Cameron wins EU skirmish

Discussion in 'Politics' started by Jason, Oct 28, 2010.

  1. Jason

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    News just breaking - Cameron has a "blocking minority" for the proposed 5.9% EU budget increase.

    The UK has been supported by 10 countries:
    Germany
    France
    Netherlands
    Sweden
    Czech Republic
    Denmark
    Austria
    Finland
    Slovenia
    Estonia

    The upshot is that the budget increase should now be 2.9%.

    I know it's not brilliant - 0% would have been good, or a cut better - but it is likely to be the best deal that was available. Bearing in mind that the budget wasn't even up for discussion today this is an achievement of sorts.
     
  2. Joll

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    Cool! :D
     
  3. Jason

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    Of course Cameron's achievement is just a sideshow, though a little win nonetheless. The big issue at the summit is Euro stabilisation. I can't see a scenario that works. As I see it:

    1) Do nothing. The German constitutional courts are expected to rule that the Greek bail-out breaches German law, and the view seems to be that that will plunge the Euro back into crisis. There are also problems around other periphery nations - Ireland and Spain are the two that are particularly worrying. Do nothing is not a solution.

    2) Go for a new treaty. But the last one took years. It will need referenda. For example Ireland would have to vote on it. The UK referendum lock (forthcoming) would be activated. A new treaty would have provision to punish countries that are likely to breach parameters, and the turkeys aren't going to vote for Christmas. Even if it went through it would be too late.

    3) Try to ratchet Lisbon. While I appreciate the capacity of the Eurocrats to make a treaty mean what they want it to mean I just don't think it can be done. Presumably Merkel doesn't think it will work, hence the request for a treaty.

    I can't think of another solution. And I'm therefore going to venture the view that this summit is intended to fail. At the end the EU will be saying we know the status quo isn't working but we can't get agreement to do anything about it. THEN it is going to be possible to have another summit where a coalition of those countries who want a new treaty take it forward for their countries alone, and do it very quickly. This is the moment when the Euro breaks into Noro and Soro.
     
  4. Joll

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    Hmm, interesting...

    Tbh, I think they'll get away with opening Lisbon to include emergency economic measures. I do think we'll have to assess whether it will affect the UK or not, and if not - I suspect we won't get a referendum. :S

    It would be a good chance to legally specify that the new measures don't apply to the UK - and Cameron may (possibly) let it through in return for keeping the rebate and maybe tightening up on the EU budget (surely they can't go ahead with their own profiligacy at the same moment as including harsh penalties for everyone else who ends up in difficulties? Or can they?!).
     
    #4 Joll, Oct 28, 2010
    Last edited by a moderator: Oct 28, 2010
  5. dandelion

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    The question of a 3% increase, or any other number, ought to turn on what it is being spent on. What? Is this purely a numerical 3% increase, in which case is it really an increase at all taking into account inflation? I had the impression that the uk budget cuts were cuts after adjusting for inflation, ie potentially real numbers increases. On question time someone asked what a 3% increase represented in numbers and nether lab or con spokesmen knew. the answer seems to be 450 million pounds according to the bbc. Not much. The voting totals are

    The UK 29
    Germany29
    France 29
    Netherlands 13
    Sweden 10
    Czech Republic 12
    Denmark 7
    Austria 10
    Finland 7
    Slovenia 4
    Estonia 4
    total 154 when 91 are needed to block a measure, which would be britain france and germany plus any other one of the above.

    It might be more correct to say the UK has agreed to follow the line of the other major eu countries.
     
  6. Drifterwood

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    So our contribution to Europe is something like a couple of percent of the UK Government's overall budget?

    Given the benefits of the trading bloc, I would say that this is a very small price to pay.
     
  7. dandelion

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    Somehow the uk defence thread has also become a eu budget debate. I posted there some numbers on the budget. europa has 2010 contributions of 12.5 billion, of which we get 6 or 7 billion back as expenditure within the uk. cant recall now what uk total government expenditure is? A significant chunk of our net contribution is 'earmarked' for development of new accession countries. That was our choice.
     
