Euro crisis: “Hold your sides and laugh out loud, otherwise you’ll have to cry.”

Despite some optimistic noises overnight, it still seems more likely than not that Limbo Greece will face new elections.  As the Guardian live-blog noted earlier today

The Democratic left party in Greece has said it will not back a pro-bailout government.

That almost certainly means that Venizelos’s attempts to form a government coalition around agreement on the bailout terms are dashed and that the country will face fresh elections

In the meantime, there are still a few days left to catch eurosceptic Michael Portillo’s erudite examination of the problem on This World: Michael Portillo’s Great Euro Crisis.  The Guardian reviewer highlighted one scene of particular interest, if not for the right reason.

There was a wonderful exchange between our man and Germany’s minister of finance Wolfgang Schäuble. Portillo averred that democracy would suffer as a result of the crisis. Schäuble gave what I suspect is his daily blink, followed by a precise summary of all the layers of democratic election involved in constructing the European institutions involved that would “supplement” sovereignty. “For a British Eurosceptic,” he added, unsheathing his internal switchblade and gently pressing it against Portillo’s psyche, “that’s a little difficult to accept. For that reason, one must constantly promote it as the better solution for the 21st century.”

I said Portillo was charming. I didn’t say it wouldn’t still be fun to see him metaphorically unseamed to the chaps. And so it was.

Well, perhaps…  Here’s the clip, courtesy of Mick

Schäuble’s riposte is fine…  But doesn’t actually address the question.  [Or the political trilemma – Ed].

As Tim Garton Ash, a believer in the European Project, pointed out recently, also in the Guardian

I hope to live long enough to read the official French and German records of next week’s conversation between Hollande and Merkel in Berlin, and first-hand accounts of the relevant conspiratorial dinners. By these well-tried methods, Europe’s leaders will reach a compromise. It will probably involve a watered-down but then dressed-up Hollandesque “growth pact” to complement Merkel’s fiscal pact, with European funds, banks and so-called mechanisms allowed to provide an added element of stimulus.

I don’t recall whether back in 1991 people quipped about Kohlrrand or Mitterohl, as everyone now does about Merkozy giving way to Merde. But well they might have, although Kohlrrandeotti would have been more exact then, and perhaps Merkhollti today. (The economic competence, integrity and reported influence on the German chancellor of Mario Monti merit at least a letter or two.)

More seriously, the fundamental politics of this decision-making have not changed. Since Maastricht, the European parliament has gained more powers, but that has not produced European politics to shape European economics. Now, as then, these are national leaders, pursuing national interests, as defined by their own national elites. They justify their conduct to still overwhelmingly national media. The elections that matter are national ones, most recently in France and Greece. Even some sub-national elections – such as Sunday’s in North Rhine-Westphalia – can be more important than the European ones. [added emphasis]

And, as President of the Euro Group of finance ministers, and Luxembourg’s Prime Minister, Jean-Claude Juncker is reported to have claimed years ago – “We all know what to do, but we don’t know how to get re-elected once we have done it.”  [But do you believe him? – Ed]  Perhaps…

But if believers in the European Project aim to continue to “supplement” sovereignty in the manner they have been doing, one thing remains true – “None of Europe’s leaders are yet spelling out the cultural revolution that is to come.”  One way, or the other…

Here’s Michael Portillo’s summation from This World.

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  • I’m left wondering what, exactly, is the alternative to “the European project”.

    But, then, I’m one of the few left around here born pre-Cold War. And with two generations of my family in Commonwealth War Graves.

    Despite any Great Euro Crisis there isn’t a Great European Crisis. Though I’m sure the Andrew Undershafts would jump at the chance.

    Take a deep breath and reach for your Economist:

    The euro zone needs to do a lot of hard things. Our list would include at the very least: in the short term, slower fiscal adjustment, more investment, looser monetary policy to promote growth and a thicker financial firewall to protect the weaklings on the periphery from contagion (all of which the Germans dislike); in the medium term, structural reforms to Europe’s rigid markets and outsize welfare states (not popular in southern Europe), coupled with a plan to mutualise at least some of the outstanding debt and to set up a Europe-wide bank-resolution mechanism (a tricky idea for everyone). It is an ambitious agenda, but earlier this year, with the Italians, Spanish and Greeks all making some hard choices and ECB money flushing through, the politics seemed possible.

