The good news out of the Eurozone today is that the relevant leaders appear to be reaching an agreement. The bad news is that in order to reach an agreement, they’ll likely have to fudge and punt on key points. Wolfgang Munchau has a good overview including the point that France and Nicholas Sarkozy may now be a bigger impediment to progress than Germany:
Mr Sarkozy’s proposal could not be more different. He has said that he is not prepared to cede any sovereignty to the centre. He wants to retain the inter-governmental approach that has so abysmally failed in the past. He opposes any attempts to strengthen the European Commission, or to involve the European Court of Justice in adjudicating on breaches of the rules. While rejecting Ms Merkel’s obsession with austerity, he is not interested in a genuine fiscal union either. He is open to a eurozone bond and to the European Central Bank having the role of lender-of-last resort. I would surmise that this is because France would stand to benefit from both.
I think the Germans are overstating the significance of better and more enforceable budget rules, but the contrary view that these countries should all be cosigning loans together without collective supervision of budgets makes no sense. Also note that disagreement on this point, unlike Greek debt repayment or Italian labor market regulations, goes right to there core of why they made a European Union in the first place.
In superficially unrelated news, note that EADS (makers of Airbus passenger aircraft and other fine aerospace products) “could name Tom Enders, Airbus chief executive, as its next chief executive as early as Thursday, in a move that would usher in personnel changes to maintain a delicate Franco-German balance at the European aerospace group.”