The EU's Big Five (& Austria): where are they at ahead of tonight's summit?

The 'growth dinner' of EU leaders is about to start. No big decisions are expected (this is a meeting of EU leaders after all) but here's an overview of where the different big countries are at:

Germany

Berlin  remains fiercely opposed to Eurobonds, but interestingly, EU Energy Commissioner Günther Oettinger - a fellow member of German Chancellor Angela Merkel's CDU party - argues in an interview in today's Handelsblatt:

"Eurobonds are a matter of timing. I advice all participants not to position themselves inherently against them."

Similarly, Rainer Brüderle, the parliamentary leader of the FDP (Merkel's junior coalition partner) told German radio Deutschlandfunk that if structural reforms and budgetary discipline were implemented, Germany should not rule out the introduction of Eurobonds “at a later stage".

It won't touch Merkel for now, but an indication that Germany is set for a long, grinding and existential (in the euro sense of the word at least) debate on this issue.

Austria

It looks like Austrian Chancellor Werner Faymann is on a different wavelength to his Finance Minister Maria Fekter. The latter is opposed to the idea of debt-financed growth à la Hollande, while Faymann told Kleine Zeitung in an interview that he "fully supports" Hollande in wanting to discuss Eurobonds at tonight's meeting. However, the Austrian Chancellor made clear that Eurobonds are "a long-term project that cannot be realised in the next two or three years" while stressing the need to also have strong mechanisms to ensure that budget discipline is "an absolute prerequisite" for the proposal to be implemented.

France

French President François Hollande held a joint press conference with Spanish Prime Minister Mariano Rajoy earlier today. Nothing new came out of it and France's focus at the tonight's summit remains:

• Fiscal stimulus is necessary to achieve deficit and debt reduction; 

• Greece must remain in the eurozone, and its partners need to do more to help the country return to growth. However, previous commitments must be respected;

• No taboos on Eurobonds - they must be discussed. Their main purpose is to cut the financing costs of struggling eurozone countries.

We can't help noting how Hollande of late stropped referring to the fiscal treaty as frequently, instead stressing the 'growth pact' for the eurozone.

Spain

In his joint press conference with Hollande, Rajoy simply reaffirmed Spain's priorities for tonight's meeting (and the near future), saying that "financing" of states and banks was "the most urgent" of all the issues:

• Immediate action is needed to keep borrowing costs at sustainable levels for Spain and other peripheral eurozone countries. Rajoy stopped short of mentioning the ECB during the press conference, but a new round of ECB bond purchases is clearly on his wish list

• Eurobonds are not a priority, but could be discussed as part of a broader, long-term debate on  deepening European integration;

• He also said that the EU need "certainties" including that "the euro will exist for ever and no country will default [on its debt]." The EU institutions should start sending clear messages on these points. Okay, Rajoy...

Italy

Staying true to his style, Italian Prime Minister Mario Monti has kept awfully quiet, although he has warned that trying to isolate Merkel tonight would be "impractical and counterproductive" (no kidding). Monti and his cabinet are presumably doing a lot of work behind the scenes, based on a couple of specific proposals (which we mentioned here and here).

The Italian government yesterday adopted plans to unblock between €20bn and €30bn by the end of the year to make overdue payments to private firms that have supplied goods or services to the public administrations. Could this be a sign that Monti's proposal to temporarily exempt overdue payments to businesses from the EU's deficit and debt rules is gaining ground in Berlin? Possibly...

UK

The UK will continue to voice its opposition to a financial transactions tax (the Commission STILL has not given up on this proposal and will apparently present a massaged impact assessment tonight showing that the negative effect on EU GDP is not bad at all, never mind what it said initially). Cameron will also, rightly, push for various pro single market measures. It will be interesting to see how the UK responds to ideas for 'project bonds' and topping up the European Investment Bank. Cameron will also urge "decisive action" over Greece/the euro and may also provide some (largely irrelevant) advice on how the Greeks should vote in the forthcoming elections and the Germans should respond to proposals for Eurobonds.

