The Commission plans to impose a tax on financial transactions throughout the EU, at a rate of 0.1 percent on stocks and bonds and 0.01 percent on other financial products. [This] “could generate up to 57 billion euros, if applied across the EU.

Which is not a sure thing, the paper notes –

Nine countries, including Germany and France, are defending bringing in the tax, but others, like Britain, are opposed because they fear it will provoke financial activities to relocate.

Britain’s Prime Minister has also erupted in “fury” at the summit, writes the Telegraph, quoting David Cameron –

The Financial Transactions Tax is a bad idea. It will put up... the cost of people's pensions, it will cost many, many jobs. It will make Europe less competitive and I will fight it all the way.

The directive drastically tightens the definition of a bank’s capital reserves and hugely increases the level they are required to have, so that each institution has a cushion of funds to absorb violent economic shocks. According to the European Banking Authority, the hundred largest European banks would need to find some 485 billion euros of capital in order to comply with Basel 3.

The bill provides that each bank keeps 7% of its equity capital in reserve. The UK wants to increase this requirement to solidify its deposit banks. France, however, wants the funds involved in insurance subsidiaries to be excluded. Le Figaro says:

The debates will likely be very heated and may lead to adoption of the text being postponed until May 15. However, failure seems forbidden, as Europe needs to prove today that it is moving forward on the path to strengthen its banking system.

Last week, Le Monde reported that the European Commissioner for Internal Market, Michel Barnier, wants to ask banks how they have used the 1,000 billion euros, which were injected by the European Central Bank to avoid the credit crunch.

According to the Riots Communities and Victims Panel, an independent body set up by the government –

… the riots were fuelled by a range of factors including a lack of opportunities for young people, poor parenting, a failure of the justice system to rehabilitate offenders, materialism and suspicion of the police.

The riots were triggered by the death in Tottenham, North London, of local man Mark Duggan, shot dead by police on 4 August. Between August 6 and 10 August, rioting spread to several London boroughs and districts of cities and towns across England. For the panel, "The key to avoiding future riots is to have communities that work," the Guardian writes, adding that –

Recommendations include fines for schools that fail to teach children to read properly; earlier and better support for troubled families; a "youth job promise" to get more young people into work; and primary and secondary schools to "undertake regular assessments of pupils' strength of character".

The United Kingdom is observing the Greek operation very sceptically, and feels the new German forcefulness verges on a claim to hegemony. Equally suspicious, the Germans feel the UK has no grasp of the political, economic and historical logic of a united Europe.

By refusing to discuss their respective concerns and questions about the future of Europe, the Süddeutsche Zeitung notes, the conference participants have perfectly illustrated the mistrust between German and Britain – two countries that –

... instead of building bridges, are burrowing into tunnels.

According to several senior officials privy to the talks, the political bargain involved Michel Barnier, the French commissioner for the internal market and scourge of the UK Treasury, replacing the UK’s Baroness Ashton as the European Union’s foreign policy chief.

The London daily reveals that the reshuffle plan was developed with the team of Jose Manuel Barroso, the European Commission president, but enthusiasm waned due to fear that the European parliament would resist the move. A spokesman for Barroso, however, has denied the plan, saying the EC president “never had and never does have the intention to propose this change”. This said –

… several people involved say the Commission reshuffle was a serious and credible option during the intense diplomatic activity before the December summit. The British “were handed Barnier’s head on a plate”, one person said.

The Financial Times notes that –

The removal of Mr Barnier would have been cheered by many in the City and Westminster but some UK officials concluded that it would have amounted only to a temporary reprieve. Mr Cameron instead tried and failed to ensure that permanent guarantees to protect financial services were written into the new treaty.

For Der Standard, this “bizarre conspiracy” is evidence of European conservative leaders awareness that their political dominance is on the verge of collapse. A harsh critic of Angela Merkel, the Viennese daily points out –

All of this is perfectly clear, and this initiative is bound to fail. The Chancellor could not devise a strategy to better assist Hollande. The French have grown weary of Sarkozy’s broken promises and obsequious gestures. And that is not to mention the overwhelming majority of voters who have no desire to see Berlin decide on the issue of their president.

