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More on Europe. November 26, 2011

Posted by WorldbyStorm in Economy, European Politics, Irish Politics.
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Scariest moment for me this week – bar none? Talking to a close friend whose professional expertise in matters international is more than credible than most and who found the actions of the last three weeks by Germany and France stunning. Granted, they threw in the caveat about the issue being a ‘eurozone’ one rather than an EU, but noted how thin that was and how the institutions of the European Union have effectively been bypassed and how this has led to government change in two EU states – Greece and Italy.

And it is stunning. It is something that even a year ago, even six months ago, would have been incredible. It represents a rupture with both the spirit and letter of what the EU is meant to represent. It is a devolution to two states of effective power in the EU, with all others, including the UK, positioning in orbits of decreasing proximity and therefore influence. Guess where Ireland is, probably by this schema somewhere out beyond Pluto – no longer even a planet – in the Kuiper Belt in the halo of comets.

But it continues apace. Read Arthur Beesley in the Irish Times today and this rupture is still extant. Germany and France attempt to come to some sort of agreement, albeit Germany is in the stronger position. Note that:

EU leaders are due in Brussels for a summit in a fortnight. As market turmoil intensifies, they are under pressure to deliver yet another “big bang”.

But the real action is…

…a meeting in Strasbourg between German chancellor Angela Merkel, French president Nicolas Sarkozy and Italy’s newly installed technocratic prime minister Mario Monti [which] served up some vital clues.
The first was Sarkozy’s abrupt retreat from his drive to radically expand the mandate of the European Central Bank. Dr Merkel simply brushed this off, leaving her closest ally with nothing to show for an intensive diplomatic push to give the ECB a new role. The chancellor wants no truck with anything which would see the central bank print money to hand to errant euro zone governments. Sarkozy backed down.

What’s so amazing is how no one apparently gives a toss about this. Germany and France vault into attempting to control this process and EU leaders are happy to wait two weeks?
But there’s worse, at least from an Irish and EU perspective. The Franco-German comfy little coup necessitates the breath of some form of democratic legitimation. So… in order that the
moves are now under way in Europe to toughen the enforcement of the EU’s long neglected budgetary rules…
… actually are implemented…There is…

…the increasing possibility that Taoiseach Enda Kenny will have to fight a European referendum at a time when onerous austerity policies linked to the EU-IMF bailout are biting hard. If that sounds like an impossible mission, Mr Kenny may not have choice in the matter.

Note the latter point about no choice, and ponder the democratic deficit in that statement and then note the political insanity of asking the Irish people to vote yes to such measures at such a point. Which means that – in order to push such a referendum forward it will have to be couched in existential terms – In or Out. Nice.

But it’s not just Ireland which presents a problem…

Mr Van Rompuy is wary of prompting British claims for a repatriation of powers from Brussels if the treaty is reopened. Therefore, he is working to achieve maximum flexibility within the law as its stands.

And looking at all this to me there’s a real sense that Merkel et al have almost no feel for the realities on the ground. Perhaps to them they’re irrelevant. Perhaps they’re playing a longer game with an EU that is sans the UK, sans Greece and perhaps sans others in the periphery. Or perhaps they simply don’t have a clue what to do and it’s a case of trying whatever comes to mind.

Whatever, there’s no sense of a strategy, no sense of an European union but rather of two or three or four countries [at best] taking a leading role very much to save themselves and after that let events fall as they will.

And all this is political. The ‘increased scrutiny of national budgets [which] can be expected to be pretty severe’ will be profoundly political – and yet we are unlikely to see German levels of state provision anytime soon. If ever.

What’s most telling is how imperfect, how flawed the EU and the single currency have actually been. I’ve said it before, the latter was not fit for purpose, the former ever more evidently unable to operate under the stresses and strains of a genuine crisis.

And now we face the prospect of a referendum. Good luck with that.

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Comments»

1. irishelectionliterature - November 26, 2011

Its frightening alright. On the bus the other day the two people in front of me were talking about what the best currency to put their savings was as the euro was going under.

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WorldbyStorm - November 26, 2011

That’s a conversation that I hear a lot of. Is there an answer? I don’t really have any savings but if I did I think I’d be a bit concerned.

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ejh - November 26, 2011

Certainly a point that’s occurred to us (i.e. the missus and myself). I guess theoretically we want to put as much of our Euro savings as we can into sterling at the right moment, but of course we won’t know what the right moment is until everybody in a better position to know has done it first and hence rendered it pointless.

