23 November 2010 12:46 PM
Where the EU intends to go: not federal power, centralised power
I've just been reading the excellent Q & A on the Irish bail-out by City Editor Alex Brummer in today's paper. But then I hit this line: '...this might involve common tax policies which could undermine the sovereign independence of nations to write their own budgets and control thier own treading conditions. The sceptics believe this would be a huge step on the way to a federal Europe.'
Uh-oh. Even the brilliant Brummer has been infected with the weasel vocabulary.
What common tax policies and the rest would be is not 'a huge step on the way to a federal Europe.' They would be s a huge step on the way to something much worse -- a centralised European government.
Federal means James Madison. Centralised means Louis XIV.
Not that I want federal government in any style at all for the countries of Europe. But let's be clear what it is we are talking about here.
What every European treaty has been leading to is a single, centralised government with power superior to the governments of the member states. For anyone to use the phrase 'federal Europe' is to do the EU elite a favour -- it helps camouflage their intentions.
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22 November 2010 1:21 PM
COSI creep: or how the EU Home Office will reach into every part of your life
In my investigation for this week's Mail on Sunday about the shocking powers of prosecution the EU now has over all of us -- you can read it in yesterday's blog post -- I could only include a brief warning about the sinister new committee to be set up under Article 71 of the Lisbon Treaty.
But the committee is so dangerous that it needs more than a brief warning. Here is an example of how this new Committee on Operational Co-operation on Internal Security -- known as COSI -- will be able to reach into every part of your life. Critics say it is the beginning of an EU Home Office. And it is. But it could be even worse than that.
What the elite running the EU institutions mean when they keep something as vague as that is: 'We intend to make it mean what we want to make it mean. Just sign the contract.'
Something similar has already happened with Article 122.2 (TEC), the part of the treaty barring bail-outs for member states. This article says that, despite the ban on bail-outs, if a member state is in difficulties because of 'natural disasters or exceptional occurrences beyond its control,' then the European Council may grant Union assistance.
Now, any honest person would read that as meaning if Slovenia gets flattened in an earthquake, the EU can rush in some aid. In fact, earlier this year it was interpreted by the EU elite to mean permission for the €110bn bail-out given to Greece. The elite apparently decided to interpret as a 'natural disaster' (because for sure it was not an 'exceptional occurence') the fact of Greece having generations of lying politicians and bent book keepers running its government. Who'da thought it, eh?
So it is reasonable to expect the same elasticity of interpretation to be given to Article 71 charging COSI with 'operational co-operation on internal security.'The word 'internal' and the word 'security' will be stretched further than you could imagine.
Lessons about just how far activist judges in the European Court of Justice and power-hungry officials can stretch such powers can be found in the history of the Commerce Clause of the US Constitution.
You can reckon that the EU elite -- who are devious and dishonest, but not stupid or ignorant -- are well aware of the Commerce Clause. Indeed, one can suspect that Article 71 was designed to be their own version of the clause.
Under the enumerated, limited powers given to the federal Congress, the framers of the US Constitution gave the Congress power 'to regulate Commerce with foreign Nations, and among the several States, and with the Indian tribes.' And that's it, no more.
Leave aside the foreigners and the Indians for now. Any honest person from 1787 and well into the beginning of the 20th century would have read that to mean the Congress could make laws regulating commerce only if the commerce were between two or more States.
How absurd the power-grab became can be gauged by a Supreme Court decision in the 1942 case known as Wickard v Filburn. It was one of the most important cases putting in place the big government, socialist programmes of Roosevelt's New Deal. Wickard v Filburn was one of the cases which allowed the Washington politicians and bureaucrats to get their hands on almost every kind of commerce, almost everywhere.
In 1941, a farmer called Filburn was told by the agricultural authorities that he had permission to grow a limited amount of wheat that season. Farmer Filburn grew 239 bushels, which was more than he was told he could grow. But the wheat was never sold in any interstate commerce, indeed, it was never sold in any commerce. It was eaten by Farmer Fiburn's own cattle.
'The Court nevertheless held that this wheat "affected commerce" because if he hadn't grown it, he would have had to buy wheat to feed his animals, and maybe the wheat the he conceivably might have had to buy would have possibly come from out of State.'
Don't think the European Commission and the European Court of Justice aren't precisely aware of the effect a European version of Wickard v Filburn -- or any one of dozens of other US federal government power-expanding cases -- would have on their own powers over you, your business, your investments, every part of your life. All they need to do is find a clause in the European constitution called the the Lisbon Treaty which will allow it. And there it is, Article 71 and COSI.
