The European Union suffered the most damaging split in its 54 year history after David Cameron used the British veto to block eurozone treaty change after France and Germany opposed “safeguards” to protect Britain’s economy….
The Prime Minister insisted that he had been prepared to support treaty change among all 27 of the EU’s members to allow the 17-strong eurozone to take measures to tackle its debt crisis and to enforce tough new fiscal rules for the single currency.
But after 11 hours of bad-tempered talks, Mr Cameron said that he had blocked the changes because France and Germany and refused to agree to a “protocol” giving the City of London protection from a wave of EU financial service regulations related to the eurozone crisis.
To me — from far far away — this looks like a shred of good news for the UK in very bleak circumstances particularly considering the impending meltdown.
Could someone trustworthy from the UK comment?
Well I am from the UK, and try to be trustworthy, but I have no particular crystal ball on this.
However, personally I am glad that Cameron stood firm on this – I am not sure he had much option because agreeing to the Franco-German plans would have been cutting our own throats in killing the City as a place to do business, and so wrecking our economy through all the other businesses and employees who rely upon the City.
I also think a number of other things are going on:
1. Many other countries will be privately glad Britain did this. There is considerable concern about the grab for power by the French and the Germans who it is felt are getting too big for their boots.
2. In the switch and bait manner that we in the Communion have become familiar with, Euro-politicians have taken a debt and currency crisis and instead of dealing with that, moved the agenda on to creating a massive undemocratic super state of Europe – again many are concerned about the powers of Europe as it is, without further drift to a federated super-state.
3. Direct tax raising powers for Europe as Germany and France are advocating is the slippery road to creation of a super state. It was when the Australian States allowed the federal government to raise taxes to pay for WWI, that the power of the states diminished and the federal model took over, much as it did in the US. In addition to the destruction of the City of London, this is what would happen to us, as once given tax-raising powers, those who tax and set budgets will control political power in Europe as well.
4. None of this addresses the real issue – the problem that the Euro is – as Boris Johnson said, that our efforts are going towards keeping the cancer alive on life support, rather than the patient. This is because the problem for countries such as Greece, Italy and Spain is not their borrowing and bond issuing problems, but the structural situation which gives rise to those problems in that they cannot devalue or float their currency as a way of restoring the competitiveness of their markets. The value of the Euro is pegged not to their needs but to the value of the German Economy. There are no proposals to deal with this structural problem for them.
5. Our banks have been warned to prepare for the disintegration of the Euro – at the least, and possibly for their own sakes, countries like Greece will have to withdraw in order to restore the competitiveness of their economies – which were not strong enough without some financial dishonesty to have joined in the first place. Hopefully this can be managed in a disciplined manner rather than through a run on the markets.
6. The Germans are prejudicing their own position by supporting the Euro – they are the only people able to bail out their neighbors and keep the Euro going, but the markets are recognising that Germany does not have sufficient funds to do so, and this is being reflected in the German bond market.
So overall, it is a dire situation, but talking about enhancing the European Super State in order to protect the Euro is frankly beside the point. Only money, and some common sense about the entrenched problems the Euro has created will lead to any future for all of us.
Don’t expect Germany and France to accept the British veto however – they will be back in the next last chance summit to save the Euro, the Planet, and the Universe shortly.
Public opinion here will be behind what David Cameron has done.
Another thing worth noting carefully in Cameron’s words are his warning that any new treaty arragement by a group within the group, will not be able to use the existing European Treaty organisations and arrangements. Just thinking about that, it means that not just the European Commission arrangements and structures will not be available to it [just remember the problems over using NATO structures by a group within it for intervention in Libya] but also and perhaps critical all institutions created under the existing treaties and their assets will not be available. So what is the most important institution which might be within this definition? The European Central Bank! While set up for the purpose of the Eurozone, it was set up under the existing European Treaties and the shareholders are the 27 central banks of the European Union see here and here
I think that could be a big problem for Germany and France and their plans if the ECB cannot be drawn into their structural plans by a treaty amendment.
One need only look at this to truly appreciate how fragile liberty is. For the sake of security and efficiency the Europeans are being asked to cede sovereignty to unelected officials. A super-dictatorship in effect.
In our own country much of our politics is aimed at skirting our Constitution and the liberties protected therein.
“In our own country much of our politics is aimed at skirting our Constitution and the liberties protected therein”.
Yes, and trust me, that’s not a place you want to go.
Pageantmaster — re: your #4. But that’s exactly the point, isn’t it? Can you have a joint currency without joint power to tax and oversee budgets, joint backing of debt etc? Instead you’ve got a bunch of folks issuing Euro-dominated bonds, but there is no such fiscal entity as “Europe” to back them up. Nor can they let their currency float to make their products more competitive in foreign markets and to make it easier for them to pay back their debt.
Personally, I fail to see how the whole “Euro” idea makes sense in the first place, but if it does, you can’t say “in some ways we’re going to act like a fiscally-united entity but in other ways we’re going to act like completely independent entities.” This was pointed out when the Euro was instituted but poo-pooed by those who were pushing the idea. Now we see why it doesn’t work. I assume the British are congratulating themselves for not having gotten suckered in. At this point, however, countries have to get off the Euro or figure out a more centralized way of controling their Euro-linked economies.
