Friday, 9 December 2011

Passengers on the Titanic to be charged for deck chairs.

European leaders took a decision this morning that effectively puts an end to the European dream. Not that the EU will cease to exist, on the contrary; after decades of inching towards greater sovereignty sharing through a slow but democratic process, most Member States will now sign up to an intergovernmental Treaty outside the EU legal framework which at a stroke places national budgetary competence in the hands of people outside national governments and parliaments. It may be the realisation of a federalist dream, but this was never the outcome sought by any civilised, democratic European federalist. It's the sort of thing King George's American subjects went to war over with England.

The result will be that when governments break the draconian new budget rules on deficits - and there are many reasons for doing so from time to time other than profligacy - they will have their noses rubbed into it by having to pay fines to Brussels. It has been tried before. It was called the Stability Pact. It was invoked twice, against France and Germany, who simply dismissed it. The EU Commission didn't have the guts to call them to account, which it had the powers to do.

I have been a European official for thirty years, I am an alumnus of the College of Europe, I believe a united Europe is the only way forward  in order for our continent and way of life to survive, and I say that this decision is madness. In years to come, every cut in public services, every tax rise, will be blamed on "Europe". A generation will grow up that will learn to loathe that word and dispise the Brussels system, which is in fact a semi-government with one of the best administrations in the world, but led by one of the worst sets of mediocre politicians we have seen since the 1930s and who are clearly in over their heads. The politics of the liberal capitalist counting house await the peoples of Europe.

In reality, the Greek problem has nothing to do with it, but it is has now become the justification to yank the entire European polity to the right. What was a European-minded Germany is creating a German Europe. France without the UK is too weak to stand up to this and has chosen the winning side for now. The irony is that what is making this possible is the pressure of the markets. The same markets that Germany considers itself to be immune to. Atavistic German phobia about inflation is stronger than economic analysis.

The Germans are spectacularly missing the point: this is a banking crisis, not a fiscal or budget crisis. Moderate inflation - something we have lived with on and off for decades - is essential for stimulating growth at the moment. A more active role on the part of the European Central Bank can mean the difference between private bankruptcy or survival for millions of Europeans in the years to come. This new German Europe will turn people not just against the whole idea of Europe but will awaken ancestral fears. Germany may now have postponed its return into the mainstream of popular European belief that she is a safe neighbour  for another couple of generations. It may also have set off yet another resurgence of nationalistic feelings in this part of the world.

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