Líderes Europeus negociam como Colapsar a Europa

Herman van Rompuy pede menos soberania, para o resto dos Estados-nação.

POR LUIS MIRANDA | THE REAL AGENDA | 16 SETEMBRO 2012

Flashback: Herman van Rompuy, presidente da União Europeia: “Os Estados-nação homogéneos estão mortos.”

O colapso do euro e da União Europeia não é um resultado da crise financeira criada pelos banqueiros. Na verdade, a crise foi criada como uma forma de justificar a aquisição de Estados-nação independentes na Europa, América, África e Ásia.

Depois de ler o que Herman van Rompuy tem dito — sobre como acabar com os Estados — é claro que nenhum país sairá reforçado como resultado de qualquer ação tomada pela União Europeia, o Banco Central Europeu ou o FMI. Agora há uma luta dentro da hierarquia bancária, cujos membros estão discutindo qual é a melhor maneira de completar o colapso do sistema financeiro global, começando com a zona do euro e depois levando-o para as Américas.

O presidente da UE não tenha renunciado ao seu objetivo de destruir as nações e coloca-las sob o poder de órgãos de governo não eleitos. “O tempo dos Estados-nação homogêneos acabou”, disse Van Rompuy, acrescentando que “em todos os estados membros da União Europeia, há pessoas que acreditam que seu país pode sobreviver sozinho no mundo globalizado. É uma ilusão — é uma mentira.” A força desta declaração só pode vir de um homem quem por trás das cenas conhece todos os detalhes da implosão planejada do sistema financeiro global.

Desde a semana passada e durante o fim de semana, líderes europeus se reuniram para determinar a melhor maneira de destruir a zona euro, consolidando o poder sobre os estados independentes como fizeram com a Grécia. Depois que o Banco Central Europeu admitiu que compraria títulos soberanos de países endividados, o Fundo Monetário Internacional (FMI) lançou-se como um abutre financeiro descrevendo como a entidade acredita que deve ser o seu papel no mecanismo para destruir a economia europeia. Enquanto isso, o primeiro-ministro espanhol, Mariano Rajoy, que não aceitou formalmente as condições dadas pelo BCE, entrou em uma corrida para pedir condições mais suaves antes de entregar o seu país ao BCE e ao FMI.

“A decisão do BCE de fornecer fundos para a Espanha, praticamente força o país a buscar um segundo resgate”, disse o chefe do BCE Mario Draghi. O BCE já manifestou sua intenção de comprar quantidades ilimitadas de dívida da Espanha e outros países em necessidade, por isso espera-se que Rajoy não vai deixar passar a oportunidade de pedir um resgate completo. Diplomatas espanhóis têm ido para Bruxelas, Frankfurt, Washington e Madri para tentar negociar melhores condições antes que a Espanha solicite o resgate neste outono.

Mas de acordo com membros da elite em Bruxelas, nem mesmo um resgate será uma forte rede de segurança para a Espanha, porque é claro que o país não pode cumprir sua metas de redução do défice, devido à depressão econômica que ocorre em Europa e a falha do governo espanhol de aumentar sua renda. Assim, o resgate é nada mais do que uma cortina de fumaça para facilitar a entrega da Espanha a seus credores, os banqueiros europeus.

Enquanto isso, a chefe do FMI, Christine Lagarde, disse que a organização está interessada em jogar um papel na concepção e acompanhamento do plano do Banco Central Europeu para comprar títulos emitidos por governos da zona do euro. Lagarde destacou que as medidas recentemente anunciadas pelo Presidente do BCE, Mario Draghi, “pavimentam o caminho para a frente”, mas observou que a prioridade deve ser aplicada de uma forma coordenada. “Estamos prontos para ajudar na concepção e implementação de todos os programas que devem ser parte da solução”, disse Lagarde, que enfatizou que a sua instituição está disposta a participar “ativamente” na concepção e desenvolvimento do programa de compra de dívida dos países da zona do euro.

