I had the pleasure this evening of listening to John Peet, the Europe editor of The Economist, giving a brief yet insightful talk on the future of the euro and how it relates to the future of the “European project” – the political and economic institutions that comprise the European Union. Sadly I didn’t take any notes during the talk and subsequent discussion, but here are a few thoughts.
Mr Peet was correct in saying there seems to be something perverse about poorer countries paying to bail out those with more wealth – countries that have already been bailed out (notably Ireland and Portugal) have been asked to contribute billions of euro to a fund that will likely come tobe used to “rescue” the Italian government and European bankers and bondholders.
Another interesting fact briefly alluded to was that traditionally the European elite have been – either intentionally or otherwise – oblivious to their own role in the crisis. Countries – in particular Greece – were allowed to join the euro even though they failed to meet the fiscal and monetary conditions set out under the Maastricht Treaty of 1992. Moreover, many countries had imposed upon them enormously pro-cyclical monetary policies that caused unsustainable booms – here, Ireland is a principal example. Yet Jose Manuel Barroso has laid the blame for the ongoing sovereign debt crisis almost entirely at the feet of the “markets” and speculators, apparently refusing to contemplate the idea that the eurozone optimal currency area was nothing of the sort.
There are however areas where I found myself in disagreement with Mr Peet. I will do my utmost to represent as faithfully as I can his arguments, but I apologise if my recollection overlooks various nuances in his argument.
The prospect of a Britain largely excluded from the decision making process of the European Union (a scenario envisioned by some commentators in the wake of Mr Cameron’s “veto” of fiscal pact negotiations for the currency bloc) is, in Mr Peet’s view, a troubling one. I agree virtually without reservation that decisions imposed upon Britain without British input is a situation that should be avoided, but I don’t think that this entails the need for greater integration of Britain in an increasingly federalized Europe. Indeed, if the goal is for Britain to have as much influence as possible in the decisions that affect it, then the logical solution would seem to be to withdraw from the institutional structures of the Communities and regain “complete” influence on policy.
It was also said that should the euro fail, it would also be the end of “Europe”. It’s not necessarily true that a catastrophic failure of the single currency would lead to a disintegration of the political settlement that governs the twenty-seven members of the Union and political integration existed long before the euro, but Mr Peet is right to say that it would be made likely, with the single market weakening as national governments attempt populist economics in an effort to restore a semblance of stability should national currencies be reintroduced. Where my own assessment differs from the speaker’s is whether this would be a catastrophic event. I don’t think that it would be. Over the past century, the world has seen a trend toward ever-lowering barriers to trade between economies (notwithstanding the currently-stalled Doha round of trade talks) with free trade taking preference over protectionism. There’s no reason to think that, in the long run, this trend would be counteracted by a potential but by no means guaranteed increase in obstacles to trade between European Union members, most of whom recognise the benefits of such policies entirely independent of the existence of the political Union.
I can do little better than link to this post on the Telegraph‘s blog section, criticizing the Deputy Prime Minister Nick Clegg for attacking the House of Lords for being undemocratic whilst speaking unfalteringly in support of his own special interest, the unelected bureaucrats at the European Commission.
It was not the Lords who decreed that many fishermen will be prohibited from going to sea for more a one day a week, nor which helps itself unasked to money from our taxpayers. Nor was it we who imposed requirements on our NHS to employ foreign doctors unable to speak English and which discriminate against British born and trained young doctors. Like the restrictive employment laws which are now costing jobs here in Britain all these interferences in our country and many more come from the apparatus in Brussels of which Mr Clegg is a one-time employee.
So we might ask our Deputy Prime Minister: “What about the Eurocrats?” Are they not a closed society in which power is entrenched in the hands of an unaccountable elite? Indeed, so much power that they have recently carried out coups d’état against the elected governments of Greece and Italy.
Two points stand out after watching via iPlayer Stephen Sackur’s interview with Marine le Pen, leader of the French Front National, for the BBC’s Hardtalk.
- Ms le Pen proposes to repeal laws that restrict the Banque de France lending to the government at low interest rates, removing her country from international financial markets. The same financial markets that have forced eurozone leaders to accept that they saved too little in the good times and spent too much in the bad and enact policies to bring their fiscal policies to more sustainable levels. In short, she proposes opening the door to massive government deficits that ultimately come at the expense of the people who are forced to pay the money back through taxes or, as is more likely, through having their spending power reduced by inflation.
- The French economy certainly suffers from being uncompetitive on the global stage and Ms le Pen is correct that some of that is as a result of being unable to devalue the currency in much the same way the United Kingdom did during 2008 – 09. Yet uncompetitiveness would persist under her leadership even in France returned to the franc – the country’s would-be president denied categorically that France is harmed by its restrictive labour laws, including collective bargaining agreements that are imposed on third parties and the minimum wage, which serve to push up relative labour costs and actively contribute to the country’s declining competitiveness.
The Front National are not short on policies and rhetoric that should make them unelectable even discounting their apparent economic illiteracy – the people of France should take note.
I think it is fair to say very few support teachers ever receive a promotion of a similar scale to that of Mohamed Ibrahim, who is moving from Newman Catholic College to Mogadishu to take on the role of Deputy Prime Minister and Minister of Foreign Affairs in Somalia’s embattled Transitional Federal Government.
Here are a few links from Auntie Beeb that have caught my eye today.
The 9th of July 2011 is the day that the United Nations welcomed its 193rd member: the Republic of South Sudan was declared an independent state admit jubilant celebrations in Juba, the main seat of government. The BBC also has this interesting profile of the new country. (Incidentally, I’m becoming quite infuriated with the Corporation’s insistence at calling South Sudan a “nation”, but that’s another matter.)
Nick Robinson has an article on a speech given by John Major on the issue of devolution in the United Kingdom. I particularly enjoyed reading, “My own view on Scottish independence is very straightforward: it would be folly – bad for Scotland and bad for England – but, if Scots insist on it, England cannot – and should not – deny them,” although I’m yet to read the whole speech in full. [Emphasis mine.]
The News of the World, due to be closed this weekend after 168 years, is printing five million copies of its final edition. The paper has been torn apart by the ongoing scandal regarding the hacking of the telephone lines of various high profile figures.
And finally, although not particularly related to this blog, this page allows the Atlantis space shuttle to be tracked undertaking what is the last mission for the Space Shuttle programme.