Collapse of the euro is 'inevitable':
Bailing out the Greek economy futile, says FRENCH banking chief
By Sam Fleming and Tim Shipman
12th February 2010
The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday.
Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone bloc.
The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a 'double-dip' recession in the embattled zone. The bailout of Greece will only act as a 'sticking plaster' for the Euro crisis, the bank warned today
The bailout of Greece will only act as a 'sticking plaster' for the Euro crisis, the bank warned yesterday
Claims that the euro could be headed for total collapse are particularly striking when they come from one of the oldest and largest banks in France - a core founder-member.
In a note to investors, SocGen strategist Albert Edwards said: 'My own view is that there is little "help" that can be offered by the other eurozone nations other than temporary, confidence-giving "sticking plasters" before the ultimate denouement: the break-up of the eurozone.'
He added: 'Any "help" given to Greece merely delays the inevitable break-up of the eurozone.'
The alarming claim came a day after European Union leaders promised 'determined and co-ordinated' action to shore up Greece's tattered public finances, but disappointed traders by failing to provide specifics.
Further details are expected early next week, but markets were in high anxiety yesterday amid fears political divisions among rich eurozone members could derail any rescue.
The euro slid almost 1 per cent to $1.357 yesterday, meaning it has lost
10 per cent of its value since November. The pound rose to 1.14 euros.
Earlier this week Business Secretary Lord Mandelson's claimed that the single currency had been a 'remarkable success' and that it remained in Britain's interests to join.
David Cameron ridiculed that claim yesterday.
He told the Tories' Scottish conference: 'Are this Government the only people in the country who still think that would be a good idea? Our deficit and debt are bad enough without the straightjacket of the euro.
'If I am elected for as long as I am prime minister the United Kingdom will never join the euro.'
The French bank's warning was echoed by Mats Persson, Director of the Open Europe think-tank, which campaigns for reforms in Brussels.
He said: 'The eurozone is facing a fully-fledged crisis. The Greece episode has made it painfully clear how flawed the euro project was from the very beginning.
'Even if Greece receives a one-off bailout it would not solve the real problem, which is the huge differences in competitiveness between the eurozone's richest and poorest members.
'If these differences are to be evened out, the EU would need a single budget and common taxes so it can redistribute resources.
'One thing is clear, Britain made the right choice in staying out.'
Mr Edwards argued that Portugal, Ireland, Greece and Spain are too economically weak to withstand the rigours of eurozone membership.
Countries that are highly uncompetitive are normally able to slash interest rates and devalue their currencies to prop up their economies.
But this is not possible within the euro, given its one-size-fits-all economic governance.
The implication is that weak, peripheral eurozone members will have to suffer years of painful deflation and tumbling living standards, as well as draconian budget cuts, in order to adjust.
Harvard University Professor Martin Feldstein, a long-standing sceptic on the euro, yesterday said the single currency 'isn't working' because member governments have no incentive to keep their public debts under control.
'There's too much incentive for countries to run up big deficits as there's no feedback until a crisis,' he said.
The eurozone faces the danger of a 'doubledip' recession after Germany's economy retreated into stagnation.
Figures published yesterday revealed that the countries who have joined the euro collectively grew a mere 0.1 per cent in the fourth quarter of last year - equal to Britain's own faltering performance.
Germany was the biggest drag, recording zero growth in the final three months of 2009 after emerging from recession earlier in the year.
Axel Weber, President of Germany's Bundesbank, warned this week there is a chance his nation's economy will contract in the first quarter of
2010, in part because of the severe winter, in a major blow to recovery hopes.
The figures from the European Commission are a blow to Britain's embattled manufacturers, which count the eurozone as their biggest export market.
France provided a bright spot in the report, expanding by 0.6 per cent in the fourth quarter-But Italy, Spain and Greece all registered contractions in their gross domestic product.
Economist Martin van Vliet of ING Bank said: 'The paltry pace of fourth quarter growth makes crystal clear that the eurozone economy cannot yet stand on its own feet.
'The disappointing eurozone growth data are a sobering reminder that recovery from financial crisis led recessions tends to be slow and protracted, and might not prove very supportive in calming markets' fears about the region.'
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Telegraph Greece could bring euroland to its knees The architects of economic union failed to recognise its Achilles' heel, says Edmund Conway.