Tanto Herman van Rompuy, como o primeiro-ministro italiano Mario Monti tem chamado para uma reunião com outros líderes europeus para encontrar um terreno comum para “derrotar idéias populistas que tentam destruir o euro”, disse ele. “A integração da UE é um problema permanente”, disse Herman Van Rompuy, “mais uma vez enfrentando problemas econômicos e sociais (…) por isso, saúdo a idéia do presidente Monti de realizar uma reunião especial sobre futuro da unidade europeia “, disse Van Rompuy.

O Presidente explicou que a Comissão Europeia está consciente das críticas e oposições que existem no momento, mas destacou “os enormes esforços de todos os países e instituições da UE com solidariedade sem precedentes”. O Sr. van Rompuy provavelmente quer dizer  que há solidariedade com os banqueiros, não a favor da população europeia, que, apesar de sofrer as maiores taxas de desemprego da história recente, não tem apoio direto de líderes da UE . Na verdade, as primeiras iniciativas tomadas pelos governos da UE cortaram gastos de programas sociais, salários, pensões e outros programas que costumam aliviar a carga sobre a maioria do cidadão europeu médio.

Espanha deverá expandir sua campanha por melhores condições antes da aplicação de um plano de resgate durante a reunião de ministros das Finanças da UE. “Essa é uma conversa que não deverá ocorrer entre Espanha e do BCE, mas entre a Espanha e todos os membros da zona do euro,” disse Benoit Coeuré, diretor francês do BCE, em entrevista à France Inter.

Herman van Rompuy, não evitou as perguntas feitas na semana passada sobre o resultado dessas negociações. Van Rompuy disse que em dezembro será apresentado o projeto de uma nova arquitectura europeia. Este projeto será realizado pelo BCE e pela Comissão Europeia, e irá incluir quatro pilares interligados: um sindicato bancário, uma união fiscal, união económica e uma união política mais intensa.

Líderes Europeos Negocian cómo Colapsar Europa

Herman van Rompuy pide menos soberanía para el resto de los estados-nación.

POR LUIS MIRANDA | THE REAL AGENDA | 16 SEPTIEMBRE 2012

Flashback: Herman van Rompuy, presidente de la Unión Europea: “Los Estados-nación homogéneos están muertos”.

El colapso del euro y de la Unión Europea no es un resultado de la crisis financiera creada por los banqueros. De hecho, la crisis fue creada como una forma de justificar la adquisición de los estados nacionales independientes en Europa, América, África y Asia, entre otros.

Después de leer lo que Herman van Rompuy tiene  — para poner fin a los Estados — es claro que los países no se verán fortalecidos a raíz de cualquier medida adoptada por la UE, el Banco Central Europeo o el FMI. En estos momentos hay una lucha dentro de la jerarquía bancaria, cuyos miembros están discutiendo cuál es la mejor manera de colapsar el sistema financiero mundial, comenzando con la zona euro y extenderla más tarde a las Américas.

El presidente de la UE no ha renunciado a su objetivo de destruir a las naciones y someterlas al poder de órganos gubernamentales no electos. “El tiempo de los Estados-nación homogéneos ha terminado”, dijo van Rompuy, quien agregó que “en todos los estados miembros europeos, hay personas que creen que su país puede sobrevivir solo en el mundo globalizado. Es más que una ilusión — es una mentira.” La firmeza de esta sentencia sólo puede venir de un hombre que detrás de las escenas conoce todos los detalles de la implosión prevista del sistema financiero mundial.

Desde la semana pasada y durante el fin de semana, los líderes europeos se han reunido para determinar cuál es la mejor manera de destruir la zona euro, consolidando el poder sobre los Estados independientes como lo han hecho con Grecia. Después de que el Banco Central Europeo admitió que comprará bonos soberanos de los países endeudados, el Fondo Monetario Internacional (FMI) se lanzó como un buitre financiero describiendo lo que cree que debe ser su papel en el mecanismo para destruir la economía europea. Mientras tanto, el primer ministro español, Mariano Rajoy, que no ha aceptado oficialmente las condiciones dadas por el BCE, entró en una carrera para pedir condiciones más suaves antes de entregar su país al BCE y el FMI.

