Eurocrash: euroscepticism under threat
Monday 27 August 2012
 However, more than 24 hours down the line - with even the Voice of Russia having published a piece - the only British newspaper which seems to have offered a full story is The Guardian. This is a piece by Hans Kundnani headed, "The German people will decide Europe's fate", with the strap: "Starkly divided opinion in the EU's biggest economy could be as big a threat to the euro as Greek debt". We could hardly disagree with this view, reflecting as it does the Booker column of the Sunday before last (below), which in turn was built on our work on the blog in the preceding weeks, where we have been flagging up the prospect of a new EU treaty and discussing its implications.  Interestingly, the Irish Times also carries a report, but it is far more downbeat about the idea of a treaty, claiming a lukewarm response from the "colleagues", and Ireland in particular, to attempts to reopen EU treaties. This paper cites as it authority, a reference to the original piece in Spiegel which has Westerwelle's "Future Group" unmoved by talk of treaty change. However, that is not my reading of Westerwelle's inititative. While it is fair to say that the Group was focused on working within existing treaty structures, its interim report did not exclude "the option of more far-reaching reform measures in the medium term", such as treaty change. Nor would it be wise to attribute this current initiative solely – or even – to Merkel. The idea of a new treaty has been a long time in the making, cooked up in its present form following the informal dinneron 23 May, when the "quartet" of EU presidents was set to work do devise a new treaty. What we are seeing is the next stage in this long-term "play". For the moment, one must assume that the "colleagues" will be successful in their endeavours and that the December Council will approve the launch of a convention. One would not expect Merkel to lend her name to it unless it had a fair chance of success. And, with van Rompuy setting the agenda, chairing the meeting and "divining" the consensus, she can hardly lose. As to the danger presented to the eurosceptic movement, we already touched on this in our earlier piece. The immediate problem is that it will enable Cameron in the general election campaign to "park" the EU as an issue which, as we have previously indicated, is always the political objective of all the main parties.
For the Tories, especially, though, a convention is the "get out of jail free" card which will allow then to make all sorts of promises that will help marginalise UKIP.
The essence here is that, while there are severe constraints for Britain in seeking to renegotiate new treaty terms in an IGC – pointed out during the Article 50 debate - in a treaty convention anything goes. Cameron and his team can grandstand to their hearts' content, putting up no end of proposals. Doubtless, under these circumstances, concessions will be on offer – mainly to ensure free passage for the new treaty. Long after our general election is over, this will leave Cameron (or even Miliband) to grant a referendum to approve the treaty, supported by all main parties, the likes of Open Europe, Hannan and the europlastics, and the entire weight of the establishment and the British media. In fact, what will be on offer may be very little different from what we have today – but with a huge raft out opt-outs which keep us clear of the political union running the eurozone, and some token concessions. Their importance will be grossly exaggerated, presenting the British public with the semblance of a victory, for which they will be asked to vote. Against that will be a fragmented, disorganised and under-resourced "no campaign", trying to fend off accusations that it is seeking to rob Britain of its victory. It will be a very uneven contest. Thus, the eurosceptic movement faces the distinct possibility of a nightmare scenario, a referendum which it cannot win, the loss of which will re-affirm the status quo for a generation or more.
Then there is the added irony that the only chance of restoring our liberties is through the German people. And, for reasons we will explain in a later post, they may not deliver. If not, we stand at risk of being locked into the EU without hope of remission.
The existential crisis for the EU might be on its way to becoming an existential crisis for euroscepticism.
COMMENT THREAD Richard North 27/08/2012 |
Eurocrash: the Bundesbank fights back
Monday 27 August 2012
Headlined in Spiegel yesterday, repeated in most German newspapers – even Bild - and spilling over into Reuters and the British press, is a further instalment of the ongoing battle between theBundesbank and the ECB. But this is only the latest round in the war of words that some believe had already been won by the ECB.
However, Spiegel describes Bundesbank chief Jens Weidmann as going on a "collision course" with the ECB. Buying government bonds is dangerous, a burden on taxpayers and would lead to new problems, he says, then declaring in a direct attack on Draghi's empire: "central bank financing can be addictive like a drug". Further digging into the ECB, Weidmann criticises its plans to launch a new programme of purchasing government bonds. "Such a policy is for me too close to public finance by printing", he warns, then declaring: "In democracies, parliaments should decide on such an extensive pooling of risks, not central banks". If you buy the Euro-banks' government bonds of individual countries, "the papers end up in the balance sheet of the Eurosystem", Weidmann explains. "Ultimately, the money has to be found by the taxpayers of all other countries". The basic problems are not solved in this way, he concludes. Defending his "aggressive communication policy", Weidmann states that, "If monetary policy allows itself to become a comprehensive political problem solver, its real goal risks moving further and further into the background". Therefore, he says, the ECB should not "guarantee keeping member states in the eurozone at any price". In a plea for openness, he says that, "We central bankers are currently acting in a border region, and have to interact on more fundamental issues. Therefore, we must also be prepared to explain the convictions that we hold in the Council to the public", adding: "The Governing Council is not the Politburo". And despite the focus on Weidmann, Handelsblatt reminds us that he is not alone. A recent edition of Welt had former ECB chief economist Jürgen Stark arguing that the funding planned by the ECB would be "a clear breach of European law". Currently, Weidmann is also supported by CSU General Secretary Alexander Dobrindt, who in Bild am Sonntag controversially branded Draghi's plans for the euro as "highly dangerous", calling the ECB president the "forger of Europe". Dobrindt, incidentally, thinks Greece would be better off out of the eurozone, following which, he says, "we need a Marshall Plan for the economic reconstruction of the country". Now, even Merkel has been dragged into the dispute, having been asked in a television interview for the ARD "report from Berlin" programme to comment on Weidmann's words. She praised Weidmann for speaking out about his doubts and said she saw strong Bundesbank influence within the ECB as positive. although she was reported as taking care not to voice any support for his criticism of Draghi's policies. What makes the attacks on the ECB all so very strange, though, is that, effectively, Draghi hasalready given up. He has signalled that he intends to wait until after the Karlsruhe ruling on 12 September before launching any initiatives. Despite that, Spiegel is still telling us that the ECB governing council will, at its meeting on 6 September, decide to look at bond purchases. I guess we already know the outcome. But, whatever is decided, this controversy is very far from over. COMMENT THREAD Richard North 27/08/2012 |
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