By Edmund Conway Published: 6:32AM GMT 11 Feb 2010 Comments 125 | Comment on this article
The Greek crisis has brought the muddle of the euro to light Photo: EPA Pigs are dispensable; or, at least, so says the Ministry of Defence, which yesterday owned up to detonating more than 100 of the poor sow-and-sows in its bid to improve the lot of soldiers blasted by roadside bombs in Iraq and Afghanistan. It is an enlightened attitude that cannot be said to be shared by our European neighbours, who were last night on the brink of endorsing the biggest pig-rescue mission in history. Of course, in this case, the PIGS in question are not animals but countries – or, to be more precise, Portugal, Italy, Greece and Spain. In crisis talks in Brussels today, European leaders will discuss how to prevent Greece from imploding, and tipping its Mediterranean neighbours over the financial precipice. To the great horror of their more sensible Teutonic counterparts, these countries surfed on the tide of cheap credit provided by euro membership and generated a debt bubble so enormous that it threatens to take down their economies.
Investors are terrified that those at the sharpest end – in particular, the Greeks – will fail to honour their debts, and are demanding an ever-higher interest rate from them. If such a rate is imposed, Greece could soon, like every debt recidivist, find itself so hopelessly mired in interest payments that it will no longer hope to escape from its debt. It may already be there. So far, so familiar. Greece is not the first and will not be the last country to face fiscal oblivion during the crisis. But what sets Greece and its porcine neighbours apart from, for instance, this sceptred, indebted isle, is that they are part of the euro. Should one of them default, the very act could bring the entire currency down, plunging the world economy's most important continent into financial and economic chaos. Moreover, none of the usual escape hatches for such crises is available in this case. Usually, the options would be, in order of increasing desperation: first, promise to cut the deficit as soon as possible; second, allow your currency to depreciate as fast as possible; third, if all else fails, call in the International Monetary Fund for a bail-out. Greece has already laid out an impeccable austerity budget to slash its deficit, but, for all its sincerity, investors are loath to take it seriously, given tax- avoidance has long been a Greek national sport. As if to confirm its worst fears, the country was more or less shut down yesterday by a public sector strike. A general strike is in the diary for the end of this month. And this before even the nastiest spending cuts have come into force. So what about an IMF bail-out? This is the option that would make the most economic sense, and has been pushed hard by the UK, the US and the IMF itself. But here's where we leave logical economics behind and embark on what this really is – a political story. Sensible as it is, an IMF bail-out is being resisted tooth and nail by Brussels, which understandably fears what that would imply: a clear signal that the euro project has failed, not to mention an opportunity for Washington to stick its nose into European economic management. Which is more or less where we were last night. The European Commission is edging closer to a "solution" to the crisis. It may be done through the EC or, in slightly more ham-fisted fashion, by effectively passing a begging bowl round Germany, France and others. In time-honoured fashion, the discussions, which concern the fate of hundreds of millions of Europeans, are all going on behind closed doors. The upshot is that, one way or another, the euro's richer members will finance Greece for at least a few months – on the strict proviso that it carries out the austerity measures it promises. Sounds like a muddle? Correct, but for blame one must look to the euro's original architects, who made a concerted decision when creating the currency not to allow for eventualities like this. After all, to do so would have been to suggest that the project might fail. Quelle horreur! But their refusal to see the economic logic – that in the end a currency union will fail unless there is some form of central economic government with fiscal powers – has left the European project facing its greatest test yet. It was possible to sweep this uncomfortable truth underneath the carpet for the single currency's first decade, but now the full scale of the Greek crisis has brought it back on to the agenda. And appropriate as it is that Greece finds itself the Achilles' heel of the euro, it could easily have been one of a number of countries. Even after the current mess is cleared up, the eurozone will find itself faced with an awkward question: does it admit that currency union was a mistake and dismantle it, or does it press on and create an effective European economic government to fill in the missing gap? To do nothing seems untenable. Brussels, which of course has no reverse gear, is pushing for the latter. A few years ago, one would probably have assumed it would succeed. Today, the consensus behind ever-closer integration is disintegrating. The European project was forged in the post-war years when the public was willing to do anything to prevent a repeat of those atrocities. But the majority of Europeans were born well after the war. If Brussels expects to be able to push through closer economic integration over their heads, it may be in for a rude awakening. Even in Brussels, pigs can't fly.
Telegraph
Sticking plaster won't solve the euro crisis Without help, the euro will eventually be brought down by its weakest members, says Jeremy Warner.
By Jeremy Warner Published: 6:52PM GMT 12 Feb 2010 Comments 17 | Comment on this article
The euro will stumble between crises unless changes are taken Photo: Getty Images Europe's political leaders are barking up the wrong tree in thinking the immediate solution to the continent's manifest fiscal problems lies within the eurozone. When reason takes second place to pride, the result is always bad and self-destructive policy. The loss of face feared by the eurozone if others are brought in to sort out the mess threatens just such an outcome. The sooner it is recognised that the initial sticking plaster should be applied not by Germany and France, but by the global economy's traditional lender of last resort, the International Monetary Fund, the better it will be for all.