The fact that Merkel is depending on support from Cameron (who regularly gives her the brush-off on the euro) and Rajoy (who has just announced a major increase in the Spanish deficit) shows how weak she has become. To deliberately ignore the next possible president of her most important partner country highlights a lack of political instinct the like of which has not been seen for decades.

In Paris, Libération notes that this development coincides with a poll which found that 41% of French voters consulted believe that Germany “is using the crisis to strengthen its economy on the back of other populations…” If François Hollande is elected, “we will have to begin by picking up the pieces”, notes the daily which cites political analyst Sabine von Oppeln. The latest news is all the more significant when considering that in 2007, two months before the last French presidential vote, Angela Merkel held an official meeting with socialist candidate Ségolène Royal, which was followed by a joint press conference and a handshake in front of the cameras.

The Institute’s economists argue that:

… the interaction between migrant inflows and GDP emerges as positive, indicating that during periods of lower growth, migrant inflows are associated with ... slower [dole] claimant growth than would otherwise have occurred.

Over in Italy, employment is on the rise again after a 3 year fall triggered by the economic crisis, notes La Stampa. Latest data from the National Institute of Statistics (ISTAT) reports that jobs held by Italian citizens grew by 39,000 in the third quarter of 2011. Employment among immigrant workers, whose number has been steadily rising in recent years, continued to grow, albeit at a slower pace, up 120,000 jobs compared to 167,000 in the Q2 2011. Is it a positive signal of a progressive recovery from the crisis?”, asks sociologist Luca Ricolfi on the Turin daily –

I fear the answer is no. […] Something new is happening: after years of crisis, Italians are realising that they can no longer afford to retire early, to accept top level jobs only and hold out for better times. We are not yet seeing direct competition, but [employers] are reacting to the crisis by reducing the demand for foreign labour and [employees] not abandoning the jobs they hold. […] The apparently unstoppable rise in foreign employment now seems bound to slow down, if not to cease.

But the crisis is also prompting a growing number of Italian unemployed to give up looking for work, notes Corriere della Sera, quoting data from Eurostat’s Underemployed and Potentially Active Labour Force statistics. 2.7 million Italians, the highest in the EU, out of a total of 8.2 million, are available for work but not seeking it. The only countries where pessimism over employment prospects is still relatively low are Germany, France and Belgium.

For La Tribune, this unexpected announcement, made on the eve of the January 9th meeting between German Chancellor Angela Merkel and Sarkozy is an error motivated by the upcoming April French presidential election.

But, the paper continues, this Lone Ranger attitude adopted by the French president, is more than an error, it is a foul.

A foul against Europe, which defends a community-wide project, the only way to maintain leverage at the global level; a foul against Franco-German fiscal convergence even though it is more than ever necessary for the two countries to move forward in concert; and finally, a foul against France, which has no interest in chasing away the few financial jobs that have not already relocated to London.

In Germany, this "Sarko solo" is sneered at by Spiegel-Online, which calls the initiative a "cuckoo's egg" in Germany's nest.

The grandiose verbal spin put on the project cannot hide the fact that with this surprise, solitary action, Sarkozy is wiping his feet on the coordination so touted by Paris and Berlin. As for greater integration of economic policies within the EU and the eurozone, that too falls by the wayside. That is why, in Berlin, this operation was discovered with irritated surprise. Thus, government spokesperson Steffen Seibert declared: "Germany's goals remain the same, that is to say, the introduction of this tax within the EU.

Why is Sarkozy riding alone? In Barcelona, La Vanguardia sees a simple reason: the need to rid himself of the image of being Angela Merkel's lackey:

A stinging parody on the Merkozy couple broadcast on New Year's Eve on Germany's ARD television channel, based on a 1960s British sketch – Dinner for One – sums up the fatal trap that being stuck with this image represents for Sarkozy. In the sketch, the German Chancellor plays the lady of a mansion, sitting at a table with no other guests, while the French president plays her butler. In a sarcastic metaphor of a European summit meeting, an off-camera voice describes Nicolas Sarkozy as a "loyal servant," always ready to fill the glass of his employer and to follow her instructions: 'Madame Merkel, the same procedure as the last summit?' he considerately asks the chancellor.