“La decisión del BCE de proporcionar fondos a España, prácticamente obliga al país a solicitar un segundo rescate”, dijo el jefe del BCE, Mario Draghi. El BCE ya ha expresado su intención de comprar cantidades ilimitadas de deuda de España y otros países que lo necesiten, por lo que se espera que Rajoy no va a dejar pasar la oportunidad sin pedir un rescate completo del país. Diplomáticos españoles han ido a Bruselas, Frankfurt, Washington y Madrid para tratar de negociar mejores condiciones antes de que España pida el rescate este otoño.

Pero de acuerdo a información privilegiada de Bruselas, ni siquiera un plan de rescate financiero será una fuerte red de seguridad para España, porque es claro que el país no podrá cumplir con sus metas de reducir el déficit debido a la depresión económica que tiene lugar en Europa y el fracaso del gobierno español para aumentar sus ingresos. Así que el rescate no es más que una cortina de humo para facilitar la entrega de España a sus acreedores, los banqueros europeos.

Mientras tanto, la jefe del FMI, Christine Lagarde, dijo que la organización está interesada en jugar un papel relevante en el diseño y seguimiento del plan del Banco Central Europeo de comprar bonos emitidos por los gobiernos de la zona euro. Lagarde subrayó que las medidas recientemente anunciadas por el presidente del BCE, Mario Draghi, “allanan el camino a seguir”, pero señaló que la prioridad debe ser aplicada de una manera coordinada. “Estamos dispuestos a ayudar y colaborar en el diseño y ejecución de todos los programas que deben ser parte de la solución “, dijo Lagarde, quien ha enfatizado que su institución está dispuesta a participar “activamente “en el diseño y desarrollo del programa de compra de deuda de países de la zona euro.

Tanto Herman van Rompuy, como el primer ministro italiano Mario Monti, han convocado a una reunión con otros líderes europeos para encontrar un terreno común para “derrotar las ideas populistas que han tratado de destruir el euro”, dijeron. “La integración de la UE es un problema constante”, dijo Herman Van Rompuy, “una vez más frente a los problemas económicos y sociales (…) así que le doy la bienvenida a la idea del presidente Monti de celebrar una cumbre extraordinaria sobre el futuro de la unidad europea “, dijo Van Rompuy.

El presidente explicó que la Comisión Europea es consciente de las críticas y oposiciones que existen en este momento, pero hizo hincapié en “los enormes esfuerzos de todos los países e instituciones europeas realizadas con solidaridad sin precedentes”. El Sr. van Rompuy probablemente quiere decir que hay solidaridad hacia los banqueros, no a favor de la población europea, que a pesar de sufrir las mayores tasas de desempleo en la historia reciente, no ha tenido ninguna ayuda directa de los líderes de la UE. De hecho, las primeras iniciativas adoptadas por los gobiernos de la UE iban a recortar el gasto en programas sociales, salarios, pensiones y otros programas que generalmente alivian la carga que pesa sobre la mayor parte del ciudadano europeo promedio.

Se espera que España amplíe su campaña para obtener mejores condiciones antes de su solicitud de un plan de rescate durante la reunión de ministros de Finanzas de la UE. “Esa es una conversación que no debe ocurrir entre España y el BCE, sino entre España y los demás miembros de la zona euro”, dijo Benoit Coeuré, director francés del BCE, en una entrevista en France Inter.

Herman van Rompuy no rehuyó la semana pasada a preguntas sobre cual será el resultado final de todas estas negociaciones. Van Rompuy dijo que en diciembre el proyecto de una nueva arquitectura europea se habrá presentado. Este proyecto se llevará a cabo por el BCE y la Comisión Europea, e incluirá cuatro pilares relacionados entre sí: un sindicato bancario, una unión fiscal, una unión económica y una unión política más profunda.

European Leaders Negotiate How to Collapse Europe

Herman van Rompuy Calls for less sovereignty for remaining nation-states.

By LUIS MIRANDA | THE REAL AGENDA | SEPTEMBER 9, 2012

Flashback: Herman van Rompuy, President of the European Union: “Homogenous Nation States are Dead”.

The collapse of the Euro and the European Union is not a result of the financial crisis created by the bankers. In fact, the crisis was created as a way to justify the banker acquisition of independent nation states in Europe, America, Africa and Asia, among others.