That's not to say that the IMF can provide long-term remedies for the euro's deeper fault lines and contradictions. It cannot. These are intractable problems that will require Herculean reform within the eurozone. As it is, the problem requires rather more than the vague statements of support we have seen thus far from European leaders. Their approach is eerily reminiscent of the initial stages of the banking crisis, when governments attempted to halt the rout by promising to stand behind deposits. This should, in theory, have made everyone feel safe about their money without having to put taxpayers' cash on the table. Predictably, the confidence trick failed, if only because it did nothing to answer well-founded concerns about the underlying solvency of the banks. The same is true of Greece, and perhaps others, too. The country is as broke as a busted flush and needs direct support in servicing its debts. The reason this would best be provided by the IMF has little to do with the fact that it is technically illegal, under the Maastricht Treaty's no bail-out clause, for EU members to do so themselves. The legislation tat underpins the euro has already been tested to destruction, and as it stands is now largely irrelevant. Rather, it is because of the geo-politics of the eurozone. At a time of growing austerity, German taxpayers will deeply resent any hint of their money being used to rescue the profligate Greeks. The anger felt by German voters will be matched by Greek resentment of the vice-like austerity Germany would impose. A level of pain is being demanded of the Greeks that Germany would never dare inflict on its own citizens, and indeed would regard as economically harmful. It wouldn't take much to revive memories of the devastating famine under Germany's wartime occupation of Greece. Austerity imposed through fiscal and monetary subjugation would risk the very opposite of what the euro is meant to achieve: international friction would fast replace economic co-operation and harmony. Germany has always been sensitive to the charge that the euro is little more than a form of economic imperialism, and it is, in any case, not at all happy with its presumed responsibility as the eurozone's powerhouse to bail out the dominions. That wasn't meant to be the deal at all, even if it might be in Germany's interest to do so; the consequences for German banks and the wider economy of a Greek default would be profound, by some estimates at least as bad as the collapse of Lehman Brothers. The IMF, which has decades of experience in this kind of thing and is entirely comfortable with its role as the economic bullyboy of the world stage, is likely to make a better and more impartial job of it. Already, it is to be brought in to monitor Greek compliance with its fiscal bed of nails. Besides, Greece is only an outrider for fiscal problems which, to varying degrees, have engulfed virtually all advanced economies. The problem is not specific to the Club Med nations of the Eurozone. Yet the IMF can be of no help when it comes to the longer-term challenges facing the single currency. When Greece and other under-developed European economies cheated their way into the euro, they bought themselves the luxury of low German interest rates, which in turn produced a construction, housing and credit boom. As the German economy grew more competitive, these smaller economies became less so, opening up a progressively larger trade gap between the surplus euro core and the deficit fringes that could not be corrected through devaluation. The obvious remedy is for Germany to do more to stimulate domestic demand and, counter-intuitively, become less competitive. Judging by yesterday's GDP figures, which showed nil growth in the fourth quarter, it may have to, for its exports are plainly not going to get any further support from the Club Med countries, all now condemned to a beggar-my-neighbour, deflationary race to the bottom of output and living standards. The euro area also needs urgently to establish central treasury functions and more mobile labour markets, the mechanisms by which the United States maintains a single currency. But as things stand, Germany demonstrates little appetite for any of these things. The euro will almost certainly survive the present crisis. There is too much political capital vested in the project for it to fall at the first fence.. Yet until these issues are addressed, it will stumble from one crisis to the next.
Telegraph Will markets call EU bluff on Greek rescue? Greek bail-out accord lacks substance and finance's poker players may soon call its bluff.
By Ambrose Evans-Pritchard, International Business Editor Published: 9:49PM GMT 11 Feb 2010 Comments 53 | Comment on this article
The Greek crisis has brought the muddle of the euro to light Photo: EPA The white smoke has at last emerged from the Bibliotheque Solvay in Brussels, but global markets do not like its odour. The Greek rescue plan agreed by EU leaders after a week of leaks is strangely thin, raising suspicions that Germany, Holland and the creditor states of Northern Europe still cannot agree on the terms of any bail-out. The euro tumbled 1pc to a nine-month low of $1.36 against the dollar and Club Med debt yields jumped as investors read the summit text, searching in vain for details of debt guarantees or bilateral loans, or guidance on an EU eurobond. All they found was an expression of "political will".
