Barroso: Pathetically eager to defend the indefensible

Commission President José Manuel Barroso
(He’s probably got Christine Lagarde on speed-dial too)

It was Sir Winston Churchill who said “You can always count on the Americans to do the right thing, after they’ve tried everything else”. Today, we might amend the quote.  You can always rely on the EU to try everything else, but to lack the moral courage to do the right thing in the end.

I am thinking, of course, about the €uro, which has been in crisis as long as I can remember.  Last night on BBC World Service I saw that rather fetching “€uro Crisis” logo they trot out several times a week.  It’s getting to be an old friend.

My good friend and colleague Danish MEP Morten Messerschmidt (I’m speaking at his Conference in Copenhagen at the weekend) suggested that the position of EU — and especially German — politicians is “We know how to save the €uro.  We just don’t know how to get re-elected afterwards”.  This gets to the nub of the issue, which is that the only solution that would actually work is wholly unacceptable to German voters.  Although to be fair, I’m not sure that most European politicians have even recognised what would be needed to save the €uro.

For ten years or so, the €uro project (described by Lord Lawson as “The most reckless political adventure of the post-war era”) seemed to be doing well enough, and those of us who had predicted disaster were taunted by the euro luvvies, and could only reply “Wait and see”.  And we waited.  And we saw.  Schadenfreude is an ugly thing, but we are surely entitled to a certain sense of vindication as the €uro disaster unfolds.  But it’s a personal tragedy for millions across southern Europe.

Since the crisis set in, we’ve had banking bail-outs.  We’ve seen national bail-outs and recovery plans.  We’ve seen the IMF turned into a branch office of the ECB.  We’ve seen a series of initiatives, each less successful that the last as the markets come to understand the futility of these gestures.  We’ve seen a series of bail-out funds and “big bazookas”.  The ESM.  The EFSF.  And above all, the German obsession with grinding austerity and seemingly permanent deflation, poverty, hunger and unemployment.  Many economists are now questioning whether permanent fiscal contraction can ever be consistent with economic growth and recovery.

We in Britain have a long experience of running a successful currency union between several disparate countries — England, Wales, Scotland, Northern Ireland.  And the only way to hold such a union together is a system of permanent fiscal transfers from richer to poorer areas.  We call in the Barnett Formula.  This is not rocket science.  As long ago as 1977, the MacDougall Report, commissioned by the European institutions, advised that fiscal transfers of 6 to 8% of European GDP would be needed in the EU to hold a single currency together.  But the politicians simply ignored the advice — and now we see the consequences.

All it takes is for Germany to agree to annual transfers of (say) €1000 billion every year from North to South, and the problem would be solved at a stroke.  Sadly, though, the solution would pose two new problems: economic and democratic.  The economic problem is that northern Europe is already grossly over-taxed, so a major new tax for fiscal transfers would do great damage.  And the democratic problem is simply that German voters won’t pay for it.  Given that the fiscal transfer solution is not available, therefore, the next best thing is an orderly dismantling of the current failing structures.

Last week in Strasbourg, Commission President Barroso reported on the recent European Council meeting.  At one point, turning on Nigel Farage by name, he said “You can’t blame Europe for the economic crisis — you’ve got the same problems in England”.  I think strictly speaking he meant “You can’t blame the €uro”.  But let’s take him at his word.

We can indeed blame Europe.  The €uro crisis has done huge damage to the eurozone.  And given that Europe remains the UK’s largest trading partner, with something like 43% of our exports (albeit declining), clearly the €uro crisis is indeed having a knock-on effect in the UK, and negatively impacting our trade performance.  But of course the EU is doing much broader damage to the UK economy.  Awell-researched recent study by the highly respected economist Tim Congdon puts the total costs of Britain’s EU membership, including regulatory costs, at 10% of GDP. This is a vast burden on a national economy.  No wonder we’re struggling to get out of recession.

Barroso is desperate to blame the banks, the Americans, the Anglo-Saxons — anyone and anything — so long as he doesn’t have to face the reality that the problem is the €uro itself.  Without a lender of last resort, without common debt instruments, without massive fiscal transfers, the €uro cannot survive.  And Brussels dare not recognise the reality.

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5 Responses to Barroso: Pathetically eager to defend the indefensible

  1. maureen gannon says:

    I watched the tirade that was hurled at Cameron and our country by these well suited silk shirted buffoons yesterday on TV,
    Ideology is blind to reality. it matters not that people go hungry commit suicide give their children to churches , what care they for the masses that feed their bloated coffers , and who is this Barroso ? he should be a minion taking orders he has never been elected by any of the citizens he refers to. who is he to insult our PM and country [thats our job] not his, and for his information I am a Subject NOT a citizen, and will never be part of their servile masses.
    Orwell could have written their script.

  2. john macgregor says:

    well said that lady , yes who are they, Barroso/van rumpoy, jumped up little hitlers thats who they are .
    if our PM was not so stupid he could see the same as we do , we are being run by non elected baffoons, they call THE EU .

    as we joined the common market years ago it looked ok , but as time has gone on we have been enveloped into this sham they call the EU .

    ITS TIME EVERY MAN & WOMEN OF THIS COUNTRY TO TELL CAMERON ( WE ALL WANT OUT OF THE EU ) now

  3. Phil J says:

    Surely the only pertinent question now is: ” who is paying and how much are they paying the Pinnochio’d puppet Barosso to keep beating the survival drum of the EU-SS Titanic?”

  4. Wilfred Aspinall says:

    Under the Treaties of the EU every citizen of the Member States is a citizen of the EU. This was one of the compromises that a Conservative government allowed to be adopted even though some of us said it was a really bad idea. We never learn and even now David Cameron is indicating that under his watch the UK will not leave the EU.

    Negotiations to repatriate powers don’t start by your chief negotiator laying our trump card on the table.

    Roger is absolutely right the euro currency cannot survive without fiscal union whereby a central body can transfer funds to economically depressed ares in the EU. The Germans will never agree and we should use our veto to protect our economy.

    Remember most of the member states of the EU in my life time have either been dominated by a dictator or lived under Communism. Those who lived in those times find nothing wrong with unelected leaders setting out policies that they are obliged to follow. Not us in the UK nor do I think young people in the EU as a whole. Watch this space.

    Even now there are German nationals who are saying these constant bail outs are throwing good money at bad and this has to stop.

    Perhaps Germany, Austria, Luxembourg and the Netherlands will eventually recognise the folly of the euro and in order to save their own economy leave the eurozone and leave the rump of this ill fated currency to fend for themselves.

    Wilfred Aspinall
    Former Member
    European Economic and asocial Committee

    • JOHN MACGREGOR says:

      we should use our veto & get the hell out of it , we won the War , so why do we want to be ruled by the bluddy Germans,
      ONLY BECAUSE WE THE BRITISH ARE BRITISH & WANT TO STAY THAT WAY

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