Uncertainty in the Eurozone continues as Chancellor George Osborne refuses to give the IMF £25 billion towards its bailout fund for distressed countries. European finance ministers set out to raise €200 billion (£168 billion) to enable the IMF to assist some of Europe’s most fragile economies. Britain and some other non-Eurozone countries, however, failed to comply leaving the bailout fund €50 billion Euros short at €150 billion. Osborne expressed in a conference call to EU finance ministers that he would only pledge more funds to the IMF under a more global G20 setting; and that due to prior agreements only a further £10 billion would be available even then.
Former IMF managing director, Dominique Straus-Kahn castigated the Euro area’s leaders for their poor leadership and presaged that the Eurozone will fail unless affirmative solutions are implemented within the next few weeks. European Committee President, Mario Draghi spoke in similar tones of foreboding doom as he detailed the tumultuous debt obligations that are set to mature in the first 3 months of 2012: €230 billion of bank bonds: €300 billion of sovereign bonds: and €200 billion of collateralised payments.
Draghi appeared more confident in the competence of his Euro leaders asserting that the Euro is here to stay: “I have no doubt whatever about the strength of the Euro, its permanence, its irreversibility.” But he once more reiterated his stance on ECB bond buying: “The ECB cares about financial stability, it cares a lot, but this has to be done without undermining the credibility of the institutions.”
Britain’s recent abrasive stance towards the Eurozone has scuppered potential resuscitation packages and it seems Germany has realised the importance of getting the UK on side; German foreign minister, Guido Westerwelle potentially reopened EU treaty negotiations by suggesting that the City of London could receive the financial protection that David Cameron was not afforded. The UK PM decided to veto the treaty talks last week in Brussels, but Westerwelle told reporters he still considers a full EU pact a distinct possibility: “With goodwill it is do-able, there is no doubt for us that we want to make the next steps in the EU together as 27.”
In a rhetoric of camaraderie the German foreign minister described an ambitious utopian future for Britain inside the EU:
“We think we have a common destiny. We think the EU is not only the answer to the darkest chapter of our history. It is also a life insurance in times of globalisation because no country – not Germany, not Great Britain, not France – no country is strong and big enough to face the challenges of globalisation alone. My main message for the British people: you can count on us, and we can count on you. For us Europe is not only our destiny, it is our desire, it’s the lesson we learned. Please understand for us Europe is much more than a currency or single market.”
Whilst Westerwelle’s points are compelling, they may not be enough to convince some conservative Euro-sceptics in the coalition government. As it stands the UK is benefitting from its position of additional detachment from the Eurozone, with the Pound trading at a 0.2% increase against the Euro at 1.195.