The court's verdict, which referred to the European Charter of Fundamental Rights, has undermined Dublin II. Noting that in 2010 90% of illegal immigrants entered the EU via Greece, the judges took the view that “Greek authorities are not capable of managing the flow of refugees.” They further pointed out that the UK and Ireland must be aware of the risks in Greece, where refugees find themselves in an unbearable situation and have to contend with interminable delays in the processing of their applications, and should not deport them to the country.

In the wake of the judgement, from now on the state where refugees are located when detained by authorities will have to process their applications, explains TAZ, which notes that Germany is not ready to accept "a general change to the Dublin system."

With one million Britons living in Spain and some 50,000 UK resident in Portugal –

The Foreign Office is concerned that expats who have invested savings in their adopted countries could be left stranded, unable to withdraw cash and facing losing their homes if the banks call in loans.

Foreign Office sources said it was planning for a “nightmare scenario” with thousands of penniless Britons sleeping at airports with no money and no means of getting home.

Among the plans being discussed are the sending of planes, ships and coaches to the region, as well as extending small loans to those stranded. Although Spain and Portugal have a bank deposit guarantee scheme where clients are covered for up to €100,000, “banks limit withdrawals to stop people removing all their money and leaving the country.”

According to a Foreign Office source, the plans are-

… drawing on experiences of other mass evacuations, such as during the 2006 war between Hezbollah and Israel where the UK sent warships to evacuate expats from Lebanon.

“It sounds like a scare-story, but it must be taken seriously,” writes El Mundo, on a scenario that “has sounded the alarm throughout our country’s British community, in Marbella and Malaga especially”.

Noting that the revelations coincide with the downgrading of ten Spanish banks by rating agency Standard & Poor’s, the Madrid daily writes that the majority of British expats in Spain are retirees who have sunk their savings in coastal residences which “took an enormous hit when the housing bubble burst.”

Clegg, who initially appeared to back the PM’s summit veto, only to later declare he was “bitterly disappointed” and feared that Britain would become a “pygmy in the world”, justified his no-show by saying “I would have been a distraction if I was there."

For The Independent, traditionally close to the deputy PM’s Liberal Democrat party, this was “Clegg’s day of rage”. The prime minister and his deputy, the London daily writes -

… are at odds over whether the Government should move quickly to rebuild bridges with the 26 other European Union countries after Britain was left isolated at last week's Brussels summit.

[…] Both Conservative and Liberal Democrat ministers admit the Coalition faces the biggest crisis since it was formed last year.

For EU-sceptic the Daily Mail, Clegg’s “histrionics” are nothing short of “cowardly” –

Nobody expected Mr Clegg or the obsessively Europhile Lib Dems to be thrilled by Mr Cameron walking away from the Franco-German led talks in order to protect the City and other vital national interests... [But] the brutal reality is that … Mr Clegg exposed himself as a weak man.

The Mail also scoffs at the notion that the spat could lead to a Lib-Dem walk-out that could topple the coalition.

The polls point to annihilation if they walk away now and, besides, they like their ministerial cars too much.

… it looks like the Big One, the moment when a government in London exercised the famous British veto on an important EU matter and withdraws to the margins of the European Union, thus ending 50 years of more-or-less consistent policy.

Britain, he argues, has withdrawn back to the “splendid isolation” it celebrated as an empire in the 19th century. “So is today's isolation splendid or miserable? Is it better or for worse?”:

Yet I do not hear the sound of champagne corks or celebration among British Eurosceptics. Beware of what you wish for, is a wise saying. Who knows what happens now? But Europe, for all its follies and failings, has become a scapegoat for weaknesses that are really our own. We may be about to rediscover that awkward truth. It was why we joined in the first place.

