Those pesky Danes and other matters

Yesterday the Danes voted against further integration into the European Union. As Open Europe says:

Danish Prime Minister Lars Løkke Rasmussen said after the vote, “I don’t consider this as a step back. The Danes have refused to take a step forward…The reasons why Danes refused to choose what we proposed is probably that there’s this feeling of uncertainty given the fact that Europe is right now faced with other major problems which we haven’t really solved.”

Or, in other words, we lost dammit. Now what do we do? The Danes might not like another referendum.

At issue was Denmark's joining fully the EU's justice and home affairs policies. This is how the Danes voted:

The referendum resulted in a large majority - 53.1 percent No, against 46.9 percent Yes - refusing to join EU justice and home affairs policies. Denmark opted out from this part of EU policy when ratifying the Maastricht treaty 22 years ago.

"People wanted to stay in control, and I have great respect for this,” said Liberal prime minister Lars Loekke Rasmussen.

Loekke Rasmussen phoned EU commission president Jean-Claude Juncker and Council president Donald Tusk on Thursday evening and plans to start talks in Brussels on 11 December to secure a parallel deal regarding future Danish participation in Europol, the EU’s joint police body.

Loekke Rasmussen also invited all political parties in the Danish parliament for one-to-one talks on Monday, in order to digest the referendum result and formulate a new Europe policy.

"I have already indicated my support for [UK prime minister] Cameron and his talks ahead of a British referendum to secure continued membership of the EU. We have a strong ally in Great Britain to reform the EU," the Danish PM said.

There is muttering to be heard in various places that this might show the EU that Britain is not the only country that is dissatisfied with the ever closer union and that, in turn, will spur the Eurocrats to being amenable to reforms, particularly as it has now become officially known (as opposed to worked out by all of us who have bothered to think) that the notion of some kind of a deal at the December European Council is moonshine.

British and EU leaders will try to reach a deal on British demands for reforms at February's EU summit, while using the upcoming summit on 17 December for political guidance.

"Debate" at the December meeting "should pave the way for a deal in February," European Council president Donald Tusk said on Twitter on Thursday (3 December).

Tusk announced he will send a letter to EU leaders on Monday (7 December) to give his assessment on the ongoing talks.

In a phone call with Germany's Angela Merkel on Thursday, UK prime minister David Cameron admitted that "the scale of what we are asking for means we will not resolve this in one go.”

Cameron "did not expect to get agreement at the December European Council," his office said after the call.

OK, neither of them is a summit but let us not quibble. Or not too much.

In other related news, a YouGov_De poll has given an unsatisfactory result to the Europhiles: 37% support return to the Deutschmark while 45% want to continue in the euro. Yes, they are still in a majority but it is not exactly overwhelming.

And so we come to UKIP and its performance in the Oldham by-election yesterday. Unfortunately, I have to leave that till another posting partly because I need to vacate this spot but also because I have a certain amount to say on the subject of that result.

The view from over here - 2

And so to the European Union. Russian aggression would not be so bad, would not even happen if President Putin "not a particularly wise man but not stupid, either" had not sensed a basic weakness in the West and, in particular, in the European Union.

The problem, in my opinion, is one that the good Professor does not want to acknowledge as he cleaves to the US foreign policy establishment's views: weakness is inherent in the European Union because of the way it is structured and because its basic lack of real purpose in the real world. That would never be acknowledged by somebody who thinks it was the American foreign policy's greatest achievement.

Professor Mead's list of specific problems that face the EU was interesting though not every item was exactly new to some of us.

The biggest of all problems has been the shift to information economy, which, together with globalization, put great pressure on wage rates and employment. This has continued through the last few decades and has been affecting ever more parts of employment. Is this actually a problem or an opportunity? That depends on how you identify yourself.

European self-identity, particularly since the Second World War (though that event was not mentioned by Professor Mead) has been what might be termed the blue social model: a stable society, a fair amount of government control of the economy and the existence of national champions, all of which may have looked particularly inviting in the late forties and fifties but has long turned stability into stagnation. (Then again, that is precisely the model that UKIP is promoting in its policies, if one can use that word.)

This model or assumption did not allow and still does not allow for the changes that flow out of technological and informational upheavals; instead people's certainties have been destroyed and the institutions that were supposed to provide them have lost their legitimacy. Well, well, so the European project was predicated on an assumption that did not take into account inevitable changes? How many blogs did I write on that subject? How many articles in such publications as the European Journal? I have long lost count.