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shea - November 26, 2011

Australian dollars apparently the way to go democratic state, economy linked to massive Chinese industrialization currently underway. sterling to close to American dollar and Euro. one of many pieces of advice doing the rounds for people with savings. no advice from anyone, political parties, trade unions etc for people who don’t have savings. if where at the point where we are not talking about if a collapse happens but when then this is a serious lack of leadership from certain people.

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alastair - November 27, 2011

I don’t think the euro is going anywhere. I’ll be leaving my fantastic wealth in euros for the duration. The fallout of a retreat to fragmented european currencies would still be greater than riding out the storm with the euro. Not exactly the greatest reassurance, but it’ll still do the job.

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WorldbyStorm - November 28, 2011

There’s something in that, certainly at a global level, but it’s worth reflecting on the mood music coming from Berlin about a smaller tighter ‘stable’ eurozone as well as the point that while the euro is almost bound to survive in one form or another [I find it hard to believe that even in a reduced state of affairs Germany/France/NL/etc wouldn't retain it] we’re not necessarily/inevitably going to be on the inside in this state.

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alastair - November 28, 2011

I reckon we’ll be on the inside (though have doubts about the Greeks), but even in a worst case scenario – that we were on the outside, your euro savings would still be safely anchored to the inner circle, regardless of what the Punt Nua might be valued at.

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make do and mend - November 28, 2011

It’s not often I would agree with Alstair (note to self – don’t get in the habit) but I tend to think that the Euro will be saved. The integrity of the top eschelon is heavily invested in the Euro project. I’m not sure what the whole European project is about anymore, but I do know that people who have put their prestige on the line, however unwarranted their self assesment is, will go to great lengths to safe gaurd it.

At worst, the-powers-that-be might be forced into a smaller Euro club. The Euro will still be around and exchangeable.

On another note, if things like fiscal oversight with powers of veto of national budgets by the EU and the creation of so-called national indepedent budgetary commitees are established in the wake of this crisis, I can only think the European elite will be happy to save the entire Euro project.

Still, having a very small percentage of one’s money in another currency isn’t a bad idea.

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LeftAtTheCross - November 28, 2011

The discussion on savings in interesting, perhaps more so because of the Grundrisse reading group where we’ve been covering “the Chapter on Money”. Money as a store of wealth. I’m not sure what advice Marx would offer to savers in the current situation! Convert them into use values perhaps, food, fuel etc. Unless you’ve very little savings, or a massive bunker in your back garden, that’s perhaps not all that practical.

If anyone has savings and also has debt, mortgage etc, my personal inclination would be to pay off the debt. You can bet that if the Eurozone fragments and Ireland falls outside the core (although Donagh offered a farily convincing opinion on why that’s unlikely to happen: http://cedarlounge.wordpress.com/2011/11/09/and-even-ifwhen-berlusconi-goes%e2%80%a6-it-still-doesn%e2%80%99t-satiate-the-markets%e2%80%a6/#comment-108644) that people’s savings will be converted into Punts and their debts will remain in Euros.

As for the strengths of different fiat currencies, well if the global financial crisis gets more crisis-ier and the Euro goes under, one might imagine that as one of the global currency blocs it would have a contagion effect into all other currencies also, given the interconnectedness of the globalised economic system. I’m not sure having savings in Australian Dollars, Yen, Sterling, or whatever is going to provide any escape, not if the financial capital bubble is bursting.

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2. CL - November 26, 2011

‘Or perhaps they simply don’t have a clue what to do and it’s a case of trying whatever comes to mind’-That seems right and the same is true in the U.S.
The capitalist crisis deepens and the ruling class doesn’t know what to do. Except more of the neoliberalism that caused the crisis in the first place. And repression from militarized police forces.
The worldwide protest movement seems equally lost. The question is will it succumb to the repression?

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WorldbyStorm - November 26, 2011

My fear is this, that every time the EU and national governments push forward, from their perspective in terms of austerity, etc, there’s no push back at all. As was put to me Greece is almost sui generis in that opposition to the state is deeply embedded. Not so much here or elsewhere. Merkel and Sarkozy have done what they have because none of their supposed peers has raised a voice in opposition. And none of the populations has systemically pushed back at all bar those responses we know of.

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3. shea - November 26, 2011

do people think it will come to a referendum here? like obviously there are rule changes coming but if they don’t give a toss about about tearing up democracy in greese and italy then why will they give a toss about it in Ireland.

i’ve had family work in the commission. the way they explain the practice’s there would make our gombeens blush. the place in full of family members and political parties hacks doing internships to paid contract work thats unnecessary, to friends getting printing contracts catering etc. iam not capturing the essence of what my cousins say but they describe it as a form of patronage/bribery that makes politicians around the eu sort of dependent on the e.u in a way that its eassier to go along with things than rock the boat. maybe a consideration for why theres no challenge to whats going on.

