Maastricht 20 years down the line

Yesterday was the 20^th anniversary of the Maastricht Treaty. On 7^th February 1992 the European Economic Community laid the foundations for becoming the bureaucratic beast it is today. Common Foreign and Security Policy was adopted, as well as the creation of Justice and Home Affairs. The EEC now extended into military and judicial cooperation. But perhaps most ironically, Maastricht also led to the creation of the currency of Europe.

A mere two decades later, the Eurozone is on the brink of collapse. How timely that next month the clock ticks down on Greece to address its public finances. Twenty years to the exact day the treaty creating the Euro was signed, Greek leaders have been told they must enforce austerity measures or risk losing a new bail out which could prevent the country from defaulting on March 20^th when the current loan matures.

Greece must now demonstrate they will satisfy terms laid down by the EU, European Central Bank and International Monetary Fund, known collectively as the troika, ironically a Russian word once used to describe the supreme officials of Communist states. Yet it is becoming increasingly difficult for Greece to enforce spending cuts, leading to job losses and slashed budgets, with full democratic acquiescence from both Parliament in Athens and the Greek public.

In effect, EU chiefs are edging Greece towards the exit door. They are willing to risk a default and then eject Greece from the euro if Athens refuses to comply with demands insisting that the eurozone is now strong enough to fight against the risk of contagion. Both Merkel and Sarkozy are talking to the press about "time running out" and the French President has even argued that the South Mediterranean member state would get "no community money" without reform.

It seems to me that Greece is being made a scapegoat and enabling the two big economies to flex their muscles. Of course, the Greek crisis was spawn of irrationally high unsustainable public spending under a new currency where vast sums could be borrowed at such low interest. But who set those rates, and who benefited from them? Germany of course. Then when the house of cards came crashing down after the credit crunch struck in 2008, all fingers pointed towards Greece and their woeful borrowing track record. Nobody seemed to comment on the fact that a single currency spread across such diverse economies without fiscal integration and with one common interest rate could not in essence actually work.

NowGovernments across the EU are struggling to assimilate into domestic law savage measures dictated by Brussels; measures that, in effect, will soon be underscored by the new fiscal compact signed last month by 25 member states which essentially criminalises budgetary indiscipline as determined by the European Court of Justice. Finally the Euro members are building fiscal integration, but are essentially closing the stable door after the horse has bolted. As a result, Greece, who indeed was reckless with spending in the boom years, will effectively be left in tatters and expected to pick up the mess.

It is now widely held that Europe cannot cut and grow. Thus far austerity measures have led to deepening recession. Focus on growth is needed to pull southern European states back into competition, yet ironically the stranglehold on trade and working flexibility imposed by EU competition rules and social policy written twenty years ago prevent growth-enhancing investment taking hold.

Twenty years ago the UK negotiated opt outs which could be argued as having prevented us from becoming like Greece ourselves. As a nation we run quite a high structural deficit, that is, we spend far more on public services than we can logically afford. However the pound is strong, enabling us to borrow at rates that we can pay back. As a result, the Labour Government ran up incredible debt, leaving the mess to be sorted out today, but because we were not a euro member the tidy up is not one hundred per cent dictated by Brussels and we did not collapse when Ireland went down. Equally opt outs in social policy mean that we can in some areas be more flexible if we decide to "work our way" out of recession. Despite strikes over pensions and wage freezes, we are not witnessing the sort of uprising that has taken place in Athens. Then again, our austerity measures are not being drawn up by essentially an entente of foreign governments and supra national powers. We are also not part of this new compact, which although by law cannot be an EU treaty following the UK veto at Christmas, in all but title, is. Essentially when we said before Christmas "no" to EU law criminalising cerrtain percentage budget deficit, due to a lack of unanimity, the law could not be passed. Instead what has happened is 25 out of the 27 member states, that is, everyone bar us and the Czech Republic, have clubbed together to forge a treaty that will be governed by the European Court of Justice and whose negotiations and administration will take place within EU buildings. In essence, they went ahead and made the treaty anyway, calling into question the legality of its operation. But what are we to do? The highest court of appeal on such issues IS the ECJ. Are we to approach the Court of Justice and ask them to examine how lawful they are? What about when decisions made between the 25 members of the entente have an impact on Britain, via the single market, or through financial services reform? We are in a highly precarious situation that will at some point in the future rear its ugly head again.

This week Greece has been forced to accept an additional 15,000 public sector job cuts, which still fail to satisfy the demands of the troika. It has been reported that the Greek Finance Ministry is now examining the economic consequences of leaving the Euro, following on from the not so discreet rhetoric being issues from France and Germany.

Unsurprising then that this milestone anniversary for the EU has been kept so quiet

The Non-Treaty-Treaty Veto U-turn Thingey

This week has seen plenty of dicsussion about David Cameron’s treaty “U-Turn”. In fact I was a little startled to not see the matter picked over on Question Time last night but one assumes the BBC hadn't picked the right members of the panel for that.