  8. Jason

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    There is certainly a view that France, Germany and others wanted to block the 6% budget increase - but Cameron is the one who took the lead on this. His blocking minority is quite a bit bigger than the minimum needed, as Dandelion points out. It is also still possible that stalemate in subsequent negotiations may lead to last year's figures being rolled forward, ie a 0% increase. The matter is of course relatively small fry.

    The UK will presumably oppose increases in the next seven-year budget - so Cameron has set the mood music with his opposition to 6%. The UK will presumably stick to the view that any bail-out costs for the Euro should be carried by the Eurozone (and those nations pledged to join up), ie by everyone except the UK. And presumably Cameron will stick to the UK's budget rebate. But even these issues are in the end pretty minor compared with the major issues facing the EU.

    While I'm 101% sure the summit will issue a statement saying that the summit has been a great success and all problems related to the Euro are now solved IMO this cannot be correct. I think Merkel is right that a framework for Euro stability necessitates some new treaty, whether it is called this or whether it is just an add-on to Lisbon. This surely has to be the big issue, and also one where there isn't a way forward which looks remotely likely to work. Merkel isn't re-opening the Pandora's box of EU-wide treaty for fun - rather out of desperation. And I also think Merkel knows that a new treaty isn't possible. So is she putting forward the only option in order for it to be rejected - and then comes plan B?

    There's an interesting article in The Economist.
     
  9. B_nyvin

    B_nyvin New Member

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    The EU budget is so pitifully small anyway...i'm amazed this is even being made a big deal. Of course EU-phobics will make ANYTHING a big deal.
     
  10. dandelion

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    That is quite correct, this has always been arguing over principle rather than substance. As you said, it was true in the 1980s or so the UK was getting a bad deal, so bad the others agreed to a rebate. There is a fundamental difficulty in principle at the moment of the EU getting a budget increase when many other areas in all countries are getting cuts.

    Jase, (and anyone else), the UK cannot realy stand aside and let others get on with revising the euro as they please, because we have to be mindful of setting up condition we will be happy with when we join. (which we will eventually....). Having a new 'treaty' is rather a question of how you look at it. the EU has evolved by a number of more formal or less formal methods as have seemed expedient. This might be a good time to press for concessions in exchange, but just what concessions do we want? Whats wrong with the status quo? Exactly what concessions would Greece demand for surrenedering autonomy? Rather big ones, I would think.
     
    #10 dandelion, Oct 29, 2010
    Last edited: Oct 29, 2010
  11. Jason

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    I agree that changes to the euro impact on the UK. Notwithstanding we are out of the Eurozone and with a government that has a clear committment NOT to join, and there are real limits to the input we can expect to have in the revision process. Probably the reality is that we can agree not to disrupt whatever the Eurozone wants to do and may get some sort of concession for this - though it is grubby politics and I would prefer us to keep out of the whole matter. I don't think there is anything major we want. My world view is that the euro is now terminal and the issues are around managing the break-up.

    The status quo is the one thing that cannot possibly continue. Monetary union does not work without fiscal union. But the alternatives are grim.

    The Greek problems have just been the first act of very many euro problems - there will be crisis after crisis after crisis until either the euro breaks or there is fiscal union. It is less a case of what the Greeks might demand as what will be inflicted on them. The only way that Greece can remain part of the euro for (say) another five years (that's assuming the euro survives, which I don't think it will) is by accepting colonisation. Merkel is talking about taking away voting rights as a punishment - this is an enormous issue. Greece would be without proper representation in the EU, but the Eurozone would impose austerity in definace of the will of the Greek people. This is the worst of exploitative colonisation. A worrying story in the last few days is the movement of EU soldiers into Greece to help Greece patrol its frontier with Turkey. It seems to me that this is sausage slicing. Greece has a problem with border security because it is broke. Instead of funding Greece to enable Greek soldiers to do the job we have thousands of EU soldiers moved into Greece to help Greece. The next step is that they help the Greek government keep law and order on the streets of Athens. We've all seen the pictures of strikes and demonstrations in Greece but this is just the first act. If the euro continues to be inflicted on the unfortunate citizens of a proud country the consequence is colonisation, both economic and military. Do Greeks really want a generation of punishment at the hands of the ECB? Do they want EU troops in Greece? Do they want a loss of sovereignty as their nation cannot vote? Do they want the Franco-German dominated stitch-up that is the Grand Coalition to be the sham democracy which rules Greece? This is indeed a way of creating fiscal union - force it on periphery countries through colonisation.

