Macron’s victory may create more problems than it solves

Emmanuel Macron campaigned for – and indeed, won – the French Presidential election on an unashamedly pro-EU platform. His victory was greeted with huge sighs of relief across the Continent. Rather ironically, however, his enthusiasm for the Single Currency and indeed the European project as a whole may have the opposite effect, as John Stepek pointed out in a recent edition of Moneyweek magazine.

At the heart of the problem is that when it comes to further integration within the EU and in particular, the single currency area, it is far easier to talk the talk than walk the walk.

A broad range of economists acknowledge that so many economically divergent nations pushing ahead with a single currency in the 1990s was far from ideal. If a monetary union is to work, fiscal and political union, while not prerequisites, certainly reduce the risk of a catastrophic failure. As it currently stands, the Eurozone is far from being an optimal currency area.

This is exactly the line Macron has been taking. In other words, as Stepek puts it, “He’s one of the rare pro-eurozone politicians who’s actually quite honest about the euro and the eurozone. He is calling openly for a much closer Europe. He reckons that Europe needs a common budget, a common banking system – effectively, a full-blown United States of Europe.”

Any French politician who has made such a proposal in the past has been fobbed off by Berlin with the curt instructions to put their own house in order first. Reforms to France’s generous pension arrangements, bloated public sector and short working week have been often proposed by a number of newly-elected Presidents only to be scuppered by tyre-burning, stone-throwing protesters backed by France’s powerful trade unions.

But just suppose Macron succeeds where his predecessors have come to grief. Even a streamlined French economy will take years to converge with Germany’s and then, what about Italy or Greece? Following Macron’s victory, the headline in the Bild newspaper, which Stepek describes as the rough German equivalent of the Sun, was “How expensive will Macron be for us?”

This is not just the heart of the Eurozone’s problem – it highlights a major stumbling block with the whole European project. Germany has been happy to be a net contributor to the EU’s funds via the EU budget. In some ways, it would be very churlish of the Germans to moan about this. Labour market reforms in the first decade of the 21st Century made German businesses more competitive and the single currency also made German goods relatively cheap in other Eurozone countries. Italy and Spain, habitual devaluers before adopting the Euro, have lost this option. Unable to weaken their currency and thus boost their export markets, businesses in these countries have failed to compete with the Germans.

The unemployment figures bear this out. Only 3.9% of working age Germans are out of work and youth unemployment was a mere 6.7% in March. The corresponding figures for Italy are 11.7% and 34.1%. Spain and Greece are even worse, with overall unemployment at 18.8% and 23.2% respectively and more than two out of every five young people out of work in both countries.

Closer fiscal union means that not only would German taxpayers be paying into the EU budget to rebuild the infrastructure of the former Soviet bloc countries, but they would be liable for the social security and pension benefits of unemployed and retired Greeks, Italians and Spaniards. At the same time, a banking union would increase German liabilities if an Italian bank went bust. In short, it would be all pain for the average German (who is doing very nicely out of the Euro) with very little gain.

But surely the gain would be the big step towards full political integration which has always been the goal of the EU project? We are now getting to the heart of a fundamental flaw in the whole federalist vision. The idea of an United States of Europe may have been appealing in the late 1940s when everyone was keen to find a format which would prevent another world war. The problem is that while certain intellectuals, particularly on the political left, have long had an internationalist outlook, ordinary men and women are far more attached to the concept of nationhood and ethnicity, even though they may not even be aware of how deep that attachment runs.

But the subject of fiscal transfers, along with the related issues of benefits and welfare, can be guaranteed to bring such sentiments out into the open. Even in the United States of America, there is considerable resistance in some states to a European-style welfare state – and significantly, the states in question are the most ethnically diverse. It seems to be hard-wired into our nature that we are more willing to make sacrifices for people who are “one of us” than for people we perceive to be different.

