Is this what you call a Union?

Not since Captain Corelli's Mandolin have images of the Swastika in Greece been so prevalent on our TV screens.

Is this really the 21st century reality of the European Union?
Chillingly, yes.

Fifty thousand people took to the streets to protest against German Chancellor Angela Merkel's visit to Athens as she made her first visit to Greece in five years. Despite strict security measures and a ban on public gatherings, police still resorted to firing tear gas at protestors and arrested almost 200 people.

The Greek people blame Merkel for overseeing the strict programme of cuts that have been conditions of receiving financial help.

Greece is set to miss the fice year debt reduction target that was set when the country's €100 billion bail out was negotiated, that's despite the extraordinary measures taken by the Government that has seen thousands reduced to poverty and homelessness.

Across Europe the situation is deteriorating. In Spain the Red Cross has appealed to the public to supply food parcels for stricken countrymen and has launched a massive appeal for millions of Euros to help those most in need in the country. It is the first time such an appeal has been launched to help those in need domestically, with usual campaigns targeting the world's poorest in Africa and Asia. The charity say some 2.3 million Spaniards are now extremely vulnerable and in need of food aid.

Yesterday, Greek Prime Minister Antonis Samaris pleaded with the German Chancellor that his country was "bleeding" from all the internationally imposed cuts, however she showed no sign of backing down on German sanctioning of the demands, instead choosing to compare the situation in Greece to that in her own East Germany after reunification with the West.

You would think with so many Nazi-themed insults being bandied about by the disgusted people of Greece,  she would avoid alluding to the war.

Yet what we got from the Greek Government was more of a tail between the legs grovelling about rectifying mistakes, perhaps in reference to the image being portrayed by German media as a nation of lazy and workshy complainers. Similarly Merkel has been tarnished with Nazi Overlord representations through out Greece. Yesterday's meeting was more a PR stunt to show solidarity between the two nations, rather than a meeting to discuss a productive settlement and reinforce both sides' commitment to maintaining Greece within the Eurozone.

Yet for many, the cards are still very much in German hands.

German-led conditions attached to emergency loans have made Merkel the face of austerity for Greeks. Merkel has been depicted in the Greek media wearing jackboots and an SS uniform.

Yet the austerity is not working. The Greek economy is set to contract for a sixth year in 2013 while the government continuously fails to meet deficit-reduction target. The economic downturn is the worst since World War II, post Nazi occupation. Which brings us onto the thorny matter of war reparations.

Under German occupation Greece was forced pay war loans to Hitler, leading to hyperinflation and a famine in which more than 500,000 Greeks, or 7 percent of the population, died between October 1940 and October 1944, a quarter of a million from hunger.

It is believed that under  occupation from 1941 to 1945, Greece paid Germany some £86 billion, which many believe the German's still owe. Despite Greece receiving reparations from Italy after World War II in recompense for Mussolini's occupation of the country, Germany never paid Greece. Fast forward the clock sixty years and the irony that the Greek people see the German Chancellor as transforming their country into a "German protectorate" is evident amidst calls for the occupation loan to be repaid, which would go a long way to securing Greece future financial security.

Is this what the European Union, set up in the wake of World War II, was supposed to lead to?

One country dominating the affairs of another, peoples at loggerheads over who is right, who is wrong, and who owes who what?

It amazes me that the international community has failed to speak up on the issue. When it is falling to charities in 21st century Europe to make appeals for food aid due to political measures being enforced by other countries or unelected organisations, it is staggering that nobody is speaking up.

The UN's Development Policy and Analysis Division (DPAD) notes that the debt crisis in the euro area, especially in Greece, remains the biggest threat to the world economy. An escalation could trigger severe turmoil in the financial markets and a sharp rise in global risk aversion, leading to a contraction of economic activity in developed countries. In their World Economic Situations and Prospects report, they advise

"Breaking out of the vicious cycle of continued deleveraging, rising unemployment, fiscal austerity and financial sector fragility requires more concerted and more coherent efforts on several fronts of national and international policy making.
On the fiscal front, it is essential to change course in fiscal policy in developed economies and shift the focus from short-term consolidation to robust economic growth with medium- to long-run fiscal sustainability. Premature fiscal austerity carry the risk of creating a vicious downward spiral, with enormous economic and social costs.
Fiscal austerity has already pushed many European countries further into recession. This is particularly relevant for the debt-ridden euro area economies. Euro area countries have fallen back into recession, following fiscal retrenchment over the past two years. Clearly, the efforts at regaining debt sustainability through fiscal austerity are backfiring in low growth and high unemployment."

