That's enough Europe – ed Friday 25 May 2012  That leaves us with a good piece from Ambrose, whose masters will insist on calling it a summit. It was an "informal dinner" of the European Council, at which decisions could not be made, and where there was no intention that they should be made. Largely, it seems to have served the function of a "get-to-know-you" benefit for Hollande. At least Ambose has the decency to admit that the affair was theatre, with the arch reference to a "Kabuki" summit, referring to a highly stylised from of Japanese drama. I wish I could do culture like that – I had to look it up on Wiki. Why he should complain that this non-summit "falls short" though is a mystery. It was never going to come to anything exciting – in public at least. It was very obvious from the start that we were to be treated to a dose of political theatre, and it is something of an insult to our intelligence that the media insist on pretending otherwise. All the hacks on the spot know it – why do we have to go through these charades? In this case, even the picture tells its story (above) with the caption telling us: French president Francois Hollande achieved his coup de theatre. The French media gently accused him of staging a choreographed spat with chancellor Angela Merkel over eurobonds, knowing that Germany will not share its credit card with the debtor states until there is a fully-fledged United States of Europe – anathema to France.I hate to say this, but "theatre" is exactly what I was writing two weeks ago, with a much better analysis than anything the media has to offer, delivered two days ago. But since eurobonds were never going to happen, that makes the comments by ECB president Mario Draghi all the more interesting. The EU, he says, is at a "crucial moment" in its history. "We have reached a point in which the process of European integration needs a courageous leap of political imagination in order to survive," he says. Yet no such leap is in evidence. The eurozone is no closer to equipping itself with federal debt machinery and a genuine lender of last resort. That is not quite a statement of the bleedin' obvious – more a summary of the current state of play. But what Draghi doesn't say is that to make this "courageous leap" will require a very substantial new treaty, going far beyond Lisbon, amounting to a commitment to full political integration, the outcome being a United States of Europe in all but name. Draghi is right, therefore, to say that no such leap is in evidence. Even to open the members to an IGC with this on the table would ensure a fracture of the European Union. The UK could not accept further integration – none of the non-eurozone countries could go for it, and even Germany and France would have serious problems getting it past their legislatures. In essence, therefore, the one thing that could drag the EU back from the abyss cannot be done. Politically, it is no more achievable than it was in 2002 when the notes and coins were introduced. Even the eurozone counties are not prepared to pay the price. The magic of the "beneficial crisis" has not worked. This is a crisis too far. In such times the very fundamentals of the European Union come under stress. Ambrose says they have changed, reflected in German headlines denouncing the French leader. But then Ambrose does have a habit of jumping the gun. In March he was forecasting the end of Merkel's Europe and the awakening of the Latin Bloc. Nevertheless, via Ambrose, we have Bild Zeitung accused Hollande of "arrogance" and lamenting the end of Franco-German condominium. "We once had the Merkzoy. Merkollande does not exist," it says. Hollande, says Ambrose, vowed to end the tradition of Franco-German stitch-ups and was true to his word. He plotted with Italy's Mario Monti and Spain's Mariano Rajoy before the gathering, relishing the revival of French leadership in a new guise. Germany's Handelsblatt says he was acting as the "lawyer" of debt-stricken states, the champion of the Latin Bloc. That the Franco-German "motor of integration" is creaking has been evident for some time, henceBooker's piece in February. The EU is splitting at its very core, he wrote. Nothing really has changed since that piece was published, and there was a lot of good analysis there. Ambrose currently relies on banking sources such as Julian Callow, from Barclays Capital, but frankly, I would not give their thoughts tuppence. These people constantly and consistently misread the situation. The things we must be careful of is that the Franco-German alliance has proved both resilient and durable, and while Merkel is allowing Hollande room to play his games – establishing his political territory, largely for domestic consumption, when the chips are down, he will most likely come into line. This time, though, the odds are stacked against holding the status quo. Greece is going to have to leave the eurozone, and that is going to change the European dynamics forever. It will be the end of the long march od political integration. This retreat from Moscow starts in Athens. Desperate as always to "plant a flag" on the story, The Times, via Reuters is saying that "David Cameron will face demands from Tory MPs