During the formal session in Seoul last week of the EU-Korea Interparliamentary Council, the economic situation in the EU itself was on the agenda. Our Chairman, a German EPP MEP called Christian Ehler, set the scene from an EU perspective.
I should mention that Christian is a good guy and an effective Chairman of the delegation, having had a distinguished career before being first elected in 2004. But I am amused at the way he repeatedly describes the EPP as “the conservative group in the parliament” – in contrast to the former Chairman of the EPP, my old friend Hans-Gert Poettering, who angrily rejected both “conservative” and “centre-right”, insisting that the EPP was a centrist group. When I challenged Christian on this (in an amicable way), and reminded him that the British Conservatives had left the EPP to form a Conservative Group, he replied that we were “too far that way”.
I was also a bit concerned by his repeated use of the term “global governance”. I believe he meant no more than international coordination on things like financial regulation, which I wouldn’t oppose in principle, but I told him that to many English ears the term “Global Governance” carried ominous and anti-democratic resonances. He said that he felt our hosts would understand “global governance” better than “international coordination”. Hmmm.
Christian said that the problems (I don’t think he said “euro-crisis”) in southern Europe showed the need for more financial regulation. We had to demand higher capital ratios from the banks. We needed tighter controls on hedge funds, and venture capitalists, and rating agencies. Oh, and we needed to ban “naked short selling”, as Germany had already done. (Naked short selling? What other kind is there? Short selling in a sharp suit?). Of course he never mentioned the two primary causes of the crisis – policy errors and inadequate implementation of existing regulation.
I took the opportunity to offer a slightly nuanced perspective on the crisis from a country that had chosen not to join the euro – and with an expansive gesture I included our Vice Chairman, the excellent euro-sceptic Danish MEP Anna Rosbach, in my comments (Denmark is also outside the euro). I reminded the meeting that Angela Merkel, the German Chancellor, had stated plainly that “the euro faces an existential crisis”. I mentioned the recent study of thirty leading UK economists, the majority of whom believed that the euro would not exist in its present form in five years time (one said it might not last the week).
And I reminded them that respected commentators believe that the EU’s “shock and awe” rescue package might not materialise, and that if it does, the aggressive associated austerity measures demanded from Greece might not be politically deliverable. There was already blood on the streets in Athens. By this point I could almost hear the other MEPs (except Anna) squirming with embarrassment. I expressed my own view that Greece would be forced to restructure its debts (a polite term for default), and might have to quit the euro. I admitted that the UK had debt problems on a comparable scale, but reminded them that our independent currency gave us a huge advantage in the face of this problem.
Responding to the EU side, the Korean answer was very simple. The Koreans had assessed the position (which could of course affect their trade and investments in the EU). They believed that the euro crisis resulted from imbalances and inflexibility within the eurozone, coupled with the inability of the eurozone members to set their monetary policy to address the difficulties.
Of course the Korean analysis is exactly right, and is what we sceptics have been warning of for more than ten years. So if the Koreans can see the obvious, why can’t Brussels?