Last week, Debating Europe held a head-to-head debate on the consequences of a eurozone collapse. We brought together British Conservative MP Bill Cash and former Irish Taoiseach (prime minister) John Bruton to discuss the possible effects of what many consider the worst-case scenario: a break-up of the single currency. We’ll post a few highlight clips from the debate today, and tomorrow we’ll be putting online the full video with a couple of extracts responding to comments we received from Debating Europe readers.
It was a fascinating debate, with the two participants holding almost polar opposite views. Bill Cash MP argued that we are witnessing a crisis of democracy, and that we need to renegotiate the EU treaties in order to produce a more democratic, looser coalition of nation states. In light of the debate on treaty reform that we saw at the “State of Europe” roundtable, it’s interesting to hear that British eurosceptics are also pushing to re-open the treaties.
Bruton, however, argued that what we’re seeing is a problem of globalization and interdependence. We don’t have political arrangements that are swift enough to cope with the speed that markets now move at. According to Bruton, though, the EU is still better placed to deal with a crisis than an intergovernmental coalition of states would be. He argued that the EU needs to remedy its existing design-flaws, then it could be “an example to the rest of the world” in how to handle crises.
What would a eurozone crisis actually look like, though? Whilst Bill Cash agreed that the immediate consequences would be dire, he also argued that there’s “always a silver lining to every cloud”. The consequences of the “jolt” of a eurozone break-up would force reform on the European institutional arrangement and make it more democratic and more realistic.
Bill Cash also criticised the “socialist inspired ideas that might be good in theory but aren’t actually affordable” – which he blamed for getting us into the crisis. Might a more humble Europe, living within its means, with a more democratic intergovernmental arrangement between member-states, be the “silver-lining” behind the crisis?
John Bruton, however, completely disagreed. He argued that, if the euro were to break-up, we would witness competitive devaluations between states – something that led, in the 1930s, to the Great Depression – and the re-imposition of capital controls. This would mean an effective end to the single market and result in European economies becoming more fragmented and inefficient at a time when large markets like China, the US and India are dominating the international order. All of this, Bruton argues, would speed up the relative decline of Europe.
What do YOU think? Would you agree with Bill Cash that we need to renegotiate the EU treaties so the organisation resembles more a loose coalition of nation states? Or would you agree with John Bruton that, if the EU can fix its design-flaws, then it can be a model for the rest of the world? Would a eurozone break-up have a “silver lining”? Or would it just speed up European decline? Let us know in the form below and we’ll take your comments to policy-makers and experts in the run-up to the European Council meeting on 23rd October.
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11 comments Post a commentcomment
The EU is supposed to be a democratic union of 27 democratic States (http://www.schuman.info/fed.htm ). It isn’t. It is controlled by a political clique or cartel odf parties and their machines.
Three suggestions that are in the original treaties and have not been applied by governments. 1. All Councils of ministers to be open ot the public — so politicians do not make corrupt deals. This would include the European Council and the eurogroup who are now involved in multi-trillion euro operations — many times the EU budget — without a proper legal framework of the Community or public assent. (see article 15 Lisbon treaty, TEC) 2. The European Parlaiment should have Europe-wide elections not 27 national ones which are fraudulently fixed by government parties. (http://www.schuman.info/election2.htm ) 3. The Economic and Social Committee, the third democratic chamber in the Community system for organized civil society, should be DEMOCRATICALLY elected from European associations as the original treaty says. This body composed of representatives of enterprises, consumers and workers would control matters concerning the euro currency so governments could not fiddle their statistics as EuroStat complained for years.
We should learn the lesson that secret meetings of politicians lead to trouble — not the least that the Commission which was supposed to be composed of NON-politicians, that is INDEPENDENT personalities, is now entirely composed of politicians. Thus all controls are being taken over by political party machines. Power needs to be returned to the people’s institutions as defined and agreed by governments and peoples originally.
I think going back to French and Netherlands referendums which brought down the original treaty expounded by Giscard d’Estang’s chairmanhsip, it opened up a can of worms…which we’re still trying to overcome.
The Lisbon Treaty which followed was not only a political compromise but a dismal failure to draw the member countries to ever closer union. Enlargement did not help either….
Merkel and Sarkosy are not the socalled giants of EU Project – going forward. They’re not only opposed to Community Method of resolving the debt contagion; ie. giving back power of initiative to the Commission (ie. a neutral body) is not what they prefer because of personality problems with Borroso; nor do they respect the treaty provisions which provide EP with equal decision-making power on major political issues.
In other words, inter-governmentalism a la Merkel/Sarkosy is the reason why we’re now in a very serious crisis of decision-making process in the EU.
What’s the alternative?
In due course these two politicians will be off the political stage.
And then we shall have the opportunity (may be) to restart the Community Method of decision-making in both Council and EP.
Unless majour pieces of policy papers orginate from inside the Commission (eg.Maastricht Treaty), the Council will enforce its political muddling process; and, if allowed, may even provide the public to get so disgusted with the entire Euro Project that at some point in time the whole project will come tumbling down like a house of cards.
So, the political solution is NOT less Community Method but definitely more in order to get this single market of 320M back on track.