The second problem is the demographic transition that will require some rethinking on the subject of the welfare state and care for the old. As a matter of fact, what this does require is some rethinking, particularly in Britain about the employability of older people. While people live longer, are healthier and keep their marbles longer (assuming they had them in the first place and I do not mean the Elgin ones) employers, NGOs that call themselves charities and unions continue to exist in a world of about sixty years ago when anyone who lived for three score years, never mind the extra ten, was to be treated as one who could no longer do anything but doze in the sun.

The third problem is the poor functioning and perceived illegitimacy of the European institutions. They are far too bureaucratic, function poorly and are not well regarded by an ever growing section of Europe's population. (I need not say that this came as a complete shock and surprise to me.) At a time, added Professor Mead when no European country can cope on its own (as when could they?) it is not helpful to have European institutions that actually make that coping far more difficult.

The obvious answer is to start thinking how European countries could create links and alliances with some institutions that would strengthen them and not destroy their economy but this is not an idea that comes easily to someone who really does think that the European project was going to be one that lived by liberal ideas of law, justice and liberty. (I kid you not. That is what some American supporters of the EU quite genuinely think they had helped to bring about. Now they are, understandably, upset.)

Problem number four was that the various shifts in political and, especially, economic structures affect different countries differently. Thus Britain, German and the Nordic countries have done reasonably well while France and the Mediterranean ones have not. These tensions would have emerged even without ....

Problem number five: the euro.

Well, all I can say is d'uh! I mean, no, nobody, absolutely nobody said any of this ten, fifteen, twenty years ago. And what did we get in response from the likes of Professor Mead: oh don't worry, it will be fine, European integration is a grand idea, it will be the envy or the world. (NO, do NOT get me on to that subject.)

So, President Putin looked at this seriously dysfunctional structure with political institutions that are not considered to be legitimate and huge economic tensions and thought "hey, I could be President of that easily". No, sorry, he thought, "hey, I can invade anything I like and they will do nothing". And so he did. Well, up to a point. He invaded Crimea and semi-invaded Luhansk and Donetsk. The West did nothing and the EU, in particular, cannot decide what it should do and how to go about doing anything.

Could this have been avoided? Well, possibly, but that would have required an understanding of President Putin's mentality and of Russia's essential weakness. On the other hand, I do not agree with Professor Mead that Putin has inflicted one propaganda defeat on the Europeans and the Americans after another. In what way has he won the propaganda war? In that, apparently, he has continuing support in Russia, no matter what he does? That was to be expected. In that some people, so engrossed in their own little problems that they cannot understand what has been going on in Russia and see Mr Putin as the leader of the anti-Western world thus to be supported? Slightly more surprising but, again, not a huge achievement. But Russia is not exactly a popular country and all suggestions of her allying herself with China and Iran, creating a huge bloc of anti-Western powers fall down, as Professor Mead said, on the fact that China is not particularly interested. An alliance with Iran and what remains of Assad's Syria has considerably less cachet.

Here we should have come to the point of what is to be done with the fact that history has returned and we cannot get away from it. Unfortunately, as I mentioned in my first blog, there was no real answer. Apparently, it would be a good idea if the US and the UK would stop criticizing everything those nasty Europeans do and engage in some sort of dialogue to sort things out.

Well, to start with, we are in different positions. When the US throws up its collective hands up in horror, they do so as outsiders who feel that the wonderful structure they helped to create did not turn out all that well and they are going to have to come back to sort everyone out. When the UK .... ahem ... throws up its collective hands up in horror it is with the knowledge that we are part of this whole shambolic structure, that we have wilfully abandoned the idea of our own foreign policy in order to help create a common one, that we are among the most obedient member states.

The problem from the point of view of Professor Mead and the foreign policy establishment in the US is that for some bizarre reason of their own they saw "Europe" or the European project as something they could point to as an example to all and sundry. That makes me wonder whether they actually understand the concept of history at all. It is the history of Europe that makes the European Union an impossible proposition unless, as its founders knew full well, it is imposed rapidly and ruthlessly on the populations; but it is also the history of such areas as the Middle East or South-East Asia or Africa that makes any imitation of what Europe does unlikely. That, dear readers, is what the return of history really means.

Meanwhile, what is to be done (to quote that terrible novel and equally terrible political tract)? Well, it seems that the Yanks will have to come back.

And we won't come back till it's over, over there. 

Sounds somewhat familiar

Jonah Goldberg, one of the best and most entertaining right-wing journalists, writers and pundits on the other side of the Pond, author of the excellent Liberal Fascism sends out a regular newsletter to which anyone who is interested in cheerful conservatism should subscribe.

