However, in addition to giving up her stance on extensive private sector involvement in any activation of the ESM (the eurozone's forthcoming permanent bailout fund) - a key German negotiation position over the last few years - one of her key demands was to push for Treaty change at 27 (Sarko always favoured a more inter-governmental approach), and many of her other ‘wins’ were also premised on getting that agreement (e.g. the right to take other member states to the ECJ in the event of breaches of the new agreement on fiscal integration and budgetary discipline). This has now been blown out of the water for the foreseeable future, following David Cameron’s veto.
For all the predictable talk of the end of an era and the UK’s permanent isolation in Europe henceforth (we argue Cameron had little choice) did Merkel actually come out a winner in all of this? Clearly, Sarkazy if the one leaving Brussels the happiest (not minding doing business at 17, albeit now with the 'help' of some euro outs as well).
But Merkel didn't fare that well. This is not for lack of trying; Merkel has arguing that: “I am very pleased with the outcome”, and that the agreement on fiscal integration was a “breakthrough” in the debt crisis. The reality is that Merkel has no legal guarantee (despite her argument to the contrary) that the EU institutions, in particular the Commission and the ECJ will be allowed to play an active role in implementing and policing the agreement. Instead, the measures in the agreement will be subject to long-winded political wrangling and horse-trading, precisely the sort of scenario that Merkel wanted to avoid.
It is not surprising therefore that Merkel has acknowledged the need to transplant the agreement on fiscal integration into the Treaties as soon as it is possible to do so. This means the UK has not exhausted its veto quite yet (though, as we've noted, there's a complex legal discussion over whether a group of countries formed outside the EU treaties can use the EU institutions to facilitate and enforce its decisions), and Merkel will still have to accommodate British concerns on the single market and financial services if she wants to get around this amicably; any attempt to override do so would be highly acrimonious and subject to legal challenge, which would take time to resolve.
This has been noted back home, with Foreign Minister and former FDP leader Guido Westerwelle acknowledged the deal was "not great", while Der Spiegel wrote that Merkel “paid a high cost” in order to secure the agreement, noting that she had maintained all along that an intergovernmental agreement would be second best vis-à-vis Treaty change. For all the “UK is isolated” stories in the German press, SPD party leader Sigmar Gabriel struck a sober note when he pointed out that the agreement is "insufficient" and will remain so until Britain joins up.
Meanwhile Die Welt wrote a piece which examined Merkel’s reputation for toughness and consistence in Europe, i.e. “Madame Non”, pointing out that throughout the crisis, Merkel has already crossed plenty of what had initially been “red line issues”.
Politics aside, the German media are also sceptical that the agreement on further fiscal integration, and also the agreement on an additional €200bn in funding for the IMF, will be enough to arrest the economics crisis - an editorial in FTD argues that:
"For all the understandable anger both sides should not obstruct the possibility of one day making a fresh start under new governments. In summary: The euro will not go under. But the crisis is not over. The AAA rating of the Euro-zone remains at risk. The next rescue summit is guaranteed to come.
All in all, still plenty to play for…
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