"Euro area member states will take determined and co-ordinated action, if needed, to safeguard financial stability in the euro area as a whole. The Greek government has not requested any financial support," it read. The 27 leaders never even discussed how they might shore up Greece or the rest of Club Med. German Chancellor Angela Merkel said she was not willing to broach the subject at all. The only relevant topic was whether Greece was complying with Treaty obligations, and how the country would slash its budget deficit from 12.7pc to 8.7pc this year – in a slump. "They offered nothing," said Jochen Felsenheimer, a credit expert at Assenagon in Frankfurt. "It was just words without any concrete measures, hoping to buy time." Whether the EU has time is an open question. Credit Suisse says Greece must raise €30bn (£26bn) in debt by mid-year, mostly in April and May. Greek banks have been shut out of Europe's inter-dealer markets, forcing them to raise money at killer rates. They are suffering an erosion of deposits as rich Greeks shift money abroad. This could come to a head long before April. "Economically, we are in a very risky situation. Greece is close to default.. We face systemic risk like the Lehman collapse and unless there is a bail-out for Greece, there will have to be a bail-out for the whole European banking system within two or three months," he said. Yet they are damned if they don't, and damned if they do. "A Greek bail-out increases the risk of EMU break-up, because monetary union can only work if everybody sticks to the rules," Mr Felsenheimer said. French banks have $76bn of exposure to Greece, the Swiss $64bn, and the Germans $43bn. But this understates cross-border links. There are large loans between vulnerable states. The exposure of Portuguese banks to Spain and Ireland equals 19pc of Portugal's GDP. Interlocking claims within the eurozone zone are complex. Contagion can spread fast. Marc Touati, of Global Equities in Paris, said the "haemorrhage of Greece" must be stopped to prevent a domino effect. "We have to move fast, above all to keep Greece in the eurozone. If not, Spain, Portugal, and Italy will be next. It could reach France," he said. French President Nicolas Sarkozy drew an explicit parallel with Lehman Brothers in his press conference with Chancellor Merkel, saying EU leaders had given a cast-iron pledge that no eurozone member would be allowed to fail, just as they promised during the financial crisis that no big bank would be allowed to fail. Details can be thrashed out later, in this case by finance ministers next week. The talk is of a "coalition of the willing", a group of states acting outside the EU Treaty structure. Britain would not be obliged to help. The IMF would bring "expertise" but not set policy. Each country will choose its own way of helping, perhaps using state banks or sovereign wealth funds to buy Greek debt. In Germany's case this might be KFW: for France in might be Caisse des Depots. The arm's-length solution is elegant but it does not hide the fact that such action amounts to a debt guarantee for a serial violator of EMU rules. It implicitly opens the door to bail-outs for a string of countries in crisis. BNP Paribas said any rescue confined to Greece is doomed to fail. "The market would only concentrate on its next 'victim', which would be Portugal," it said. Put another way, investors will demand a similar guarantee for Iberian debt. It is this worry over open-ended liability that made Germany hesitate. Such help would need approval by the German Bundestag – and some other national parliaments. If Germany finances an unpopular rescue that merely puts off the day of reckoning, or if Athens squanders the aid, the deal will come back to haunt Mrs Merkel. There was an element of bluff in Thursday's accord, as if the EU leaders hope to muddle through with "constructive ambiguity", fingers crossed that their vague political pledge will never be tested. Bluff is a valid tool of statemanship, but in this case their bluff could be called very soon.
Greece calls EU rescue plan timid
Greek Prime Minister George Papandreou has criticised the European Union's response to the country's financial crisis as timid and too slow.
Mr Papandreou told cabinet members at a televised meeting in Athens that the EU lacked coordination and undermined Greece's credibility.
At a summit in Brussels on Thursday, the EU offered Greece its backing but gave no details of any plans to help.
Greece's debt crisis has put pressure on the euro, causing it to lose value.
Speaking on his return from Brussels, Mr Papandreou said that while Greece had received a statement of support, delays and conflicting statements over the past few months had made things worse.
"But in the battle against the impressions and the psychology of the market, it was at the very least timid, " he added.
He said that speculation about the country had "created a psychology of imminent collapse".
Mr Papandreou also accused EU institutions - the Commission, the member states and the European central bank - of a lack of coordination.
After the Brussels summit, EU leaders said Greece must take further measures to tackle its huge debts and cut its budget deficit by 4% this year.
Greece's deficit is, at 12.7%, more than four times higher than eurozone rules allow.
Mr Papandreou said after the summit that his country was ready to take the extra action needed to reduce its deficit.
Thursday's talks followed a public sector strike that brought many services to a standstill in Greece.
The government's decision to freeze public sector salaries and raise the retirement age are among the austerity measures that have angered Greek trade unions.
IMF help
Analysts say that powerful eurozone members such as Germany may be able to help by buying Greek government debt or by providing loan guarantees.
But EU leaders appear reluctant to call on the International Monetary Fund to shore up the Greek economy. That would be a big blow to pride in the single currency.
They have asked the European Commission to draft additional measures to be taken by Greece, "drawing on the expertise of the IMF".
The EU will assess Greece's implementation of the austerity plan next month.
Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/europe/8513430.stm
Published: 2010/02/12 18:29:09 GMT
GREECE: GENERAL STRIKE NEARS; PAPANDREOU, APPLY PLAN
(ANSAmed) - ATHENS - Greek civil servants went on strike today, paralysing airports, schools and hospitals, and in February the private sector will join them in a general strike against the austerity measures announced by the socialist government. However, Premier Giorgio Papandreou says that there are no alternatives to his plan to get the country back on track, and with a majority of citizens, the markets and Europe behind him, the plan will move forward. The Adedy union, whose members went on strike today, announced that they will take part in the strike against wage and pension cuts called by the private sector confederation, Gsee, scheduled for February 24. Communist union Pame will also take part in the protest, which will make the initiative a general strike. Participation in today's protest, according to Adedy, was 85%, taking place just before an extraordinary meeting of the EU tomorrow in Brussels and 24 hours after Athens outlined its measures on pay, taxes and pensions as part of the recovery plan that must bring the Greek deficit to below 3% by 2013. Such measures involve a general salary freeze for 2010, and reductions to supplemental pay of 10%, extended to pensions of over 2000 euros. A tax amnesty will be introduced to regularise incoming capital from abroad. Finally, the pension age will be gradually raised by two years and equalised between men and women. Today Papandreou confirmed in Paris that there are no alternatives to the austerity package and that he is ready to take ''all necessary measures'' to deal with the crisis. From recent surveys, it would seem that his plan has support, with over 60% of Greeks saying that they are in favour of wage cuts and believing that the government has an effective plan to save the country.(ANSAmed).
http://www.ansamed.info/en/top/ME11.XAM20145.html Back to top
Telegraph
Euro hit by disappointing eurozone GDP figures European economic growth slowed to a snail's pace in the final quarter of last year, raising fears that the region could experience a double dip recession and sending the euro to its lowest level against the dollar in nine months.
By Jonathan Sibun, Assistant City Editor Published: 7:04PM GMT 12 Feb 2010 Euro hit by disappointing eurozone GDP figures Photo: Getty Images Eurozone gross domestic product rose just 0.1pc in the three months to the end of December after growth in Germany, its leading economy, stalled. The weak performance followed an increase in Eurozone GDP in the third quarter last year of 0.4pc and raised the prospect that the region could fall back into recession if hard-hit economies including Greece, Spain and Italy continue to falter.
France bucked the trend with growth of 0.6pc but Germany was flat, the Italian economy shrank by 0.2pc and Greece by 0.8pc. The euro fell sharply against the dollar and the yen and also weakened against sterling after the data was released. The euro was down 0.4pc against the dollar at $1.363. The single currency, which has fallen nearly 10pc since late last year, was also hit by continued uncertainty over a Greek bail-out following a report that an aid package for the country was unlikely to be unveiled at next week's meeting of European finance ministers. Markets remained skittish after European leaders committed to help Greece on Thursday but failed to lay out concrete plans. The International Monetary Fund on Friday joined the EU in pledging support for Greece. "We stand willing and able to support Greece in ways that the Greek authorities think is appropriate," said John Lipsky, first deputy managing director at the IMF. In a difficult day, traders were also spooked by China's decision to increase banks' reserve requirements for the second time this year, a move some fear could slow growth in the booming Asian economy. Oil also fell more than a dollar a barrel to below $73 (£47) after a US government report showed crude oil and gas stockpiles rose more than expected in the world's biggest consumer economy. The FTSE 100 closed down 19 at 5142.45, while in the US the Dow Jones Industrial Index was down 43 at 10101.19. However, despite the crisis enveloping Greece and Friday's fall, the FTSE finished up 83, or 1pc, on the week. The European Union's vast cost is one of the biggest reasons to be concerned about Britain's relationship with it, says Matthew Elliott, Taxpayers Alliance In our book The Great European Rip-Off, my colleague David Craig, and I, estimated the total cost to Britain of the EU, once the harmful impacts of its numerous policies and regulations have been taken into account, to be £118 billion a year. That is equal to £1,968 for every man, woman and child – a life-changing amount of money for millions who are currently struggling to make ends meet. So what is that cost made up of? Up front, we paid the EU £16,398 million of taxpayers’ money directly in 2008: £650 for every person, or £45 million a day. This goes into the central EU budget. Of course, that £16,398 million contribution is a gross figure and the EU are always quick to point out that we receive money back from Brussels in the form of grants. In fact, in 2008 they were generous enough to hand £9,830 million of our own money back to us. Before accepting that this money should be deducted from any estimated cost of the EU, though, it is worth looking at exactly what those grants are for. You will occasionally see "Funded by the EU" badges stuck on works of public art, stiles, free school diaries, or in other places, and the range of things the money is used for is remarkably broad. On close investigation, the actual list of what those EU grants goes on, throws up numerous dubious examples. Meals for industry representatives at swanky restaurants, thousands