The one that hit my in-box on November 1 had this inter alia:

I was going to dedicate this entire “news”letter to gloating over the glorious, nay magisterial, fustercluck that is Obamacare. But a few factors transpired against me. No, none of those factors include the sanctimonious finger-wagging trollery we hear so much from liberals these days that it is somehow wrong to root for the failure of a law that deserves to fail.

Frankly, I don’t quite get the charge. Conservatives said the law wouldn’t work and will be bad for the country. We’ve been pretty consistent on this point (See: 40-odd House votes to repeal, 8 bajillion conservative op-eds, magazine articles, radio diatribes, tea-party protests, the 2010 midterms, etc). And now that it is going into effect and isn’t working and is proving bad for the country, we’re supposed to suddenly act as if this is terrible news? Or, as some argue, this is the moment for Republicans to work with Democrats to make this horrible law more bipartisan.

This sounds very familiar though about another fustercluck and that is the single currency and, indeed, the whole project of Economic and Monetary Union.

At the time we eurosceptics said over and over again not that they will not introduce this ridiculous idea (that was the line many self-deceiving Conservatives took) but that it will be introduced and it will be a disaster. There are thousands of words out there as well as many recordings of radio and TV appearances by this blogger and many others arguing themselves hoarse on the subject.

Well, what do you know? We have turned out to be right. And what happens? Sorrowfully, we are told by all those who were completely wrong that it is not nice of us to gloat; indeed, it is not nice of us even to say "told you so". Instead, we must all pull together to make this ... ahem ... fustrecluck work. For all our sakes.

Well, sorry. It was a bad idea then and it remains a bad idea. As, of course, is our participation in the whole European project.

Latvia is joining the eurozone

Despite obvious misgivings on the part of the population, Latvia is set to become the eighteenth member of the eurozone.

In a report, the Commission confirmed that the Baltic state had met the criteria for joining the single currency.

Officials hope the news will show the eurozone is set to grow despite a three-year sovereign debt crisis.

Latvia is keen to strengthen ties with western Europe and reduce its dependency on Russia.

One can understand why Latvia would want to reduce dependency on Russia (something the East European and Baltic states have been trying to achieve since the early nineties with variable success) but the notion that the crisis will somehow magically disappear because another country clambers onto the sinking ship seems rather doubtful.

Latvians show reluctance to join the euro

The Wall Street Journal thinks this reflects "Ambiguity Over Euro":

Political parties in Latvia skeptical of joining the euro zone next year took the bulk of the votes in the capital in local elections Saturday, heightening the view that many here still don't support joining the bloc.

I'd say it reflects some reluctance on the part of the people of Riga (likely to be the most pro-euro part of the contry) to join a problematic currency union. Never mind, says the article.

Still, the elections, held to select members of 119 municipal councils across Latvia—including the 60 members of Riga's city council—aren't expected to derail Latvia's planned adoption of the euro in January. The European Commission is expected this week to green light the small Baltic nation's entry into the euro zone.

Quite so. Why should votes and elections matter?

Latvians don't want the euro

Well, I am shocked, I tell you, shocked. Apparently the idea of the euro, due to be introduced in  Latvia in January 2014, is unpopular with the people of that country. What can they be thinking of?

They are thinking of two things: the fact that their currency is the symbol of their cherished independence (a questionable concept within the EU) and the equally important fact that they cannot trust their politicians to tell them the truth. How extraordinary! I dare say they might also be looking at the mess the eurozone is and wondering whether it is worth their while to be part of it.

ADDENDUM: I see The Banker has nominated Andres Vilks of Latvia its European Finance Minister of the Year 2013 [scroll down].

In the first nine months of 2012, Latvia’s economy grew 5.6%, the fastest pace of any EU country. The road to this remarkable turnaround was not an easy one, however. After entering into an International Monetary Fund (IMF)-supported readjustment programme in 2008, Latvia implemented a programme of fiscal adjustment which totalled about 15% of its GDP. The results were painful, but resulted in renewed confidence and subsequent successful bond issues.

In fact, a somewhat better result than seen in the eurozone.