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21 November 2010 5:26 PM
March of the Euro police: the EU's shocking powers of prosecution
The full extent of the police and criminal prosecution powers that the European Union has over British citizens can be revealed today.
A Mail on Sunday investigation has uncovered an alarming array of new EU controls over justice and home affairs for which no one has voted, and most are unknown to the public.
These include:
• Europol, the £60 million-a-year European criminal intelligence agency, whose officers have diplomatic immunity.
• An 800-strong paramilitary police force called the European Gendarmerie Force.
• The European Arrest Warrant, which now allows British citizens to be seized in the UK and sent without appeal to foreign jails for months or years without bail while awaiting trial.
Europol now has more than 650 officials at its headquarters in The Hague, from where it directs investigations across Europe.
When its Euro police officers are operating in the UK they have diplomatic immunity and cannot be touched by the British judiciary.
Their official website even lists ‘Europol fictional appearances’, among them the film Ocean’s 12, in which Catherine Zeta-Jones plays a Europol agent.
The paramilitary police force has been trained in Italy and armed to be deployed as ‘an expeditionary police mission’ under military command if necessary. The gendarmerie is not yet a full EU institution. However, its official purpose is ‘a consistent and co-ordinated deployment of EU police forces with a military status and full police powers. The EGF will be, first and foremost, at the disposal of the EU.’
Members are drawn from Italy, Spain, Portugal, Romania, France and the Netherlands. Their logo is ‘a background of blue sky, the cruciform sword symbolises the force, the laurel crown the victory, and the flaming grenade the common military roots of the police forces’.
The European Arrest Warrant (EAW) can also be used to extradite Britons who have been tried and convicted in their absence by a foreign court.
Meanwhile, the European Commission plans to turn Eurojust – a judicial co-operation body set up in 2002 – into an EU prosecutor using powers given by the Lisbon Treaty.
Also new, the European Investigation Order (EIO) gives foreign police forces the power to compel British police to carry out investigations on their behalf. These may include interrogation of suspects, interception of communications and bank records, and the handing over of DNA samples and fingerprints.
British police can be forced to investigate offences which are not crimes in the UK, or which they consider to be minor offences.
Before the Home Secretary agreed in July for Britain to opt in to the EIO, Commander Allan Gibson, head of the specialist crime directorate at the Metropolitan Police, wrote to the Government and expressed concern that the investigation order did not allow that the ‘proportionality’ of a crime be considered.
He was also worried about the workings of the EAW, which ‘has been complicated by requests for fugitives suspected of low-level offences’.
Other new laws giving the EU power over Britain include the EU’s Data Retention Directive, which forces telecommunications companies to keep details of every telephone call, email and text message and all web traffic for at least six months, and to make the data available to law enforcement authorities.
Last week, Cecilia Malmstrom, the EU’s Home Affairs Commissioner, demanded that the EU also be given powers to analyse intra-European bank transfers.
And then there is the sinister new committee to be set up under Article 71 of the Lisbon Treaty, called the Committee on Operational Co-operation on Internal Security, known as COSI. Critics say this could be the beginning of an EU Home Office.
The treaty says COSI will be established to ‘ensure operational co-operation on internal security’.
According to a memo from the last Government, signed by disgraced former Labour MP and junior Minister Phil Woolas, the committee would decide how police, border, immigration and criminal justice authorities would deal with cross-border matters.
COSI will, for the first time, bring together three of the EU’s policing and criminal law organisations – Europol, Eurojust and Frontex, the EU’s border security force. Frontex is currently deployed on the border between Greece and Turkey with 19 patrol cars, nine vans equipped with thermal-imaging systems, and a helicopter.
In July, the three organisations issued their first joint analysis – a report on the state of internal security in the EU. The report insisted that ‘a common integrated architecture is required’ to deal with crime and terrorism in the EU. The word ‘architecture’ is used in Brussels to mean ‘another EU institution.’
So can Britain stop any of this? The answer is almost none of it. The Lisbon Treaty removed Britain’s veto in justice and home affairs. Once Britain has opted in to any part of EU legislation on policing and criminal law, there is no opting out.
Investigation and prosecution programmes are multiplying so rapidly in the EU that, according to Stephen Booth of the think-tank Open Europe, 17 law enforcement systems and databases currently operate or are being developed.