    The other way is some sort of Treaty. I know there is talk of tweaking the Lisbon Treaty. Merkel is talking about changing two lines as if this is trivial, some sort of typo correction - but it isn't. It only takes a sentence to give enormous new powers to the EU, basically creating a (limited) fiscal union. (The possibility of tweaking exists in art 48 para 6 TFEU and ONLY works when changes do not increase the competencies of the EU - but the changes contemplated would do precisely this) Merkel might want to try some process short of a true Treaty revision but I don't see how referenda can be avoided in France, Belgium, Ireland and I guess in the UK too. Does anyone think Ireland would vote yes? And a yes vote from the UK is almost as unlikely. And France - when it is realised that the implications will be a bigger emergency fund and put their retirement age up more? And I notice today's Guardian has some sarcastic comment in the editorial to the effect "does Belgium exist?" - I can't guess how an EU treaty vote might go.

    Colonisation of Greece, Spain, Portugal, Ireland and others is too horrible. A new treaty isn't going to happen. Best I can see is some sort of coalition of the willing (ie France and Germany) where they move forward first into a brave new world of fiscal harmonisation and (while staying on the euro) issue a new currency at a higher level enabling the euro to depreciate. This isn't being talked about. But what other option is there?

    Europe/EU/Eurozone is in a mess. Think big mess.
     
    #11 Jason, Oct 29, 2010
    Last edited: Oct 29, 2010
  12. dandelion

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    The situation in Greece fundamentally has nothing to do with the euro. The euro has given them some benefits and some difficulties in handling their finances. They have failed in handling those finances themselves. This is now Germany's problem, because Greece is a member of the euro. It is not Greece's problem. It is Greece's big leverage point which has forced Germany to bail them out. Off hand I'd think they would be nuts to agree to changes to the system which could weaken their position. And they do have to agree. Thje German chancellor is desperately trying to devise schemes to continue the bailout contrary to the German constitution because she has no choice.


    What options are there to creating yet another currency? Obviously, stick with the one we have got. What precisely is wrong with it? Germany et al are trying hard to unwind their position so that a greek bancruptcy within the system will happen gracefully. If it comes to that. Who knows, the economy is looking up. Maybe.
     
  13. Joll

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    This does seem pretty horrific, but I do think it's the likely way that things will proceed. To keep the Euro going, there may well be step-by-step fiscal unification, and takeover of the countries that can't manage their debt. :redface: I'm pretty glad we never joined.
     
  14. Jason

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    It attempts an economic impossibility - a monetary union cannot endure without a fiscal union.

    We've had a thread on this before. It is just about possible to have a short-lived monetray union while fiscal union plays catch up. This happened in nineteenth century Germany through their customs union, and I think there is little doubt that this is what the architects of the Euro project intended.

    Now we either move quickly to fiscal union or the euro fails. There is no third way.

    Fiscal union is in theory possible. For this the northern Eurozone must give money (not loans) to the periphery. And the periphery nations would have to accept economic governance, which is pretty much rule from the north. This would have to be set out in a treaty which would establish a sovereign state of Europe. And in view of the market turmoil it needs to be done very quickly.

    While fiscal union is in theory possible I just don't see all the countries agreeing. So IMO we are left with an inevitable break-up of the euro. IMO Merkel and Sarkozy and everyone else knows this - but dare not whisper it because it would spook the markets. But I do think they are working their socks off for plan B. I think it goes like this:

    - Propose a new treaty, or treaty changes. Let the idea be diluted, talked to death, shown to be impossible.
    - Get very close to the next crisis.
    - Propse a new treaty for SOME Eurozone nations. This includes fiscal union (which is what France and Germany are racing towards right now). It also needs a new unit of exchange for the treaty nations which they use for national transactions and inter-treaty-nation transactions. While keeping the euro they float a new currency (DM?).
    - Euro devalues taking pressure off periphery.
    - Other treaties come in, eg a Latin treaty, a Greek treaty, and Irish treaty.
     
