The Worm at the Heart of the EU

Following the appointment of Junker as the next EU President, the media was full of headlines such as “Cameron suffers humiliating defeat” which obviously was echoed by the Ed Miliband who currently is leader of the Labour Party and as on most things, has no policy for the EU anyway. But the simple truth is that Cameron can take both comfort and a quiet pride in having tried very hard and how uncomfortable the experience personally, to publicly save Europe from itself.

The real problem is not Junker, nor even the power grab by the European Parliament or the daft idea of “Spitzenkandidat” which lacks any democratic legitimacy, no the problem remains the same which is that the EU wants to bury its head in the sand and ignore the obvious.

Its the Economy Stupid !

Whilst I would have few fears for the UK being outside of the EU but still trading with it, we need to be realistic, whether in or out, what happens in Continental Europe today as in many generations past, has a major impact on the UK. It is not that mealy mouthed defence of “…3 million jobs depend on us being in the EU…” that is pure bullshit. What isn’t BS though is that a healthy and prosperous Europe with whom we trade is crucial to British interests and that rather than “UKIPPER Think” is what we all need to grasp.

The worm in the heart of the EU that will destroy it in the end is the Euro which was yet another project that was created by Brussels on a “build it and they will come” basis. As a monetary union it was a disaster from the start because it lacked all the essential ingredients for a common currency including a central bank capable of being a lender of last resort. It was this very issue on which Westminster politicians quite rightly warned the Scottish electorate prior to the Referendum, that without political union, there would be no sharing of the Pound Sterling.

Perhaps it was with this clearly in mind that political union being a prerequisite for a common currency which is why the technocrats in Brussels wanted it so badly. That it would effectively become political union by the back door – the “ever closer” bit of the EU which means that the eurozone would become the basis for a Federal EU.

Too Much Silence

Unfortunately and to this date, no one in Brussels and no national leaders within the eurozone have spelt this out to the EU electorate and asked for their endorsement. This is the reason why the whole idea of the “Spitzenkandidat” lacks any democratic legitimacy, the candidate needs to have been on the ballot paper and not just the creature of some political grouping in the European Parliament, a Parliament that lacks a pan European Demos anyway. These people could as easily foist a Napoleon, Hitler, Stalin, any one of their relatives or a glove puppet on the EU electorate as EU President.

For the Euro to work, there will need to be a dissolving of national sovereignty within the eurozone countries, an agreement on fundamental tax and spend policies for ALL which is enforceable and the agreement for transfers of funds from the prosperous areas to peripheral economies. In other words, someone needs to tell the German taxpayer that YES, they are going to pay off the Greek debt as part of the offset for the benefits Germany gains in export competitiveness by being part of the Euro and not having their own D Mark currency which would appreciate sharply upwards in comparison.

Why Vote for Junker ?

From a British and David Cameron’s perspective, Junker is probably the ideal person to have as EU President in terms of getting a successful renegotiation of the British relationship with the EU done. As an old sweat EU technocrat he knows his way around the system, is well versed in back room deals and is beholden to both the EU Parliament and a personal desire not to end his career as a total loser so an ideal person to get a deal done within the time frame of Cameron getting elected and holding an IN/OUT Referendum in 2017.

From a purely selfish perspective (Britain’s), most of whatever happens within EU is of less concern to us because we are not in the Euro and never will be so already we are “outside” the mainstream and very much on the periphery of the EU with a Free Trade Agenda – the Single Market. In fact our current situation puts us well on the way to the position of being an independent nation with a trade only agreement with the EU. The main drawback to such an arrangement has always been that being an ‘outsider’ means that you have to live within the ‘rules’ but have no part in making them however, one may well argue that this is where we are already by not being within the eurozone.

Going forward, all the future decisions will centre around propping up an improbable currency and any British Prime Minister of any political party will find themselves in a parallel situation to David Cameron over an increasing number of probably diverse issues. As for having to comply with trade rules we have no hand in making, that applies to any country, USA, China, India etc.etc. with whom we trade.

As to why the others voted for Junker, the Socialists and Southern Europeans want a slackening of austerity, Merkel has a difficult domestic political situation so she was forced to support an incompetent, for the rest ‘Germany said so’. This pattern will repeat itself often over the next decade on most issues.

The Way it Works

David Cameron has been accused of being clumsy, using the wrong tactics and so on but in all truth, he has just been both honest and direct. True, this is not how the EU has ever worked, deals are done behind closed doors: “ I will support you on the CAP, you support me on Fishing Quotas…” On top of this, the language used is always dishonest or just plain wrong. If a particular Prime Minister (or equivalent), gets a good deal that they can sell to their electorate it is wholly because of their negotiating genius, if a bad deal, it is all the fault of Brussels.

As no one has even tried to put the case for a Federal Europe to the electorate, let alone explained in detail what it might mean in practical terms, there will never be an EU wide referendum on the matter. Besides which, the Brussels bureaucracy just don’t trust the electorate, “Look what they did to the EU Constitution when they were given a vote, outrageous !” is their attitude so if they are going to save the Euro, it will be done by stealth.

The Euro can only be saved by dissolving national sovereignty and imposing one set of rules to all eurozone countries, if you are not prepared to put the case to the electorate then there will need to be a series of artificial crisis created so that “solutions” that all can agree on can be pulled out of the hat and sold to the various electorates, this process will go on and on until completed in a Federal States of Europe or, the French revolt on the streets against the whole process which is the most likely outcome in my view.

The point is that being outside of the eurozone, any future British Prime Minister that attends EU Summits will just be there to make the numbers up and get buckets of shit thrown at them by the rest.

IN or OUT ?

It has been a main objective of British Foreign Policy towards Europe since Henry VII to ensure no large power blocs form in Continental Europe that could harm our interests. The enlargement of the EU to 28 member states has ensured that it is so unwieldy, corrupt and incompetent, it no longer represents a potential threat to the UK, even if it does to itself.

Although there is a lot not to like about the EU, my view has always tended to be that Britain should have a seat at the table. However in reality the game is still afoot and the heart of that lies in how the eurozone crisis gets resolved and it may well be that if Cameron can successfully negotiate a suitable deal, that may become the platform by which other countries in the eurozone could extricate themselves from the Euro whilst remaining in the EU.

Let me elaborate on that by emphasising the currency issue.

About 4 to 5 years ago, a possible solution to the Euro crisis might have been to split the currency in two with Germany and the other Northern Europeans leaving the eurozone and setting up a new D Mark zone leaving France to lead the other Southern European countries in the Euro zone. However and subsequent to numerous bailouts and so forth, it is likely that German banks are now so entwined in this mess that is no longer a viable option and now as then, there is no political will to do anything so positive.

One of the key reasons that the UK could leave the EU and still be able to happily operate a free trade deal with it lies in the fact that it has its own currency so the big trade barrier of the ‘transaction costs’ of a different currency are already being absorbed. So let us imagine that a suitable Treaty change that accommodates the UK and keeps us within the EU comes about that provides a suitable ‘platform’ to which one other element could be added.

In our banking crisis, it was a common tactic as in the case of Northern Rock, to divide a bank into a “Good Bank” and a “Bad Bank” as far as the liabilities were concerned. It would not be so different if the ECB created a second currency and in combination with the modified treaty, moved some countries into that currency zone which could move at a different pace to the Eurozone itself as far as deficit reduction is concerned.

Well, it’s a thought, isn’t it ?

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