Six of these systems require the collection or storage of personal data at EU level.
The budget devoted to justice and home affairs is set to increase by 13 per cent in 2011 to £944 million, which, as it was in 2010, would be the highest percentage increase among all the different areas.
Conservative MEP Timothy Kirkhope said he was worried about the escalating cost of these agencies.
‘It is important that the costs of all EU agencies, and expenditure on justice and home affairs, reflects the economic challenges within Europe.’ He also warned against ‘a move towards a European harmonised criminal area’.
But Baroness Ludford, Lib Dem MEP and her party’s spokesman on European justice and human rights, dismissed concerns about a harmonised criminal area. ‘Terrorists and mafia bosses pay no attention to national borders, so Europe’s cops and judges have to play in a team to stop the bad guys dodging the law by skipping across borders, which is the purpose of the European Arrest Warrant,’ she said.
However, Mr Booth said: ‘The EAW was a knee-jerk response to 9/11 that has turned out to be completely disproportionate. The premise underlying it is that all member states’ judicial systems are equivalent, when clearly they are not.’
These programmes are part of the drive to form what the Lisbon Treaty calls ‘an area of freedom, security and justice’. This means an EU-wide area of policing, prosecution and law enforcement without frontiers.
Laws governing freedom, security and justice are established in the treaty as a ‘shared competence’. This means EU law can now suppress existing legislation in justice and home affairs in a member state and replace it with European legislation.
Part of the drive to establish this ‘area’ is the insistence that each member state recognise the laws of other member states.
Labour MEP Claude Moraes insisted an EU Home Office was not being created: ‘It is all about political co-operation between member states,’ he said.
But Nigel Farage, MEP and leader of UKIP, disagreed: ‘Are we seeing the creation of an EU Home Office? Yes, absolutely. There is not a single aspect of our lives that these people do not wish to control.’
The Commission intends to forge a ‘common European culture of policing’ by ensuring that over the next five years one-third of all police officers and border guards are trained in European affairs.
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19 November 2010 3:01 PM
Der Euro: on the other hand
He's not quite in agreement with David Marsh as to just what the Germans have been playing at with the euro all these years -- which is, that in order to protect their exports, the Germans designed the euro to hold off upward pressure on their exchange rate.
You can read the details in the post. It's just below this one.
Pieter says: 'I don't think the Germans have done it consciously. Actually, the French were tired of having to devalue the whole time and wanted to profit from Germany’s strength.'
'Of course as they didn’t make enough reforms and now they’ve lost competitiveness, but that’s because French politicians didn’t do enough, and it cannot be blamed on German politicians.'
'Another reason was protecting against the dollar’s follies, following Nixon leaving the gold standard, and the prospect of using the coming crisis to build a superstate (that’s where we’re now). '
'That’s also what Marsh writes in his book. A bit strange if he would now suggest it was a conscious plan to keep other countries down. They were capable enough to know that the euro would prevent other countries from devaluing, but the Germans were somehow pushed by Mitterand into the euro (in exchange for reunification).'
Pieter may or may not be right about Marsh's theory. What's for sure is that Marsh, like the Germans, thinks a strong currency is a bad thing. So do uncompetitive companies. Savers and investors would disagree.
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15 November 2010 12:49 PM
Der Euro: as ever, the D-Mark by other means
This is Marsh's point to remember: 'In pre-EMU days, if the German economy were growing at an estimated 3.7% as it is this year, the German currency and interest rates would both come under upward pressure – damping exporters’ performance and the growth outlook.'
The Germans designed the euro to make sure that couldn't happen.
By the way, I'd tell you who the forum's members are, except the membership is kept secret. Apparently it is made up of central banks, sovereign funds, financial regulators, that sort of thing. Prof Lord Desai, Emeritus Professor at the London School of Economics, heads the advisory board, and members meet in private everywhere from Frankfurt to Kuala Lumpur.
Beyond that I know little, except I've met Marsh and have his book on the Euro. All of which means he sends over his commentaries. The one out today is particularly worthwhile, given the upheavels in the eurozone.
And don't think the upheavals have nothing to do with Britain and sterling, because as you will see by yesterday's post, Britain has already been sucked into this chaos on the periphery of the EU -- meaning, the economic disasters in Ireland, Portugal and Greece. Stand by for disasters in Spain and Italy.
The source of the pain -- other than the fundamental stupidity of any country joining the euro at all -- is the fact that the single currency has been from the start a way of keeping the German currency at an artificially low exchange rate.