After reading what van Rompuy’s intention is in multiple occasions – to end nation-states as we know them — it is clear that countries will not be strengthened as a result of any measure adopted by the EU, the European Central Bank, or the IMF. As we speak there is a fight inside the banking hierarchy, whose members are discussing what is the best way to collapse the world’s financial system, beginning with the Euro zone to later spread the collapse to the Americas.

The EU president has not shied away from his goal to destroy nations and to submit them to unelected governing bodies. “The time of the homogenous nation state is over,” Mr he Rompuy said, adding that “in every European member state, there are people who believe their country can survive alone in the globalised world. It is more than an illusion — it is a lie.” The firmness of this statement can only come from a man who behind the scenes knows all the details of the planned implosion of the world’s financial system.

Since last week and over the weekend, European leaders have met to determine what is the best way to bring down the Euro zone while consolidating power over the independent nation-states as they’ve done with Greece. After the European Central Bank admitted it will buy sovereign bonds from indebted nations, the International Monetary Fund (IMF) launched itself like the financial vulture it is to discuss what it believes must be its role in the mechanism to destroy the European economy. Meanwhile, Spanish Prime Minister, Mariano Rajoy, who has not officially accepted the conditions given by the ECB, entered a race to beg for softer conditions before he hands his country over to the ECB and IMF.

“The decision of the ECB to provide funds to Spain, pretty much obligates the country to request a second bailout,” said ECB head, Mario Draghi. The ECB has already expressed its intention to buy unlimited amounts of debt from Spain and other nations who may need it, so it is expected that Rajoy will not let the opportunity pass by without requesting a complete bailout of the country. Spanish diplomats have gone to Brussels, Frankfurt, Washington and Madrid to try to negotiate better conditions should the country request the bailout this Fall.

But according to Brussels’ insiders, not even a financial bailout will be a strong safety net for Spain, because it is clear that the country will not be able to meet its goals to cut the deficit due to the depression now taking place in Europe and the failure of the Spanish government to increase its revenues. So the so-called rescue or bailout is nothing else than a smoke screen to facilitate the handover of Spain to its creditor, the European bankers.

Meanwhile, the IMF chief, Christine Lagarde, has said the organization is interested in playing a relevant role in the design and monitoring of the European Central Bank plan to buy bonds issued by euro zone governments. Lagarde stressed that the measures recently announced by the ECB President Mario Draghi, “pave the way forward”, but pointed out that “the priority is to be implemented in a coordinated manner.” “We are prepared to help and assist in the design and implementation of any programs that should be part of the solution,” said Lagarde, who has said that her institution is willing to participate ”actively” in the design and development of the program debt purchase of euro zone countries.

Both Herman van Rompuy and Italian Prime Minister Mario Monti have called a meeting with other European leaders to find common ground to “defeat the populist ideas that have sought to destroy the Euro,” they said. “The integration of the EU is an ongoing problem,” said Herman van Rompuy, “again dealing with the financial and social problems (…) so I welcomed the idea of ​​President Monti to hold a special summit on the future of European unity,” said Van Rompuy.

The president explained that the European Commission is aware of the criticisms and oppositions that exist right now, but emphasized “the tremendous efforts of all European countries and institutions made ​​with unprecedented solidarity”. Mr. van Rompuy probably means solidarity towards the bankers, not in favor of the European population, which despite suffering the largest rates of unemployment in recent history, has had no direct help from the EU leaders. In fact, the first initiatives adopted by EU governments were to cut spending on social programs, salaries, pensions and other programs that generally alleviate the burden on the largest portion of the average european citizen.

It is expected the Spain will expand its campaign to obtain better conditions previous to its request of a bailout during the meeting of finance ministers of the EU. It is expected that both Spain and Greece will clear the timing of the petition as the appetite of European partners to facilitate (or not) things mild conditions (or not). ”That’s a conversation that should occur not between Spain and the ECB, but between Spain and the other members of the euro zone,” said Benoit Coeuré, French director of the ECB, in an interview on France Inter.