A German, whose public sector employees have to work well into their 60s, is therefore unlikely to take kindly to subsidising the pensions of Greek public sector workers, many of whom used to retire in their 50s. But Greek austerity is biting impossibly hard. At our Annual CIB rally, Ambassador Chrysanthopoulos told us that his own pension had been cut from 3,400 euros per month to 1,200. If the recently announced cut of a further eighteen per cent applies to him, he will be down to under 1,000 euros a month – and he reckons himself lucky! So real hatred for Germany is building up in Greece, as is impatience with Greece in Germany. The German people may yet find the price of European empire too high while poorer Greek households on the most basic social security are currently receiving around 8 euros per household (not per person) per day. So starvation stalks the land – all in the name of building a European superstate.

An extreme example? Perhaps, but it illustrates graphically the challenges which Macron’s election has brought to the surface. How deeply does the average German, Greek, Frenchman, Swede, Pole, etc  – as opposed to an intellectual or a politician – really love the EU? If the depth of love of the rank and file isn’t strong enough to transcend ethnic and cultural divisions or to be willing to endure financial deprivation and extreme hunger, the only question which Macron, Merkel or their successors will need to consider is how the whole EU project can be put peacefully to sleep without a total political and economic catastrophe.

Photo by Lorie Shaull

EU unemployment could be higher than the official figures

A study by the European Central Bank has suggested that the real level of unemployment in the European Union may be higher than the official figures.  If the numbers of underemployed and unemployed people in the Eurozone are added together, it apparently amounts to between 15% and 18% of the total workforce.

France and Italy in particular have not seen the slow recovery within the Eurozone translate into reduced levels of unemployment. Bert Colijn, a senior economist at the Dutch bank ING, estimates that in Italy, the total of the underemployed and unemployed may be as high as 30%.

In total, five million jobs have allegedly been created across the EU since the 2008 financial crisis, but many are part-time or temporary. This means that wage growth is pretty anaemic in many EU member states.

This report, if true, paints a very bleak picture indeed for some EU member states, as the official data is pretty grim. The youth unemployment rate in Greece stood at 48% in January. In Spain, it hit 56.1% in April 2013, but by March 2017, it had fallen to 40.5% – still two in five young people. The figures for Italy and France were 34.1% and 23.7% respectively. By contrast, in Germany, the figure was 6.7% and the overall unemployment rate a mere 3.9%.

These figures highlight the flawed nature of the single currency. The Germans insisted on a “strong” €uro as the price for surrendering the Deutschmark. They have ended up gaining a very profitable export market for their goods on their very doorstep. Meanwhile, the Mediterranean countries are suffering.

Given that, on the one hand the current state of affairs is going to continue to keep unemployment high in these countries while on the other, Germany would have considerable say in any moves towards further integration within the Eurozone, the prospects for their struggling neighbours to the south are unlikely to  improve any time soon.

Brussels’ provocations

By Horst Teubert

German business associations are calling on the EU Commission to end its Brexit provocations. A disorderly Brexit would entail enormous costs for the German economy, the President of the German Chambers of Industry and Commerce (DIHK) warned; therefore an amicable Brexit agreement with London must be reached. The Federation of German Industries (BDI) expressed a similar view. The head of the EU’s Commission’s recent audacious financial demands and deliberate indiscretions have stirred massive resentment in the United Kingdom and were rightfully considered an attempt to influence Britain’s upcoming parliamentary elections. Observers attribute these indiscretions to EU Commissioner Jean-Claude Juncker’s German Chief of Staff, Martin Selmayr (CDU), who is currently playing a key role in the Commission’s Brexit negotiations’ preparations. The German Chancellery is now calling for restraint in view of the severe damage a hard Brexit could entail for the German economy.

The Commission’s Indiscretions

German businesses are complaining about the EU Commission’s recent provocations: On the one hand, the deliberate indiscretions concerning confidential talks on April 26 in London between the British Prime Minister, Theresa May, the President of the EU Commission, Jean-Claude Juncker, and their respective closest collaborators in preparation of Brexit negotiations. The alleged contents of the talks were leaked to a German newspaper, which published a detailed report, spiked with assessments, presenting the British government as blind to reality, uncompromising and disunited.[1] Juncker’s statements, reproduced in the report, are rightfully regarded in Britain as an attempt to tarnish Theresa May’s Conservative government and thereby reinforce EU-oriented forces, particularly among the Liberal Democrats and segments of the Labour Party during the election campaign – apparently to no avail. The obvious attempt to interfere in the country’s internal affairs has stirred massive resentment in the United Kingdom. In last week’s local elections in various parts of the country, all pro-EU parties, except the Welsh Plaid Cymru, lost mandates, whereas the conservative party made substantial gains. In spite of the significance of particularities in local elections, this is regarded as an expression of the wide approval for May’s political course.

