THE EURO WON'T BE BURIED UNDER THE CHRISTMAS TREE

One of the most intriguing events of the first ten days of December was certainly the EU summit, which was followed by the international community with great interest. It was at this summit that the members of the European family had to adopt a fateful decision meant to answer the burning questions that have concerned everyone for several months: will the single European currency and the euro area continue to exist? Or will everyone leave the zone of economic turbulence, thereby calling into question the existence of the euro area, and therefore, of the EU?

It should be noted that this summit was initiated by the leading EU countries - Germany and France, who offered their troubled fellows two options to overcome the critical situation. The first option, pushed by Berlin with the active support of Paris, suggested significant changes to tighten fiscal discipline and increase accountability for its violations throughout the EU, which, in turn, implied major changes to the existing European treaties. To approve this plan, it was necessary to obtain the consent of all 27 EU member states. However, due to the obstinacy of some countries, particularly Britain, they had to give it up. Then another fallback option was put on the agenda, according to which the 17 countries included in the single European currency zone, which, if desired, can be joined by other EU countries outside the eurozone, had to rehabilitate the eurozone. That's why the plan was figuratively called "17-Plus". In the end, eurozone countries decided to establish a new budget-tax (fiscal) union, which will be open to other EU states. A new draft agreement between the 17 eurozone countries and those who wish to join the union is to be prepared by March next year. The main objective of the reforms envisaged under this project is to correct the "design flaws" of European treaties and block all the loopholes that allow EU countries to flout the rules and regulations regarding the allowable budget deficit and total public debt. An agreement was reached that all countries would pass legislation on its maximum level.

The "17-Plus" deal itself provides for the introduction of "iron" financial discipline and automatic sanctions for violators. Part of the debt will no longer be written off as was the case with Greece. The European Commission (EC) will receive extensive supervisory powers in the process of preparing national state budgets. At the same time, regular euro area summits should secure closer coordination of economic and social policies in these countries, which is also important for the state of financial affairs. All countries of the eurozone should have uniform tax rates on corporations and financial transactions, and any measures of financial assistance in the future should not include private investors, as it was with Greece. Although the existing European instruments are still in force, the new treaty is meant to change a number of important provisions to limit the sovereign budget regulations of countries. All these intentions to improve the euro area concern long-term prospects. In the short-term, the EU will provide the IMF with an additional 200 billion euros to strengthen its ability to help the euro area. Also, a decision was made to launch a European mechanism for financial stability in 2012, and the amount of available funds will make up 500 billion euros. It is noteworthy that another 9 member states (Bulgaria, Czech Republic, Denmark, Hungary, Latvia, Lithuania, Poland, Romania and Sweden) expressed a desire to join the project envisaging the strengthening of control over fiscal policy and the volume of public debt, but only after the approval of the proposals at the level of national governments. Thus, the treaty can be signed on the basis of the formula "17 eurozone countries + nine EU countries".

At first glance, it seems that we can congratulate eurozone countries on their successful exit from this difficult situation and on the adoption of an optimal solution for economic recovery. But it is only at first glance, because, despite some positive points, some questions still remain open. First, as has already been noted, the new treaty is mainly intended for overcoming and preventing crises in the future, whereas the current problems of the huge debts and deficits of Greece, Portugal, Ireland, Italy and Spain have not been resolved yet. Experts also do not exclude the onset of recession in the hitherto relatively prosperous Netherlands, which may further aggravate the situation. On the other hand, it is difficult to predict the response of the citizens of these countries to the policy of tightening fiscal policy, sharply reducing social benefits, freezing salaries and increasing the retirement age.

Second, the intention to limit the deficit in the eurozone to 0.5 per cent of GDP also raises many questions. Today, the permissible level of the deficit in the EU countries is set at 3 per cent of national GDP, while the external debt should not exceed 60 per cent of GDP. Currently, only Finland strictly adheres to this framework. Even the most prosperous German economy cannot boast of these parameters. In this case, it is not clear how the more ambitious plan to rein in the deficit and public debt will be implemented.

But as they say, it's not so bad compared to the fact that Britain, which is the third largest economy in Europe and is not a member of the eurozone, refused to join the new "budget agreement". Initially, London explained its refusal to join the European single currency zone by the fact that this move means giving up sovereignty. This position of the UK - the locomotive of the EU countries outside the euro area - was harshly criticized by French President Nicolas Sarkozy at the October summit of the organization. At the last summit, Sarkozy also lamented that as the price for his support, David Cameron demanded that the UK be exempted from a number of provisions governing the financial market of the European Union: "We could not let this happen, because it is the insufficient degree of regulation that led to the current global financial crisis. Had we given in to London, our work to return control over the finances would have been undermined." Apparently, these contradictions led to a certain degree of pessimism in European Commission President Jose Manuel Barroso. "We believe that the proper version of this agreement will allow us to improve management and enhance the credibility of the euro area. But I'll be honest with you: it would be better to adopt a single agreement for all," he said.