    M., le Président de la République, Hollande: your move.

  • Pete Baker

    “I’m left wondering what, exactly, is the alternative to “the European project”.”


    That would depend on what you understand “the European project” to be.

    For the original believers I mentioned, it was not, as Tim Garton Ash points out, a “half-baked” “monetary union made without the fiscal union necessary to sustain it”.

    And those believers remain determined to completely bake that union to “supplement” sovereignty “as the better solution for the 21st Century”.

  • Portillo is right that there is a crisis with Democracy but Wolfgang Schäuble was never going to admit that in a TV interview. The fact is that if the Eurozone had its own Government elected by majority of Eurozone citizens, the Germans would be obliged to commit themselves to Eurobonds or some alternative to thicken the firewall.

    Add to that the fact that almost nobody in the Eurozone wants to go back to the individual currencies and you have a recipe for many years of economic stagnation and falling living standards – unless there is some catastrophic economic event that comes much earlier and blows the whole thing apart.

    The bankruptcy of Spain can not come quickly enough.

  • Zig70

    I’m a bit too simple for European politics. Have we entered a parallel universe where the Germans won the war? What sovereignty are Germany giving up? How does this mechanism work? Merkel proposes what is acceptable for her people and everyone else in the eu roles over, minus a few tantrums? Is it money/funding, awe, deference or what?

  • lamhdearg2

    “Broadly, national opinion polls have the Christian Democrats of Chancellor Angela Merkel bumping along at around 36%.* The main opposition party, the Social Democrats, receives just 26%. In other words, both need an alliance. ”
    “But support for the pro-business Free Democrats, currently in government with Ms Merkel, has been collapsing”,
    Enter the Pirates,(see The Pirate Party),
    Germany is in pre election mode, nothing that is said (or done) in that country this year(prez) or next (federal) can be trusted to be the German position come 2014.
    predict lots of limbo,
    *36% just like the **** party in 1936.

  • Pete Baker @ 8:30 pm:

    Silly me. And I just kinda thunk it was essentially defined in Article 2 of the Treaty of Rome.

  • Zig70 @ 9:34 am:

    Is it not a trifle ironic (I know, from past experience, irony earns a yellow card here) that

    — federal Germany, with considerable devolution of power, is considered centralising and authoritarian,

    while (say)

    — the UK, where successive governments have sequentially strengthened the power of Westminster, and permit minimal regionalisation, is somehow nobler, more “liberal”, less authoritarian?

    If there’s anything wrong with the German constitution, the Basic Law of 23 May 1949, remember — it was essentially overseen and “guided” by British constitutional lawyers. Funny thing: if ever we get a “British Bill of Rights”, I’ll wager it looks very like Section 1, Basic Rights.

  • Alias

    The europhiles uncritically re-spew the line that that the EU was founded as a peace organisation. The rest of the world knows it was created by French government as a follow on from the Monnet Plan so that France could retain control of Germany’s principal coal and steel regions which were awarded to France as part of the spoils of WW2. It was the divison of Germany after the war and the creation of organisations such as NATO and the UN put an end to its warmongering in Europe – plus, of course, France getting its hands on nuclear weapons also nipped Germany’s colonial aspirations via military means in the bud and converted them into colonisation via economic means.

  • Greenflag

    FinanzMinister Schauble refers to the Greek entry to the Eurozone as ‘spilt milk’ i.e in the past . True enough but if Greece’s economy was unfit to join the Eurozone in 2000 why would it be any fitter to be in the Eurozone today given all that has happened since Goldman Sachs ‘cooked’ the Greek national books to facilitate euro zone entry and make a quick $700 million besides.