The Prime Minister has revoked his original standpoint of blocking a new compact observing tighter fiscal regulation and budgetary control governed by the European Court of Justice. That is now going ahead, but without the involvement of the UK or Czech Republic. What does this mean? Well before Christmas the UK vetoed a new treaty which would effectively see economic governance enforced to all 27 members of the EU by Brussels. Apparently we do not have a new treaty, due to the veto, and so instead 25 out of the 27 member states have drawn up an "intergovernmental pact" which is supposedly separate from EU jurisdiction (as we blocked it - you see, any new treaty has to be ratified by all member states) yet the European Court of Justice will preside over it and the meeting will take place within the governmental buildings of Brussels. In essence, they have I would propose illegally sidestepped the knotty issue of the fact that an EU treaty of fiscal governance was blocked, and gone ahead and effectively made one anyway. This poses the question of how a 25 state intergovernmental pact can use the jurisdiction of an institution of the 27 member state EU without it in some way being regarded as an EU treaty. It also leaves the UK vulnerable to decisions made under this new entente which could affect the single market or financial industry in the City of London as we are not part of it. Now I'm not suggesting I'd want us to be part of it, far from it. Instead we have been told that if new regulation encroaches upon UK sovereignty, the legality of the agreement will be called into question, which would effectively mean appealing to the ECJ to pass judgement on its own lawfulness. It is a strange situation that until put into practise, remains pretty hard to fathom. What is clear is that the EU is prepared to work above the law which it writes itself and bend the rules whenever it feels like it if not all parties are appeased by the decision making.

So when will this not-a-treaty-treaty come into force? Well Nicholas Sarkozy has stated that France will not ratify the new “treaty” until after the French Presidential elections, with his main contender, Francois Hollande, suggesting he would demand a rewrite if he were to gain power. This means the 25 member state agreement will not even be put into place until after the start of May, yet the Eurozone is likely to stumble quite dramatically before this legislation can seriously send out a message of calm to the markets. The initial bail out loan to Greece is set to mature on 20^th March with the possibility of an uncontrolled default looming large. The bubble of toxic debt currently hovering over southern European Euro countries could burst when Greece fails to start paying back the loan and with potentially disastrous consequences. If this were to happen, how much would the UK be dragged into the mess?

I have addressed two letters, one to the UK Chancellor of the Exchequer and one to Edwina Hart, the Welsh Government Business Minister, asking whether any contingency plans or impact assessments have been prepared for euro collapse and whether any public money has been set aside to rescue businesses should the single currency come to a timely end. We have heard how the UK Foreign Office has prepared a rescue strategy for British nationals if a collapse of the single currency leads to social uprising across Europe, but what about the equally pressing possibility that shockwaves from another crunch could smash against UK shores?

I am concerned that Welsh businesses are implored to trade further afield than the EU, especially with the fantastic links we have with the Commonwealth, yet the rhetoric from the First Minister’s Office suggests a vain clinging to the ideal of the EU as some kind of saviour for Wales. After all, if the single currency goes down, anybody who relies on trade with the countries involved will be equally damaged. So have Welsh businesses been encouraged to slough the bonds with Europe and look elsewhere? I have heard little to this end. Instead all we continue to hear are members of the political elite still championing the EU as of some kind of irreplacable benefit to Wales. The usual reasons, trade and regional funding, are constantly echoing around newspaper columns, but in truth, we can see how in fact the trade links established with the EU are the reason many businesses should be starting to panic, while recent damning reports confirming what I have always said about EU Cohesion Policy are coming to light.

It is interesting how recently the myth of structural funding has been overturned. For years Cohesion Policy has been championed as the greatest benefit for Wales of EU membership. Even though parts of West Wales are net beneficiaries of the funding, overall, Wales, like the UK as a whole, pays far more in to the pot than is ever returned. In fact, I have often argued that Cohesion Policy is essentially Brussels saying to Wales ‘You pay us millions, we will give back 65% and tell you how to spend it in return for you publicising how generous the EU is’. It’s simply propaganda funded by extortion.It would of course be far better for us to manage our own regional spending, but propagandist nationalists would suggest Westminster would leave us high and dry and only Brussels can be trusted to make sure we get a fair deal. Really? It is silly to believe this just to fulfill a patriarchal agenda when it is clear that this would surely not be the case. In Scotland and here in Wales the forces for independence vainly cling to the idea that membership of the EU in their own right would be the way forward, after all, the benefits of being part of the British pound and receiving money via the Barnett Formula from Westminster would need to be replaced with another pot of cash. I think not. If one can see how easily the UK can be defied when it suits the EU, imagine the rollocking smaller states would get from Brussels. Plus the EU would control the North Sea Oil, the whole of the Welsh farming industry, would force us to sign up to Schengen, and make all businesses stick to their frankly inept and dangerous working and competition laws which would render us wholly uncompetitive and wholly dependent upon Mother Brussels for everything (which is of course, what they want). Plus with a whole contingent of new members lined up to join, our needs would be increasingly disregarded. It is also part of EU law that any new member states must sign up to the Euro, a rather chilling prospect I think you will agree. Plus I can't see member states like Spain sitting back and letting Scotland, or potentially Wales, sign up to the EU independently when it has such problems with the Basque separatists and those who want to see an independent Catalunia. If Brussels were our look-to government and not Westminster, I would imagine people would soon grow sick and tired of the amount of legislation and control being filtered down from Brussels when the dream was to have a Wales standing on her own two feet. I would also imagine if that were the case England may well decide to break away from the EU and grow in wealth and freedom until the disparity across the Severn would be unimaginable and everyone was regretting not sticking with the devil we know.