of promotional items like fridge magnets, and key rings, £460,000-worth of media training for EU officials based in London, video podcasts about EU events, and even a project run by an actors’ union to combat discrimination against elderly female actors – all are counted as grants to Britain from the EU, which we are expected to be grateful for. The direct contribution to the central EU budget is just the beginning, though. On top of the cost of funding an army of well-paid bureaucrats in Brussels, the British taxpayer also foots the bill for a cohort of public servants employed by our own Government to implement, and oversee, the EU’s rules and regulations. With the EU in control of business, trade, environment, agriculture, fisheries, migration and more, a sizeable portion of each Government department effectively works for Brussels. Those regulations themselves generate a large bill for all of us indirectly, too. Having paid Brussels to come up with so many rules, and having funded people in Whitehall to administrate them, we as consumers, employees and shareholders then have to bear the cost of abiding by it. EU regulation touches just about every level of every industry. If you want to build something, grow something, mince something, scrap something, recycle something, burn something, paint something, bake something, package something, or do a myriad of other things, there is a sheaf of densely-typed regulations just for you. In total, red tape from Brussels adds another £100 billion of lost income, extra expenditure, and forfeited economic growth to the bill. The EU’s policies on food production have been particularly disastrous. The Common Fisheries Policy has had a horrendous impact economically, socially and environmentally. Almost 100,000 jobs have been lost in fishing and dependent industries, leading to increased social security bills in devastated fishing communities. Because fishing boats are banned from bringing home fish that exceed their quotas, even if they are caught accidentally, 880,000 tonnes of dead fish are dumped into the North Sea every year. With the fish supply reduced by these quotas, and by the radical reduction of fish stocks, prices at the till are increased to the tune of £4.7 billion a year - £186 a year per family. The same goes for the Common Agricultural Policy. A huge proportion of the EU’s annual budget is spent on dishing out subsidies to European farmers, whose sales are protected by tariff barriers which effectively tax much non-European produce out of the market. On top of our direct taxpayer-funded subsidy, the CAP costs the British consumer an extra £5.3 billion on their food bills. There are numerous other examples of waste. The VAT system is so dysfunctional that it loses £80 billion of taxpayers’ money a year through carousel fraud. The EU’s libraries are so overfunded, and underused, that each book loan costs £570. A leaked copy of the secret report by auditor Robert Galvin, that we published earlier this year, revealed financial irregularities in the accounts of the majority of MEPs in the European Parliament . The list goes on. Of course, there is heated debate about the actual cost of the EU, when everything is taken into account. Various estimates have been produced, ranging from that of the Conseil d’Analyse Economique, which is chaired by the French Prime Minister, and which failed to identify any trade benefits from the Single Market, or the Euro, to that of the Swiss Federal Government, which concluded that, joining the EU would cost between six and eight times more than their current relationship with Brussels. The striking thing is that no Government has yet demonstrated, in a fully detailed assessment, that the EU is of overall benefit to its members. Remarkably, even the EU itself has failed to produce any convincing figures to demonstrate the benefits of the organisation. Commissioner Gunter Verheugen estimated, in 2006, that the cost of regulation to the European economy, as a whole, is £405 billion a year, while the Commission itself believes that, between 1986 and 2002, the Single Market only brought benefits of £110 billion. Even after taking inflation into account, that means that the EU Commission, itself, believes the costs are three times larger than the benefits. When weighing up any activity, it is sensible to work out how much it costs and what benefits it brings. If you join a club, you would expect the perks received in return to be worth at least the cost of your membership. If they were not, then you wouldn’t join – there are better things you could do with your money without such a costly middle man. The more one looks into the costs and benefits of the EU, the more it seems like just such a rip-off. All the data suggests that it is a hugely expensive club which provides very little in return for your membership fee. As hotly as the EU’s cheerleaders try to discredit any, and every, figure produced that casts it in a negative light, it is impossible to ignore that the weight of evidence suggests overwhelmingly that the EU is a net cost for Britain. It would be perfectly easy, of course, to settle the debate once and for all: the British Government could carry out its own cost/benefit analysis. Strangely, whenever that proposal has been put to government ministers, they have blathered, obfuscated, and then refused to carry one out. The unwillingness of a Government which believes, as Gordon Brown put it, that "we benefit from our membership of the European Union", to do the sums that would prove, or disprove, that assertion once and for all is suspicious, and telling. One of the first acts of an incoming Government should be to carry out just such a comprehensive cost/benefit analysis. Matthew Elliott Matthew Elliott is chief executive of the TaxPayers’ Alliance and co-author of 'The Great European Rip-Off’ (Random House) ?
