European Crisis, Opportunity or Business as usual?

The political leaders are on their way home.  Overnight discussions, morning photographs and lunchtime press conferences: the ritual of governance in the European Union. A final declaration issued. It falls into the normal trap of countless meetings: a list of things to do, mostly by other people. And of course with one participant refusing to play.

What are the consequences of the summit to save the Euro, or indeed to save Europe (or at least the European Union bit of Europe)?  I see these avenues:

An outpouring of prejudice and stereotypes.  The weekend media (formal and online) will have a field day of jokes about Britain, Europe, Merkel, Sarkozy.  Fog in Channel, Europe cut off;  Auf Wiedersehn England, don’t mention the war, de Gaulle was right.   The clichés will drown you.

But is it enough?  The economists and other soothsayers will look into the tea-leaves of the deal.  Some will say of course, the eternal optimists.  Others will say nothing new, not enough, we are all doomed.  A tweet overnight summed it up:  “It’s like the captain of the Titanic ordering more lifeboats for the return voyage”.  With friends like that…   Is there a deal behind the scenes with the ECB, Lagarde ,Merkel and Sarkozy to fix the markets in the next few weeks?  Watch the arcane mysteries of TARGET2, of CDS, of 2 month, 6 month, 1 year, 5 year, 10 year bonds.  Why did Soros buy EUR2billion of debt last week?

Politicians when they get home will realise just what a headache they have given themselves.  Finance Ministers will struggle to understand their advisers on the details; National bankers will add to their knowledge and confusion. Many heads of government will see two dark shadows: the date of the next election and how to keep their coalition partners in line.  Let alone getting a vote through Parliament.  Who will be Slovakia this time around?   Or for a real fly in the soup: how many times will the Irish have to vote in referenda to come up with the right decision.  All by March of course.

In Brussels the Eurocrats will be hard at work on the detail: where the devil is.  The masters will be at work on by the middle of next week the staff working papers will have everything buttoned down including resolving the intra-DG rivalries.  This time there are two elephants in the room.  The European Parliament.. remember them?  An intergovernmental deal will cut them out in these post Lisbon days expect an eruption.  And somewhere in the deep grass there is a small voice crying out “what about the democratic deficit?”.    Lurking with the EP will be the UK.   You wondered when I’ll get round to Cameron.  His grounds for “veto” were weak.   He clearly decided that keeping happy his own Little Englanders in the Conservative Party (and his party funders) was far more important than the future of the UK or of Europe.  Of course it is useful for Cameron to blame the Eurozone for the failings of the Tory governments economic policies (a line seriously weakened with news that UK exports to the EU broke records in the last few months).  But if the EZ17, with perhaps a few future members, want a new work of working on their currency then so be it.  The real danger is that the UK blocks the use of the European institutions.  That is a deep crisis.

And you and I?  We will continue to suffer austerity, unless in a few successful areas of the EU.  Soon the politicians may start to realise that debt control is not the solution to our problems.  It is as Merkel keeps saying how resources are used.  If the UK has a debt reduction programme surely time to end the nuclear missile waste of money; why is Greece still buying ex French warships to protect itself against a candidate country? Why are semi nationalised banks still operating as if it was cowboy country.. in Germany as well as in UK and Spain.  The indignados, the Occupy and others see that business as usual is not an option.

A fiscal union is a step forward.  Political union, with European democratic control, is the way forward . It will be a leap forward when it drops the fixation with  neo-liberal growth and austerity.