What is so staggering is that Europe, and when I say Europe I mean a few figures from the European Commission in Brussels, the European Central Bank and leaders of the wealthiest Eurozone member states, are being allowed to dictate policy that is having a very human cost.

One wonders if a similar situation was being faced by ECOWAS or with the CFA Franc whether or not Europe would be muscling in to dictate what be done to rectify the situation.

Without a doubt.

Although Central African CFA francs and West African CFA francs have always had the same monetary value against other currencies, they are separate currencies. They could theoretically have different values from any moment if one of the two CFA monetary authorities, or France, decided it.

Why does the Euro not break up and follow the same agenda?

Answers on a postcard please.

The moral implications of bail outs and austerity

Morally bankrupt.

Bankrupt?

How little we have seen of the human impact of the ongoing financial crisis in the Europe.

Of course we have seen reportage of the human reaction, be they stern faced Ministers assembling around large oak tables, shooing away the clucking throngs of news journalists awaiting any shred of carrion to be tossed from the wreckage, or the gathering crowds of unhappy protestors, waving banners before being strewn with rubber bullets by an equally unhappy, yet duty bound police.

And yet then, when we read on, we learn that Greece has asked for that, despite being reprehensible for having committed such and such an oversight, while doom laden Spain is sure to encounter this in their fate leaving it to Germany to propose that, and so forth.

As such the anthropomorphic labelling of whole countries is enabling both journalist and reader to be removed from what should be the real news story of the unfolding Eurozone disaster, the true cost to the everyday citizen. The people angle.

But it has suited the European Union to convey this image and the largely national-leaning print press to extenuate it. Define the problem as an entire country’s fiscal profligacy and then the only tool for debt solution is the EU's favoured austerity that must be shouldered by all. In Brussels it allows for a convenient bypass of democratic wont in order to transact further powers within their scope, while for national governments and newspapers, it conjures a sense of national unity  by lauding an "all-in-this-together" sermon that allows the weakest in society to be most heavily burdened, despite being the furthest removed from the causes of the crisis. What is so ironic is that while in Brussels, Barroso readily condemns the very notion of nationalistic, populist barriers to deepening European integration, he relies upon it implicitly to sell the Troika imposed programme of cuts to a nation. Everyone must do their bit.

Mr Barroso, it was your fiscal policy and foolhardy adherence to a single currency, placing political will before economic sense, that both caused the problem and continues to prolong it, so why must Senor Garcia be forced to work until his joints are ground to dust while his children will be taxed for the ills committed by their predecessors? I am sure when the concept of a single currency without unified fiscal policy was being drawn up he wasn't consulted.

Every country that found itself in the same position as the Eurozone after the credit crunch in 2008 was able to find a solution. In Iceland, the economy hit such a wall that the country defaulted and devalued the Krona. Iceland is now recovering very quickly and is borrowing again on the world markets as a creditworthy entity.

You see the debate that has raged in newspapers across Europe about what to do with a problem like Greece depends heavily on viewing each and every man, woman and child on an Athenian controlled island as both part of the problem and therefore responsible for its solution.

If a person borrows money, they receive the amount directly and must pay it back according to the terms and conditions. If a country borrows money, the citizens are unlikely to be informed of the loan, its purpose and certainly not its terms and conditions. How then does central government, let alone the government of a third country, morally justify imposed austerity?

Yet the personification of Greece as the naughty member of the Eurozone allows the EU to paint the picture of the reckless neighbour who, finding themselves unable to pay for their mortgage, appeals to the bank for help to keep their house. They are relucantly granted a reprieve on condition of some very stern, and of course wholly warranted, terms and conditions. Therefore if Greece gets a bail out at the cost of imposed spending cuts and strict austerity measures, then Spain would have to subscribe to the same punitive conditions if their economy is also to be rescued. Of course Senor Garcia cannot see why his benefits are being stripped when he has done nothing but work hard all his life. Meanwhile Germany, who does not find herself in such a financial mess, can bang the fist on the table and make demands which will affect the retirement age of Kirios Papadopoulos. Of course when I say Germany I mean Merkel and her cronies and their Brussels-based counterparts.

In 1995 Germany strongly opposed an IMF bail out of Mexico arguing moral hazard in giving a €17.8 billion loan as it essentially worked out as a rescue package for the American investors who had shored up so much Mexican short-term debt. Now the boot is on the other foot and it is German banks facing losses if Greece is allowed to go under, with as much as €22 billion of Greek public debt held by German investors. Suddenly Frau Merkel repeats the tune of solidarity for Greek and EU ears, but will happily pour scorn on Athens as and when it will placate her own people.

