"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that you were our countrymen."

Thursday, 17 June 2010

Open Europe Briefing

The excellent Open Europe has published a new report detailing steps being taken towards an EU economic government.

The rise of the EU's economic government: Proposals on the table and what has already been achieved

It's a 20-page .pdf file which, amongst other topics, analyses the Greek bailout, the effects of the Stability & Growth pact, the monitoring of all 27 national budgets and possible cracks in the Franco-German axis.

Here are the keypoints followed by a few quotes from some of the euro-elite:
  • The eurozone is now a de facto debt union, with its members taking on the liabilities of each others' sovereign debts and with the European Central Bank financing states through its purchases of government bonds.
  • The legality of the eurozone rescue packages, agreed in the spring, is dubious since they are inconsistent with the 'no bailout' clauses in the EU Treaties. The €60 billion stabilisation fund, for which British taxpayers are liable for around €8 billion, is particularly questionable on legal grounds - and would most likely not survive a test in a non-politicised court. Crucially, it transfers both powers and potentially more taxpayers' money to the EU - both of which the UK Coalition Government has said it opposes.
  • At the summit, EU leaders will discuss a proposal requiring member states to submit their national budgets to the Commission and other finance ministers before sending them to national parliaments. The UK Government opposes this, but according to the Commission has no veto over the proposal.
  • German Chancellor Angela Merkel, and now French President Nicolas Sarkozy, have said that a change to the EU Treaties might be necessary to achieve stronger economic governance, including tougher sanctions for member states that violate the bloc's budget rules. A Treaty change is likely to come up against resistance but is not off the cards if Angela Merkel spends the political capital needed to push it through.
  • UK Prime Minister David Cameron has said he will veto any Treaty change that transfers more powers from Westminster to Brussels. However, rather than being on the defensive, Cameron could work with Angela Merkel and other partners to achieve Treaty changes – but ask for substantial EU reforms in return, including the repatriation of powers back to the UK.
  • The nature of the negotiations is likely to depend on the contrasting Franco-German visions of how to deal with the current economic problems.
  • France, on the one hand, hopes to move a step closer to its long-held desire for economic government of the eurozone, including the greater harmonisation of all economic policy across its 16 members.
  • Germany, on the other hand, is pushing for much tougher budgetary rules for the eurozone, backed by sanctions, but fears the politicisation of economic policy. It therefore wants to water down the French plans for economic government by more loosely applying aspects of them to the entire 27 member states rather than focussing them more tightly on the eurozone members.

“We are clearly confronted with a tension within the system, the ill-famous dilemma of being a monetary union and not a full-fledged economic and political union. This tension has been there since the single currency was created. However, the general public was not really made aware of it” - European Council President, Herman Van Rompuy, 25 May 2010
“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created”- Then European Commission President, Romano Prodi, 2001
“The single currency is the greatest abandonment of sovereignty since the foundation of the European Community… the decision is of an essentially political nature" - Former Spanish Prime Minister Felipe González, 1998
“The introduction of the Euro is probably the most important integrating step since the beginning of the unification process. It is certain that the times of individual national efforts regarding employment policies, social and tax policies are definitely over. This will require finally burying some erroneous ideas of national sovereignty”- Then German Chancellor Gerhard Schröder, 1999
“The process of monetary union goes hand in hand with political integration and ultimately political union. EMU is, and was always meant to be, a stepping stone on the way to a united Europe”- Then President of the European Central Bank, Wim Duisenberg, 2001.
“The European currency will lead to member nations transferring their sovereignty over financial and wage policies as well as monetary affairs. It is an illusion to think that states can hold on to their autonomy over taxation policies”- Former President of the German Bundesbank, Prof. Hans Tietmeyer.
"There is no example in history of a lasting monetary union that was not linked to one state" - Member of the ECB Executive Board, Otmar Issing, 1991

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