Berlusconi Tells Netanyahu: “I Have a Dream – Israel in EU” Israeli PM says Italy is one of Israel’s greatest friends. On Iran: “Put the pasdaran on the EU blacklist”
JERUSALEM – “I have a dream: that Israel will one day join the European Union”. Silvio Berlusconi’s official visit to Israel began with a wish. “We are proud to be, with Judaeo-Christian culture, at the base of European civilisation”, said the Italian prime minister standing next to his Israeli counterpart, his “friend Benjamin” Netanyahu. “We are here to testify to friendship, solidarity and desire for collaboration”, added Silvio Berlusconi, who on Wednesday morning will speak in the Knesset, the Israeli parliament.
“FRIENDSHIP OF ITALY AND ISRAEL” – On arrival, Mr Berlusconi was greeted by an embrace from Benjamin Netanyahu, a guard of honour and high praise. “My dear Silvio, we are very happy to have you in Jerusalem”, said the Israeli prime minister. “Italy is one of Israel’s greatest friends and yours is an historic visit”. Mr Netanyahu then quoted Teodor Herzl, the ideologue of the Jewish state: “The foundations of western culture were laid at Rome and Jerusalem”. Mr Berlusconi thanked his counterpart for the welcome. Alluding to Iran without actually naming it, Mr Berlusconi said that even today, there were those who challenged Israel’s existence: “We will oppose this together as an international community and prevent it from ever occurring”. He added that the future was Israel’s main concern and it was necessary to be aware of the terrible past that Jews have lived through “in order never to go back to the world’s indifference, which is the greatest evil”.
PREMIER PLANTS OLIVE TREE – One of Mr Berlusconi’s first appointments had an environmentalist flavour. He planted an olive tree of peace in the Forest of Nations above Jerusalem as a token of friendship with Israel. The ceremony, organised by the long-established Keren Kayemeth LeIsrael (KKL) association, is a symbolic gesture requested from all leaders visiting Israel, explained the KKL’s Italian representative, Raffaele Sassun, as he welcomed the Italian PM. “I must have planted more trees than any other Italian alive”, joked Mr Berlusconi, who also said that it was “a ceremony full of significance”. “I am the only man in Italy who collects ancient olive trees. In Sardinia, I’ve got at least 20 olives that are more than 1,000 years old, certified by the University of Jerusalem, which has 2,000 of them. Sometimes, I tell my guests that the trees are straight from the Garden of Gethsemane and that the mark on one of the trunks was made by Jesus’ knee”.
“NO MORE SHOAHS” – One of the most significant moments of the day came during the visit to the Yad Vashem Holocaust Museum. A visibly moved premier wrote in the visitors’ book: “Our soul screams ‘It’s not true, it can’t be true’ and then cries out in defeat ‘Never, never again’”. With profound emotion, Silvio Berlusconi”. The prime minister then took part in the ceremony of relighting the eternal flame at the remembrance memorial before laying a wreath to commemorate the six million Jews killed under Nazism.
“PASDARAN ON BLACKLIST” – Another crucial issue is Iran. Jerusalem has requested Italy to have the the pasdaran, the Iranian revolutionary guards, included on the European Union’s blacklist. Italy’s EU policy minister, Andrea Ronchi, explained after a meeting with the Israeli deputy prime minister, Silvan Shalom, that the Israeli government has asked for Italy’s cooperation to put the proposal to European authorities. He said that he was personally in favour and that Rome would consider the request. The subject of Iran and its nuclear threat came up again during the toasts that preceded the gala dinner at the King David Hotel. Mr Netanyahu referred to the “bloodthirsty dictatorship that puts the entire world in danger, the greatest challenge since the days of the Second World War”. Mr Berlusconi’s reply was very sympathetic: “We are a friendly country from whom you can ask everything it is proper for a friend to put at your disposal to support your just rights. My task is to prevent my colleagues, European and international prime ministers, from making the mistake of indifference, which was the mistake in the past of all nations before the first great tragedy under Nazi Germany”. Mr Netanyahu replied in words of great esteem: “This is a time for courageous choices and you, my dear friend Silvio, have the clear vision, determination and courage of a true leader”.
KNESSET SPEECH – This is only the beginning. Mr Berlusconi’s diary is a packed one. On Tuesday, various bilateral talks are on the agenda as well as a plenary meeting with ministers from both sides present, the first such meeting in the history of Italian-Israeli relations. The seven ministers in the PM’s party will return to Rome on Tuesday evening but Mr Berlusconi will stay through Wednesday. In the morning, he will make his eagerly awaited speech to the Knesset, the Israeli parliament, and then he will attend the opening of an exhibition of drawings by Leonardo da Vinci. Finally, he will go to Bethlehem on the West Bank, where he will meet the president of the Palestinian authority, Abu Mazen, and visit the Church of the Nativity.