It may suit Brussels, political leaders, newspapers and ministers to talk about Greece, Spain, Germany, Portugal and Ireland as if they are characters in philosophical problem. But the real moral debate is not who should be paying the debt, but how.

All Eyes on Germany This Wednesday

Wednesday could be the most pivotal day yet in deciding the fate of the Eurozone.

Yes we’ve had critical summits and last minute emergency meetings. But September 12 is being hailed by some as the day that could make or break the common currency as Germany’s constitutional court will announce whether or not the European Stability Mechanism, or permanent bail out fund of €700 billion, is legal according to German law. So far 14 of the 17 Eurozone members have ratified the treaty, with Estonia, Italy and Germany yet to put pen to paper.

It is the reaction in Germany however that will pull the most influence. As the economic powerhouse of Europe, Germany has already been criticised by George Soros, one of the world’s leading financiers, for failing to face the brunt of the crisis and has been warned that the Eurozone would face a long depression unless Germany are prepared to take on some of her neighbour’s debts. “Stay and lead, or quit the Euro” has been the message from Soros.

As the clock runs down on a rescue mission, it is becoming increasingly apparent that time is no longer on the side of the Eurozone. With Spain sizing up the possibility of needing a full state bail out, Prime Minister Mariano Rajoy has been clear in his intent to review all the conditions of seeking financial aid from the European Central Bank before arriving cap in hand. Nothing will be clear about the ECB’s recently announced bond buying plan until a rescue is requested, and how much this would mean signing over sovereignty to faceless bureaucrats in Brussels and at the IMF. Even if this were to happen, the Bundestag would then have to approve the terms of the agreement, and with recent backlash against the German Government from the media about the ECB’s proposals to buy Eurozone government debt, it is clear public opinion does not support the idea of Germany effectively bankrolling and underwriting the financial problems in other single currency member states.

Whereas in America, the banking crisis was quickly resolved after the collapse of Lehamn Brothers in 2008, Europe, due to its lack of federal unity, has been unable to find a weighty enough solution. On the same day as Germany decides on the legality of the ESM, the European Commission will announce proposals for a new Eurozone supervisor, an offshoot of the ECB that will regulate some 6,000 banks. Yet once again Germany is no longer playing ball. Whereas many see the creation of a supervisory institution as a concession to Germany’s demands that a watertight structure be brought in if German euros are to be used to underwrite Eurozone debt, Germany has now cast doubt on whether one central supervisor is enough and whether the ECB can supervise so many banks at onece. There has even been murmurings that some Germans suspect the French of trying to shift so much responsibility onto the ECB so as to deliberately render it impracticable. Meanwhile Britian, which houses the majorty of the EU’s financial industry, is of course outside the single currency and sceptical about any legislation or supervision that would shift power away from the City towards Brussels.

Even if a resolution is found, many still believe it is too late to make a real difference. The Eurozone is back in recession and unemployment has reached recird highs.

Also on Wednesday theDutch will go to the polls to decide on their future Government, with more vocal opposition to the country’s role in single currency bail outs than ever before. While it seems likely a pragmatic centrist government will be elected, there is no doubt that the ongoing Euro crisis has played a key role in many of the election campaigns with increasing public discontent over the handling of the Eurozone crisis and calls for the Netherlands to become  more assertive and sceptical about demands made in Brussels and by other Eurozone members.

Meanwhile in Greece the three party government cannot agree on austerity measyres designed to save almost €12 billion and ensure the next tranche of bail out funding from the IMF and EU. It is estimated that Greek debt is still at a whopping 166% of GDP. If the next chunk fo bail out money is withheld in the wake of insufficient reform, it is likely Greece would default, catapaulting the single currency back into crisis as markets would once again rally at the threat to the single currency, rocketing the cost of borrowing sky high and serving a heavy blow for Spain who is already teetering on the edge of insolvency.

According to Der Spiegel today Merkel’s rhetoric has somewhat changed on a Greek exit. Whereas before her and finance secretary Wolfgang Schäuble may have viewed Greece as the runt of the litter, it is reported she has now spoken out about the suffering of the Greek people in the wake of the crisis and implored that everything must be done to prevent a 'Grexit.'

This may of course also have something to do with the fact that in the wake of an exit, the €62billion owed by Greece to Germany would effectively have to be written off.

It will be interesting to see on Wednesday what the German Constitutional Court rules.

Welcome to my club

How easy it is to jump onto the bandwagon of popular opinion.