Berlin’s Special Role

London has taken note of the special role Germany is playing in this affair. The indiscretions were published in a German newspaper and were probably leaked by the German EU official Martin Selmayr, a member of the CDU. Selmayr is Commission President Juncker’s Chief of Staff, and, according to reports, he is closely allied with Chancellery Minister Peter Altmeier. He is considered to be Juncker’s most important prompter, having a “tight grip” on the Commission, according to observers. (german-foreign-policy.com reported.[2]) He also holds a prominent position in the Brexit negotiations: Last October, Juncker mandated him to conduct regular preliminary talks on the Brexit negotiations with London. In the meantime, Selmayr has repeatedly announced that “Brexit will never become a success,”[3] thereby following Berlin’s suggestion that the Brexit could possibly have a deterrent effect on EU critics in other member countries. Selmayr is suspected of having leaked the recent indiscretions, because they contained also those parts of the confidential talks in London, in which only he and Juncker had participated on behalf of the EU. Michel Barnier, the chief Brexit negotiator, and his deputy, Sabine Weyand, joined the talks only later on April 26th. Alongside Selmayr, trade expert Weyand is the second German in a decisive procedural position in the Brexit negotiations.

100 Billion Euros

Alongside this indiscretion, the most recent hike in the amount Brussels is demanding that London pay for its exit from the EU is being met with resentment in Great Britain. Even the 60 billion euros, mentioned a while back must be seen – to put it mildly – as an unrealistically exorbitant starting point for the negotiations. Last week, the commission increased the amount even further, to €100 billion, according to which, two years after its exit, the United Kingdom is to pay, for example, agricultural subsidies for other EU countries, as well as EU administrative costs, alongside co-financing both the European Central Bank (ECB) and the refugee agreement with Turkey. On the other hand, London would not be able to lay any claims to its share of the EU’s assets.[4] Observers suppose that these unorthodox demands have been ultimately raised to increase pressure on London’s government and lower its re-election possibilities in favour of EU-oriented forces – until now, to no avail.

More Strain on Germany

Instead, Brussels’ provocations are now leading to public complaints from the German economy. Britain is its third largest sales market for the highly export-dependent German industry and its second largest foreign investment site. At a time when business with important business partners is suffering – due to sanctions (Russia) or political tensions (Turkey), when trade with its most important ally, the United States, has become unreliable with the recent change of government and its number one sales market – the Euro zone – remains deeply embedded in a crisis, German business associations are adamantly refusing to take on any more risks.[5] “Now, it is important not to smash any more porcelain during the talks,” warns Dieter Kempf, President of the Federation of German Industries (BDI), in reference to Brexit negotiations. “Reason and pragmatism” must be the guidelines for “both” negotiating partners.[6] One should not forget “that the Brexit will come at high costs, also for the German economy,” warned Eric Schweitzer, President of the German Chambers of Industry and Commerce (DIHK). A disorderly Brexit, in which merely WTO standards apply between the EU-27 and Great Britain, trade between Great Britain and the EU would engender trade tariffs of around twelve billion euros. Because of the extensive exports to the United Kingdom, this “would engender an enormous additional strain, also on German enterprises.”[7]