Herman van Rompuy did not shy away last week about what the final outcome of all of these negotiations must be. Van Rompuy said that by December the project for a new European architecture will have been submitted. This project will be undertaken by the ECB and the European Commission and will include four pillars connected to each other: a banking union, a fiscal union, an economic union and a deeper political union.

Spain Officially under Brussels Rule

By requesting a financial bailout of its banking system and accepting all measures recommended by Brussels, Spain has effectively walked into the wolf’s den.

By LUIS MIRANDA | THE REAL AGENDA | JUNE 26, 2012

The reaction to Spain’s decision to accept a financial bailout for its banking system had immediate reactions everywhere in that country and abroad. First, the decision to request over $100 billion dollars to Brussels to rescue what the country’s Prime Minister says is 30 percent of the banks caused the collapse of the stock market. Second, by the mid afternoon, the adoption of new rules from the European bankers caused Moody’s to downgrade 28 Spanish banks and left Spain’s credit rating just above junk status. Third, The European Union will, as it did with other countries that were rescued, assumed complete power of the budgetary policy of the Spanish government.

On Thursday, European finance ministers will meet to discuss the details of the latest European rescue which implies that Spain will have to adopt every single recommendations originated in Brussels. Any violation to such rules will consequently bring harsh penalties against the peninsular nation. Another issue that will be discussed on Thursday and Friday will be the guidelines that the European government will give each nation that requested a bailout in regards to the supervision that the euro zone leaders will exercise over the banking system and the amount that each government will spend, how and when they will spend it.

Now that Spain is in the bag, European leaders like Herman Van Rompuy, Jose Manuel Barroso, Jean-Claude Juncker and Mario Draghi are proposing to establish a system where there is complete centralized control over the financial sector in each of the countries which will include the economic and budgetary matters. In Spain, economists and TV commentators are already analysing the implications of such a decision, since Spain has no longer anything to say about what is done with its finances. The Prime Minister Mariano Rajoy has said on national television that new and more difficult measures are still to come. Those measures include a 10 percent increase in the sales taxes, which will reach 18 percent. This increase is surely to affect the prices and food and other basic needs.

After the increase in the sales tax or IVA, Spain will have to ‘reform’ its pension system, which will mean that Brussels will also take control over the retirement of millions of Spanish people. Those who have contributed into the retirement system, will have to retire later and take a significant haircut to their benefits once they decide to stop working. That is if they receive any retirement benefits at all. Additionally, the government will also propose a cut in the salaries it pays to workers in the public sector and a considerable reduction in the number of people it will employ once Brussels recommendations are effective.

Although the details of Spain’s bailout are not fully disclosed to the public or the media, leaks provided to some economists in that country detail that the country will have to take care of the bankers’ debt for at least the next quarter of a century while paying an interest rate of between 3 and 5 percent. Spain’s incapacity to meet its obligations was the caused cited by Moody’s for its most recent downgrade, Meanwhile, and as a consequence of such downgrade, Spain will have to continue paying higher interest rates at bond auctions. This situation would get even worse of Spain needed another financial bailout in the near future.

French junior budget minister Jerome Cahuzac, one of the people who meets today with the rest of his European colleagues to work out the details of Brussels meeting on Thursday, has said that it is only fair that Spain also submits its sovereignty just as his own country and many others in the euro zone have done it as a condition to receive so-called rescue packages. “This is what we are talking about, budget solidarity in Europe which implies that not only that the French budget, but also the German, Italian and Spanish budgets be subjected to a review by all our partners,” Cahuzac said.

As we reported yesterday, Spain is now finalizing a memorandum of understanding which will be presented before the Eurogroup on July 9, where the final decisions will be made by the 17 finance ministers who work on behalf of the European bankers. The Spanish economy minister explained that the money loaned to Spain will be managed through the Fund for Orderly Bank Restructuring (FROB), which is supposed to be a state-backed cashier, but that in reality is a banker-controlled window that dictates where will the funds recently requested by Spain will be directed.

As it has happened throughout Europe, most of the measures adopted by governments to supposedly deal with the economic crisis have only tightened the belt of the working class, the people who always take on the heaviest burden when banks decide to collapse a country’s financial and economic system. In the case of Spain, as we have said, the financial rescue of its banks means prices going through the roof, later retirement, less or no retirement benefits, a reduction in the purchasing power for the middle and lower classes and a perpetual state of indebtedness for the next 2 or 3 generations of Spanish people, who will have to work all of their lives to pay the debt incurred into by the Spanish banking system.

