Deauville Agreement Merkel Sarkozy


On 19 October 2010, just days before the summit that was supposed to find a solution to the instability of the euro zone, French President Nicolas Sarkozy and German Chancellor Angela Merkel met privately in Deauville and reached a bilateral agreement on the easing of the new sanctions regime for countries that violate eurozone rules. Opposition in the centre-right-dominated European Parliament is unlikely to block the reform deal on budget rules that EU heads of state and government will approve next Thursday and Friday at a summit in Brussels. One of the concerns of these analyses is that the announcement may have been anticipated and, therefore, the increase in spreads may already have occurred. But as Truelle et al. (2010) describe it, the agreement between Merkel and Sarkozy was a surprise – it struck those present at the Luxembourg Eurogroup meeting “like a bomb.” Therefore, the evidence, as it exists, indicates that Deauville is essentially a non-event. At best, existing perceptions of the market have been reinforced. Although he has attracted little media attention in France, he was a tonic for Sarkozy when faced with protests against an unpopular pension reform. Paris had to make concessions this week on another front to reach an agreement on the regulation of hedge funds. On 19 October 2010, Angela Merkel and Nicolas Sarkozy agreed that state bailouts within the European Stability Mechanism will now have to impose losses on private creditors. This agreement was held responsible for the increase in public spreads in late 2010 and early 2011. This section discusses the current results of research on the market reaction to deauville`s surprising announcement. With the exception of Greece, the increase in spreads was within the range of variability over the past 20 days.

“Everyone agreed that a limited revision of the treaty (for the new bailout rules) would be necessary,” she said. “The crisis mechanism only applies if the stability of the euro as a whole is threatened.” “Europe has given the opportunity to punish irresponsible governments that do not respect economic agreements,” says Hospodérske noviny. The Czech business daily notes that Slovakia – the youngest state to adopt the euro and criticised for not wanting to contribute to Greece`s bailout – has announced that it supports automatic sanctions to punish countries that overspend. But “everything will remain as before: sanctions will not depend on economic results, but on political decisions,” the Bratislava-based newspaper reports. BRUSSELS (Reuters) – An agreement between Germany and France that allowed an agreement on reforming the European Union`s budget rules has alarmed lawmakers in the EU and other member states who are at risk of being sidelined by the bloc`s major powers. Rogozine believes there is only one reason for having a NATO-wide missile defence system to prevent the United States from bypassing NATO and pursuing bilateral agreements. “The involvement of all NATO members is not a question of security, but of preserving unity,” he said. Figure 1 Reactions to the Government Bond Market to the Deauville Agreement, October 19, 2010 Abnormal Cumulative Changes (Base Points) “The Deauville Agreement shows us that the lady and the gentleman have not learned from the mistakes of managing the Stability and Growth Pact in the past.

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