Faced with British Prime Minister’s "bluff" that he would impose a veto on any reform of European treaties, the 17 Eurozone states "wearily decided to close ranks without him, in a bid to put an end to the crisis that has rocked the monetary union: between now and March 2012, they have agreed to negotiate an intergovernmental treaty, the option privileged by Nicolas Sarkozy, to ensure that the budgetary discipline demanded Angela Merkel is set in stone," reports the French daily.

For Le Monde, the agreement, which will pave the way for the reform of the treaty that regulates the manner in which the 27-member EU operates, constitutes:

A choice with major consequences, that will bring about the emergence of a two-speed Europe, from which the United Kingdom may be increasingly excluded by core Eurozone countries guided for better or for worse by Germany and France, the two main economies of the monetary union.

Le Monde remarks that the exclusion of the United Kingdom, however painful it may be, is a salutary and, all things considered, logical decision:

The British do not believe in the European idea. They are alien to this project, which is currently bogged down, but which appears to be more necessary than ever: to forge a single entity that will be able to exist as such among the other powers of the 21st century.

We should have no regrets about what happened in Brussels. The ambiguity about the role of Britain has been cleared up: deep down, the British, who joined what was the European Economic Community in 1973, are only interested in one aspect of Europe – the single market – while they have remained indifferent, if not hostile, to the rest of the European project.

“Our biggest national interest,” the PM writes, “is that the eurozone sorts out its problems.”

But just as Germany and others have their requirements for treaty change to strengthen fiscal discipline, so Britain has its requirements for treaty change too. If we are changing the treaty that applies to all EU countries and allowing the eurozone countries to have new rules, it is also important that there are rules to keep the single market fair and open for key industries for Britain, including financial services.

The Prime Minister also warned the German Chancellor and President Sarkozy of France that they could not ignore Britain even if the 17 eurozone members agreed new rules without the rest of the European Union.

The Times also notes that although Mr Cameron still evokes the need to repatriate powers from Brussels to London –

… his message will disappoint those Tory MPs who have been urging him to seize the moment and insist on loosening Britain’s ties with the EU before agreeing to a more integrated eurozone.

… many of those involved said they felt like they were participating in explicitly anti-police riots. They cited "policing" as the most significant cause of the riots, and anger over the police shooting of Mark Duggan, which triggered initial disturbances in Tottenham, was repeatedly mentioned – even outside London.

The report notes that 73% of those interviewed have been subject in the last 12 months to “Stop and Search” – a controversial anti-terrorist law which gives police powers to stop people without suspicion. Interviewees from Muslim and black communities expressed “deep frustration” at the way people in their communities were targeted. Against a backdrop of high youth unemployment and cuts, the report also notes that:

Many rioters conceded that their involvement in looting was simply down to opportunism, saying that a perceived suspension of normal rules presented them with an opportunity to acquire goods and luxury items they could not ordinarily afford. They often described the riots as a chance to obtain "free stuff" or sought to justify the theft.

"As usual, the talk is in terms of victory and defeat, and bills in history that remain unpaid,” laments columnist Matthias Matussek:

To be able to bring up the war is a perpetual delight. I see them laughing; I can laugh too. They’re calculating a German contribution to Europe roughly equivalent to the reparations demanded by the Treaty of Versailles. How interesting – and how useful! [...] Asking the administrators of the legacy of the Empire for their views on the German malaise is like giving your sick but favourite sheep to the butcher to look over…. Anyone who listens to (the British) muse philosophically on the historical debts of Germany, on Europe and the world, will find it hard to believe there was a financial crash in the British Isles.

In Paris, Le Monde notes the “gulf” that separates German and British views on Europe’s future. On the one hand, the Chancellor is calling for further European integration; on the other, Prime Minister David Cameron believes that the crisis should be an opportunity for Britain to "reshape" its relationship to the EU. “That is to say: ‘repatriate powers' to London, rather than see them 'drift' to Brussels.”