However let's not go too far with this line of thought. The more pressing concern is what is going to happen over the coming months to the economy.

The unravelling narrative of the Eurozone crisis is far from over and I would venture to suggest that across the continent the public are becoming wearied and justifiably concerned about the direction what was once a simple free trade community has recently taken. What is left unaddressed however is whether public opinion alone can democratically overturn the burgeoning powers the EU bestows upon it’s self. Given the recent move in Brussels to compose an essentially illegal “treaty” one would suggest that democracy is slipping further and further away from EU conscience. Only time will tell how long this delicate balance between an increasingly agitated public and a wilful supranational superpower can last.

No surprise at latest Turner of events

Whatever Brussels touches turns into disaster, rather like a kind of Anti-Midas.
We have seen Common Fisheries Policy destroy marine stocks and encroach upon the seas of developing countries, trawling their waters and stripping whole communities of a means of sustenance.

Common Farming Policy led to stockpiling milk, leading to artificially high prices. Farmers are effectively paid by Brussels rather than by the consumer and only after jumping through hoops, rather than having the freedom to farm and sell their produce at proper prices and maintain and healthy and free agrarian industry. Seeing what has happened to the single currency, can you imagine how severely food supply and self-sufficiency would be rocked should a bio catastrophe or drought hit the European farming sector? I dread to think.

Of course the Eurozone is an utter, utter disaster and is heading directly towards even deeper crisis as Eurocratic egos cannot face relinquishing the keystone project of the single currency or admit defeat.

Now proposals to tax financial transactions have been slammed by Ernst and Young for potentially creating a £95 billion abyss in EU public finance at a time when quite frankly the European economy is crippled by the single currency albatross nobody is prepared to slaughter. It's common sense that a tax levied on banks making financial transactions only in Europe will cost Europe dearly. It can only work if the rest of the world agrees to something similar. But the EU is desperate to get their hands on cash from somewhere and are left with the difficult situation of either having to go to the German taxpayer and potentially alienate the one stalwart voterate of the block or find international investment to plug the trillion euro hole that has emerged like a gaping apocalyptic chasm, and unsurprisingly, nobody wants to cough up. The Chinese have turned their backs, stating that Germany is the only country that can rescue the common currency, and other than that, few international buyers are really up for solving the debt crisis of a bungling Union.

2012 has started much in the same way that 2011 trundled along, with inconclusive crisis talks, insubstantial commitment to solve the problem and pie in the sky solutions that say more about inter-state grievances than any clear direction to grab this issue by the scruff of its neck. We've had more rhetoric from France seeking any way to attack "anglo saxon" capitalism, hence proclaiming they will steamroller through a tax on the City of London. But hold on, was it really anglo-saxon capitalism that got us into this mess? It is convenient to point the finger at bankers, and nobody is saying they didn't play their part in the global financial crisis, but what is keeping the Eurozone stuck in fiscal quicksand is no longer the credit crunch but for a large part underscored by the sort of unrealistic, idealistic and potentially disastrous socialism that blighted Communist Russia.

There is even a storhttp://www.blogger.com/img/blank.gify today on the BBC that I could hardly bare to read, about Greek parents abandoning their children due to the severely troubled economic times being faced in the member state. Why it is almsot like the beginnings of Holodomor. When the common currency is leading to heartbreaking poverty on this scale it is time to let go of political ideals and admit defeat. It all chimes of the sort of blind arrogance of a political elite who wish to impose plutocratic ideals on the populace, regardless of the fall out.

It makes you want to put your head in your hands and simply yell out "how on earth did they let it get this far?"

