On 30 January, European Union leaders met in Brussels to fix the new “budget discipline” treaty decided on 9 December.
The British government made itself a minority of one on 9 December in trying to block the treaty, but has subsequently quietly assented to the treaty involving EU institutions in enforcing its constraints on eurozone member states who sign up for it.
However, on the one hand, the treaty's loopholes through which governments can claim exemption from its budget rules have become large enough that the European Central Bank has publicly said it is unsatisfactory.
On the other hand, to the extent that the treaty has any bite, it will push governments towards drastic cuts which will make the economic crisis worse. Wolfgang Münchau of the Financial Times writes: “The new European fiscal pact [is] quite mad... I have yet to meet anybody who can explain what good the treaty will do.”
EU leaders are trying to impose ruinous further cuts on Greece in the run-up to large repayments on its debt which Greece has to make on 20 March, and for which it needs further credit from the EU. It was revealed on 27 January that the German government is proposing that, as a condition of further credit, the EU should require that the Greek government commit to making debt payments before it spends anything on running Greece, and accept a European commissioner as dictator over its budget decisions.
Even Greek finance minister Evangelos Venizelos has flatly rejected such impositions, similar to what European powers did to countries like Egypt and Turkey in the era of high imperialism.
Italy is bobbing along just the right side of debt disaster; Spain's levels of slump and unemployment are soaring; Portugal is having to pay higher and higher charges to borrow in global markets, and is lurching towards Greek-scale debt crisis.