    Portillo is right that there is a crisis with Democracy but it doesn’t affect voter turnout in French Presidential elections where over 80% cast a vote .The USA will be lucky to see a 55% turnout in their election in November .We have seen the USA ‘democracy’ turn into even more of a plutocracy as the SUPERPACS choose the GOP candidate and as the Wall Street ‘rats’ back both Obama and Romney financially in order to keep the Presidential puppets on string regardless of who wins . The Banks which were too big too fail are now bigger and we read that Morgan Stanley’s Jamie Dimon has just ‘apologized ‘ for losing another 2 billion dollars to poorly picked and even more poorly managed never mind the blind oversight of ultra risky derivatives .

    Nothing has changed for Wall St nor it’s outliers in the City .
    Voters might want to remember that when they go to the polls be it in Greece or Ireland or the USA or Nord Rhein Westfalen.

    Break up the banks into smaller units or nationalise them . Leaving them as they are is just a recipe for a continuation of the present crisis ad infinitum or until there’s blood in the streets 🙁

  • Greenflag

    @ lamhdearg,

    ‘*36% just like the **** party in 1936.

    Comparing the CDU to the National Socialists of 1936 is nonsense .

    In 1928 the Nazis got 2% of the vote in German elections which was a drop from the 6% and 8% of earlier elections in the early crisis ridden elections in 1920 and 1926 approx. In 1930 the Nazi vote increased to 30% while the Communists also got almost 30% .The remaining 60% was divided between the discredited establishment parties (think Greece today) which had been seen to fail the German people in the 1918 -1930 period .

    Although there had been some recovery in the German economy up to 1928 ( helped by USA investment ) the Wall St collapse of 1929 while it drove the USA into it’s great recession the effect on the German economy was to undo the recovery which had been underway and which was now again in freefall . The discredited forces of the establishment and capital and the churches backed the nazis over the communists (no surprise there) and we all know the rest of the story . 55 million dead in World War 2 and the ensuing Cold War , German Partition and the Totalitarian Communist regimes in Eastern Europe 1945 to 1989 -some might even suggest that in Russia what now exists is more like totalitarian capitalism with a strong dash of Putin dictatorship .

    The next German Federal Elections will probably see a resumption of a CDU /SPD Grand Alliance with the pro business FDP putting in a perfomance like the PD’s in Ireland or like the Lib Dems in the next British Elections

  • lamhdearg2

    greenflag, i just compared the vote, 36%,ie not the majority. up the Pirates.

  • As Alias @ 1:06 pm, yesterday, sagely points out: you can’t trust the French. You offer them a metre, and they take thirty centimetres. Must explain why de Gaulle and the RPF were so vehemently opposed to the ECSC. O subtle serpent!

    In truth, the ECSC seriously diminished French control of German coal and steel. While Paris, post 1945, was clamouring to take over Lorraine and the Saarland, and the de-industrialisation of the Ruhr, the Truman administration (heavily prompted by the likes of Ernie Bevin) were wisely agin it all. In passing, one of the reasons suggested why the UK didn’t join the ECSC is because Ernie was in hospital, and not at Cabinet committee to crack whip.

    Anyway, the ECSC didn’t take over from French occupation. There was the period of the International Authority (France three votes, rest twelve). Yeah, sure, the French continued, until 1981, to receive some equivalent of royalties out of the deal; but the legacy of the ECSC is there to see to this day: decent social and housing conditions for some of western Europe’s most deprived industrial areas. [Memo to self: revisit Zola’s Germinal.]

    Far more significant to see the ECSC as a creature of the Cold War, a natural follow-on from the Brussels Treaty of 1948, and a further device to involve emerging Federal Germany in western European defence.

    There is, most conveniently via the Economist archive, Sir Nico Henderson’s 1979 scintillating analysis of the UK’s wrong-footed attitudes to European integration. One doesn’t have to be a Euro-freak one-way-or-the-other (and, I trust, I’m not) to see the merits of his arguments. Since Henderson’s main thrust is the continued economic decline of the UK, compared to our EU partners, he has an enduring relevance.

  • Zig70

    @Malcom, thanks, Interesting read from Henderson. The No team should note it and Ireland, North and South needs to be competitive in Europe and be looking over their shoulder at other eu countries like our Polish friends who have demonstrated work ethic, skills and lower wages. A No vote in my mind would still require austerity to compete. I would see a brain drain from the private sector to the public sector mainly due to wages and benefits.