I agree with the above speakers in everything…
I will add…Why break up the euro, and form a two tier Europe, aka an unequal Europe..Again….Rich and poor all over again..?? Why don’t the richer nations give up their greed and allow the poorer to blossom and prosper?
The euro is not the problem…Our Governments are..They fail to secure or create policies that the euro currency needs to be stable, because of national interests..Go all the way and stop patching things up..
Yes you are going to lose some of your wealth but the whole Continent will gain in stability, so no more need to keep bailing out the poorer states…but then you have states that think that their way is the best way, and things should be done their way, so the smaller states should follow their lead…
Break up the euro only if you want to have an unequal “Union” but then I do not want to be part of it, and I won’t believe in it any more…Simple because to me, a “Union” represents solidarity and cooperation..Not bullying, slander and unethical competition…If you want such thing, then call the spade a spade, but then perhaps you should break up EU as well, and allow the eastern, smaller or southern states create unions of their own and stop meddling with their affairs or telling them what to do…
But of course the rich countries would lose out the most from this, wouldn’t they? No more influence, no more cheap stuff from the south, no more open markets to sell your gadgets..We need it each other, but let’s make it a fair game and beneficial for all..yes?
I do not think the exit from the Euro is a viable solution for any members: the implied costs are too much and going back to monetary sovereignty implies an immediatly fall of government credibility when setting fiscal or monetary targets.
This discussion stems from the huge mistake of considering the default of a State – a fiscal failure – as necessarily coupled by a monetary failure – the break up of the monetary union. These problems are absolutely independent at least as long as politicians cannot blur the two, which is the actual problem of the Euro (see here http://ideashaveconsequences.org/why-the-default-of-greece-should-not-drag-the-euro-behind/leo).
What is actually under scrutiny is what political and fiscal form the EU must adopt, and whether it can stand some fiscal entities’ defaults (like Greece). Economically there is not a great problem, faulty entities come and go, and get replaced by better managed entities; politically is a great problem as no politicians are willing to face own failures and need not to delude their constituencies.
I find it unfair to subtly discuss of a politician’s problem with his/her constituency instead of focusing on the direct interests of the people in a system which must work toward the best equilibrium regardless of who is sitting on the government chairs. In order to meet people’s needs we must have competing fiscal entities, be they counties, laender, regions, or Nations themselves; a degree of coordination may be useful (laws must not be conflicting at international level), but this must not take us to a political cartel, authorities and fiscal entities must fight to attract workers, brains, and capitals.
It seems extraordinary that when Parliamentarians in the UK are discussing a referendum with the possibility to leave the EU that the clever lawyers in Brussels say that it is impossible for EU delinquent countries to leave the euro zone. Leave the EU is possible but leaving the euro is impossible?? even for mega fraud of statistics, corruption and secretly indebting the whole Union? This encourages moral hazard for the future, that is corruption.
The clever lawyer-politicians could use the same clause to clean up the game. The European Council will not do this because there is a political clique that takes mega fraud– that is fraud at the government level with public money — as part of the rules of their club. Example: All governments want to go on a spending spree BEFORE elections — not with party money but with State money that is taxpayers’ money. Is this a politicians’ perk or is it plain fraud, corruption and bribery? What sanction have the public against crooks in government who see public money as pocket money to get votes? EuroStat warned about this.
The so-called reforms of finances and debt with the six pack still suffer from the main defect: they leave all the levers of abuse in the hands of the perpetrators of excess debt and fraudulent accounts and statistics — the political clique or cartel. Only card-carrying members of the main political parties — the cartel — are power brokers. The reaction is similar to what commercial cartels normally do — ask for more power to regulate themselves, while refusing independent control to the citizens’ groups over the accounts.
At present the EU is not only NOT dealing fully with correcting the abuses of politicians by instituting proper measures of control of finance through elections of organised civil society through the Consultative Committees, it is refusing he most obvious ways to stem massive, massive mega fraud on VAT for example. Hundreds of billions are involved in ‘carousel fraud’. It is refusing to stem energy blackmail where oil / gas rises from 9 dollars /barrel in 1999 to 146 dollars in less than a decade. That is typical action of a cartel too, OPEC and friends. The EU needs to develop proper energy INDEPENDENCE. Details of how this can be done are on http://democracy.blogactiv.eu/2011/07/15/euro3-how-to-pay-the-bill-for-the-euro-frauds-and-corrupt-political-fixes/ and other the same site. The Warning about the jihadi attempt to DESTROY Western capitalism was made on 9/11 and recorded in 2011 on http://www.schuman.info/Warning.htm .
The politicians have had a decade to do some REAL reform. They have worsened the problem. They have had thirty years since Greece joined and began to mispend Community money. Instead of insisting on reforms in the 1980s they gave more public money. If Greece is serious about reform it should look at the examples of Slovakia and Latvia. If the politicians are serious they should start the reforms by empowering independent, non-party organised civil society to act as their supervisors for their moral and ethical conduct, not party buddies in the European Parliament and the Commission where non-party, independent people are now banned.
