Angela Merkel, chancellor of Germany

In the immediate aftermath, the deal reached in the early hours of Friday morning by eurozone leaders was hailed as a victory for Mario Monti, the prime minister of Italy, and his allies, and a defeat for Germany’s Angela Merkel. But the reality is a little less clear-cut.

Merkel’s concessions should certainly not be downplayed. Allowing direct recapitalisation of banks to bypass governments and enabling countries to tap rescue funds to lower their borrowing costs are two policies that the German chancellor has opposed for months, both publicly and privately.

However, with a lot less fanfare, Merkel has succeeded in pointing the eurozone firmly in the direction that she desires.

The gradual transfer of power from what Merkel considers as inadequate national-level banking supervision to the European Central Bank is a major leap towards political integration.

In allowing the European Stability Mechanism (ESM), the eurozone’s rescue fund, to buy government bonds, Merkel did not approve any re-writing of the ESM’s rules. She merely allowed an existing ESM instrument, previously agreed by leaders of member states, to be activated. Crucially, this does not represent more money for the eurozone’s safety net: Merkel seems to have won the battle to keep the eurozone’s ‘firewall’ to what she regards as a maximum. What is more, the agreement to allow direct recapitalisation of banks will not happen until the ECB takes up its banking supervisory role.

Mario Monti, prime minister of Italy

Monti was self-assured during a post-summit briefing to reporters that lasted for almost an hour, but there was no triumphalism. He projected the image of the calm, competent economics professor he was until succeeding Silvio Berlusconi last autumn.

Even though he played the role convincingly, no one was fooled: during the preceding 24 hours, Monti had been tough as steel. By holding the EU’s €120 billion growth pact hostage to agreement on measures to force Italy’s and Spain’s borrowing costs down, he extracted significant concessions from Merkel – above all the possibility of using eurozone funds to buy government debt.

Monti, who is under considerable domestic pressure to water down his labour-market reforms, said that, in the past, EU leaders had treated each other with “excessive courtesy”. This summit clearly demonstrated that, with Monti around, courtesy will be carefully measured.

Herman Van Rompuy, president of the European Council

Van Rompuy emerged from the gruelling summit largely unscathed. True, his pre-summit proposals – drafted with the presidents of the European Commission, the European Central Bank and the Eurogroup – had been unpicked by German officials as “unbalanced” (containing more detail on debt mutualisation than about anything else), and the leaders found themselves unable to endorse the proposals in their current form. Instead, they asked Van Rompuy and his co-authors to develop a roadmap for closer economic and monetary union, with an interim draft to be discussed in October. But the push toward closer union will give the Belgian Christian Democrat considerable power in shaping the future of the EU.

Francois Hollande, president of France

Hollande can be satisfied with the results of the European Council. His ambitions did not so much concern Italy’s and Spain’s demands for short-term action or Germany’s long-term political integration plan. The key item for Hollande was the pact for growth and jobs that he had been calling for since he became a candidate for France’s presidency.

The prospect of the pact not being approved on Thursday night – because Spain and Italy were using their consent as a bargaining chip to get what they wanted – did not worry Hollande too much, largely because he agreed in principle with his southern neighbours.

“Italy and Spain are simply saying that what interests them is what happens next,” he said mid-way through the summit. “They could not give a partial agreement; they want to give a global agreement. For them, the stability measures must be a priority.” His sympathy with Spain and Italy marked a break with the Franco-German axis of the past two years, and he got what he wanted to boot.

Mariano Rajoy, prime minister of Spain

Rajoy was lucky to have an ally as skilful as Monti at the summit. The two men are linked not by personal friendship but by a congruence of interests – above all that of keeping borrowing costs down.

Rajoy, whose crisis management has come under criticism, was able to benefit from Monti’s tactical blocking of the EU’s growth pact without having to put his own head too far above the parapet. This worked for both leaders: it allowed Monti to say that he was not alone, while Rajoy benefited from Monti’s hardball tactics without having to do very much himself. This way of doing business was clearly to the taste of the self-effacing Rajoy. It is less clear whether this approach will work when Rajoy can no longer hold on to Monti’s coattails.

David Cameron, prime minister of the UK

The summit’s big decisions were made without help or hindrance from the UK. The sense of a country on the margins was plain afterwards when Prime Minister David Cameron spent most of his time talking about its own obsessions: the latest British banking scandal, the UK’s relationship with the EU, and the EU’s future budget.

In the run-up to the summit, Cameron and his finance minister, George Osborne, had been urging the eurozone to act decisively. Afterwards, Cameron welcomed the decisions on the European Stability Mechanism, while stressing that British banking would be unaffected and that British tax-payers would not be bailing out banks elsewhere in Europe.

He adopted a more muted, less critical tone about the eurozone’s efforts than in the past. Asked whether Merkel had been defeated, he said “We…should show some understanding about the difficult political decisions that we are expecting others to make.”

What perhaps caused greater discomfort for him was that the build-up to the summit had fuelled calls within his own party for an in-out referendum on the UK’s membership of the EU. At the weekend (1 July), he contributed an opinion piece to a newspaper trying to dampen down enthusiasm for such a vote. On Tuesday, he was forced to return to the theme in parliament, declaring his opposition to a referendum “now”.

Enda Kenny, prime minister of Ireland

Ireland is the example that Spain wants to avoid emulating – where the obligation to bail out the banks has fed government debts. Now Ireland stands to benefit from the agreement that the ESM can bail out banks directly, without the government taking on more debt. Eamon Gilmore, Ireland’s deputy prime minister, described this as “a massive breakthrough” that would “allow the country to recover much faster”.

Kenny was more restrained in his reaction. “Will it make it easier to emerge from the programme?” he asked rhetorically about the impact that a re-engineering of Ireland’s debt might have on the country’s ability to emerge from the international bail-out programme. “It certainly won’t make it more difficult.”

Reflecting on the negotiations and on last year’s success at a meeting of leaders of the eurozone in securing a reduction of the interest rate on Ireland’s debt, he said of himself and other members of the European Council: “I’m a hard grafter and they’re finding out that they shouldn’t tangle with me too often.”

Mark Rutte, prime minister of the Netherlands

Rutte is facing parliamentary elections in September, because after his government lost the support of the right-wing Freedom Party (PVV) in April he was forced to submit his government’s resignation.

In domestic politics what matters most is probably whether the eurozone’s decision leaves Rutte open to being outflanked on the right, by the PVV. The other political parties have already accused him of talking tough at home, but giving ground in Brussels.

Like Merkel, Rutte faces accusations at home that having previously taken a hard line on public finances, he has given in to pressure from Italy and Spain. He maintains that there will be “strict conditionality” attached to any help for the Mediterranean countries.

He stressed that it was in his country’s interest to see a solution to the problems of the southern eurozone. The creation of a European banking supervisor was important, he said. He also claimed victory in seeing off the idea of Eurobonds – “a dreadful idea”. It will be the election campaign that determines whether Rutte has miscalculated.

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