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EWI - November 26, 2011

then why will they give a toss about it in Ireland.

Because people here can take legal challenges to compel the Government to adhere to the Constitution.

Sarkozy and Merkel – well, I thought that there must be something seriously wrong with these two given their warm welcome a few years ago from the Bush-loving Anglophone Euro right, and I have unfortunately had my worst fears confirmed.

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shea - November 26, 2011

hope your right. but have a bit of a feeling that some people will play the ‘so what’ argument.

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WorldbyStorm - November 27, 2011

I have a sort of friend who worked in Brussels who was equally scathing as you que about the set up. Said it was nepotism writ large. Very depressing given what we face.

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4. Pope Epopt - November 26, 2011

There is a telling interview in the Berliner Zeitung with Jens Weidmann, the architect of the Merkel “Nein”, which will probably be historically ranked well above the De Gaulle “Non”.

Apart from the content moral righteousness and lack of flexibility is more than a little striking – a kind of economic Calvinism. The decision making in Germany has a great deal to do with self-image, and a fear of contagion from the Great Schuldigern (the world Schuld encompasses both debt and guilt, remember) – the non-elect.

What horrifies him about the Eurobond is the possibility of financial miscegenation:

Diejenigen, die uns kritisieren, fordern eine Vergemeinschaftung von Haftungsrisiken im großen Stil. Dies ist der Notenbank verboten! Those who criticise us are demanding the communalisation of liability/responsibility to the max. The central bank is forbidden to do this!

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Pope Epopt - November 26, 2011

I should explain that Weidmann was Merkel’s advisor and European point man for the past number of years and is now ensconced in the Bundesbank, which effectively seems to have a veto over the ECB.

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Pope Epopt - November 26, 2011

Other points in the interview:

1. He is firmly behind the idea of rapid fiscal union with the right of the Eurozone management (presumably the Frankfurt group?) to intervene in national economic decisions, being agreed by treaty. To the proposal that the by the time the political changes are in place the Euro will be split, he has no answer.

2. Austerity is, of course, the answer and should be universally applied and will somehow magically (and this is quintessentially magical thinking) lead to growth. Ireland is a poster child for this.

3. The Euro has been good for Germany and there is no question of a return to the D-Mark:

Es wird uns zuweilen unterstellt, wir wollten die D-Mark zurück. Das ist absurd. Deutschland profitiert in vielerlei Hinsicht vom Euro, wirtschaftlich und politisch. It is sometimes alleged that we want the Deutschmark back. That is absurd. Germany profits with respect to the Euro in many ways, economically and politically.

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Pope Epopt - November 26, 2011

So it’s an extraordinary combination of moral superiority, nationalist small mindedness, mad economic doctrines taken as religious truths.

One point in his partial defence should be made – Weidmann is a constitutionalist – he says that decisions about that Euro should be taken at the political level, and that he is constrained by German law, as he doubtless is. And of course the consequences of German constitutionalism have been the remarkable shouldering aside of democracy elsewhere in the EU. Also it is taken as read by Weidmann that German arrangements are to be projected onto the greater European stage. The ECB must follow the Bundesbank, in all essential respects.

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5. Pope Epopt - November 26, 2011

All in all I think Germany will ride the Euro as long as possible, but I find it very hard to believe that Herr Weidmann has not got a plan B.

Personally I’m a great fan of Weidmann and Merkel. If anyone is likely to create a Lehmanns moment in European and global finance capital again, this time magnified by the socialisation of the debt mountain, it is them.

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WorldbyStorm - November 27, 2011

Hold on a second. Do you mean in a negative or positive way?

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Pope Epopt - November 27, 2011

Positively negative. I’m feeling apocalyptic tonight.

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ejh - November 27, 2011

Aren’t we all. I reckon I’m losing about an hour’s sleep a night to the crisis.

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6. EamonnCork - November 27, 2011

Why the glum faces? Cheer up lads. According to Roddy Doyle in yesterday’s Guardian, “We live in a time of deep recession but, here in Dublin, things still start as ‘brilliant’, and work their way up.” What a brilliant insight.

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7. EamonnCork - November 27, 2011

We’re pretty miserable down here in Cork but it’s good to know things are different in the capital.

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8. Shay Brennan - November 27, 2011

Well I’d say Roddy’s fingers on the pulse. Dubliners must not be the blacks of Ireland anymore.