Current rumours have reverted back to suggestions that Greece may be ousted from the single currency. Merkel and Sarkozy warned that vital rescue funds would be held back from Athens unless Greece completes a deal over the size of losses that will be imposed on private investors, with the German leader branding Greece a "special case" suggestive that rules may be twisted to allow a swuft departure of Greece, thus sparing the German taxpayer the financial if not the moral onus of rescuing the failing mediterranean economy. For while the southern states of the Eurozone may have ended up in a quagmire of overspending brought on by sudden access to low interest rates and the possibility to spend more than they could ever hope to accrue, Germany flourished due to riding roughshod over interest rates to suit her own booming manufacturing economy and has come out on top not just due to the German work ethic, which is evidently commendable, but due to sheer bloody dominance of the single currency. There is surely some burden to shoulder there, as the Chinese press has rightly pointed out.

One thing is for sure, if 2011 was a year that rocked the boatm perhaps 2012 will either see the whole vessel capsize or a man thrown overboard.

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!

A Face Off over The Burqa

The reason I am dragging this subject back into the blog is because I was asked about the matter for a radio show just recently. Click here to listen to Eye on Wales in which I contributed.

Should we, could we and would we ban the burqa?
The French have of course brought up the issue, and I stumbled across this fascinating article on the Time Online which really spells out where Britain has gone with it's overdose of political correctness.

Written by French journalist Agnès Poirier, it reveals why on this occasion, we should be following their lead.

"The burka is not a religious problem, it's a question of liberty and women's dignity. It's not a religious symbol, but a sign of subservience and debasement. I want to say solemnly, the burka is not welcome in France. In our country, we can't accept women prisoners behind a screen, cut off from all social life, deprived of all identity. That is not our idea of freedom.”


So spoke Nicolas Sarkozy in Versailles during his first state of the nation address to France's two chambers, the National Assembly and the Senate. He won rapturous applause and there is little doubt that an overwhelming majority of the French agreed with his every word. I say an overwhelming majority because this issue crosses all party lines in France. Republican principles of equality and secularism are so deeply grounded in the French mind that they belong as much to the Left as to the Right.

For someone like me, firmly on the Left, the defence of secularism is the only way to guarantee cultural diversity and national cohesion. One cannot go without the other. However, when I get on Eurostar to London, I feel totally alien. To my horror, my liberal-left British friends find such a position closer to that of the hard Right."

This point of view struck me as such an interesting truism I felt I had to cite it here. But interestingly the situation in France and the UK is not comparable. Across the Channel, the Burqa has been banned in state-run schools since 2004 and cannot be worn in hospitals or municipal offices or for that matter "anywhere where people interact as equal citizens"

Poirier goes on to say (and I am starting to like this woman more and more) that such a ban could never happen in the UK.

"When Jack Straw dared to state the obvious in 2006 by saying that the burka and the niqab were “visible statements of separation and of difference” before asking politely that women visiting his constituency surgery consider removing them, it provoked angry protests from Islamic associations and the British liberal- Left, always inclined, it seems, to defend the rights of liberty's enemies.

Seen from France, Britain's tolerance of extremist views looks at best naive, at worse dangerous: a recipe for trouble, division and painful soul-searching....If Britain's tolerance of political and religious extremism is often bewildering to the French, it also fascinates them. This tolerance does appeal to some French because of its sheer exoticism. French tourists visiting Britain for the first time, London in particular, are struck by what they perceive as a kaleidoscope of different ethnic minorities going about their day in their religious and cultural attire, cohabitating seemingly peacefully with punks and the half-naked: being free to differ.

What those visitors may discover later is that the price of this peaceful cohabitation lies in a constant bargaining of specific rights for specific communities in the name of cultural difference - the opposite of equality as understood in France. In France, public swimming pools would never allow women-only sessions to satisfy the demands of a minority. A public space is constructed for citizens to interact freely, and legislation written to remove the barriers of difference that separate them.

Seen from Britain, French principles of equality and secularism are often misinterpreted, and dismissed as authoritarian or prejudiced. But critics of the French approach don't seem to understand that secularism is neutral - the State doesn't recognise any religion in particular but protects them all, guaranteeing cultural and religious diversity by ensuring that one faith does not get the upper hand.

Can our two countries learn from each other? France could certainly try that very British tolerance and Britain could be more rigorous in arbitrating between the common good and the demands of communities. But our two systems are anchored in such different traditions and histories that we can only keep marvelling and staring in bewilderment at each other's approaches to social harmony; both of which are struggling to keep pace with the growing confidence of minorities who, once ignored, are now at the centre stage."

The fact that Poirier draws a conclusion that the British seem to pander somewhat to those minorities that impact upon the very concept of Britishness is interesting, and leads me to make this final point...

You never see women in the dictatorial, tyrannical, misogynistic cultures that promote the veil asking for the right to not wear it, for fear that stoning or flogging or domestic violence would ensue. The fact that Muslims in support of the ban hold it up as the right of that particular woman is as incongruous and hypocritical as people who suggest in some way that lapdancing, pole dancing, porn and the resultant objectification of women is in fact female empowerment. I think not.