Calls for Restraint

Over the weekend, the first calls for restraint had been heard in Berlin because of complaints from within business circles, and the fact that the EU’s provocations seem to be backfiring in the United Kingdom. Chancellor Angela Merkel made known that she is “upset” about Commission President Juncker, because “his failed Brexit dinner” has only made the climate worse between Brussels and London.[8] The German MEP Ingeborg Grässle (CDU), chair of the European Parliament’s budgetary control committee, criticized Juncker in the name of the European Parliament. “It is time that the EU Commission presents a bill comprehensible for everyone,” she demanded in view of the sum London has to pay for the Brexit. “We want to maintain good relations with the British.” The most recent demands – a good example of the EU Commission’s dealing – are “completely exaggerated.”[9]

The original was published by german-foreign-policy.com and is used with permission

[1] Thomas Gutschker: Das desaströse Brexit-Dinner. www.faz.net 01.05.2017.
[2] See Eine nie dagewesene Machtkonzentration.
[3] Florian Eder, David M. Herszenhorn: Brexit will never be a success: Juncker’s top aide. www.politico.eu 05.05.2017.
[4] Hendrick Kafsack: Ich will mein Geld zurück. Frankfurter Allgemeine Zeitung 04.05.2017.
[5] See A Dangerous Game and Auf brüchigem Boden.
[6] BDI fordert Pragmatismus im Brexit-Poker. www.handelsblatt.com 06.05.2017.
[7] DIHK warnt vor hohen Brexit-Kosten. www.dihk.de 04.05.2017.
[8] Merkel verärgert über Juncker nach Brexit-Dinner. www.spiegel.de 06.05.2017.
[9] Andre Tauber: Wie hoch ist der britische Anteil am EU-Vermögen? www.welt.de 07.05.2017

EU bolshiness has converted a remainer into a leaver!

With thanks to Rev Philip Foster for spotting these two letters in the Daily Telegraph.

Sir,

At the referendum, I voted to remain in the EU. However, after seeing how some of the European leaders and bureaucrats have behaved towards Britain, like petulant children who have had their ball taken away, I am now totally convinced that we should leave the EU.

A J C Gorman, Ickenham, Middlesex

This letter appeared on 3rd May. The previous day, a very interesting letter was printed, written by a German now resident in Switzerland:-

Sir,

Since German unification – about which Margaret Thatcher was rightly very sceptical – the EU has ever more succumbed to the will of a nation that is obsessed with the idea of a Reich. What we are witnessing now is the latest attempt in the form of the German usurpation of an EU that will eventually morph into the Fourth Reich.

For a German of a certain age like myself, this is painful to experience, and one can only hope that the Fourth will last even less time than the Third.

Heinrich Wenzel Randogne, Valais, Switzerland

 

Photo by HonestReporting.com

CIB’s first post-referendum rally

So much has happened since 14th May 2016 when we staged our last rally. On that occasion, our Chairman, Edward Spalton, pointed out that it could be the last rally before we gained our freedom. Forty days later came that historic vote, but there is much to do before we will be totally free of the EU’s clutches. Even so, looking back on last year’s event, it is hard to believe that we are finally on the way out, with a new Prime Minister who has pledged herself to honour the Brexit vote and has already triggered Article 50 of the Lisbon Treaty, thus formally beginning the withdrawal process.

Our first speaker, Patrick O’Flynn MEP, will be one of those who will lose his job when we finally withdraw, but he didn’t seem too perturbed about it. He said that UKIP will be putting country before party and does not intend to field a full slate of candidates in the forthcoming general Election. A distinction will be made between long-standing consistent Brexit supporters, especially if they only held their seats with small majorities, and those he called “five-minute-to-midnight” converts to the Brexit cause. His concluding remarks were particularly well received:- Remainiacs were welcome to campaign to reverse the result, he said, but it would take forty years by which time the EU would no longer be in existence.

The next speaker was retired ambassador Leonidas Chrysanthopoulos, who described in graphic detail the ongoing problems faced by Greece as a result of the EU-imposed austerity package. The Greek sovereign debt crisis began as far back as 2009 and the enforced belt-tightening has ruined the country, with the death rate having increased dramatically. Furthermore, in spite of massive spending cuts, the country’s debt to GDP ratio has got worse. It was 146.2% in 2010 but by 2016, it had risen to 179%. Ambassador Chrysanthopoulos is a member of EPAM, a Greek anti-EU campaign group with whom CIB has had links that go back a number of years.

