The fallout from last week’s EU Summit rumbles on. Anglo-Gallic name-calling seems to have sunk to new lows amidst threats by the “Anglo-Saxon” ratings agencies to downgrade Eurozone debt in general and France’s in particular. Fitch’s is French-owned, by the way.
Meanwhile the EU machinery cranks on. European Council President Mr Van Rompuy sent the draft fiscal compact treaty to EU leaders on Friday night. He hopes to finalise the treaty by late January for signing in March. Just in case there is the odd mishap en route with individual countries’ ratification procedures, democracy is such a nuisance you know, the treaty will be enforced if a minimum of a crude majority of Eurozone states ratify it. In other words, all will be well if just nine of the EU17 endorse it. The EU hierarchy will then view their work, pronounce it good and declare the euro rescued.
Well, maybe. I would like to know if any of the EU leaders seriously believe that the agreements made at the December Summit, amounting to a rehashed Stability and Growth Pact and a rehashed EFSF, tackle any bit of the Eurozone’s inherent flaws. For truth to tell, the Eurozone crisis is no nearer to resolution than it was before last week’s Summit. As the evidence mounts of the damage being done by the Eurozone crisis to Eurozone economies specifically and to the western world including ourselves, more generally, frustration with the vacillating Eurozone leaders is turning from bemusement to desperation.
The Paris-based OECD recently stated:
“…imbalances within the euro area, which reflect deep-seated fiscal, financial and structural problems, have not been adequately resolved. Above all, confidence has dropped sharply as scepticism has grown that euro area policy makers can deal effectively with the key challenges they face.”
There is, in other words, an increasing belief that today’s Eurozone’s leaders are incapable of sorting out the Eurozone mess. Mme Lagarde, managing director of the IMF and former French Finance Minister, joined in the fray last week. Warning of a 1930s-style depression if the problems of the Eurozone are not dealt with, she made it clear that “…the core of the crisis at the moment…is obviously the European countries and in particular the countries of the Eurozone”. And the Obama administration has been vocal in expressing its concern that, without swift and decisive action from Europe, the region’s debt crisis could damage the fragile US recovery and the president’s re-election efforts. If only there were “swift and decisive action” from Europe.
The Eurozone leaders are under terrific pressure to deliver either the big bazooka of fiscal unification or implement an orderly reconfiguration of the Eurozone. We, the world, are waiting for action. The ball is most definitely in their court.
In an act of hubristic grand-standing the EU leaders waxed lyrical about the non-outcome of the UN climate summit in Durban last weekend. The EU Commission declared “Durban conference delivers breakthrough for climate”. Mind you, our own, rather excitable, Secretary of State for Energy and Climate Change was equally enthusiastic, if not more so.
The Commission announced in self-congratulatory tones:
“…after two weeks of negotiations, the 195 Parties to the UN climate change convention agreed on a roadmap, proposed by the EU, for drawing up a legal framework by 2015 for climate action by all countries. The Durban conference also agreed that there will be a second commitment period of the Kyoto Protocol, made operational the new Green Climate Fund for developing countries and approved a series of measures which build on the progress made at last year’s Cancun conference.”
But truth to tell, whilst the EU committed to further costly reductions in CO2 emissions, the other major emitters including the US, China, India and Russia have kicked any such commitments into the long grass. Yes of course there will probably be some agreement with “legal force” by 2015, to take effect in 2020. But the agreement may or may not place obligations on the big emitters to cut their emissions – probably not. Canada, a fairly significant emitter, announced its formal withdrawal from the 1997 Kyoto Protocol on climate change last week, citing economic cost. Canada is a very sensible country.
The EU’s climate change policy is deeply, obviously and spectacularly flawed. If dangerous global warming is indeed caused by manmade greenhouse gas (GHG) emissions, then the response has to be global. After all, the EU accounts for only 12% of the world’s total, the UK a measly 1½%. So where the EU leads, with the UK as chief scout, other countries must follow in order to achieve a meaningful impact on global manmade GHG emissions. But other countries are not following and will almost certainly not follow. Why should they listen to a declining and dysfunctional Europe which has made mistake after mistake? They see the shambles of the Eurozone, especially when the begging bowls come round, and draw their own conclusions as to the competence and wisdom of the EU’s political leaders. Surely, the EU must start to realise that its clout in these international forums is diminishing. It should start to see itself as others see it.
The Eurozone and the EU’s climate change agenda (regrettably supported by our government) have several features in common. They are both deeply flawed, they don’t and can’t work and they’re horrendously expensive. Politicians of Europe, wake up please, see the damage you’re doing. You are damaging people’s lives. Swallow your pride and do the right thing for the people of Europe. Call time on the Eurozone and call time on pretending to save the planet from “dangerous manmade global warming”.
> From Comment earlier this week, Matthew Sinclair: Dismal Durban