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Old 24th Sep 2011, 07:13
  #17 (permalink)  
Air Profit
Join Date: Apr 2009
Location: No where
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...read it and weep...

Europe’s problem is that no one knows who’s in charge

It’s no good calling for leadership if none of the EU leaders has the authority to act.

By Charles Moore

8:02PM BST 23 Sep 2011

When the euro began, it proved difficult to agree on the design of the banknotes. In the end, its founders settled on pictures of bridges. British pound notes signify the national bank’s quantity of money (originally a weight of sterling silver) under the authority of the sovereign (the Queen). Euro notes are much vaguer. They express an aspiration. Those bridges represent man’s attempt to link what is naturally separate.

Now the bridges are cracking, and it turns out that it isn’t really anyone’s job to pin them together. Something called the troika – the European Commission, the European Central Bank and the International Monetary Fund – is handling the crisis, but the very fact that these three entities have to be triple-yoked indicates the problem. The only power that actually might be able to do something is Germany, and it seems paralysed.

Since this is a financial crisis, most of what you read about it is expressed in financial terms. Will the ECB buy up more bonds from distressed member states? Will the European Financial Stability Facility increase? Will the eurozone create a fiscal union? All perfectly reasonable questions in themselves, but they fail to ask the prior question, which is political, not economic: “Who’s in charge?”

The posh word for this question is “sovereignty”, and we Eurosceptics have been attacked more violently for worrying about it than for any of our other sins.

In a fierce and timely pamphlet, Guilty Men, published yesterday by the Centre for Policy Studies, Peter Oborne and Frances Weaver expose all the people who excoriated us doubters and insisted that the euro would work. They quote Chris Patten, former Tory chairman, Governor of Hong Kong, European Commissioner, and now the new chairman of the BBC. In a lecture at the time of the euro’s beginning, Lord Patten said that sovereignty, “in the sense of unfettered freedom of action, is a nonsense”. “A man naked, hungry and alone in the middle of the Sahara desert,” he went on, “is free in the sense that no one can tell him what to do. He is sovereign, then. But he is also doomed.”

Having defined sovereignty in this way, Patten was then easily able to prove that it was a useless concept – better for Britain to allow such empty freedom to be circumscribed in order to “achieve some other benefit”. But this is not what sovereignty means. It means those institutions and people who, in any political community, have ultimate authority – who is Caesar, as Jesus put it when asked about paying the tribute money.
That authority relates, of course, to power, but it is not only a matter of power, but also of legitimacy. It requires consent, which, in modern times, usually means democratic consent. In Britain, sovereignty is supposed to reside in what constitutional historians call “the Crown in Parliament”. Those of us who stuck by this concept were called little Englanders, xenophobes, bigots. But all we were really doing was insisting on those basic answers which you need before you embark on an awfully big adventure. Our questions were mocked and the answers never came.
In 1998, when the euro was brewing, I was invited to give a speech about it to the Institute of Directors. I looked up the European Commission’s Q & A booklet on the subject. To the question, “Will full economic and monetary union spell the end of my country’s right to determine its own economic policy?”, it replied, “Yes and no”. “Surely the right answer, from the pro-EMU point of view,” I said in my speech, “has to be an unequivocal 'yes’. Otherwise there will be different Caesars for different things with their powers undefined or, worse, different Caesars for the same things. In the long run, that is not possible.” Because of that original “yes and no”, half of the eurozone economy is now on the brink of collapse.
So this week, when everyone, including our Prime Minister and the head of the IMF, calls for political leadership, it cannot be provided. This is not because the leaders are not much cop (though they aren’t), but because they lack the necessary authority. The eurozone is suffering from a sovereign debt crisis, because no one is sure who is sovereign. Within an area united under the same currency some government debt – in the most extreme form, that of Greece – is toxic. Other government debt – above all, that of Germany – is fine. Greece finds herself neither sovereign, nor free, nor, to use the Patten phrase, achieving “some other benefit”. She is up the creek without a paddle, and so, quite possibly, are Portugal, Spain, Ireland, Italy, and more.
The Euro-visionaries such as Jacques Delors did not mind avoiding the question of sovereignty. Indeed, they almost rejoiced in it. They had wanted political union and failed to get it. So they hoped that, by pushing through economic and monetary union, they would make political union inevitable. If only they could get enough people into the room, they reasoned, they would find that they would not want to leave.
What they refused to contemplate was what is now happening. In 1997, William Hague predicted that being in the euro would be like “being trapped in a burning building with no exits”. He was attacked for his “half-way-out extremism” (Hugo Young), but today the acrid smoke from that fire is billowing across the markets. You can hear the screams of those trapped inside.
The crisis today is indeed worse than what followed the collapse of Lehman Brothers in 2008. People make bright suggestions for how the problems of the eurozone could be sorted out. These all depend on the idea that reform can be agreed and enforced. Given that treaty change can take years, and markets can collapse in hours, this seems improbable.
But there is a much deeper problem than one of time. In a really beautiful cutting from 1997, Oborne and Weaver find Lionel Barber, now the editor of the Financial Times, quoting with approval some words of Dominique Strauss-Kahn, then the French finance minister. Strauss-Kahn was attacking Britain for staying out of the euro. “Monetary union,” he said, “is like a marriage… People who are married do not want other people in the bedroom”: poor old Britain would find herself locked out. Subsequent events suggest that Mr Strauss-Kahn’s own bedrooms are rather less exclusive than he implied, but the assumption behind what he said was that the diplomatic marriage of France and Germany would ensure all was well. This turns out to be quite untrue. Diplomacy cannot create a nation, or even a looser political community, such as a United States of Europe. For that, you need the agreement of citizens. Such agreement has never seemed more remote in the history of the European Union than it does today.
It is not beyond Germany’s financial power to rescue the ailing eurozone countries. But the increase in political power for Germany which such a rescue implies is surely way beyond what most of the people of Europe would accept. The Germans do not want it either: in agreeing to create the ECB, they willed the means, but not the end. Now that the end is nigh, they are terrified.
What Europe faces, then, is a disaster that was predictable – and predicted – and is now unavoidable. In the process, millions will lose their jobs, an entire generation will miss the opportunities which their parents enjoyed, and blood will probably be shed. The rulers of Europe have never been so wrong since the late 1930s.
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