EU summit does not get very far according to the Guardian

http://www.guardian.co.uk/business/2012/dec/14/eurozone-summit-stalemate

European leaders wound up their final summit of 2012 on Friday in much the same manner as they started the year – kicking the euro crisis can down the road, playing for time, crossing their fingers, hoping the worst is behind them.
In almost three years since the Greek drama erupted in February 2010 and spread quickly around the fringes of the eurozone, the leaders have never quite managed to get ahead of the curve despite 22 summits and countless meetings of eurozone finance ministers.
This week's two-day summit in Brussels repeated the pattern. It was supposed to lay out a grand plan and timetable for reforming and stabilising the euro regime through a battery of federalising political and fiscal moves. In the event, the documents from the EU council president, Herman Van Rompuy, were shredded amid more clashes over fundamentals between Berlin and Paris, while an even more ambitious blueprint from the Commission president, José Manuel Barroso, was simply ignored.
"One wonders how these two gentlemen will enjoy Christmas," quipped Andrew Duff, the Liberal Democrat MEP and ardent European federalist.
Van Rompuy, who has had a very bad month, was told to come back in the middle of next year with a better, more modest plan. The mood was darkened further by German Chancellor Angela Merkel dismissing claims that the worst was over for the eurozone and stressing that the bloc faced two years of painful reforms, slow growth and high unemployment.
"The changes we are going through are very difficult and painful," she said. "We have tough times ahead of us that cannot be solved with one big step."
Despite the stalemate and the seeming complacency, leaders concluded their summit keen to list the year's achievements. And they do have things to brag about.
A year ago Greece's days in the euro looked numbered. This week it got €34.4bn (£28bn) in bailout funds, albeit six months late. There will be no departure from the euro soon. "Grexit is dead," crowed the Greek prime minister, Antonis Samaras.
The bailout fund, the European Stability Mechanism, an embryo European monetary fund, is up and running. There is agreement it can be used to rescue failing banks without adding to government debt – though there is no deal on whether, and when, to do that.
Despite Bank of Italy figures showing Italian public debt had risen above €2tn for the first time in October, borrowing costs for Italy and Spain have fallen sharply from highs in the late spring, taking the edge off the crisis. The big shift this week was the deal on the start of a single supervisor for the eurozone banking sector, with authority vested in the European Central Bank in Frankfurt. This looks like a euro glass that is half full and gives the leaders reasons to cheer. But a half-full glass is also half empty.
The real fights over the banking supervisor, involving money and who pays to shore-up or wind-up failing banks and guarantee depositors, are still to come and will be vicious. The Germans – mainly, but not only – are not interested in having their banks taxed to create a fund that could then be spent, say, to mitigate the impact of a bad Portuguese bank, which is how the so-called common resolution regime is supposed to work.
"The Germans are fighting a brilliant delaying campaign to hollow out the banking union," said a senior diplomat. "They want to avoid all mutualisation. All common pots of money are off the table until after the German election."
The election is next September when Merkel will run for a third term. All action on the euro crisis will be minimised pending that outcome. It is, by some margin, Europe's biggest political event next year. The biggest event this year was the French election and the victory of President François Hollande. At every EU summit since May, including early on Friday morning, Hollande and Merkel have clashed over policy framed broadly as German austerity and rigour versus French expansionism and pooled spending. The result has been stalemate and lowest common denominator policy-making.
"When France and Germany don't get along, things are very bad," said a senior EU official. "When they come to a summit without a deal, very little can happen."
The other newcomer who has arguably had the biggest impact has been Mario Draghi, the ECB president. Within weeks of taking office at the start of the year he was flooding Europe's banks with €1tn in cheap, short-term credit. That bought a little time, did not really work, but by the summer in London he pledged to do "whatever it takes" to save the euro, amplifying that promise in September with new policy of unlimited bond-buying in the financial markets, albeit tied to stringent conditions.
It was a gamechanger, the single biggest shift that relieved pressure on Spain and Italy and took the heat off the eurozone's leaders, even though the bond-buying has not yet been tried. But Draghi, said the senior EU official, is worried his actions have encouraged the politicians to relax, triggering the current complacency and time-wasting. He is also worried that the ECB's new role as eurozone banking supervisor could hurt the bank's reputation and credibility if the new regime is rendered toothless by German resistance.
The contrast in fortunes between the two key leaders, Merkel and Hollande, is striking at year's end. More than four out of five Germans, in a poll on Friday, were satisfied with Merkel's conduct, while Hollande's popularity has slipped every month since he was elected to 41% last month, a level half that of the German leader's. Merkel's electoral calculations could still be upset by the need for a Spanish bailout in the spring, predicted by senior people in Brussels, or by political and market turbulence around the same time in Italy.
With unemployment soaring across Europe – albeit not in Germany – and years of austerity impacting on European societies, the sense among senior policy-makers and diplomats in Brussels is that something will have to give, that economic shrinkage rather than deficits and debt is the bigger problem, that German rigour will need to be relaxed, that it is time for French expansionary policy. There is little sign the Germans are listening.