Friday, 23 December 2011

16 December 2011

My apologies if you loathe the expression “not fit for purpose”, but I’m beginning to wonder if we need to ask whether perhaps the European Union is, sorry, “not fit for purpose.”

(If you do loathe the expression, don’t blame me, blame John Reid, who introduced it into the political lexicon in 2006 when he took over at the Home Office and promptly declared the immigration department you-know-what. The Guardian style guide sniffs that it’s “a recent cliché that quickly proved itself unfit for the purpose of good writing”. To which I’m tempted to reply with another neologism: “wha’ever …”)

But I digress. It’s a week now since the bust-up in Brussels that resulted in all those headlines about the UK being left stranded in a minority of one on the question of how to devise a new framework to deal with potential financial melt-downs.

As so often with EU summits, in the cold light of day and when everyone has caught up on some sleep after an all-night negotiating session and too much coffee, the reality seems to be rather more complicated.

For one thing, the framework is so vague that no one seems quite sure what they’ve either signed up to, in the case of 23 EU governments, or refused to sign up to, in the case of David Cameron. Have a listen to our interview with the Swedish finance minister, Anders Borg, which was broadcast on Wednesday, to get a flavour of how opaque the whole thing is.

And to add confusion to the complexity, what are we to make of last night’s confirmation from Downing Street that the UK will have “observer” status at future negotiations and will take part in “technical discussions” about how to move forward.

If you were to conclude from all this that they’re making it up as they go along, I wouldn’t seek to change your mind.

I well remember during the 1990s traipsing from one EU capital to the next, as six-monthly summit followed six-monthly summit, watching in some bewilderment as Europe’s leaders went about designing the EU of their dreams.

The UK dream at the time (this was in the days of John Major at No. 10 and Douglas Hurd at the Foreign Office) was an EU that would gradually transmogrify into an entity that was, in the jargon of the time, “wider, not deeper”.

The Germans and the French, on the other hand, wanted an EU that was both deeper and wider. In other words, open up to new members (remember the Big Bang, when 10 new members joined in 2004?), which was what Britain favoured, and also build what in the words of the founding Treaty of Rome was called “an ever closer union among the peoples of Europe”, which Britain was a lot less keen on, even if Edward Heath had signed up to it when we joined in 1973.

So now we have a union of 27 member states, soon to be 28 when Croatia joins in two years’ time, and a currency union to which 17 of them belong and eight more are due to join at some unspecified time in the future.

Can it work? Can the lamb of Malta lie down with the lion of Germany? Can Portugal march hand in hand with Poland? Or has it all become too unwieldy, too stretched as a concept and too unbalanced as an economic entity, to survive the immense stresses to which it is now being subjected?

Perhaps the middle of a deep economic crisis is not the best time to try to tackle these issues. But you only have to listen to the sniping between London and Paris this week to understand that the bonds that bind this union (and I don’t mean bonds as in “sovereign bonds”) are beginning to fray quite seriously.

Gideon Rachman of the Financial Times wrote this week: “Markets and voters are increasingly refusing to obey the grand pronouncements issued by EU leaders at their ever more frequent crisis summits. Add to that the growing tensions between EU members, which go well beyond the isolation of Britain, and you have a formula for continuing confusion and disunity.” That’s the politics of it.

In The Times, Anatole Kaletsky wrote of last week’s “fiscal compact” plan: “It is arithmetically impossible for all the countries in the eurozone simultaneously to deflate their way out of a debt crisis ... By imposing permanent austerity on the whole eurozone, the fiscal compact would guarantee permanent depression. And that in turn guarantees that the treaty supposedly agreed last Friday will never see the light of day.” That’s the economics.

In our interview on Wednesday, the Swedish finance minister confidently predicted that 2012 will be even worse than 2011. And this is the man whom the Financial Times has named as the most successful finance minister in the EU.

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