He has given a post-summit interview to the Frankfurter Allgemeine Zeitung (FAZ) giving his interpretation of the results of the EU Summit: Bundesbankpräsident. Weidmann lobt Gipfel-Beschlüsse 10.12.2011. He celebrates the fact that the EU-minus-Britain's solution also omits the third essential element of what would be necessary to save the euro, if such a thing is still remotely possible, a fiscal and "transfer" union, i.e., a united eurozone fiscal policy which would include systematic transfers of funds from the wealthier to less wealthy countries, similar to how the US tax system transfers funds from wealthier to less wealthy US states.
Die Staats- und Regierungschefs haben sich auf einen Fiskalpakt verständigt, nicht auf eine Fiskalunion. Die nationale Souveränität in Haushaltsfragen bleibt im Kern erhalten, direkte Eingriffsmöglichkeiten in nationale Haushalte hat der Gipfel nicht vorgesehen. In diesem Ordnungsrahmen würden Eurobonds die grundlegenden Probleme der Staatsschuldenkrise nicht lösen, sondern verschärfen. Sie würden die notwendigen Anreize für eine solide Finanzpolitik entscheidend untergraben.It's disingenuous and dissembling for him to claim that the EU-minus-one agreement rejects "direct possibilities of intervention in national budgets". Diplomatically, Merkel is minimizing the loss of national sovereignty over budgets involved in her latest austerity straightjacket for not just the eurozone but the whole EU-minus-one. Angie doesn't like referendums, and claiming there is no loss of sovereignty is her diplomatic fig-leaf for insisting that lesser nations like Austria and Ireland don't get uppity on her and hold national referendums on whether they should surrender the key fiscal policy decisions for their countries to Angie. Angie overthrew the Greek government when former Prime Minister Georgious Papandreou, himself all but totally a servant of the one-percenter lobbies despite being nominally a Socialist, insisted on having a referendum over the failed results of Angie's previous round of demands on Greece, replacing it with a government of creditors' collection agents.
The heads of state and government have agreed on a fiscal pact, not on a fiscal union. The national sovereignty in budget matter is retained in essence [literally, in its core], the summit did not foresee direct possibilities of intervention in national budgets. Within this set of rules [literally, in this area of order], eurobonds would not solve the problems of the sovereign debt crisis, but rather intensify them. The would undermine decisively the necessary incentives for a solid financial policy.] [my emphasis]
The democratic legitimacy of the European Union and its institutions is disappearing at an astonishing rate. For Greece and Italy, rejecting the "post-democracy" (Jürgen Habermas) Angie's EU imposed on them and returning to full parliamentary democracy will mean leaving the eurozone and the EU. Protecting democracy for the rest of the EU members besides Germany will also mean the same, unless the EU could be completely refounded with meaningful limits on Germany's ability to dictate political outcomes. But since it took a lifetime to establish the current EU and refounding it on more secure democratic principles would require statesmanship of the highest order - of which there is a screaming deficiency in Europe right now - such a short-range result is all but unthinkable.
The EU-minus-one agreement calls for a rigid adherence to a maximum of 3% budget deficit by all EU-minus-one countries. The treaty language itself yet on the table. But the agreement calls for automatic sanctions (not yet specified) for what in German are called Defizitsünder ("deficit sinners"), itself an indication of the mindless Calvinist moralism of such a foolish requirement.
The 3% requirement has always been there since the Maastricht Treaty that formally founded the EU. And has always been an arbitrary piece of "hard money" dogma that would be disastrous if imposed during recessions, and more especially during a depression like the current one. It has often been observed in the breach, with EU heavyweight states like Germany and France violating it with no negative consequences, either economically or in terms of EU penalties.