In any case, as always, EU leaders will have a lot to talk about.

EU vs eurozone: Who has said what ahead of the summit?

Much has been said about David Cameron’s thinly veiled threat to veto Treaty change at 27 if he is unable to obtain satisfactory safeguards to protect UK financial services from overzealous EU regulation (as we have argued for), and also his determination to protect the single market from fragmentation. This is clearly a worry if the eurozone proceeds with closer integration and implements its own measures on issues such as financial regulation, labour markets, harmonisation of corporate tax base, and the introduction of a FTT at the eurozone level, as proposed by Merkel and Sarkozy in their recent letter to Council President van Rompuy.

However, amidst this Cameron vs Merkozy narrative, it is important to remember there are another 24 member states attending the summit, and they all have specific views on what they want to achieve, and crucially, how prepared they are to see a separate eurozone agreement. It is the stance adopted by these countries that will determine what, if anything, Cameron is able to bring back from Brussels.

While there is not much explicit support for Cameron’s position, the determination for Treaty change at 27 comes through strongly, suggesting that as we have argued, Cameron may have more leverage than widely acknowledged. Anyway, you can judge for yourselves:

Polish PM Donald Tusk criticised those trying to save their own money and further their own national interests at the expense of the community, arguing that this could “lead to the ruin of the European community… this is a devilish alternative”, adding that: “We can only protect our national interests by maintaining and strengthening a community of 27 countries”, although he acknowledged there was a "real threat" the summit could fail.

Finnish PM Jyrki Katainen said that: "It will be a very tough meeting I don't know how long it will take. It is always better if you change the current treaty of 27 because it's important to get a strong, united Europe and not to divide it. The situation seems to be quite tricky and now we all must be cooperative and ready for compromise. Hopefully we only have one common treaty for everybody."

Dutch PM Mark Rutte said that: "We also have to make sure that we keep the union of 27 together. It is not just a union of 17 euro countries. It is of great importance for a country such as the Netherlands, which is growth-orientated and believes in importance of jobs, that we keep countries such as the UK, Sweden and the Baltic countries and Poland in."

Danish PM Helle Thorning-Schmidt said that "I come with a mandate to negotiate this, and we're very open. We think that if the euro countries see treaty change as part of the solution, we are able to back that treaty change. What is most important right now is that we show a willingness to compromise and a willingness to find solutions in common, and then it is very important for all of us that we keep the 27 member states together. This is what has worked in other times of crisis for Europe, and that is what we will be working (for) now as well."

Romanian PM Traian Basescu warned that: “Any decision in Brussels will affect the everyday lives of all Romanians [therefore] Romania can not accept a Europe with two categories of members”.

Hungarian PM Viktor Orban said that: “The question today is whether the current two-speed Europe will develop into a three or four-speed Europe… Hungary’s national interest is that the euro zone members should find a solution that does not strain the framework of the 27-member EU. This compromise is somewhere in the direction of Germany’s position, that’s where we’d like to get to by Friday afternoon”.

Austria’s Chancellor Werner Faymann is more pessimistic, saying that the basis for agreement on EU treaty change at 27 was not very good.

Martin Shultz MEP, leader of the Socialists and Democrats in the EP, said that: "If there is too much insistence on treaty change there is a danger of backroom deals and trade-offs, which we do not want to see. I want clarity and transparency. I understand those who refuse to engage in horse-trading with a non-euro country. But we cannot allow the division of Europe into a 17-10 structure. Maybe, we should think about a 26-1 solution."

Separately but significantly, Spain’s incoming Prime Minister Mariano Rajoy (not yet allowed to attend EU summits, since his government will only enter office on 22 December), has allegedly urged outgoing Prime Minister José Luis Rodríguez Zapatero to demand that the QMV threshold on future euro bailouts via the European Stability Mechanism be raised to 90%, so that Spain can also have a veto.