Saturday, December 17, 2011

G&S Pact, The Non-EU Treaty & EFSF Presentation

Article 14, Paragraph 2, of the draft of the "International Agreement on a Reinforced Economic Union", linked here, states the following:

This Agreement shall enter into force on the first day of the month following the deposit of the ninth instrument of ratification by a Contracting Party whose currency is the euro.

EUobserver reports in an article, linked here,that the majority of French people are opposed to this Treaty. The Upper House of the French Parliament have stated they will never pass the so-called "Golden Rule". The front-running socialist candidate for next years Presidential election in France has stated he does not agree with the terms of the draft Treaty and will seek to renegotiate them.

It threfore appears likely that France will not be among the nine countries initially ratifying this Treaty, nor most probably will it ever do so!

Last evening, I posted on this blog, see here, an image of an exchange touching upon the Growth and Stability pact, that took place nine years ago. Back then I wrote, in a submission to a discussion forum run by the Financial Times, as follows:

"Events are already proving that brute force will be the only way of enforcing the terms of the Growth and Stability pact on the EU's smaller members. These latter, as can already be seen, will be the only ones to be held to the letter of the agreement."

It appears that my earlier warnings, to the effect that France and Germany, if convenient only to them, will similarly find ways around their commitments under the new Treaty, might prove unnecessary, as it now seems that they may not even have to bother to ratify it, if they play their cards craftily enough!

For more laughs (as our source Acting Man points out) during your weekend, a new version of the EFSF terms are available in a fancy presentation format linked here. Note Italy is now standing behind this fund to the extent of 19.18% of the total funding, while Spain, whose banks finally seem to be about to face the real losses of the property price collapse, read here, will meet 12.75%

Anybody else wondering how Spain and Italy can sign up to the "Fiscal Compact" by March 2012 and still meet all these commitments and obligations? Maybe they too are planning not to be among the initial nine signatories?

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