In principle, Britain's intransigence in the dialogue with Germany and France has its own logic. Apparently, London does not intend to water its economic power in the misty horizons of the EU, where Berlin, which has Paris as a powerful ally, claims the laurels of the leader. On the other hand, Britain is trying to preserve the attractiveness of its own national currency (pound sterling), which was not inferior to the single currency in price in the best times of the euro, and has now become more than a strong currency.

In economic terms, Berlin's actions are not very different from the UK's position. Germany also does not intend to grant its taxpayers' money to other eurozone countries facing serious economic challenges. Otherwise, it would not have imposed a taboo on the credit activity of the ECB and the issue of Eurobonds, which would have washed away the savings of Germany itself. Berlin accepts this plan only on one condition - if all EU members consent to the federalization of the organization, where supranational structures will have a powerful lever of pressure on national governments. But such a scenario is clearly not in the interests of London.

In this context, we can assume that the latest EU summit ended in a draw. Germany and France prevented the collapse of the eurozone, which would have played into the hands of Britain and its ally - the USA, while London, in turn, did not allow the Berlin-Paris tandem to formalize the federalization of the EU, stopping them one step away from this idea.

Competition between thalassocratic Britain and tellurocratic Germany has both economic and geopolitical and ideological coloration. The German idealist philosopher Oswald Spengler, in his work "Prussianism and Socialism", contrasted the English national spirit based on individualism and personal good luck ethics, which subordinates an individual, with the public whole that requires the individual to implement, above all, his duty before the state. The political creed of the geopolitical school of "new conservative revolutionaries" of Europe is the slogan: "First of all - Europe, and better with the East than with the West". Their radical anti-Atlantic geopolitical orientation is found in the search for allies in the East, in the construction of strategic "Eastern" alliances of Europe without hiding interest in China and India.

These geopolitical views eloquently show how deeply rooted is the conflict between Germany (its ally is now France) and Britain (a strategic ally of the US), which is reflected in today's events in Europe. Geopolitical concepts are immortal just like ideas. Consequently, the danger of disintegration processes in the EU will always be relevant, especially in times when united Europe tries to pursue an independent policy, especially if it will happen under the auspices of a leading European power. In this regard, the US-UK Atlantic tandem will benefit from economic crises in the EU, because, not allowing European countries to finally run to their corners, they can give them a dosage of support and turn them into obedient allies.

For example, urging the EU to solve the problem with the least effort, Washington advises Brussels to sharply increase its assistance by buying their debts through the ECB and by issuing Eurobonds. Germany is categorically against it, which in turn causes serious discontent among the debtor countries of the eurozone. Meanwhile, taking the opportunity, the US successfully placed another package of debt bonds on international markets. And if the EU resorts to one of the most likely scenarios in the future - the devaluation of the euro, in which the US is extremely interested, trying to prompt Europe to do so, Washington could kill three birds with one stone, i.e. reduce the competitiveness of the euro against the dollar, make serious cash on the devaluation of the European currency and, making a sweeping gesture at its expense, use its earnings to provide financial assistance to those who need the euro area, reinforcing its credibility among European antifederalists. Such a scenario would severely shake the positions of Berlin, which irritates Washington by favouring a significant cut in providing the security of the EU, in particular calling for cuts in appropriations for NATO. The United States, which is the guarantor of security, expresses strong dissatisfaction with Germany's position on NATO. Berlin is not happy with the ubiquity of Washington, which is also a staunch ally of London in European affairs, as well as with the fact that the United States is trying to cause confusion in the common European family. Moreover, through its ally Sarkozy, Germany showed that for unruly members of the family, there is more effective leverage. We are talking about the need to revise the Schengen agreement, ostensibly to better control the external borders.

The Treaty of Schengen includes 22 of the 27 EU countries. The UK, Ireland and Cyprus are not included in the Schengen area, while Romania and Bulgaria intend to join it soon. French Interior Minister Claude Gean said that this is mainly due to the problem of regulating migration flows (particularly from abroad) and controlling the external borders of the Schengen zone. But most likely, on the eve of the EU summit, it was a message to countries that could hypothetically act against the joint Franco-German project. They were deluded into thinking that in this situation, there might be problems in the field of internal labour migration within the EU, which might have negative consequences for countries that are already experiencing difficulties due to job cuts. Apparently, the hint was heeded.

To summarize, we can say that although the EU summit achieved some success in technical and economic indices, it did not clarity the most important question: "Is the split cancelled or only postponed?"