Misleading titles

Even though my knowledge of German is shaky, I could understand this title in Die Welt: "Die Deutschen wollen mehr Europa". The Germans, I read, want more Europa. But not, I noticed, more European Union. My reading of the title and my stuttering through the article was confirmed by Open Europe and its team of translators:

According to a series of Deutschlandtrend polls conducted by ARD, only 35% of Germans accept “limited” versions of Eurobonds, with 55% opposing them. 66% do not support stronger eurozone countries providing credit guarantees for weaker ones, while 80% believe that “the worst of the euro– anddebt – crisis is yet to come.” 64% support “more common policy making in Europe over the next few years” (mehr gemeinsame Politik in Europa). However, the question does not mention the EU and does not ask whether respondents agree that powers should be transferred to the EU institutions. Answering a separate question, 53% of respondents said they were opposed to the idea of “United States of Europe”, with only 42% in favour.

Then Open Europe makes something of a boo-boo of its own. They quote from the Finnish business magazine Talouselämä (goodness, do they have Finnish translators in Open Europe?) and say in the heading: "47% of Finns think euro has done more harm than good, down from 71% a year ago". What?

Ahem, no. As you were. The translated and summarized text says:

Meanwhile, a poll conducted last week by Taloustutkimus Oy for Finnish business magazine Talouselämä shows that 49% of Finns are opposed to Finnish participation in EU emergency aid to Greece, while only 34% support the EU bailout. The same poll showed that 47% of Finns think the euro has done more good than harm, down from 71% in a Eurobarometer poll a year ago.

Exactly, the opposite to what the title says. Here are the figures on the opposition to the bail-out on Reuters. And here is the full story in English on YLE. Maybe there are no Finnish translators in Open Europe, after all. That might explain the perplexing heading.

Finland, meanwhile, refuses to budge on the question of the collateral agreement with Greece and the Prime Minister has been threatened with a meeting with Council President Van Rompuy on Monday morning. There's a threat to bring terror into any politician's heart.

They keep telling us

While the House of Commons struggles with the irrelevant European Union Bill (first day of Committee was on Tuesday and nothing much was achieved, as predicted, the colleagues out there are making the usual threats and statements.

Benedict Brogan tells us that the Anglophile French Prime Minister François Fillon, has promised that France and Germany would do "anything" to save the euro. Well, there's a surprise that most of us did not foresee. Of course, the people and courts of Germany might think otherwise but the notion that the French and the German governmentswould do anything has been obvious for some time. Furthermore, M Fillon added in an interview with the newspaper no-one can read on line any more:

“In order to consolidate the euro we will need gradually to harmonise our economic, fiscal and social policies, hence we are going to go towards greater integration. We are going to need to put in place an economic system of governance for the eurozone. Great Britain is not part of the eurozone; at the same time the decision we will take will have great importance to Britain,” he says.

“The question is is the UK ready to accept or encourage greater integration of the eurozone or is the UK distrustful of that and will it create obstacles and make it more difficult to happen? I do believe the first solution would be much better. We in the eurozone have no other choice right now than further integration. Essentially the question is whether the UK wants to exert an influence on this changing Europe or not.”

So, in order to avoid the catastrophe of the euro's failure (and let's face it, the consequences will not be pleasant for anybody but the long-term future would be better) Britain must get more involved in creating an integrated economic governance.

No surprises there. Nor will there be any in the pusillanimous behaviour we can expect from the Boy-Ming and his side-kick, the Chancellor.

Meanwhile Joschka Fischer, the former German Foreign Minister has gone even further (not being the FM means that he can talk a little more openly):

At a large gathering on Wednesday evening (12 January) in the European Parliament, members of the Spinelli Group, a new network of prominent euro-federalists, called for an acceleration of European integration, arguing that a greater economic and political intertwining was urgently needed to solve the bloc's panoply of problems.

"To say that Europe is in a bad way would be euphemistic," the co-president of parliament's Green group and Spinelli member, Daniel Cohn-Bendit, said by way of introduction.

Former German foreign minister Joschka Fischer was equally pessimistic about the current state of affairs at the meeting, entitled 'A United States of Europe'. He acknowledged that "the EU's 'no-bailout' clause was quickly forgotten" in the face of Greek difficulties last year, and that "eurobonds are there, just in a different shape," but was critical of France and Germany's reluctance to move forward with further integration.

"Despite all the kisses [between French President Nicolas Sarkozy and German Chancellor Angela Merkel], France and Germany are going through a difficult period," he said.

The idea that further integration will somehow create a strong, stable entity with a great deal of influence on the world is, of course, laughable but the amount of damage that will be done and is being done in the process is not.

I'd say we understand the message all too well

Apparently, the EU has not been communicating again. As ever, when I hear those words I think of Tom Lehrer's comment:

I feel that if a person can't communicate the very least he can do is to shut up.

