Moody’s decision to downgrade Spain’s sovereign credit rating from Aa1 to Aa2 was very unwelcome to the Spanish government yesterday, but it may have come as a timely reminder to other European leaders, meeting in Brussels today, that they are still a very long way from solving the sovereign debt crisis. Ever since the beginning of the year, the markets have been willing to give the benefit of the doubt to the European negotiators, believing that the Germans and the French had finally come to the view that some form of fiscal burden sharing was a better alternative, for themselves as well as for the troubled economies, than the risk of sovereign defaults, or worse still the break up of the euro. Read more
As he entered today’s EU summit, Nicolas Sarkozy, the French president, made his first public comments about his unexpected plan for for “defensive” air-strikes against forces loyal to Libyan leader Muammar Gaddafi, saying they should be used in the event Gaddafi uses chemical weapons or unleashes airpower against unarmed demonstrators.
“The French and the English have said that we are open, if the United Nations wants it, and if the Arab League accepts it, and if the Libyan authorities that we want to be recognised ask for it, to have targeted defensive operations in the sole eventuality that Gaddafi would use chemical weapons or use his warplanes to target non-violent demonstrators,” he told reporters. Read more
Today’s back-to-back European Union summits in Brussels kick off with a discussion on Libya, and it’s sure to be dominated by Nicolas Sarkozy’s unexpected decision to recognise the opposition Libyan National Council as the legitimate representatives of the Libyan people.
Officials at both Nato (where defence ministers are meeting) and the European Union (where European foreign ministers lunched ahead of today’s heads-of-government summit) said Sarkozy’s initiative was not hugely popular; one foreign minister I talked to said it was 26 vs 1 during the EU session. There are widespread concerns about who, exactly, the west is embracing, since intelligence on the opposition’s leadership remails pretty thin. Read more