Merkel's position: Open to the idea of a banking union — creating a centralized European oversight for banks coupled with a deposit insurance — but insisted an independent authority must be in place to provide tough oversight before Europe can consider bailing out banks directly.
Decided: Allowing the bailout fund to directly give banks money, but only once a single bank supervisory mechanism has been set up, with first proposals by the end of the year.
Verdict: Largely in line with Merkel's thinking.
Idea: Giving bailouts to countries without imposing strict new austerity terms as long as the country is meeting EU debt targets.
Merkel's position: Against this idea. She insisted upon tying strict conditions such as austerity programs and structural reforms to money from bailout funds.
Decided: To allow bailout funds to be paid to nations with fewer austerity conditions as long as they are meeting EU fiscal rules. Merkel defends agreement, saying it is still within Germany's overall philosophy, emphasizing the bailed out countries would still need to meet EU fiscal rules.
Verdict: Merkel conceded ground to Italy and Spain.
Idea: Sharing debt burdens among countries by jointly issuing so-called eurobonds.
Merkel's position: Against eurobonds in the foreseeable future.
Decided: Agreed on "building blocks" of a tighter union — including, eventually, eurobonds — but postponed specifics until a study due in October. Merkel says before leaving Brussels that her stance against eurobonds hasn't changed.
Verdict: To be determined when issue is debated again in October.