Saturday August 20 2011
You don't need a degree in economics -- in fact you don't even need to be numerate -- to realise that the European Union is making a dog's dinner of the economic crisis.
Ignore the financial elements for a moment, if you will, and instead examine the politics, the human relations, the power plays and the general disarray involved here. None of it is looking good. The EU is facing a major test and it is failing it miserably.
The union's leaders appear to be rolling up in Brussels for top-level meetings every second week. Summit after summit is called where we are promised a major breakthrough.
In the immediate aftermath there is major spin about how decisions of great significance have been taken.
But the markets, with their usual brutal swiftness, recognise this for the pile of crock that it is, and act accordingly.
It's usually the market pressures that have forced the summit to take place in the first place, and since these are never satisfied the next emergency summit is never far away.
You don't have to be a market analyst to realise what is happening here: too much is going on, with far too many players and too many egos, and too many competing national interests. The markets are often accused of being irrational and impossible to satisfy. They are all that and more.
But in the case of how Brussels has been handling matters, they are on the ball in their assessments.
We have the biggest financial crisis ever, and no one is in charge.
The EU is led by politicians who, whether originally supporters of the European project or not, find their backs right up against the wall and are responding by mostly playing to their domestic agenda.
It's an understandable reaction, but even they must see that it is not working and won't work when there is a union of countries involved.
This shouldn't be all that surprising given the circumstances, and the nature of the collective that is the EU. After all, the United States of America is a proper political and financial union but even their politicians ended up staring down the barrel of a gun when it came to the budget deal negotiated earlier this month.
But this week a new level of farce was reached with the EU's latest "response" -- the meeting of German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris.
In essence, the pair of them took the startling decision to remove themselves from the beach in August (actually Merkel was hiking in northern Italy). This fact alone -- European political leaders abandoning their summer holidays -- was intended to impress and show seriousness.
What happened in the markets since that meeting shows that they, and we, might have been better off if they had remained working on their tans.
Their proposals for a closer fiscal union, and stronger rules governing spending and borrowing, make sense. After all, we have the second largest currency in the world but we have nobody really in charge of it, or speaking in one voice concerning it.
If the euro is to survive, there will have to be major changes. No one could argue with that. But the two big players "going off on one" themselves, as it were, was no help to the immediate situation that all euro countries are facing.
Try explaining the need to give more power to Brussels to a public whose scepticism regarding the EU project has reached new lows. The cart and the horse must move together here, and for that to happen we need real political leadership.
What, for example, is the average Irish punter meant to think of the French and Germans reintroducing the whole corporation tax idea. It's less than a month since our triumphant Taoiseach Enda Kenny declared our conflict with the French concerning the issue was over.
"It's over, c'est fini," said Enda on the same night that we got the interest rate cut on our bailout loans. Now we hear those two countries are getting together on it.
This is exactly the sort of move guaranteed to erode EU credibility even further. The big two are calling for a closer union, involving proposals, if extended, that would no doubt necessitate at least one referendum to be held in Ireland.
Declan Ganley et al must be rubbing their hands in glee at the prospect.
This is all the more depressing at a time when we are trying to get our own act together and looking like we are having a measure of success with that.
The EU has played a very large part in rescuing us with their loans.
But being a member of that union at present is like being attached to a runaway train driven by people who don't know what they are doing or where they even hope to end up.
We have no choice at the moment but to watch and wait, and continue our policy of appearing to be the best in a class of supposedly reformed financial delinquents. We are too small a country to do otherwise.
In September 2009 a friend returned from a conference in Amsterdam quoting one of the speakers, Bernard Lietaer, a man who knows a huge amount about money systems.
Almost two years ago he spoke to his audience of how the global economy was then in the eye of the storm -- the calmest part.
Companies failed on the way in, he said, countries would fail on the way out. Wasn't he spot on.
Perhaps the most to hope for now is that the crisis gets worse, and quickly, and gets so bad that a proper Europe-wide solution has to be found.
- Alison O'Connor
Irish Independent
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