While the Franco-German duo may be imperfect and wobbly, however, it remains key to finding a solution to the crisis:

The Germans, who are loathe to be left alone in the cockpit, are the first to say it. If Germany had to rely on its British cousins, after all, Germany might as well throw up its hands right now…. London has chosen not to join the eurozone, yet demands a say in its decisions.

In the current climate, the eternal British ambivalence undermines Europe by the day,” adds Le Monde. Summing up its thoughts on the subject, the paper concludes:

On Europe, London has to choose – or keep quiet.

According to Adevărul, Martin Schultz, the leader of the socialist group in the European parliament, has spoken of the possible emergence of "an EU divided in three parts: France and Germany, the rest of the Eurozone and other states with their national currencies". In Bucharest, the Businessmen's Association of Romania (AOAR)  has already proposed that the government take the initiative to form such a "group".

The daily remarks that the initiative would enable "countries that are not in the Eurozone to better protect their interests", but at the same time warns that ensuring "the unity of the zone" would not necessarily be easy. "The Nordic social model in Denmark and Sweden is not aligned with the neoliberal model in Eastern European countries, and London’s status as a net contributor to the EU budget is very different to the status of Eastern countries which are net beneficiaries of the EU’s cohesion policy", concludes Adevărul.

However, the experience of previous agreements hammered out after difficult negotiations should encourage us to hedge our bets. Markets move in mysterious ways, and there is a risk that this latest summit will have been for nothing. With this in mind, it is still too early to draw any conclusions as to its final outcome.

However, in a context where the response of European leaders was informed by the fact that the fate of the EU was at stake, a quick look at the European political landscape in the wake of the October 23 and 26 summits should be sufficient to tell us that the political crisis, which was obscured by the financial crisis, is only beginning.

As many commentators have noted, we are now embarked on a path towards the greater integration of the Eurozone, and this is a move which will generate a lot of uncertainty.

The highly publicised discussions between Angela Merkel and Nicolas Sarkozy have demonstrated that the Paris-Berlin axis is once again the main motor of Europe. But we are no longer in a Europe with just six or 12 member states, and this motor will have less horsepower in the wake of successive EU enlargements and the creation of powerful internal organisations like the European Central Bank.

The spat between Nicolas Sarkozy and David Cameron, and the Commons debate on a UK referendum to decide on Britain’s membership of the EU are evidence that London is also seeking to redefine its role in what is now a shifting architecture. "Merkozy" will be uneager to offer concessions to the British, who have exerted a long-standing influence on the liberal development of the European Commission, without assuming all the political responsibilities that this would imply.

However, the UK is not the only country to wonder about its role in Europe. The nine other EU members which are not in the euro, and in particular Poland and Sweden, are already grumbling about the inception of what will become a two-speed Europe. The Schengen Area and initiatives for European defence have already set a precedent for EU initiatives with a variable geometry. But they do not involve such a developed level of governance as the one implied by the control of national budgets and the appointment of a European minister of finance.

And here, we are touching on the main point about the instability to come: the economic government that Berlin and Paris are aiming to establish, with support from the Netherlands and Finland, will affect the sovereignty of states and raise the question of democratic control – an issue raised by sociologist Jürgen Habermas in a forthcoming essay from which Presseurop has published a number of extracts.

From this point of view, the EU has now embarked on a dangerous transition, in which its leaders will have to demonstrate their political effectiveness and at the same time keep an eye on the practicalities of democracy: especially when you consider that the ratification process for the 21 July agreement has already shown that national parliaments are very slow when they are required to respond to financial markets. 

Worse still, as Timothy Garton Ash pointed out this week in his analysis of the debates in the UK and German parliaments, national democracies are expressing conflicting demands that have caused the EU to stall. 

But given that no one is ready to establish a European democracy based on a parliament that is elected from transnational lists which take up a position on transnational debates, decisions will continue to be taken by political leaders who meet behind closed doors, and they will continue to be approved by parliaments that have been first and foremost elected to deal with national issues. The euro may be saved,  but the EU is still not out of the woods.

Translated from the French by Mark McGovern