Mutatis mutandis, that applies to organizations and transnational monsters. Besides, the truth is that when the EU says that they have not been able to explain properly what they have been doing we can reply as any sensible young woman would reply to a man who tells her that his wife does not understand him. Oh yes, she does, all too well, says the sensible young woman. Oh yes we understand what you have done, all too well, is what we say to yet another announcement that in future there will be better communication.

Yet, as the Wall Street Journal informs us, better communication will be the watchword next year.

According to one senior official, the heads of state and government agreed that "the communications cacophony has to stop."

Cynics might retort that the real issue in 2010 was not inept communication—but the underlying contradictions of the euro zone. Slick public relations can try to put lipstick on the pig—but underneath it's still a quadruped with a curly tail that grunts.

Nonetheless, there's not much argument that the discordant way euro-zone governments transmitted their views didn't calm trouble waters but only roiled them further.

This suggests that western European politicians haven't understood what many of their counterparts from supposedly less sophisticated countries have long internalized: You can't segment your messages according to the audience you are addressing.

I can't help feeling that a respectable newspaper could do better than refer back to one of Barack Obama's particularly unpleasant comments during his presidential campaign and, in any case, comparing a pig to EU policy is an insult to most porcines. As for tailoring your comments to your audience, that has been the norm for politicians ever since there was politics. Unfortunately for them, there is this little thing called the internet; there is also another little thing called the blogosphere. In other words, those disparate groups can now find out with great ease what was said to other groups and they often do not like being taken for mugs.

Furthermore, it matters little how you spin the message; the latter remains the same: the euro is a political project and a great deal of political capital has been invested in it, thus making its salvation essential despite the economic nonsense that it creates. In order to achieve this salvation a good deal of taxpayers' money will have to be spent at a time when all countries are looking round for cuts and savings and the rules created by the EU itself have to be broken.

Meanwhile, astonishingly enough, the eurozone is about to acquire another member and one that has had its share of economic and fiscal problems: Estonia, no longer the little country that can [scroll down].

Within Estonia, debate over membership has been heated. Support has waned since euro-zone countries had to step in and bail out first Greece, and then Ireland, whose massive government debt brought them to the brink of insolvency.

A government-commissioned survey shortly before Christmas found that slightly more than half of Estonia's 1.3 million people approve of the Jan. 1 switch from the local currency, the kroon, to the euro, down from peak support of nearly 60%.

Estonian Prime Minister Andrus Ansip told legislators this month that joining the euro "will bring along more jobs, higher pensions and faster economic growth. It will bring us stability."

But opponents say that euro membership comes at too high a cost, especially as Estonia will be expected to contribute funds to rescue Ireland and any other indebted euro-zone country that may need help.

As Poolamets, a lawyer at the forefront of the campaign against euro adoption, says: "Estonia, Welcome Aboard the Titanic".

Quite an interesting article

Marian Tupy, who is a friend, has an article in the Wall Street Journal about the euro and why it should not be saved. Worth reading. He was until yesterday at Cato Institute but is now coming to London to work at Legatum Institute. I don't wish to be nasty about an institution that has always been very hospitable, but they do need someone who understand the EU.

Professor Hankel is right

Hardly a surprising title for this blog. I have written about Professor Wilhelm Hankel (who looks and sounds just like a liberal German academic of the very old school should) before (here and here).

Yesterday he spoke at an event organized by Open Europe and there were strong indications that his own thinking has overtaken that organization's hand-wringing attempts to find some way of reforming the EU.

Professor Hankel is not happy about the way the EU is breaking its own laws as enshrined in the treaties. Nor is he too happy about the way the IMF has broken the rules under which it was set up.

According to Professor Hankel, the eurozone bailout package is illegal on three grounds: the loans violate the “no-bailout clause” in the EU Treaties; the ECB’s decision to intervene directly in the crisis and buy government bonds from weaker eurozone countries breaks the ECB’s statute; and, the IMF violates its own rules through its involvement, since under the IMF statute central banks (and therefore not governments directly) are allowed only to get aid in a foreign currency. However, Greece will get paid in euros.

In fact, he is not happy with the euro and never has been because of the complete politicization of money.

But Professor Hankel went further than that. He dislikes the EU and thinks it is time to ... well, to change it completely so it will not be the EU any more. The financial crisis was used as he said to no-one's great surprise to accelerate the change from a federation of states to a federal state and that must not be allowed to go ahead.

However, he did not reply to a question as to how this reversal of the process could take place. I suspect he thinks that at some point the governments of at least some of the member states, led, perhaps, by Germany that will finally shrug off those 12 years of iniquity and recall the many post-war years of successful democracy will simply decide to abandon the Union and restore previous arrangements. Perhaps.

