Former European Commission president Jacques Santer was appointed on Monday January 23 to head the board of the Special Purpose Investment Vehicle (SPIV), which is designed to boost the firepower of the EFSF, the eurozone rescue fund. Mr Santer, the Daily Telegraph recalls –

… led the Commission which collapsed in 1999, after a devastating report on fraud and nepotism attacked the EU's executive body for serious management failings.

All 20 members of the Commission stepped down, in what was described at the time as the biggest crisis in the European Union's history.

Although absolved of direct involvement in fraud, Mr Santer, was criticised for “his failure to impose order on the Commission” the London daily notes.

Defending the decision, Euro Group president and Luxembourg PM Jean-Claude  Juncker declared that Santer, himself a former Luxembourg PM, “served both Europe and his country in the best way possible.” However, according to Martin Callanan, leader of the UK's Conservative MEPs --

Putting Jacques Santer in charge of fundraising is like putting Dracula in charge of the blood bank. Santer's little helpers have dragged him out of retirement to give him another cushy EU job.

“Van Rompuy and his plan for Europe”, leads the Spanish daily El País, referring to the plan for immediate action that European Council President, Herman Van Rompuy and European Commission President, José Manuel Durao Barroso, will table at the European Council meeting on December 8 and 9.

“To deal with the crisis more decisively,” the Madrid daily writes, Van Rompuy proposes that the European Financial Stability Fund [EFSF] “recapitalise banks directly, and he does not preclude issuing Eurobonds in the long-term.”

For El País, Van Rompuy and Barroso -

... are finally getting to the heart of the financial problems plaguing Europe: an economy paralysed by the complete lack of credit due to the banks’ mistrustful unwillingness to lend.

The Commission, meanwhile, wants to strengthen budgetary control of the countries in the eurozone by gaining the right to –

... demand [of national parliaments] a revision of the draft budgets if the Commission considers that they fail to fulfil obligations under the Stability Pact.

"With the exception of the creation of eurobonds, we got everything we were expecting". If the banker quoted by Le Monde is to believed, the agreement reached on the night of 26-27 October on the devaluation of Greek debt, the recapitalisation of the banks, and the reinforcement of the European Financial Stability Facility will be enough to resolve the Eurozone crisis.

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

At the Eurozone summit on 26 October, outgoing Slovak Prime Minister Iveta Radičová negotiated an exemption for her country, which will not be providing additional aid to Greece, although Bratislava will continue to guarantee its share in the 109 billion euro bailout negotiated in July. Radičová, whose government fell over the ratification of the July agreement on the reinforcement of the European Financial Stability Facility (EFSF), believes that she has saved 200 million euros.

However, for SME, “the exemption is not such a good bargain.” Highlighting what it ironically describes as “a new tradition,” the daily remarks: “Every time a Slovak political leader succeeds in delaying a European plan, he/she boasts about how much has been saved and who has made savings.” But as rival daily Pravda points out, “In giving less for Greece, we will have to fear being obliged to pay more for other countries.” The newspaper adds that the money would have been placed in the EFSF, and not directly handed over to Greece.

On the front page of The Economist, Europe’s leaders are seen escaping the sinking boat that the Eurozone seems to have become. But for the influential British weekly, “The scheme is confused and unconvincing. Confused, because its financial engineering is too clever by half and vulnerable to unintended consequences. Unconvincing, because too many details are missing and the scheme at its core is not up to the job of safeguarding the euro”, writes the weekly, regretting that “Germany and the European Central Bank (ECB) have ruled out the only source of unlimited support: the central bank itself.”

For The Economist, the strengthening of the European Financial Stability Facility (EFSF) by the creation of special-purpose vehicles financed by other investors, including sovereign-wealth funds is not enough : “Why should China or Brazil invest a lot in them when Germany is holding back from putting in more money?” As for the writing-down of the Greek debt, “while the EFSF scheme is designed to offer insurance to bondholders, the European leaders’ insistence that the Greek writedown be voluntary will make euro-zone debt harder to insure.”

“Germany warns of war in Europe,” leads the Daily Express – a headline bound to set English pulses racing. According to the nationalistic British tabloid, Chancellor Angela Merkel issued this “chilling warning” only a few hours before the European summit “cobbled together” a 1 trillion euro deal in a bid to save the single currency. Speaking to German Bundestag earlier, the Chancellor said – “If the euro fails, Europe fails. We have a ­historical obligation: To protect by all means Europe’s unification process begun by our forefathers after ­centuries of hatred and blood spill.” As to the outcome of the “chaotic” Brussels summit, the fiercely EU-phobic paper quotes a senior Tory, who dismisses the deal as “a sticking plaster on a gaping wound.”

“Berlin wants more control over eurozone”, headlines Dziennik Gazeta Prawna. Germany will put more money into the European Financial Stability Facility (EFSF), created to help eurozone countries with sovereign debt problems, but in return has a list of eurozone fiscal reforms which it will put on the table at the EU summit in Brussels this Friday 4 February. Germany proposes raising the retirement age for both men and women to at least 67, introducing eurozone coordination of corporate income tax, scrapping automatic inflation-linked wages adjustment in the public sector, and introducing a constitutional provision on the maximum level of budget deficit or public debt. Moreover, Berlin will demand regulations making it easier for employers to lay off redundant staff. If the plan, which won’t be formalised until March, is endorsed – which “won’t be easy”, according to the Warsaw daily – chancellor Angela Merkel has pledged to increase the EFSF so that a total of €440 billion of it can be earmarked to help the troubled eurozone economies (currently it is €250 billion, with the remaining €190 billion held in obligatory reserve).

“Markets eager for European bonds,” headlines Les Echos. On 25 January, the European Financial Stability Facility (EFSF) raised five billion euros, of which €3.3 billion will be immediately allocated to Ireland. “The demand for the bond issue was very strong, with more than 500 orders from all over the world, most notably from Asia,” reports the business daily, which describes the markets' response to the sale as “a vote of confidence.” The newspaper  points out that “although eurosceptics would like to believe otherwise, the success of the operation is a testament to the efficiency of the EU’s response to the euro crisis. Community solidarity has paid off.” The bond issue may well “mark a turning point,” because “many investors believe that the EFSF bonds, which offer similar guarantees to German government Bunds but with a higher rate of interest, will pave the way for 'eurobonds'.”