For years, UKIP have been labelled everything from fanatically anti-European to xenophobic for holding the view that the European Union was bad for Britain. As recently as a couple of years ago, throughout the early months of my tenure as an MEP, I received accusations of scaremongering if ever I suggested the Eurozone was doomed. Those critics have fallen strangely silent of late.

Now politicians from across the political spectrum are championing a British exit from the EU, warning of the dire economic consequences of prolonging the single currency without fiscal unanimity and bandying about suggestions of an in-out referendum. All of a sudden our party line is trendy.

One thing is for certain. For the single currency to survive member states must forge closer economic bonds, to the extent of becoming a single federal entity (the argument is that the EU has borders, a flag, an anthem, a Parliament, an army, foreign policy, a currency and laws, so the only thing separating it from a federal state is the lack of tax raising powers). If this does not happen, the Eurozone will, eventually, implode, and in doing so, force the UK into a decade of depression.

Of course, the UK would resolutely not wish to be part of a federalised super-state. It raises the question of what sort of relationship we could have with a new Europe. UKIP has always championed a relationship akin to the current Swiss model, where free trade and continental cooperation remain priorities, despite not being a member. This is now being mooted by politicians who but a few months ago championed a more integrated European Union, only to find their subject today ridiculed by fate.

Either way the tapestry that has been woven by Brussels over the last five decades is unravelling at an alarming rate. Spain requires a £100 billion bank bail out to save her finances. The incomprehensible nexus that has formed between the Spanish state and the banking sector means the Government can no longer sensibly bail out the very banks that have been bailing out the Government. The Spanish Finance Minister has resolutely denied needing a bail out, but we’ve heard this before. Greece, Portugal and Ireland all said the same thing. In the UK, the Government recapitalised British banks to the tune of £1 trillion, a measure that was widely criticised on the continent as too closely bound to Anglo-Saxon capitalism. But it saved us from the economic disaster we are now seeing affect banks in the Eurozone’s largest economies – even in Germany. It’s estimated at least £200 billion must be injected into Eurozone banks to stimulate borrowing capacity, but in order for this to happen Germany must essentially underwrite all single currency loans.

It’s understandable that Germany doesn’t like the idea of so-called “Eurobonds”. Why would they? Holding them culpable of the debts of their neighbouring countries is hardly going to seem fair to the majority of Germans. Meanwhile Spain wants a bail out with no strings attached. Of course they would. They can see what has happened in Greece, where desperately ill people are queuing outside pharmacies for life saving medicines as stocks run dangerously low. Germany does not want Spain to get a free handout without agreeing to fairly stringent conditions. And thus we are left trapped in an ever revolving circle of national self-interest that is leading critics to cry out for the greatest seismic shift in political power ever seen by Europe – the move to federalise the Eurozone before the clock ticks down, despite such a schismatic resolution flying in the face of democracy.

What about the UK? What do we want? We need Eurozone banks to be protected. Barclays is exposed to Spanish banks to the tune of £26.5 billion. RBS is liable to £14.6 billion if they do collapse, while Santander, one of the high street’s biggest financial retailers, is actually Spanish owned. Then there’s our economy. In many respects inextricably intertwined with European markets, not just through EU membership but as the result of simple geographic positioning.

The most sensible answer would be the UKIP option. Leave the EU, enhance trade with traditional partners in the Commonwealth and demonstrate neighbourly cooperation and free trade with Europe as is the modus operandi of Switzerland and Norway.

As part of the Queen’s Diamond Jubilee celebrations, a lunch with Commonwealth leaders was hosted at Buckingham Palace. We were reminded that our Queen is not just the head of state in the UK. She is Queen of Antigua, Barbados, Bahamas and Belize, Canada, Grenada, Jamaica and New Zealand, Papua New Guinea, St Kitts, St Lucia, The Grenadines, the Solomon Islands, Tuvalu and Australia, as well as being head of the 54 countries that make up the Commonwealth of Nations, including India, Nigeria, Pakistan, Singapore, South Africa and Kenya. These are long established natural allies of Britain, countries with a diverse diaspora, different geographical landscapes and as a result, present true international trade opportunities.

This year Commonwealth GDP will soar past the Eurozone’s. While the Eurozone will grow by only 2.7% if it manages to avert fiscal disaster, the Commonwealth will be boosted by 7.3% growth.

I’m not bitter that my views are now being championed when for so long they have been slated. I would be a poor politician were my pride more important than my conviction. I just hope the newest recruits to Eurosceptic ideology have strength enough to hold as steadfast to their beliefs. For what Britain and Europe needs more than anything right now is a steady hand on the tiller.