And again

Another article, this time in City AM, on the question of how long Germany will stay in the euro. Guy Johnson of CNBC considers that "Germany will soon tire of footing the euro bill". Admittedly, Germany has gained something out of the whole mess.

To be fair there are some upsides to membership. Possibly the biggest one comes from the very weakness of the rest of the zone. Greece, Ireland and Portugal have all done German manufacturing a favour this year by driving the euro lower – in the process making German exports much more competitive.

But with the German economy, apparently, growing fast, will that be enough, particularly as other export markets become more important.

The single currency has always been a primarily political creation, rather than an economic one. But increasingly it’s economics that will determine its future, rather than politics. Put simply, it will not be too long before Germany doesn’t need its Eurozone partners and certainly won’t want to pay for their problems any longer.

Not this time round, I still maintain, but another crisis and that might happen quite soon, and Germany will probably look long and hard at her options. The war was a long time ago.

German economist speaks up against the euro

Well, actually, that ought to be German economist speaks up again. Dr Hankel wrote to Chancellor Merkel earlier this year, asking her not to introduce dubious legislation that would involve pumping German money into the failing Greek economy. Though there is a constitutional case in the offing the Chancellor preferred not to answer.

Now Dr Hankel has written to her again and there is an English translation of the letter on the internet. Once again, he is asking her to repeal the financial aid legislation, a serious misjudgement in his view at a time when the country is being asked to tighten its collective belt.

Since August 18 7,315 German citizens have put their name to this letter. (That's what it says on the site but the number must have grown in the last few hours.) The first letter was signed by 6,128 citizens. There is an overwhelming popular support for a referendum (at present contrary to the German federal constitution) on the financial aid laws.

Both the "Greek Aid Law" from May 7, 2010, as well as the following "Emergency Umbrella Law" from May 7, 2010, do not only constitute strong offences against EU law, but also against our own German constitution.

On the whole it is hard to disagree with the following appeal:

Germany and the few other still economically stable countries in the Eurozone are sinking money into a barrel without a bottom. This money, that the German taxpayers will have to come up with, will be lost for German citizens and their future. By now you had to acknowledge that our country can neither fulfill its social obligations, nor satisfy its promises to keep and create jobs. I am confident you will live to see that this austerity policy will lead to similar effects as we see them nowadays in Greece: protesting people, burning cars, shattered windows and maybe still worse actions. Can you account for this?

I have no doubt Chancellor Merkel will continue to keep her head buried in the sand.

Wise man

The Czech Central Bank's new Governor does not think that the solution to his country's problems is entry into the euro.

The new Czech central bank governor said uncertainty surrounding the euro zone in the wake of the Greek debt crisis is so great that there is no point considering adopting the common currency for now and expressed serious reservations about possible new Europe-wide regulations.

Miroslav Singer, a former vice governor of the Czech National Bank who was named to the top job last week, also said Czech interest rates are likely to stay at their current low levels "longer than people generally think." But he said further cuts were unlikely unless the economy slowed sharply.

Now there's a man who has been paying attention.

Open Europe reminds politicians and analysts of past crimes

It is really hard to be a perestroika europhile as you are doomed to constant disappointment (as were the proponents of the original perestroika). You call for reforms, you put forward all sorts of excellent ideas for reforms of the EU, which would be a very good and popular organization if only its bosses would listen to your ideas for reform, and what do you get? The EU and its institutions powering ahead with their own plans, which are not very sensible and not very popular but are what the EU is all about.

So you find yourself publishing pamphlets with titles like THEY SAID IT .... How the EU elite got it wrong on the euro, which is OK because Open Europe and its various predecessors were always against the euro. Or there is one that is called STILL OUT OF CONTROL - Measuring eleven years of EU regulation. Goodness knows the Boss and I get despondent about lack of progress but, at least, neither of us makes the mistake of thinking the EU can be reformed.

Actually I rather enjoyed THEY SAID IT. It is always good to be reminded of the blatant idiocies people came up with (or possibly blatant lies but the two are not mutually exclusive). Take the case of a certain Nick Clegg.

In 2002 he said:

The single currency, far from being an agent of continental style corporatism, is probably the greatest export vehicle of Anglo-Saxon economics. The euro has done more to enforce budgetary discipline, to promote privatisation and force through labour and product market liberalisation in the rest of Europe than any
number of exhortations from the IMF, the OECD, or the editors of The Economist.