Several of the comments so far seem dictated by negative attitudes towards the EU and indeed towards politicians in general. That most contemporary politicians (in Europe as well as elsewhere) do not seem to have the statesmanship of their forebears is plain for all to see. Weak and unstable majorities, as well as the electoral cycle together with campaign costs may be among the causes of that. World as well as regional organizations naturally suffer the repercussions of this state of affairs, as do nations. Suffice to see the gridlock that has affected the US Congress, which will be difficult to stop without changing the US Constitution.
To David Price I am tempted to respond using his own words, but changing the culprit:
– “EU controlled by a political clique or cartel of parties and their machines”: please replace EU with the names of most nations, not just Russia or Pakistan, but also European governments such as Italy (Berlusconi party), and even Britain (a dictatorship of the PM cabinet dominating the Secretaries as well as Westminster, who must support it unless they are prepared to risk new elections to throw out “the rascals”);
– “All Councils of Ministers should be open to the public so politicians do not make corrupts deals”: replace EU with any national or regional government – none would agree to open its meetings to the public (besides it is excessive speaking just of corrupt deals);
– “We should learn the lesson that secret meetings of politicians lead to trouble, non the least the Commission which was supposed to be composed of non-politicians”: secret government meetings are as old as history, they have created havoc as well as great decisions in the public interest; to say the Commission was to be composed by non-politicians is a sign of ignorance about European affairs.
I agree with Hari Naru that “inter-governementalism is the reason why we are in a very serious crisis of decision-making process in the EU”, but it is not the only reason: domestic political weaknesses, lack of strong, charismatic leaders, the economic crisis, and the need to save EMU through additional integration steps for which key members were not ready when EMU was created, all contribute to the crisis in EU decision-making. And yet, without the creation of EMU (the € is the world’s strongest currency despite EU weaknesses) and the European Central Bank, the worst financial and economic crisis since the thirties could have meant a series of competitive devaluations leading to the end of the Common Market and hence of the EU or put the latter on life-support.
The biggest faults of our leaders have been an excessively rapid enlargement, the inclusion of Greece into EMU (Kohl dixit), the failure to include into the Lisbon Treaty a super-qualified majority (instead of unanimity) for treaty change, and the opt-outs for EU laggards such as the UK, who never really wanted to join the EU, and actually did so only after trying to stop integration through EFTA and failing. Those who want opt-outs, let alone repatriation of responsibilities in an increasingly interdependent world in which Europeans will be sidelined if separated, should be allowed to leave and renegotiate a special partnership with the EU (like that which we should offer to Turkey), rather then spoiling the efforts of those who, rightly or wrongly, believe that unity is strength. But those who prefer a special relationship should not later complain that they are excluded from EU decision-making, however imperfect (City of London beware).
I agree with your perspective.
Let me add a few new ideas which Trichet/ECB has delivered since receiving the Karl Price in Aachen.
But, first, after listening to Commons (UK) debate on motion to withdraw from EU membership by Conservative backbenchers, I’m now more than convinced that final withdrawl of UK from EU will be a net benefit to EU Project – going forward to a more closer union.
Second, Trichet envisages the Council eventually becoming the Senate and EP the Lower House under a reformed EU Government. Thereby the Commission becomes the CEO of EU Project and responsible for its administration.
Third, what French and Netherlands refrendums did to
ever closer union is now history; but there are lots of lessons there for everyone, if they believe in a common European future in a globalized world.
There will be bumbs on the way, for sure, because the Rome Treaty (1958) construction was originally a totally new idea of cementing peace and prosperity – after centuries of inter-state wars. But like Trichet says, the goals are becoming more and more inevitable with every crisis.
Thanks Carrod Pizio-Biroli for your comments. The Community system is different in that it is a later system that takes into account the failings of previous ones. The Community system will eventually open up all the inter-governmental abuses. When the Council of Ministers was forced to be more open, the politicians invented another so-called institution called the European Council (heads of government) which is closed. This closed door operation is contrary to article 15 and others of the Lisbon Treaty. The politicians can’t keep inventing institutions. Other institutions such as the European courts plus 27 national courts will eventually bring changes.
Dear David Price,
you are so right, the democratic deficit is rooted in the European Council whose decisions are pathetic. They will understand one day that, without fully involving the Commission with its right of proposal and more general treaty role, the EU does not work and that they need to attach greater attention to pre-selecting a President of the Commission who has the authority and the courage to stand up to the leading Member States.
Corrado
I am a fan of the idea that EU should become one strong country and each country to become a state with limited indipendence and always the choice to withdraw. I believe that this policy will decrease some kinds of cost like defence cost etc and will give as more flexibility in terms of debt and maybe in terms of grow. On the other hand we should set minimum standards of quality of life that should increase each year as well as to strengthen again social policy in an orthological way.
For the EU to be efficient it must homogenise and remove the political, social and cultural differences between member states, and this is what it is doing, essentially removing the notion of Europe and trying to be more like the US and China. I doubt this can work, the world and human beings exist and develop through differences but become efficient through similarities, which usually leads to conflict, but it is a conflict made more by ultra progressives and than by Europeans themselves. The answer can only be a looser link and a more flexible political framework between member states who respect each other’s views more often. This is not what’s happening in the EU.