Tuesday, March 23, 2010

Will this be a beneficial crisis?

Readers of this blog will forgive me, I am sure, if I get a teensy-weensy bit suspicious about the oh-so-conveniently timed Cameron baby. This sort of news shocks even me with its cynicism, inured though I am, normally, to the vagaries of politicians.

Enough of British politics. The thought of all three leaders having babies within the next year fills me with absolute horror.

Let us consider the question of the ongoing fiscal crisis in the EU, particularly the eurozone, of which Greece, whose problems remain unresolved, is the most egregious example. The Economics Commissar (well, at least, they don't have one for Heavy Industry, so we ought to be grateful for small mercies), Olli Rehn clearly thinks that this could be a beneficial crisis.

On Sunday he gave an interview to Welt am Sonntag [here it is in German] in which he explained that the Greek debacle has proved that "the European Commission should be more involved in setting member states' fiscal budgets". What a great idea. Let us widen the gulf between government and governed even further. That should make everyone be satisfied with politicians.

When earlier this year I spoke at a conference organized by Euromoney Plc in Vienna against the notion that East European countries should enter the eurozone, my main argument was political. The economic tensions between the core and peripheral countries were too great and the peripheral ones were likely to suffer. In order to overcome this the EU, more specifically the Commission, would have to interfere more and more in those countries' economic affairs, thus widening the political gulf of accountability. The outcome, I said, would not be a happy one in an area where political history has been somewhat fraught in the last century.

Mutatis mutandis, this applies to Greece as well. And, of course, Commissar Rehn would not stop with Greece but move on to other countries with those difficult histories. Just what does he think will happen? Well, of course, he does not care. What matters is the strengthening of the European project.

However, there are stirrings abroad. Well, in Germany who is a vital cog in that machine. As the Financial Times reports, hostility to Germany bailing out Greece is becoming stronger as time goes on (and time is going on with some sort of a decision on the subject due at the end of this week). You can't blame the Germans. When they were herded into the euro and were forced to abandon their beloved Deutschmark, they were promised quite specifically that they would not find themselves having to bail out Greece or Italy. One has come to pass and the other is not far off.

Almost a third thought that Greece should be asked, politely or otherwise, to leave the eurozone. But even worse for the project:
Further highlighting flagging support for the euro, 40 per cent of Germans also thought Europe's biggest economy would be better off outside the single currency - a significantly higher level of scepticism than in France, Spain or Italy.
That's a little coy but we all understand who is meant by "Europe's largest economy" and it is not Greece.


  1. Re the FT/Harris poll: Note that ONLY 30% of the Germans thought they would be worse off if they left the euro. So, in this poll there was a <u>majority for leaving the euro</u>, and presumably resurrect the D-Mark.

    Now, that does not bode well for the "project". Even though Germans are known to be (too) well behaved and seldom rise up against their masters the upcoming state elections will make it very difficult for Merkel to give in to Barroso's more and more strident demands for an instant rescue package for Greece.


  2. It really doesnt matter how many ordinary German voters are in favour of getting out of the Euro or even the EU - they'll never be given the chance to express an opinion on the subject. After all their leaders know best, why would they bother asking the people that elect them?

  3. Now, now, John.

    Cynicism does not become you. As I mentioned above there are some upcoming State elections in Germany, and the electorate will be able to express an opinion on politicians handing out money to Greece or not, as the case may be.


  4. I don't see what's in it for German taxpayers to remain in the EU. Perhaps their interests conflict with those of their political class.

    Whatever happens will be interesting.

  5. The EU will surely find a corrupt and dishonest way of deferring the inevitable.

  6. Barry,

    You may be right! :-)

    It looks like the French have tried to pull a fast one on the Germans. Bruno Waterfield writes in Daily Telegraph today:

    EU draws up plans for single 'economic government' to prevent crisis

    Germany and France have tabled controversial plans to create an "economic government of the European Union" to police financial policy across the continent.

    However, the august German business paper Handelsblatt writes:

    "Der Begriff Wirtschaftsregierung wurde auf deutschen Druck im letzten Moment aus dem Text gestrichen." [The term economic government was removed from the text in the last moment, due to German pressure.]

    So, Waterfield was wrong then? No, it does not appear that way. From the Swedish daily Svenska Dagbladet:

    "I den franska översättningen står också att stats- och regeringscheferna i sitt Europeiska råd ska vara en ekonomisk regering för EU. Ljuva ord för en fransman, men väl magstarkt för många medlemsstater och texten har därför mildrats i den engelska versionen."

    [In the French version it is stated that the heads of states and governments in the European Council will be an Economic government for EU. Sweet words for a Frenchman, but a bit too strong fare for many other memberstates and therfore the text has been temepered in the English version.]

    One wonders what the Germans will say when they find out about that little fudge?