The new agreement would make penalties for violating the 3% rule supposedly automatic, in that they could only be foregone if the deficit-sinner country could persuade a majority of the European Council to vote against sanctions. Currently, penalties can only be imposed if a majority of the Council votes for them. The theory is that it's been relatively easy to block a majority vote in favor, but will be much harder to get a majority voting to make a special exemption to the sanctions. (27 - 1 = das neue Europa?/Welche Strafen drohen Defizitsündern? Süddeutsche Zeitung 09.12.2011
The EU-minus-one agreement, which was essentially dictated by Angie's government in Berlin, also assigns the European Court of Justice the right to review national governments' budgets to determine whether they meet the EU-minus-one standards for the amount of debt that would be required to finance their annual budgets. This is a related but distinct requirement to the annual budget deficit limits, Related because deficits drive borrowing needs. Presumably the Court's decision would either trigger or directly impose sanctions, which could only be overridden by the Council's majority vote.
What does all this mean for individual member states of the EU-minus-one? In one sense, it's still all hypothetical, since the actual new treaty language isn't yet available. How it may conflict with constitutional provisions of individual countries will have 26 different answers, one for each of the EU-minus-one states.
But the practical effect is painfully obvious. In the newly Germanized, Angiefied EU-minus-one, Germany will call the shots for the basic budget and fiscal policies in each individual country. If Germany wants a waiver on the deficit or debt requirements for its own national budget, Berlin can easily apply diplomatic and economic pressure to swing a majority of the Council for the waiver. Everyone else? It depends on what you can work out with Princess Angie von Merkel.
Given the effective control this hands Germany and its banksters over the economic and political decisions of the EU-minus-one countries, why would 26 countries sign on to such a proposal? Given how the euro crisis has played out the last two years, corruption (legal and otherwise) by the financial and other business lobbyists has to count as a major factor. Zombie-like ideological commitment to Herbert Hoover economics, a sad phenomenon on both sides of the Atlantic, also has its effects. John Kenneth Galbraith's reflections on the stupidity problem in Europe circa 1914 is worth remembering in this context, though today ossified political parties rather than royal dynasties are the institutions generating it, and the immediate threat a deepening and lengthening of the depression rather than war:
There was a final consideration, one that it is always thought a trifle pretentious to stress. Rulers in Germany and Eastern Europe, generals in all countries, held their jobs by right of family and tradition. If inheritance qualifies one for office, intelligence cannot be a requirement. Nor is its absence likely to be a disqualification. On the contrary, intelligence is a threat to those who do not possess it, and there is a strong case, therefore, for excluding those who do possess it. This was the tendency in 1914. In consequence, both the rulers and the generals in World War I were singularly brainless men.But on a more tactical level, there's an advantage to everyone in the to let another country go first, a kind of reverse "prisoner's dilemma" that momentarily is working to Merkel's benefit.
None was capable of thought on what war would mean for his class - for the social order that was so greatly in his favor. There had always been wars. Rulers had been obliterated. The ruling classes had always survived. To the extent that there was thought on the social consequences of war, this was what was believed. (The Age of Uncertainty, 1977)
It's telling that after Britain's Prime Minister David Cameron balked at Angie's demands early Friday morning, initially three non-eurozone countries also expressed reservations - the Czech Republic, Hungary and Sweden - at least one of them citing the solemn need to consult with their parliaments. A few hours later, presumably after intensive parliamentary consultation, they were ready to sign on to Angie's Ordnungsökonomik über alles proposals.
Tactically, it makes sense. Britain, one of the three heavy-weight countries of the EU along with Germany and France, was walking on the negotiations. The fact that Cameron's action was a major step toward ending the EU as it currently exists was obvious to all. Let Britain be the bad guy for the moment. Everybody else gets to be "good Europeans" - even though that means obedient subject of Princess Angie von Merkel for the moment.
And some country is going to default on their debt, sooner rather than later, Italy and Greece seemingly to be the mostly likely candidates at present. And they will leave the EU when they do. And then everyone else can start bailing out with a more credible diplomatic claim that it wasn't us that torpedoed the European project.
Not exactly courageous statesmanship, not by a long shot. And it shows a pathetic unwillingness to call Angie out on her abandonment of the democratic fundamentals of the EU. But at least it makes tactical sense.
Somehow, that's a bit more comforting than thinking all of Europe is caught in 1914 mode, driving toward a cliff with the pedal to the medal.
Tags: angela merkel, eu, euro, european union, john kenneth galbraith