  15. dandelion

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    Yes, we have argued this at length elsewhere. The conclusion was that historically monetary unions have existed perfectly well without fiscal unions. Historically social systems of all sorts are generally brought down by wars. The second conclusion was that the EU is already a fiscal union. You even quoted a source which said so.

    The logic is the same as with banks. The market system requires people to suffer for their mistakes: banks go broke. Countries go broke. The problem here is we consider the chaos which would ensue for those not at fault is so great we do not allow the banks to go bust, or the countries to go bust. It is not a problem for Lehman brothers, but for the bank of England. It is not a problem for Greece, but for Germany. The truth is that Greece IS already inside a fiscal union which is currently sucking compensatory finance into the country quite effectively. Germany is paying to bail out Greece. It is not paying to bail out zimbabwe.

    There is no problem with any country using an externally controlled currency. The reason countries choose not to is because having your own currency allows you to manipulate it. Invariably this amounts to taxation by stealth. It is rather like the problem of granting higher and higher state subsidies for the rent people pay. Well intentioned, but ultimately just fuels rent inflation. Thus with manipulating the currency. Thatcher understood the ills of playing with your currency and boosting inflation. It is a con to suggest having an independent (also as it would be in the case of Greece, worthless) currency is essential. How would Greece be now if it was in the position of Wiemar Germany?

    You oppose the euro. So you set out to get others to oppose it by arguing the only solution to the current situation is something so extreme others would agree to abolish the whole system. Bet the US security services love this kind of approach. The only force in the world which might have prevented the US invasion of Iraq was europe united against it.
     
    #15 dandelion, Oct 30, 2010
    Last edited: Oct 30, 2010
  16. Joll

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    Cameron's agreed to re-opening of Lisbon, as he says it doesn't affect the UK. Tbh, I'm inclined to agree on this - as long as the UK isn't required to pay into the bailout fund for Eurozone members (which it probably won't be).

    EU Parl is still quibbling over the 2.9% and saying they're still after the 6%, despite 12 or so nations being against it. Hmmm.
     
  17. dandelion

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    Is the welsh parliament arguing it should get a cut or that it needs a rise?

    As I said, amending the rules re the euro does affect us, because we will join one day.
     
  18. B_nyvin

    B_nyvin New Member

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    There is absolutely NOTHING saying that the Euro is in some hyped up terminal decline. If we listened to all the anti-Euro vocalist the Euro should've already been dissolved about 10 months ago.....welll.....it's still here as we can all plainly see...so when is it now? 2 months from now? a year from now? 10 years from now? Place your bets?
     
  19. Joll

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    That's an opinion rather than a fact, dude. And if we like the amendments in this particular case, why cause yet another fuss?

    Having said that, the proposals for withdrawing voting rights from countries that breach the 3% public deficit ceiling, does seem a bit disturbing (particularly if the breach is caused by the inflexibility of being trapped in the euro).

    PS: Haven't heard anything from the Welsh Parliament - and I'm sure they're not demanding huge austerity measures from Welsh citizens, whilst angling for a huge hike themselves. >:S
     
    #19 Joll, Oct 30, 2010
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  20. B_crackoff

    B_crackoff New Member

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    No, that was Tony Blair selling us out in an attempt to become EU President, whilst still failing to address the CAP.

    Half the EU budget is spent on CAP
    Budget of the European Union - Wikipedia, the free encyclopedia

    A 6% rise would cost the UK another Euro1Bn on top of the net contribution of at least 10BN Euros it makes already.

    Please also note that France in particular, & Germany have many more structural offices (including the Parliament), & benefit from this expenditure isn't reflected
    Has David Cameron now broken a SECOND pledge on Europe? | Mail Online

    An interesting point re the Euro is whether or not the German Courts declare the bailout of Greece unconstitutional. That would wreak mayhem on the Euro strategem.

    Bizarrely though, could you imagine the UK courts ever acting against European legislation in the same way! It would never happen, & that's hardly Eurosceptic.
     
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