Secretive Committee meets again to “save Euro”

WSJ

Two months after Lehman Brothers collapsed in the fall of 2008, a small group of European leaders set up a secret task force—one so secret that they dubbed it “the group that doesn’t exist.”

Its mission: Devise a plan to head off a default by a country in the 16-nation euro zone.

When Greece ran into trouble a year later, the conclave, whose existence has never before been reported, had yet to agree on a strategy. In a prelude to a cantankerous public debate that would later delay Europe’s response to the euro-zone debt crisis until the eleventh hour, the task force struggled to surmount broad disagreement over whether and how the euro zone should rescue one of its own. It never found the answer.

A Wall Street Journal investigation, based on dozens of interviews with officials from around the EU, reveals that the divisions that bedeviled the task force pushed the currency union perilously close to collapse. In early May, just hours before Germany and France broke their stalemate and agreed to endorse a trillion-dollar fund to rescue troubled euro-zone members, French Finance Minister Christine Lagarde told her delegation the euro zone was on the verge of breaking apart, according to people familiar with the matter.

The euro zone’s near death had stakes for people around the world. A wave of government defaults on Europe’s periphery could have triggered a new crisis in the international banking system, with even worse consequences for the global economy than the failure of Lehman.

The dangerous dithering was driven by ideological divisions that continue to paralyze the currency union’s search for solutions to its structural flaws. Deep differences on economic policy between Europe’s frugal north and laxer south, between Germany and France, and between national governments and central EU institutions hindered an effective early response to the crisis. Only when faced with calamity—the collapse of the euro zone—did leaders put aside their differences and reach a compromise.

Complicating matters: The two most important politicians deciding the fate of the euro often had conflicting agendas—and much at stake personally.

French President Nicolas Sarkozy, known in France as the “hyper-president” for his relentless flurry of new initiatives, faced declining approval ratings as his domestic economic overhaul stalled. The excitable 55-year-old leader saw that Greece’s woes could rock the euro zone. Mr. Sarkozy seized on the issue as an opportunity to prove his leadership chops and thus shore up his popularity.

For German Chancellor Angela Merkel, 56, the crisis was the biggest test of her career. A trained physicist known for her cautious, deliberative style, she feared a backlash from German voters and lawmakers, and defeat in Germany’s supreme court, if she risked taxpayer money on serial deficit-sinner Greece. Despite pressure from Mr. Sarkozy, she fiercely resisted a quick fix.

When Mr. Sarkozy barreled into one meeting with camera crews and photographers in tow, Ms. Merkel icily ordered the cameras out: “I won’t let you do this to me,” she said, warning she wouldn’t play the part of “the stubborn old bag.”

Europe eventually did establish a rescue fund in May. By then the price of calm had soared, requiring a pledge of €750 billion. It defused the panic but hasn’t snuffed out the crisis: Unsustainable borrowing still poses huge challenges, especially in Greece and Ireland.

The danger of a government-debt crisis in the euro zone began to preoccupy top European policy makers in October 2008. Hungary, an EU member which doesn’t use the euro, found itself unable to sell bonds to jittery investors. The EU, using an existing but little-used program, and the International Monetary Fund and World Bank swiftly propped up Hungary by pledging about €20 billion in loans.

But it soon became apparent that the euro zone had no tools to save one of its own. EU treaties made clear the facility used for Hungary was off limits to euro members. For most EU officials, the IMF was taboo, too: Its loans were fine for poor ex-Communist nations, they felt, but not for developed euro members.

In March 2009, French Treasury official Xavier Musca was preparing to step down as chairman of the Economic and Financial Committee, an influential body of technocrats who manage EU economic policy. He briefed his successor, Thomas Wieser of Austria, on the duties. At the end of a long list, he added one more. “Incidentally,” Mr. Musca said, “there’s a group that doesn’t exist.”