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9. dara o rourke - November 27, 2011

Yes,the dollar is a problem – your problem.Can’t remember which US politician said this.But it seems to be equally applicable to the euro now;as in it’s working great for Germany – so what’s the problem?

Sheesh.

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10. sonofstan - November 27, 2011

Habermas is angry:

http://www.spiegel.de/international/europe/0,1518,799237,00.html

I’ve often had a problem with his EU- philia, but he has the sense and honesty now to be outraged at what his country is doing to it.

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Pope Epopt - November 27, 2011

Thanks for that SoS. I’ve never really bought the discursive democracy picture, and think he’s naive about the functioning of the media in creating hegemony, but at least he has added his weight in noting the profoundly anti-democratic turn of what was supposed to be a democratic project.

Here’s a telling quotation from the piece:

“If the European project fails,” he says, “then there is the question of how long it will take to reach the status quo again. Remember the German Revolution of 1848: When it failed, it took us 100 years to regain the same level of democracy as before.”

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CMK - November 28, 2011

Several years too late. Habermas’ contempt for the electorates of France and Holland in 2005 (when they rubbished his and Derrida’s fantasy of a ‘European Constitution’) was palpable. I doubt he thinks a little island off Britain is worth thinking about and, so, probably paid little or no attention to the Nice and Lisbon sagas here.

He now does his best ‘johnny-come-lately’ act when he, finally after several decades, cottons on to the true nature of the European Union. He’ll have to take his place at the end of a very long queue of people who got there before him. People like, ya know, the unsophisticated idiots in the various Left groups and parties who’ve maintained a consistent opposition to the shape the EU was taking since at least the Maastricht Treaty, while Habermas was on the pig’s back celebrating the emerging (thoroughly capitalist neo-liberal) European Union.

Left liberalism has been revealed by this crisis to be utterly and completely bankrupt. The bond markets don’t give a crap about deliberative democracy, transnational public spheres, communicate discourse or any of that other rubbish. The EU is fundamentally about money and securing the rights of those who have it (ie. the banks and the bond markets). The four so-called ‘Fundamental Freedoms’ of the EU are all based on money or servicing business – not on stupid ‘freedoms’ like speech, assembly or the freedom to resist the unjust domination of the bond markets. The EU is now primarily about paying back debts and squeezing people hard enough so that their only option for a good life is to get into greater and greater debt. No doubt Garton-Ash and other western intelligence assets will be keen to ensure that Easy-Jet keep flying people from Estonia to Paris and back, but those people will have to simultaneously prove their credit-worthiness and their general political submissiveness, before the bond markets will hand over the money.

There’s a huge gap in academia opened by the current crisis. In no time we’ll have learned treatises, seminars, conferences on why technocracy is the way to go for the EU. Habermas and his acolytes will, no doubt, decide that maybe they can work to change bond market imposed technocracy, rather than having to work with the political expressions of the filthy Euro-rabble of citizens being crushed by EU imposed austerity.

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11. Pope Epopt - November 27, 2011

I was reading a piece (I think in Die Zeit) that made the point that it is remarkable that France has nuclear weapons and none of it’s neighbours (or more specifically Germany) are particularly worried. If you think about it from the perspective of most of history, this is indeed a remarkable state of affairs. It would be unthinkable in, say, Pakistan or even Mexico. And further away in time, say 70 years ago this insousance would also have been unimaginable.

Timothy Garton Ash also writes that a younger generation has yet to wake up to what it might loose:

SPIEGEL: The United States of Europe should no longer be the goal?

Garton Ash: We certainly have no lack of rhetoric. What we do lack are the emotions and the passion to say to people: Do you really want to risk what we have? The fact that a young man in Greece or Estonia can get on a plane in the morning and fly to Paris or Rome, without border controls and without exchanging money, and perhaps find a wife or friends there, decide to live or find a job there — this is progress that no one should put at risk. It must be made clear to people that their “easyJet Europe,” as I call this European freedom we experience every day, will be in jeopardy if the euro zone falls apart.

SPIEGEL: Are you saying that if the euro fails, Europe too will fail?

Garton Ash: No, but I believe that we, most Europeans, are still doing too well or, to put it more brutally, not badly enough yet. Europe’s biggest problem is its success, which is taken for granted even by young citizens of the Baltic countries, which didn’t even exist on the map of Europe 21 years ago. I travel in Poland a lot and it’s exactly the same thing there. But if the “easyJet Europe” of freedom is threatened, we will see a mobilization of young Europeans. I’m certain of that.

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WorldbyStorm - November 28, 2011

That’s a fascinating thought re the nuclear weapons and contemporary European relations.

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