Franco-Saxon Fiscal Union?

The phrase two-speed Europe has been bandied about in recent weeks, and it seems even the most optimistic commentators have started to pluck their heads from the sand and brandish claims that fiscal and federal union is the only thing that could save the Euro.

For a long time, people like me have claimed that you simply cannot have a common currency without the homogenisation of economies, harmonising taxation and spending and thus surrendering a great deal of sovereignty. That is why it is vital the UK never joined the Euro, and it is why the currency has suffered so significantly in the global financial crisis. Yet when we were saying this even just a year ago, we were labelled doom mongers, trying to scare the public that the EU was more ambitious than it really was, that no one was trying to undermine domestic power and there is no need to force the Eurozone to club together and become more than just an economic bloc, but in all respects other than name, a federal superstate. Now everyone is proclaiming how it is essential these moves are made, as if they too had been stating the obvious for years and were also jeering at the Commission everytime another bail out was awarded which would have as much efficacy as trying to bail out a sinking ship with a thimble.

Now, all of a sudden, the two Eurozone powerhouses, France and Germany, in the wake of the portent of economic federalisation, called an urgent meeting to establish a Eurozone government.

This new government would be made up of heads of state that will meet when necessary and will elect a stable president for two and a half years. The man they have in mind is (somewhat laughably) that famous European figurehead Herman Van Rompuy. Who? Oh, you've forgotten him already! You know, that chap who was elected President of the EU...

The establishment of this government to oversee national budgets and taxation and so forth will require changes to domestic constitutions over the coming years, and it will be interesting to see whether voters are consulted. One imagines if they were few would lean favourably towards the proposition of further intrusion upon national powers, so as is often the case with the EU when it comes to unfavourable voxus populai, one imagines there will be no recourse to public opinion. Not really democratic, but afterall, when it comes to the EU, what truly is?

It will also be interesting to see how other Eurozone countries respond. After all, the proposals amount to them handing a large amount of budgetary power over to France and Germany.
Angela Merkel and Nicholas Sarkozy are optimistic that they can persuade all the eurozone nations to pass these domestic amendments by summer 2012, which is highly unlikely.
Yet also these agreements have failed to solve the problem. International markets are wondering what will happen if Italy requires a bail out. The EFSF currently contains 440bn euros which would be a long way off enough to save Spain and Italy if there economies deteriorate. Yet actually growth in Germany has slowed to a painstaking place and actually stagnated in France, so where they could seek additional funds in the Eurozone is unclear. For the same reason the German and French leaders also refused to issue eurobonds, meaning underwriting European debt using their own taxpayers' money, by acting as guarantors. Eurobonds would have allowed weaker economis to borrow at the same costs as France and Germany, but would ultimately have led to huge public outcry by French and German citizens who do not see it as their responsibility to rescue the economies of their common currency neighbours.

The negotiations therefore are looknig at long term solutions of establishnig a tighter knit Eurozone but does not resolve the real problem today. This is surely to be expected. Since the outbreak of the recession the Commission has sought opportunities to push for deeper integration, often championed by France and Germany.

Casting my eyes back over speeches last year and in 2009 it's interesting to see how words I said over 12 months ago that were shouted down are now being echoed by the IMF to the ECB to the BBC. Take for example this speech:

"What is the future of the Euro in the light of the problems in Greece, and for that matter, Spain, Italy, Portugal and Ireland? It must be of some reassurance to the UK that we never joined the Euro. It seems promises of strength through solidarity couldn’t be further from the truth.

The problem for the 16 nations in the eurozone is who pulls the purse strings. With little fiscal coordination, and no treasury, membership to the Euro is by no means an elixir for good economic health.

It turns out that when all turns sour, they take the opportunity to seize greater control while you’re on your knees. We must wait to see how Greece will react to becoming an economic protectorate of the European Union and whether it will bring civil unrest. Is this really the European Dream? Who is next ? Spain? Portugal? Italy? Or Ireland?"

Evidentally, all the countries above slipped into economic turmoil.

Similarly I said last year that

"Ideological clinging to the euro will see monetary problems resurface in boom time and bust.

A single currency only works in tight knit federal environments. Perhaps, with this being the Commission’s ultimate intentions, they have put the cart before the horse."

I hope now people will begin to see that Eurosceptics are not extremists, right wing lunatics, heretics, scaremongers or ill intentioned. Perhaps we simply have common sense, which clearly means no common currency!