The secret task force, coordinated by the committee chairman, had been meeting surreptitiously since November 2008 to craft a plan should a Hungary-style crisis strike a euro nation. Membership was limited to senior policy makers—usually just below ministerial level—from France, Germany, the European Commission, Europe’s central bank and the office of Jean-Claude Juncker, the Luxembourg premier who heads an assembly of euro finance ministers.

The task force met in the shadows of the EU’s many councils and summits in Brussels, Luxembourg and other capitals, often gathering at 6 a.m. or huddling over sandwiches late at night. Participants kept colleagues in their own governments in the dark, for fear leaks would trigger rampant speculation in financial markets.

Potential crisis candidates were obvious: Portugal, Ireland, Greece and Spain, a group of deeply indebted states derisively tagged with the acronym “PIGS” by bond traders.

A gap quickly opened up between Germany, attached to euro-zone rules it viewed as banning bailouts for profligate countries, and France, which wanted greater freedom for national governments to support each other as they saw fit.

A fault line also developed over whether EU institutions should run any bailout operation. The European Commission, the union’s executive branch, pushed for a central role in raising and lending funds—and found an ally in France. Germany, wary of a power grab, was deeply reluctant to put its cash in Brussels’ hands.

The German finance ministry feared the commission was trying to establish a precedent for centralized European public borrowing, through EU bonds. That would imply Germany, Europe’s strongest creditor, subsidizing other nations. Instead, Germany insisted any aid must come via loans by the individual euro-zone members to a stricken country. That way Berlin, writer of the biggest check, could control the process and force a wayward recipient to reform itself.

The philosophical divide among task-force members persisted for nearly a year. Last October, it ceased to be academic.

That month, Greece’s newly elected Socialist government declared the country’s 2009 budget deficit was heading for 12.5% of gross domestic product—more than three times the previous government’s official forecast.

Stunned investors began to dump Greek bonds. Greece faced daunting debt repayments in spring 2010, and it wasn’t at all clear if it would have the money to make them.

By February, it became obvious that the 16-nation euro zone would have to do something to address the Greek bond meltdown. The secret task force of France, Germany and EU bureaucrats opened its doors to the rest of the member countries—except Greece.

A summit of EU leaders had been planned for Feb. 11 to mull Europe’s long-term economic goals. Governments insisted publicly that Greece was “not on the agenda.” The hope, say aides to several European leaders, was that if Europe didn’t upset the markets by talking about the matter, Greece might be able to sell enough bonds to escape trouble.

But Greek bond prices—a key measure of investor confidence—began plunging in the days before the meeting. Luxembourg’s Mr. Juncker convened an emergency teleconference of euro-zone finance ministers on the eve of the summit. They agreed on a statement to be read at the summit’s conclusion pledging “support” for Greece.

In Berlin’s austere chancellery building, Ms. Merkel wasn’t happy. Her advisers were telling her that Greece’s problems ran deeper than a short-term cash shortage: The country was economically uncompetitive and living beyond its means. Without a deep overhaul, a quick-fix bailout would keep Greece afloat for only a few months, they warned. In addition, Germany’s supreme court would strike down a bailout, the advisers warned, unless it was absolutely unavoidable.

Deep in the night, Ms. Merkel called other leaders, including President Sarkozy, and made it clear she would veto any promise of aid for Greece unless Athens took much tougher action to cut its public spending and overhaul its economy.

Mr. Sarkozy replied that Greek Prime Minister George Papandreou was already taking brave action.

“Now it is time for Europe to help,” he said.

“The financial markets will say this is not a solution,” Ms. Merkel told the French leader.

The next day’s summit, on a Thursday, was scheduled for 10:15 a.m. at the Bibliotheque Solvay, a historic library on a Brussels hilltop. Late Wednesday, EU President Herman Van Rompuy of Belgium postponed it by more than two hours. Snowy weather was the official explanation given for the delay.

In reality, Mr. Van Rompuy huddled that morning in his office on the fifth floor of the EU’s summit building with a few key leaders—including Ms. Merkel, Mr. Sarkozy and the head of the European Central Bank, Jean-Claude Trichet. Other European leaders were cooling their heels at the library. On currency markets, the euro was gyrating in anticipation of a bold rescue—or a bust.

