Monday, May 23, 2005

Eurostasis

Schroder and the SPD’s defeat yesterday is evidently no victory for the capitalist “locusts”, rather it is widely suggested in the media that it was because the SPD weren’t doing more to legislate against these pestilent creatures! Clearly the SPD, if it wants to get back into power following early elections, will have to offer some sort of "anti-locust" manifesto. Should they win there will be trouble ahead for business investment in Germany. The Eurozone economy is already in poor shape – and a "fashionably" anti-capitalist government in Germany could yet drag the still salvageable Eurowreck down into the depths of recession.

For more on the dire state of German politics the following article, which appeared in the Financial Times last week, is pretty good Germany loses in populist politics

So much for political turmoil, and the onset of stasis in Germany.

However, it seems that the European Union as a whole is heading down the same path!

The Financial Times led with an editorial on the European Constitution over the weekend - Time for the people to speak

Here are some issues I have with it. (The FT text is blockquoted.)

The threat that France and the Netherlands will reject the European Union's draft constitution in their referendums at the end of this month is now very real. Of those telling pollsters they definitely intend to vote, the Nos outnumber the Yeses in both countries.
I think the vote is far too close to call – predictions of victory for either side are wildly over-exaggerated.
The stakes are high. French and Dutch approval of the treaty would merely extend this marathon of participatory democracy on to an even more fraught UK referendum next year. If the French and Dutch give the treaty the thumbs down, the likely consequences will go far beyond a probable change of government in France and political ructions in the Netherlands. There may be fall-out in the financial markets, and serious setbacks to Europe's ability to pursue economic reform and remain open to enlargement and immigration.
Well possibly there might be a short-term hit to the €uro. But I tend to the view that it will be business as usual - Crisis is business as usual for the EU!
The souring of these two founder-members of the Union towards their common creation is striking. For in both countries, the constitution has been less the subject of detailed debate than the occasion for a far wider re-appraisal of attitudes towards Europe.

Many in France have grown disillusioned with, or downright hostile to, deregulatory, free-market policies from Brussels and see EU enlargement as diluting their influence. Inevitably, the constitutional debate is viewed through the distorting optic of France's miserably high unemployment rate, and focuses on whether the new treaty would create or destroy jobs.

The campaign in the Netherlands has also been warped. The Dutch used to be the EU's most reliable federalists; indeed only the Dutch had the gumption in 1965 to insist that Community business should continue despite General de Gaulle's boycott of the council of ministers. Now, however, this federalist faith is dimmed by fears that the EU has opened the dykes to Muslim immigration that could become a flood if and when Turkey joins.

This is groundless alarmism, and the Dutch should have been told so more resolutely by their politicians. Equally, Jacques Chirac, the French president, has been less than honest in presenting Brussels and its policies as more the problem than the solution to French unemployment. His government has warned that a No verdict would worsen the economic climate, but it is hard to see the wisdom or impact of such a warning when that climate is already bad, with gross domestic product growing by only 0.2 per cent in the first quarter of this year.
I think the FT is being overly dramatic here. Disenchantment with the EU has far more to do with it being out of touch with the ordinary people of Europe than anything else. If one reads/listens/watches the news every day, as no doubt the FT’s editors and journalists do, one is far more likely to overrate the issues recently highlighted by the media – hence statements such as it is to do with “deregulatory, free-market policies from Brussels” and “fears that the EU has opened the dykes to Muslim immigration”. If writers and broadcasters were less prone to panic and over-dramatisation, and were able to exercise more self control we might actually get a more realistic and balanced view of both the consequences of a “NO”, and also the underlying reasons.
Perhaps the best thing that French and Dutch supporters of the treaty can do at this stage is to refrain from overselling the benefit of a Yes vote as well as the cost of a No vote. They should instead stress that the constitution is a compromise between big and small states, and between Anglo-Saxon free marketism and continental industrial and social policy. This is why its provisions can be interpreted various ways, but also why it is probably the best bargain that 25 member states are likely to strike.
The FT stops short of recommending a “Yes” but only just. What they ought to have highlighted is that it is the inherently ambiguous wording of the Constitution, and therefore the fact that “its provisions can be interpreted (in) various ways”, that make it such a poor document. Member states will, if it is ratified, likely spend so much time squabbling over the “legal” interpretation of the document’s provisions that stasis will rapidly set in. The Eurozone is already in economic stasis – the Constitution will ensure that there is also political stasis.

In the space of the last 30 months there has been the physical introduction of the €uro, enlargement of the EU from 15 to 25 members states, and now the Constitutional Treaty – this is simply too much change too fast, and it is change that I am sure for many people appears to have been decreed rather than democratically agreed. The EU's political elite are like the 600 of the Charge of the Light Brigade - on and on they ride, but as the onlooking French General so wryly observed "c’est magnifique mais ce n’est pas la guerre!". It is indeed time for the people to speak and we need have no fear of a "NO" - it could well prove to be the best thing to happen to the EU.