He had already said in 2001

If we remain outside the euro, we will simply continue to subside into a position of relative poverty and inefficiency compared to our more prosperous European neighbours. Remember, we are already only the tenth richest nation in the EU in terms of national wealth per head. Yet you seem to think that such relative decline is a price worth paying for the sentimental satisfaction of retaining increasingly meaningless ‘control’ over our own interest rates.

In January 2009 he wrote in the Independent

The euro may well come to be regarded in the coming years as part of the answer to saving the City from permanent decline. It was easy to dismiss the fledgling euro as a ‘toilet currency’ before we realised our own economic growth was built on sand.

Yet on April 7, 2010 he told the BBC a very different story:

I don’t think the euro is for now. I go even further and say I don’t think interest rates under the Eurozone over the last few years wouldn’t have been right for the British economy […] I accept that Eurozone interest rates over the last few years would have been wrong for Britain.

Hmm. Those "last few years" included years in which he was praising the euro as the way of the future though, apparently, the interest rates were always wrong for Britain. He just forgot to mention it.

So, the pamphlet is very useful but it does soar into realms of porcine aviation by ending its Introduction with the following paragraph:

This note highlights that the politicians who sold their citizens the euro failed to either grasp or tell the whole truth about the single currency. While it is a reminder that the experts and our elected representatives can get it wrong, more importantly, it is a call for greater honesty about the future of European cooperation and a reminder of the urgent need to find a new model that is both politically and economically sustainable; one that is more in tune with the interests and preferences of European citizens.

Can't wait for the appearance of that new model.

Vindicated

Some of us may recall that doomed attempt by four eminent German professors who, in 1998, tried to stop Germany joining the euro by complaining to the German Constitutional Court in Karlsruhe. As this article in Der Spiegel explains it turned out to be a more courageous act than they had anticipated.

With the exception of a small group of people, hardly anyone agreed with them. The four men argued that the euro could not remain stable, because the economies of the participating countries were too disparate and the control mechanisms too lax. This would jeopardize German price stability and affluence. Besides, they argued, a political union had to precede a monetary union.

When the court in Karlsruhe dismissed their suit, they became the objects of malicious insults. Former Chancellor Helmut Schmidt, a member of the center-left Social Democratic Party (SPD), called them "idiot savants with no sense of history." It was an insult Hankel would never forget. After all, Hankel himself was a former close colleague of the legendary German Economics Minister Karl Schiller, who also belonged to the SPD, as well as being the former head of the Landesbank in the state of Hesse. He had also taught at Harvard and Georgetown University, among other institutions.

The four economists were ostracized by other academic institutions and the media, including professional publications. No doubt, with their absence, commentators could "legitimately" claim that there was a full consensus among experts on the necessity for the euro.

Well, the times, they are a'changin'.

The contrary professors got together again, and Schachtschneider, the legal expert, spent two weeks drafting a new complaint. This time it was directed against the bailout package for Greece. Then the four elderly gentlemen made another trip to Karlsruhe. On May 7, after the German parliament, the Bundestag, had passed legislation to approve the financial bailout plan, they submitted their constitutional complaint, together with a request for a temporary court injunction that would prevent then-German President Horst Köhler from signing the aid bill into law before the Constitutional Court could consider their complaint.

A few days later, an ad appeared in the respected center-right daily Frankfurter Allgemeine Zeitung. It was paid for by Dieter Spethmann, the former CEO of the giant German industrial conglomerate Thyssen, who had since joined the group. The copy read: "As was once the case before the outbreak of the French Revolution, Europe's politicians have now lost any sense for the rights, concerns and expectations of their citizens."

It was a call for mutiny, the goal being to encourage citizens to fight back against politicians who had knowingly violated the "no bailout" clause in the Maastricht Treaty, which prohibits an EU member state from financially assisting another member state. The professors argued that violating this clause would turn the monetary union into a bailout and debt community.

The four professors have been reinstated in their colleagues' estimation and their prescience acknowledged. Their request for a court injunction against the Greek bail-out was dismissed but now the Karlsruhe court is reviewing their complaint at length. There are publications being planned that would spread their ideas wider and explain their case in legal and economic terms. Above all, the public is now with them. As Bruno Waterfield reported two days ago,

More than 51 per cent of Germans want to axe the euro after widespread fury that Germany's taxpayers have been forced to come to the rescue of Greece and other high spending southern European countries.

Only three in 10 people in Europe's largest economy now support the single currency, a flagship of EU integration and Germany's European policy.

The Ipsos opinion poll found that disenchantment was highest, 56 per cent, among Germans over 50, those old enough to remember repeated promises that Germany would never have to bail-out other countries as the price of the euro.