to redraw Britain’s relationship with Europe in the event of a Greek exit from the eurozone". This comes from "senior government sources", and is typical of the shallow reportage that we get in this country, and the almost complete lack of thinking we get from the political establishment. Yes, the Greek exit is going to change things. But it is the start of the retreat, not the end. By the time it is over, the political map of Europe will have changed irrevocably – although it could be a decade or more before the dust has settled. And as in 1957, the UK is on the sidelines. We can only watch, wait and respond. If we had any sense, we would be working on a new paradigm for our international relations (time to dust off "Plan G"?), so that Europe can again rise from the ashes of a failed political experiment. But that is probably too much to hope for. COMMENT THREAD Richard North 25/05/2012 |
One eurobond to rule them all Friday 25 May 2012  "One Bond to rule them all; One Bond to find them; One Bond to bring them all; and in the darkness bind them". When the septics start taking the mick, you just know the end must be nigh. But even more sinister – if you are in that frame of mind – is the case of Clegg and the missing eurobond. There he was, off to Berlin to breathe hell fire and fury about Merkel's refusal to do the deed yet, when he got there, not a word about eurobonds did escape his lips. The obedient little euroslime had been "warned off" by the avenging Angela herself, leaving a nonplussed Clegg with nothing else to do but express his admiration for the effciency (sic) of the German economy, chirping that the lessons to be derived were essential for the "re-wiring" of Britain – whatever that means. Meanwhile, Clive Crook – the appropriately named former chief Washington commentator of theFinancial Times - has been writing for Bloomberg, telling us that the seeds of the EU's crisis were sown sixty years ago. This is a man who hasn't the first idea what he's talking about, demonstrating yet again that, when it comes to politics, financial journalists are so often out of their depths. Largely, Crook is also following the same hagiography followed by Peston, which also goes to show that, when it comes to the analysis of historical events, the majority can easily be wrong. Crook, like Peston, makes as the turning point the Maastricht Treaty, completely oblivious that to the roles of Spinelli and then Delors and the fact that Maastricht was part two of a two-part treaty, following on from the Single European Act. Does it really matter, you might ask, and the answer is of course in the affirmative. The sequence and the narrative behind them coming into being proves without doubt that the single currency (and economic and monetary union) was a political project, engineered entirely to promote the cause of political union. We set this out in The Great Decpetion, recording that there were two British MEPs involved in the process, Stanley Johnson (Boris's dad) and Richard Balfe. The basic narrative came from an account in French, by Jean Marie Playret director of the department of historical archives of the European Union. It doesn't get much better than that. I translated the document – all 35 pages of it – and on the back of several interviews with Richard Balfe, wrote up the story which appears in the book. I sent Richard the draft as a check, and the man who had been intimately involved in events as Spinelli's political advisor affirmed that the account was essentially correct. When Booker and I published, we thought that our revelations might provoke some interest, but it was not to be. The book was scarcely reviewed, and the real background to the single currency has been largely ignored. But the remedy, such as there is one, lies in the understanding that it is a political project. There is no economic solution – politics got us into this mess, and only politics will get us out, and even then it is going to be very messy. But only when the politicians recognise that the euro is part of a failed experiment, and decide to unravel it, will the torture begin to end.  Meanwhile, the play acting goes on with Citigroup economist Michael Saunders assuming that the Greeks will exit the euro on 1 January 2013. It is unlikely that this date has been plucked at random, but it is not what it seems. Saunders is actually saying that the exit will not occur before the end of this year, which is undoubtedly a blind, to clear the decks for an earlier exit without the markets pre-empting it. Greece's exit will not, of course, solve any problems for the euro. The "colleagues" are not yet ready to admit that their experiment has failed, and are still playing games, pretending there is a fix. But the time must come, or they will drag the whole of the global economy down with them. Perhaps if a few more people knew their history, there might be more pressure for a swift political resolution, and less pretence that there is an economic solution to this crisis. In time, we will find out, but the longer it takes, the more damage it will do, and the more it is going to cost us. COMMENT THREAD Richard North 25/05/2012 |
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