On the one hand the euro is making the peripheral countries suffer because the dominance of the Germans in the currency make their exchange rate too high; at the same time, Germany has seen its exports surge because the euro keeps its exchange rate too low.
And this was the point of the whole thing for the Germans even more than 30 years ago, as Marsh points out. He starts out with a 1970s quote from a senior German official in the German government:
”The key principle of German economic policy was to persuade the French and Italians to lower the value of the D-Mark so as to make Germany more competitive.” As the euro area enters a new period of anguish, caused by a gut-wrenching rise in Irish bond yields, these words from more than three decades back should rightly be haunting the treasuries and central banks of myriad European nations.
The schism in the euro area between creditor and debtor countries entered a new phase last week with a war of words pitting Angela Merkel, the German chancellor, against representatives of the smaller debt-laden states that now have their backs against the wall.
Germany is apparently paying little heed to the fact that monetary union has been massively helpful to the German economy by underpinning a sizable boost to export competitiveness in the last decade.
Lahnstein’s words to Healey – over a glass of beer in Hamburg in 1977 or 1978 – were passed on to Jim Callaghan, then Labour prime minister. The UK leader reasoned that the EMS would harm British exports by keeping the pound unduly high on the foreign exchanges.
This sealed the British government’s decision to keep sterling out of the exchange rate mechanism (ERM) of the EMS when it started in early 1979.
Bizarrely, the UK did join 11 years later in 1990, shortly after German unification.This was an experience that shackled the pound at too high a rate against the D-Mark before the UK left in ignominy in September 1992. The episode has been responsible for turning the UK for at least a generation – and probably for much longer - against membership of any kind of fixed currency scheme with the other Europeans....
...The Berlin government’s intransigence [now] over the debt issue, while politically understandable from a German point of view, seemingly pays little note of the realities of the euro economy which are currently heavily tilted towards Germany.
In pre-EMU days, if the German economy were growing at an estimated 3.7% as it is this year, the German currency and interest rates would both come under upward pressure – damping exporters’ performance and the growth outlook.
Now, however, with all EMU economies shackled together, and devaluation an impossibility for the peripheral countries, the hard-up states have nowhere to hide.
Germany continues to profit from excellent export performance – and it can self-righteously point the finger of blame for the euro area’s woes at those debt-ridden peripheral states.
Other countries in Europe may be wishing that they had received a similar message before they entered the euro.
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14 November 2010 8:25 AM
First the potato, now the euro: how Ireland has been destroyed again
What do Battersea Power Station, Claridge's hotel, the Citigroup Tower in Canary Wharf and the Bond Street home of royal jeweller Asprey have in common? Answer: they were all bought by Irish property investors at the height of the Celtic Tiger boom.
Those were the heady days at the start of the 21st Century when the Irish loved to boast they were richer than their former masters, the British - richer even than Germany - and the Economist ran a cover story calling Ireland ‘Europe’s shining light.'
Today swaggering Ireland has gone bust. Spectacularly, dramatically, perhaps irretrievably bankrupt, suffering the deepest recession in the world.
But, tempting though it might be, Britain should not feel any sense of pleasure at Ireland’s humiliation because, as I shall explain, Ireland's crisis could well end up costing families in Britain dear.
So what went wrong? No one in Brussels will ever admit it, but it's the euro that ruined Ireland.
Ireland joined the single currency in 1999. At the time it was enjoying healthy growth, fuelled by investment from high-tech multinationals such as Dell, Intel and Pfizer, attracted by Ireland’s low 12.5 percent rate of corporation tax.
But after the Irish turned over their currency and their interest rates to the European Central Bank in Frankfurt, things began to change.
The ECB insisted upon low interest rates for the eurozone to help the sluggish German economy. But what suited Germany was all wrong for Ireland, turning healthy growth into a debt-fuelled property mania.
First the Euro-enthusiasts across the EU fostered the idea that, since all the members of eurozone shared a single currency and had promised to adhere to strict limits on debt and inflation, they were all equal in risk.
This fiction led investors to imagine lending to Greece or Ireland was no more risky than lending to Germany or the Netherlands.
So Irish banks were free to suck in billions from Asia and Europe.
These billions - many of which came from the City of London - were what fuelled Ireland’s asset bubble. ECB policy made sure the money was lent on to Irish property speculators at real interest rates that were actually negative.
So in 2007 Ireland built half as many houses as Britain, which has more than 13 times its population.
