Will The EU's All-Nighter Save The Euro?

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European Union leaders completed a marathon of treaty negotiations overnight to address the continent's debt crisis. Host Scott Simon checks in with NPR's Philip Reeves about how this new plan will impact Europe.

SCOTT SIMON, HOST:

This is WEEKEND EDITION from NPR News. I'm Scott Simon. European leaders have agreed on a plan to try to save the euro and the continent from economic collapse. The plan they forged yesterday is a treaty that will impose fiscal discipline on eurozone members. It was largely a German initiative, also backed by France. Their E.U. partner signed on, with one big exception - Britain. This all played out at marathon talks in Brussels. NPR's Philip Reeves was there and joins us now. Phil, thanks for being with us.

PHILIP REEVES, BYLINE: You're welcome.

SIMON: The summit was called to try to deal with Europe's debt crisis and to keep countries from default, keep the euro as a common currency. How would the agreement do this?

REEVES: The basic idea is to create a treaty that would stop eurozone nations from borrowing and spending too much, and to make them balance their budgets. Europe's leaders hope that this treaty, coupled with other measures, will reassure the financial markets, and that would bring an end to the unsustainably high levels of interest that countries like Spain and Italy are having to pay in order to borrow money.

Now, if that happened, that would do a lot to calm this crisis - a crisis, remember, that is threatening the survival of the euro, perhaps of the European Union itself; that's broken banks and governments, and that could trigger a global recession.

SIMON: Prime Minister David Cameron, of Great Britain, was at the talks. What were his objections?

REEVES: Well, Germany's Angela Merkel, in particular, wanted these new measures enforcing budgetary discipline to have as much teeth as possible. So she wanted them to be enforceable by the institutions of the larger European Union. To do that, she needed to get everyone to agree to changing existing E.U. treaties. Cameron would not agree to those treaty changes unless he secured, in return, safeguards - safeguards for the City of London.

The city is a global financial center. It brings a huge amount of money into Britain. Cameron wanted guarantees that would exempt it from E.U. regulation and oversight. He didn't get that, so he exercised a veto.

SIMON: Is this a real roadblock to the treaty?

REEVES: Yes, in the sense that Cameron's move means that the Europeans have had to take another tack and offer a looser, intergovernmental treaty which may not have the same legal clarity; it may be vulnerable to legal challenge; it might, therefore, not be seen as convincing by the markets, and also the European Central Bank.

And this has exposed Britain to the possibility of being blamed if the crisis continues and spirals into full-blown financial disaster - a crisis which, by the way, Cameron says he is eager to end as the eurozone crisis is doing very significant damage to the British economy.

SIMON: And where does this leave Britain in Europe?

REEVES: It's isolated. None - not one - of the other 26 European Union nations has actually backed its position. This has kicked off a fierce debate in Britain over what Cameron's done. There are two camps. The first, which includes the tub-thumping, right-wing tabloid press, is hailing Cameron as Churchillian, a British bulldog who went over to see these perfidious, continental Europeans and fought heroically for Britain's interests. The increasingly vocal body of euro skeptics within his own conservative party are in that camp.

And the other camp thinks he's made an historic blunder which will leave Britain deeply isolated; that what he's done is to enable the Europeans to set up a parallel union in which Britain will have no part, and over which it will have no influence, even though that grouping may end up taking decisions that actually profoundly affect British interests.

SIMON: NPR's Phil Reeves in Brussels. Thanks so much for being with us.

REEVES: You're welcome.

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