Based on his own country’s unhappy dealings with the EU in recent years, he advised the UK to walk away from the negotiations  if the EU presents insurmountable obstacles. The timing of his words is remarkable as his compatriot Yanis Varoufakis, the former finance minister, had been extensively quoted by Ambrose Evans-Pritchard in the Daily Telegraph only the previous day warning of the difficulties of negotiating with the EU.

Philip Benwell from the Australian Monarchist League made us all feel very ashamed as he described the sense of betrayal felt in his country when we abandoned our Commonwealth friends to join what was then the European Economic Community. Some of us had not previously realised the economic impact on the agricultural sector in Australia and New Zealand by Edward Heath’s wicked deceit, nor that it was a factor in the rise of republicanism in Australia. Of course, that sector has now recovered but, as Mr Benwell reminded us, the result of our flirtation with Brussels is that Asia and China in particular has replaced the UK as the main trading partner.

There is nonetheless considerable enthusiasm within the Australian government to open trade talks with the UK, but Mr Benwell was looking for one particular gesture of goodwill from the UK government in return. Immigration controls in a post-Brexit UK should no longer group other subjects of Her Majesty as aliens and that we should all share a common immigration channel. His organisation, which has 40,000 members including plenty of young people, has campaigned against this discrimination for some years but has thus far been snubbed by pro-EU civil servants.

After a short break, Luise Hemmer Pihl from the Danish People’s Movement against the EU (Folkebevægelsen mod EU) reminded us that we are not the only country with a long-standing history of opposition to the EU’s encroachment upon the nation state. She mentioned the various referendums in which the Danish people had consistently rejected further integration, including a recent vote to pull out of Europol. Like all our like-minded friends across the water, her organisation was greatly encouraged by the Brexit vote.

The last speaker, John Ashworth from Fishing for Leave, will need no introduction to regular readers of this website. His most recent book, Seizing the Moment, has been published by the Campaign for an Independent Britain. Continuing the theme of how awkward the EU can be as a negotiating partner, he told us how obstructive it was when Greenland voted to leave and only the threat to close its waters to (what were then) EEC vessels forced Brussels to agree a deal.

The film Witness to History concluded the afternoon’s programme. Lasting 35 minutes, it features a fascinating interview with Lord Walsingham, who worked in the Foreign Office when plans for the European Iron and Steel Community were being discussed in 1950. His concerns about the UK signing up to a project which was ultimately designed to weaken our heavy industry, along with his opposition to the denazification policy being pursued by the Americans led him to resign and fight in the Korean war instead.

Before the speakers gave their presentations, one man who has been a consistent opponent of our EU membership ever since being present in the House of Commons in the evening of that fateful vote on the Accession Treaty in 1972 was presented with a silver salver by our Chairman, Edward Spalton. George West, who has been President of the Campaign for an Independent Britain since taking over from Lord Stoddart on his retirement, has decided to stand down.  Readers will, I am sure, wish Mr West all the best for the future and thank him for his contribution to the cause of independence.

If Denmark can opt out of Europol, so can we

Last Saturday, those of us who attended the Campaign for an Independent Britain’s annual were reminded that anti- EU sentiment is still alive and kicking in Denmark. We were privileged to be addressed by Luise Hemmer Pihl from the Danish People’s Movement against the EU, who explained that Denmark too has taken a semi-detached position within the EU and many Danish people have no desire for further integration.

Among the evidence she quoted was Denmark’s withdrawal from Europol. In a referendum in November 2015, the Danes decided to keep their opt-out from EU cooperation on justice and home affairs issues.

As from 1st May, Denmark will no longer be a member of Europol but thanks to a last-minute agreement, the country  will still have access to EU police agency’s databases.

If Denmark, an EU State, can maintain an independent position on justice and home affairs, then the UK, which is leaving the EU, has no reason to stay in Europol or in the European Arrest Warrant scheme. Whatever the result of the next General Election, we will be continuing to campaign that Brexit must mean Brexit in these critical areas.

Photo by @boetter