Waves of immigrants arrived from all over the world, flying in to work in the booming economy which one Irish prime minister promised could only become ‘boomier.’ For the first time since the potato famine of the 1840s, the population of Ireland began to grow.
Believing him and eager to cash in on ever-soaring property prices, the Irish began a credit binge that drove up levels of personal debt to the highest in Europe.
Meanwhile the Irish Government enjoyed a tax revenue bonanza - and responded by letting public sector pay and spending rip so that today Ireland has the highest paid public sector in Europe.
In short, joining the euro has meant almost everything that could go wrong in one country has gone wrong in Ireland.
Then in 2007, the inevitable happened and the property bubble burst. Tracts of land bought for hundreds of millions of euros for commercial development became worthless overnight. House prices crashed to half their value and are still falling.
The Irish countryside is now littered with 2,800 ‘ghost estates’ - populated with 43,000 flats and houses left empty or unfinished.
Irish banks have been destroyed by their bad loans and are insolvent. The bond markets will not lend money to the Dublin government, which is itself insolvent, driven to the edge of bankruptcy by trying to save the banks.
One economist pointed out last week the markets now put Irish sovereign debt in the same risk group as Ukraine and Pakistan.
And all this could have serious repercussions for Britain.
The Wall Street Journal warned last week about a connection between UK banks and their exposure to the increasingly dodgy-looking debts of eurozone countries such as Ireland: ‘Sterling is about to be snagged by the euro.’
Banks here were the biggest lenders to boom-time Ireland. Their exposure was recently calculated at £143bn. RBS alone has a £53.3bn loan book in Ireland.
Worse, Irish bankruptcy could lead to a contagion of default on debt among the other weak members of the eurozone. Such a contagion could put the banking system here under serious threat, especially if the Spanish were forced into default.
Exports would be hit, too. Ireland takes seven percent of Britain’s exports, making it a far more important market than China. But a contagion across the eurozone would hurt more than just exports to Ireland. The European Union takes 60 percent of British exports.
What's more, European observers warn that if Ireland turns to the EU for a bail-out, Britain may be forced to help in the rescue.
The European Financial Stability Facility (EFSF), the rescue fund established by the eurozone countries last May after the Greek crisis, is meant to be funded only by members of the single currency.
But money for Ireland will also come from the International Monetary Fund, to which Britain contributes, and from European Commission funds, which also include funds from every member state.
If Portugal, Spain and Italy also turn to the EFSF, the facility could be overwhelmed. If that happens, Brussels will expect every country of the EU, including Britain, to contribute billions to bail-out the insolvent eurozone member states.
A bail-out for Ireland now looks inevitable.
While Britain’s national deficit – the amount by which Government spending exceeds annual revenue -- is about 10 percent of national output (called GDP), Ireland’s is 32 percent, possibly the highest in the world outside Zimbabwe.
Ireland’s debt-to-GDP ratio could hit 140 percent by 2012, near the same the level at which Greece was pushed over the edge earlier this year. Yet last week George Papaconstantinou, the Greek finance minister, insisted that his country was in better shape than Ireland because ‘it doesn’t have banking stability problems.’
Mr Papaconstantinou was right. The Irish government has recently admitted their decision to bail-out the banks and protect foreign investors from default on the banks’ bonds will cost the Irish people E50bn – about £42bn. But independent economists put the final cost at £60bn.
The £42bn-plus cost of the Irish bank bail-out will fall on a tiny population of just 4.5m, about the same as the East Midlands. The bank-bail out burden will be near £29,000 for each household.
Many of those households are already in negative equity and struggling to pay mortgages taken out in the boom times. Economists calculate that one in eight mortgages is now ‘under water.’
Worse, unemployment is high, with the rate of unemployment held under 14 percent only because people are fleeing the dole to look for work in Canada, Australia, America and Britain.
So it turns out that, despite everything, Britain does owe a debt of gratitude to Gordon Brown. This country came within a whisker of joining the single currency. Had the decision been left to Tony Blair and Peter Mandelson Britain would have joined at the same time as Ireland.
But Gordon Brown would not let Britain abandon the pound.
As another former Chancellor, Lord Lamont, said last week: ‘If we’d been in the euro, we would have had an even bigger boom and bust in the housing and banking sectors.’
One can only look at Ireland today and say, ‘There but for the stubbornness of Gordon Brown – and the independence of sterling -- goes Britain.’
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