Mr. Sarkozy pushed the chancellor for a clear public declaration that Europe stood behind Greece. “I cannot buy that,” Ms. Merkel responded.

Eventually, Mr. Van Rompuy brokered a compromise, in the form of a nine-word sentence tacked on to a statement aides were scribbling out on a conference table: “The Greek government has not requested any financial support.” The language sneaked in a back-door mention of Greece, but it conformed to Ms. Merkel’s insistence that the country not be offered any help.

She had won the round.

Other European leaders believed Ms. Merkel was playing for time because of domestic politics. Her center-right coalition faced a crucial regional election on May 9 in North Rhine-Westphalia, Germany’s most populous state. Opinion polls showed voters were furious about the prospect of bailing out the profligate Greeks.

“It was clear that the election was playing a big role,” says the finance minister of another euro-zone country. Spokesmen for Ms. Merkel strenuously deny that North Rhine-Westphalia influenced her tactics on Greece.

The chancellor struggled to rein in speculation about an imminent bailout one Friday in late February, when the head of Germany’s biggest bank, Deutsche Bank Chief Executive Josef Ackermann, mysteriously appeared in Athens for consultations with Greek leaders. Mr. Ackermann had an idea for supplying Greece with up to €30 billion of credit—half from Germany and France, half from major European banks.

In a phone call from Athens that day, Mr. Ackermann pitched the proposal to Ms. Merkel’s chief economic adviser, Jens Weidmann. The reply: unacceptable. “You cannot tell the Greeks that this is a German government offer,” Mr. Weidmann said, fearing the already-widespread impression that Mr. Ackermann was acting as a go-between.

A posse of cameras met Mr. Ackermann when he emerged from the Greek parliament building. “I’m regularly in Greece because I love Greece and the beautiful weather,” a grinning Mr. Ackermann said, before disappearing into his armored Mercedes-Benz.

By mid-March, Greek Premier Papandreou was clamoring openly for Europe to reassure markets by putting money on the table. Ms. Merkel went on German public radio that month and said Greece didn’t need aid. An upcoming EU summit should focus on other issues—and other European leaders shouldn’t stir up “false expectations,” she said.

But behind the scenes, Ms. Merkel was starting to take over the contingency planning.

There was one thing the secret task force had agreed on: Europe, not the IMF, would handle any bailout. The German finance ministry felt the same. Involving the Washington-based fund in a bailout of Greece would be an admission of European weakness, Finance Minister Wolfgang Schäuble said publicly. Mr. Sarkozy, Mr. Juncker and ECB chief Trichet all shared that view strongly.

Ms. Merkel, however, overruled them all. Her advisers were telling her that aid to Greece could be sold to her skeptical countrymen only as part of a wrenching IMF program of economic adjustment for Greece. IMF-inflicted pain would also deter other indebted euro-zone countries from seeking aid.

The disagreement came to a head before the broader EU’s regular spring summit in Brussels on March 25.

That afternoon, before all 27 leaders gathered, Ms. Merkel met Mr. Sarkozy in one of the many spartan meeting rooms in the EU’s warren-like headquarters. The chancellor agreed to announce that the euro zone would rescue Greece if it faced default—but only as a last resort, once Greece had exhausted its access to capital markets. Also, the IMF must be part of any loan package, and the IMF—not the European Commission—should draw up Greece’s program of overhauls, she said.

Mr. Sarkozy protested against involving the IMF, whose biggest shareholder is the U.S. government. Europe cannot let “the Americans” decide who gets credit in Europe, he said.

Ms. Merkel put her foot down, insisting that only the IMF had the necessary experience. Mr. Sarkozy, recognizing that Germany’s financial muscle was essential for any bailout, reluctantly gave way.

On April 11, with the crisis of investor confidence spreading from Greek government bonds to the country’s banking system, the EU finally put money on the table. As Germany wanted, the €30 billion for the first year would come in the form of 15 separate government-to-government loans, while the IMF would lend another €15 billion. Officials hoped the sum, enough to cover Greece’s borrowing needs for less than a year, would be enough to calm markets.

It wasn’t.

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