The problem with the German demand for “austerity” is that it fails to see that you can’t pay off your debts if you can’t make money. And you can’t make money if nobody can borrow money. The ability to borrow is the lifeblood of capitalism. The Germans sell a huge amount of their stuff to other EU countries. So who do the Germans think is going to buy their stuff if these economies effectively shut down?
make that “Euro-denominated bonds” although “dominated” is not bad either. 🙂
#7 Thanks Catholic Mom
[blockquote]I assume the British are congratulating themselves for not having gotten suckered in.[/blockquote]
Well as you know, we were shadowing European currencies with what was then the received wisdom of our rulers that we would indeed join the Euro. We got into the same mess by restricting the ability of our currency to float and adjust in the Exchange Rate Mechanism by which we sought to defend and indefensible exchange rate within the band we had agreed as part or the ERM. It all fell apart on Black Wednesday.
We learnt the hard way at a heavy cost, and indeed for us watching what is now going on on the Continent, there is a strong sense of deja vu. There is no satisfaction here at all, we are worried stiff that our European markets are about to go down the pan, and we with them, but we are trying to insulate ourselves as best we can. Our major banks with government encouragement have reduced their European exposure, and everyone is planning for the contingency of the Eurozone falling apart.
We aim to keep ourselves stable and a safe financial market and home to the world’s capital traders.
Last night’s events have been well received in the London financial market by the international banks and traders working here; however, we will remember Sarkosi’s and Merkel’s little number they pulled on us, and it has done nothing to encourage us to support them and their efforts. The response here can be summed up, from such comment I have listened to as ‘a plague on all their houses’.
The history of the UK and the then European Economic Community was that we refused to join when it was mooted and mocked the idea, only to realise that we had missed the bus. Then when we wanted to join, fearful of being shut out from a continental system which was growing increasingly prosperous, the then French President Charles de Gaulle mocked us and repeatedly refused to allow us in.
Part of the intention behind the EEC which became the EC which became the EU is the desire to bind the states of Europe so closely together that war becomes impossible. A noble idea, promoted by notably Christian statesmen such as Robert Schumann. However, I doubt if they had a super-state in mind. The EU seems to have been run by its salariat for its salariat. What has alarmed commentators increasingly here in the UK is the ‘democratic deficit’: the more power has been centralised in the EU, the less accountability there is. Do not for a moment imagine that the EU Commission is answerable to the European Parliament. The very idea is laughable. Even that parliament seems increasingly toothless. Election turn-outs in many countries are risible because voters know that (a) it will make no difference and (b) those elected have a tendency to go native once in the slushly funded corridors of power. And yet, and yet, we remember having once missed the bus and wonder: have we taken a bold and decisive stand for our free self-determination, or have we once more managed to miss the bus?
I fear that we will find out before long that last night was a bit of a side-show and Euroland needs to get a grip. In spite of Sarkhosi’s bluster, France along with most Euroland economies is a basket case. There is only one serious viable country and that is Germany. Sweden is like us keeping its distance from all this for similar reasons. Many of those signing up to the Franco-Prussian Alliance are countries who have no option but to be reliant on the Germans for their money. Remember that as you listen to the bluster from people like Signor Monti of Italy claiming that Britain is now ‘isolated’. It all depends on one’s perspective – Euro-centric, or global!
I think all the talk about this conference and Britain being in or out will prove to be a bit of a distraction. The real position and problem has not changed; there has just been some political manouevering, but it has shown us that we really do not need all these blustering Euro-pipsqueaks scheming, threatening and undermining our economy.
Cranny has it
In view of the comment about Sweden above and the hyperlink to Cranmer who says that Sweden, Hungary, Slovakia are also alongside Britain: all have now fallen into line and will work for the new treaty which will proceed without Britain. We are indeed alone. Again, a reminder from history – and in response to Pageantmaster above saying that it depends one one’s perspective – at the time of the creation of the EEC we said that we in the UK were a global player, not least through the Commonwealth. Alas, we realised that this was not enough.
It will be an interesting four or five years. (1) The nations that have signed up and are currently outside the Euro will through the new treaty eventually be under pressure to join the Euro (2) The EU nations will continue their policies of high taxation and centralised economic control. Will this work? Current evidence would seem to say that it will only increase indebtedness (3) The populations of countries dictated to by an unelected Brussells elite will feel increasingly resentful and this will inflame nationalism, directly contrary to the founding intention of the EEC/EU. But …. (4) Possibly Britain will find itself increasingly discriminated against in the European market through its separate currency and inability to influence regulations. ………….. We shall see ………….. Ora pro nobis fratres …
#13 Here’s something to cheer you up, Fr Tee.
The three countries you mention, have agreed to refer the matter to their parliaments – we will have to see what results.
Actually three of Britain’s major concerns have been:
1. to maintain the universal common market of Europe;
2. to maintain Britain’s competitive business environment; and
3. to avoid being tied into the toxic regulatory and institutional paralysis of Europe.
We are still in Europe, other than monetary union issues, it is business for us as usual in the EU, we still maintain our trade relationships and we are still a leading financial centre. We have not been prepared to sacrifice the City of London to Franco-German ambitions.
Meanwhile, I think that we would be wise to not get too excited about the EU and whether this will go anywhere – there are lots of lines of fracture for the members and there is many a slip between cup and lip. It also does nothing to address the crisis for the Euro and Euroland. Time for calm and watchful caution.
The UK has said ‘no’ to a treaty which could arguably have seen as a way of taxing the City of London out of existence in order to help keep the Euro afloat.
And, as someone said yesterday, we are as isolated as a man who decided not to sail on the Titanic.