Eurocrash: the "Hun in the sun" meme Friday 22 June 2012  There is a tendency in the English media – echoed strongly in the ranks of a certain brand of euroscepticism – that fails to recognise that the war with Germany ended in 1945. This is perhaps at its most visible in the Daily Express which, in taking its line, actively misleads its readers (playing up to their prejudices) and obscures a complex and difficult situation, one which is far more nuanced than the paper will allow. The Germanophobic tendency is never far away in the English press, but it is by no means confined to this island, with the Greeks having been quick to play the German card as well. But, not least of the problems with the anti-German meme is that it elides the German government and the people, conveying a degree of homogeneity and unity of purpose that does not exist. Read the online comments in the German press and you will see a degree of antagonism not dissimilar to that found on the Telegraph website. For sure, the German economy has benefited from the weak euro, which has driven an export boom, but the boom could not have happened without the underlying economic and industrial structures being soundly based. This is not the case with other European economies, where Die Welt complains of Spain, Cyprus, Greece and Italy wanting Europe to help them, but with nothing to offer. This attitude, says the paper, endangers the eurozone, not the German stubbornness. And, as we are constantly reminded by the chatterati, the euro was devised – in part – as a means of constraining German power. That the short-term economic beneficiary is Germany strikes one, therefore, as particularly ironic. The fact is though, that this is a short-term gain and Germany stands to gain nothing from the continuing economic turmoil. But when it comes to trying to resolve the crisis, we have a German Chancellor who is electorally weak, one who has had the greatest difficulty in getting the fiscal pact through her own legislature. No sooner is success announced, she finds it is blocked by a reference to the constitutional court and the president Joachim Gauck refuses to sign the law bringing the ESM into being. To all intents and purposes, we now see Merkel being bounced into agreeing further powers for the EU, with the initiative very much in the hands of the EU quartet, and the "gang of ten". Now we get Lagarde adding to the pressure, which will come as no surprise after her performance in Riga, where the ECB also joined in the chorus. Thus we have Bruno Waterfield writing about the "embattled German Chancellor", which captures more precisely the state of the art. Any suggestion that Germany, and especially Angela Merkel, is setting the agenda, much less in control of events, is to fail completely to understand what is going on. Merkel, like all of us, is a passenger of events. And even if she has a seat in the first class section, the train's destination is the same, over the same fractured rails. COMMENT THREAD Richard North 22/06/2012 |
Eurocrash: missing the longer-term play Friday 22 June 2012  Apparently catching up is the Guardian which, as part of the "Europe project", has teamed up with five continental newspapers to interview Mario Monti on the eve of this summit. The result is the headline above with a brief report. The former could not be more at odds with the report in La Stampaif it tried. The Guardian in its typically lurid headline (redolent of the Hague claim of a "week to save the pound") is having Monti tell us that "we have a week to save the eurozone", which is not at all what the Italian newspaper is telling us. But then, reading the actual Guardian report, the text coalesces with the continental reports, and indeed with a Reuters story. It is in the latter that you see the headline: "Monti says EU hinges on summit talks outcome", with the text telling us that individual eurozone countries face "escalating speculative attacks" unless a lasting solution to Europe's financial crisis is found at the European Council. Thus, it is not that there is one week to save the euro. Monti is telling us how vital the European Council is, in one week's time. Only slightly down page are we then told that the Council "is expected to tackle long-term plans for closer fiscal and banking union" in a bid to strengthen the euro's foundations. Although the dread words "political union" are not mentioned, it can be inferred from previous reports that this is also high up the list. This fits entirely with my overnight report, which puts the emphasis entirely on the European Council and frames today's summit on the context of pre-treaty manoeuvring. Everything points to the "colleagues" staking all on a new treaty. Nor do you have to be especially bright to read this as an objective for, in the La Stampa report, Monti obligingly tells us that this is the case. "I see Los Cabos (G20) as a promising start", he says. Rome (today's meeting) is another "important step". Posing the rhetorical question, as to whether it is a step towards increased integration of the whole Union, or an attempt to form a hard core, to agree a common policy by the governments of the four largest euro area economies. By way of an answer, he tells us that the minimum and "indispensable" objective of the European Council is a "medium-term perspective of strengthening the integration". The idea is that the markets become convinced that there is "the will to make the single currency indissoluble and irrevocable". There, you see the nub of the game which was beginning to emerge at the Spring Council - a two-level strategy of firefighting on the one hand while, on the other, putting in place a new treaty as a long-stop. This, in theory, puts a lid on recurring crises. With the Bundesbank making it clear that there can be no half measures, the target is now full political union, remedying the "birth defect" of economic and monetary union. Thus says Monti, in the Süddeutsche Zeitung, in order to get safely out of the crisis, "a lot of integration required". And it must be done quickly. Sometimes, he says, "Europe seems to pay homage to a praise of slowness", adding: "This principle should be abandoned". Read carefully into The Guardian piece and you will find the essence of that message, but you have to read carefully or you miss it. With the Failygraph, journalists are focused on the short-term and are missing the longer play. And there, would that they knew it, we are in for a wild ride. COMMENT: "FOUR POWER MEETING" THREAD Richard North 22/06/2012 |
Eurocrash: four powers meeting in Rome Friday 22 June 2012  Ambrose also offers his take, with a characteristically downbeat piece. He uses a top Italian official to tell us: "Monti is desperate. Reform fatigue has breached breaking point", and: "There is a feeling here that the euro is basically dead already. Unless Germany offers a road map out of this crisis, Monti is not going to be able to hold it together much longer". However, none of the analyses I have seen really focus on the fact that this is a pre-council meeting, with talk of a treaty in the air and a "roadmap" expected from the quartet on where they think the treaty should go. In the past, we've seen this so often, with the big players meeting up before key meetings to agree a common line, setting the tone for the coming treaty negotiations. Thus, while the public agenda will highlight the G20 proposal to buy up Spanish and Italian securities – the so-called "Monti Plan" - there will be a darker purpose to the meeting. Some clue of that came during the G20 meeting when Monti told reporters that: "Decisions on Europe will be taken in the next few days", after calling on EU leaders to "draw up a clear road map with concrete interventions to make the euro more credible". This is when some of those decisions will be made, the like of which we will know not for some time. And that is the way the European Union works … meetings upon meetings, upon meetings. But one thing to note, as Witterings from Witney observed, a noticeable absentee is the UK. By the time Cameron gets to Brussels, therefore, the European Council conclusions will be a done deal, and the UK will have had very little hand in their making. One wonders whether he knows what is going to hit him. COMMENT THREAD Richard North 22/06/2012 |
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