MEDIA WELCOME BERLUSCONI – The importance of Mr Berlusconi’s visit is clear from the coverage in the Israeli media. The Tel Aviv-based daily Haaretz published an editorial under the headline “Listen to the Friend”. On Sunday, Haaretz carried an interview in which Mr Berlusconi called on Israel to set the policy of colonising the territories to one side in order to reach an agreement with the Palestinians and one with Syria, based on withdrawal from the Golan Heights. According to Haaretz, Mr Netanyahu would do well to take “the Italian friend’s advice”. The pro-government paper Israel ha-Yom, which has the second-largest circulation, welcomed Mr Berlusconi in Italian: “Benvenuto, Cavaliere!” Yediot Ahronot and Maariv were even less formal, leading with "Welcome, Silvio" headlines (Yediot Ahronot in Italian, Maariv in Hebrew). All the papers agree that Italy is a special friend of Israel. Commentators point out that one particularly delicate issue will come up during the visit: Italy’s economic relations with Iran and – as the Jerusalem Post notes – Italian assistance for Tehran’s space programme.IDV: BLOATED DELEGATION – The prime minister is accompanied by seven minsters: Claudio Scajola (economic development), Altero Matteoli (infrastructures), Franco Frattini
(foreign policy), Andrea Ronchi (EU policy), Maurizio Sacconi (welfare), Ferruccio Fazio (health) and Stefania Prestigiacomo (environment). Italy of Values raised objections to the number of delegates – about 100 in all – and announced a question in parliament: “Ministers, assistants and other collaborators for a total of 100 participants on Berlusconi’s three-day visit to Israel. In a question in the Chamber of Deputies, we ask the government for a detailed list of members of the delegation and the precise reasons for the presence of each of those accompanying the prime minister”, explained Antonio Borghesi. “We ask whether a delegation of this order should not be considered excessive at a time when the government ought to be adopting a policy of austerity”. Mr Borghesi concluded that the government’s over-lavish lifestyle “is a little too reminiscent of Craxi’s highly controversial missions abroad”.
English translation by Giles Watson
www.watson.it
Article in Italian
02 febbraio 2010
http://www.corriere.it/International/english/articoli/2010/02/02/berlusco ni_israele_ue_netanyahu.shtml ?
*Who is in charge?*
ONE may be forgiven for wondering who really is in charge in Europe when even the President of America isn't sure!
Yesterday the first EU summit under Herman Van Rompuy was held in Brussels. No less than 27 heads of governments were received in the beautiful Solvay Library and so after nine tiresome years of trying, the new European regime is off to a struggling start.
There are four bosses in Europe, each one determined to be the top dog -- the indisputable leader of the pack.
Thanks to the Lisbon Treaty we now have a European Council president , Van Rompuy of Belgium. We already have a European Commission president, Barroso of Portugal, just starting his second five-year term; a six-monthly rotating European Union president, currently Zapatero of Spain; and finally, a European Parliament president held by the former Polish PM, Buzek. Confused? Ah, yes! That is all part of what we know and love about the EU!
It is this dense taffy that ensures Europe remains firmly stuck in its tin rather than dispensed like free-flowing, colourful dolly mixtures. And, Europe with all its nations, cultures, history and zest ought to be imparting its colour to this generation rather than this hard-to-digest offering!
Turf wars and rival presidents are allowing Europe to be sidelined and overlooked as we hurtle towards a G2 (US & China) rather than a G8 world order. This was highlighted at Copenhagen when the European leaders were having their coffee break - that was when President Obama paid them a visit. Now, I'd say that a wee coffee table isn't quite in the same league as a negotiating table! Last week Obama announced that he was too busy to schedule the summit planned with the Europeans in Madrid this May. The State Department says one reason for his absence is that under Lisbon the US doesn't know with whom they should be dealing. The face of Europe on the world stage that Lisbon was supposed to provide is still missing -- not a bad thing in my book, mind you!
Europe is too diverse and too independent for a singular face. The British Isles alone have a history of separation from Europe that dates back to the days of the Roman Empire and courses through Reformation times and on into modern history. In fact, Europe is most unified when that unity is a natural bond, not a forced political union. Within the European Union of today there is no agreement as to how Europe should define its role in our world.
That is, in my opinion, a healthy sign and probably our greatest defence against the darker side of nationalism which, when under severe threat turns into a fascist monster. Of course, Europe has not always wanted the British Isles either! One Charles de Gaulle was particularly put out by the idea of inviting Britain into a union!
As a matter of fact, my own scepticism was reinforced when entering the European Parliament for the first time, as I had to let the authorities know that the Union Flag was flying upside down! It would seem in all the years since, the European Union has yet to achieve a real sense of unification, just the ability to legislate by the ton and to deliver not one but four presidents!
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