It was, after all, one of the many things the four professors warned about in those far-off days - that the members of the euro were economically too disparate and that Germany would end up bailing them out.

An interesting fantasy

Pajamas Media has published an interesting fantasy by James Bennett, the man Andrew Roberts has described as "the godfather of the Anglosphere". (Full disclosure: Jim is a very good friend and we agree on most things, especially the importance of the Anglosphere. In this article he speculates about the possibility of Chancellor Merkel suddenly deciding that she and her country have had enough. Genug!

Being reasonable

Open Europe is nothing if not reasonable. For the span of its existence it has provided the rest of us with excellent research - they have the staff dedicated to it - and with plaintive calls for the need to reform the European Union. If only everyone was as reasonable as they are, they imply, there would be none of this mess.

Their hour has come, one might say. After all, we now have a coalition government, led by Tweeedledum and Tweedledee with Dum assuring us that his party wanted to be in Europe but not ruled by Europe.

The actual plan the DumDee coalition produced for their policies on Europe is also in line with a great deal of Open Europe's thinking - sound tough but avoid all difficult problems and never go too far. For instance they do not intend to join or prepare to join the Euro in this Parliament, which is quite sensible of them, as Britain is no longer eligible for the Euro.

The coalition will also

ensure that there is no further transfer of sovereignty or powers over the course of the next Parliament. We will examine the balance of the EU’s existing competences and will, in particular, work to limit the application of the Working Time Directive in the United Kingdom.

Not quite repatriating powers but that promise was in another political era before the new politics of Britain had begun by the new coalition government that will build a new country.

Nothing daunted, Open Europe has produced a number of ... ahem ... "broken promises" from the EU elite on the euro. Actually, most of us would call them lies and, indeed, that is what we called them all at the time. So, we are not altogether surprised by the fact that all those promises were "broken" or, to be quite precise, unfulfillable.

Still, it is nice to have at least some (not very many) of those quotations in one place, so we can refer back to them and quote them in future when the DumDee coalition decides that, well, perhaps, we ought to have a look at the advantages of joining a stable single currency in order not to pay transaction charges (the biggest red herring in that entire debate).

However, Open Europe, bless its good-hearted attitude, is ready to give good advice. If only was as reasonable ... oh I do beg your pardon, I am repeating myself. Anyway, here is the advice:

While it is a reminder that the experts and our elected representatives do get it wrong, more importantly, it is a call for greater honesty about the future of European cooperation and a reminder of the urgent need to find a new model that is both politically and economically sustainable; one that is more in tune with the interests and preferences of European citizens.

Well, here is my advice to Open Europe: why not collect all those suggestions that you made to the EU, its politicians and bureaucrats in one place and call it Tales of Porcine Aviation?

Discussions about Chancellor Merkel

So did Chancellor Angela Merkel win over the question of Greece and what to do about it? Der Spiegel is allowing some people to shake their heads more in sorrrow than in anger. Take Werner Weidenfeld, Director of Center of Applied Policy Research (confusingly shortened to CAP) and "an expert on the structure of, and relationships within, the European Union" or a useful sort of bod to have around. When asked by Der Spiegel what he thought of the Chancellor's performance, he gave it a sort of B+.

Helmut Kohl would have done the same, he opined, but the problem with Merkel is that she is not so good at public relations. After the negotiations she will be perceived as stubborn and determined to push through her ideas regardless of the European principle. It is hard to believe that if that is the perception of Chancellor Merkel in Germany that would in any way harm her position.

To be fair to Herr Weidenfeld, he is not over-impressed by the horror of internal squabbling - it was always there - or by the threat of expelling Greece from the eurozone, if needs be. The eurozone needs security and that might mean expelling troublesome members. Furthermore, threats of that kind might have a beneficial effect on other countries who might find themselves in Greece's position. In other words, the PIIS (minus the G) are probably going to be a problem quite soon. Or, at least, they might be a problem. And, whatever the opposition might say in Germany, the people of that country, one assumes, prefer to have a Chancellor who is on their side, instead of paying lip-service to the idea of some putative European harmony.

The German media, perhaps unused to the sight of a German leader who puts her country's interests first, have also been mixed in their reaction. There seems some doubt as to whether the IMF with its strict rules should have been involved though what the alternative might have been remains opaque. It is a blow to European pride and to the whole European project. Well, maybe. But most of us would say that a project that relies on shady accounting (all those countries getting into the EMU though clearly not qualified) and an inability to cope with a crisis has little to be proud about.

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.