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Tuesday, 27 November 2012

And the band played on… The EU after last Thursday’s disastrous budget meeting

This weekend, I planned to write on the disastrous EU budget meeting of last Thursday, November 22.

I wanted to write a serious article, but with a comical overtone, in which I compared PM David Cameron of the United Kingdom and PM Mark Rutte of The Netherlands with the grumpy old-timers Waldorf and Statler from the Muppet Show. Just like these famous Muppets in their show, Cameron and Rutte belong to the key-members of the EU, but never really feel to be part of it.

Instead, ‘Waldorf’ Cameron, ‘Statler’ Rutte and their henchmen showed at numerous occasions their criticism towards the institute EU and their ‘de facto’ obstruction of arrangements that would really help the members-in-distress of the Euro-zone (hence: the PIIGS) or the EU itself.

Mark Rutte has always been a huge advocate of a balanced budget and in itself, this is a sensible policy. However, Rutte’s poorly devised preference for excess frugality and harsh austerity measures on the civil service, education, healthcare, unemployment and welfare benefits made the economic problems in The Netherlands rather bigger than smaller. Politicians often promise to make more achievements for less money, but the sad reality is that people mostly get less achievements for less money from these politicians.

In the EU, PM Mark Rutte starts to sound like a broken record with his endless calls ‘ad nauseam’ for fiscal austerity of the Euro-zone member states. At the same time, Rutte has obstructed every viable rescue package for Greece and all other countries, which are currently in distress. On top of that, he belongs to the group of countries that doesn’t accept that more EU activities require more budget, whether you like it or not.

Rutte’s rigid, unwise and even hostile policy has changed The Netherlands from one of the most treasured members of the EU into the ‘school brat’ of the club. Although I had good hopes for the new Cabinet and especially the new Finance Minister Jeroen Dijsselbloem, he seems like a carbon copy of Jan Kees de Jager concerning his stance towards Europe; and that is not meant as a compliment.

Just like all other European countries, the United Kingdom has been severely hit by the credit crisis. While the City of London remained arguably the most important financial center of the world and a huge money making machine, the rest of the country (‘the real economy’) suffers from the economic decline.

Until now, the United Kingdom could largely cover up its economic problems by letting the money-printing press run at ‘warpspeed’, using the fact that the Pound Sterling is under total control of the Bank of England, in contrary to the despised euro which is not under control of one government.

However, David Cameron has to deal with a population that has become more and more hostile towards the EU and the Euro-zone, to such a level that leaving the European Union became more than just a remote possibility. 

The British population refuses to be sucked in the whirlpool of rescue packages for Greece and the other PIIGS countries and doesn’t really feel connected with Europe and the European Union in the first place. Although some savvy British experts warned the UK that leaving the EU could have some serious blowback for its economic prosperity, it seems that a machinery has been started that will be very hard to switch off for David Cameron.

A few weeks ago, in a non-decisive but tale-telling vote, Labour and Cameron’s Tories as well, urged PM David Cameron to demand a reduction of 5% in the British contribution to the European Union budget: a de facto ‘mission impossible’. 

Cameron, who very well knew that he couldn’t achieve this goal, has nevertheless threatened to use his veto-weapon again, if the EU would raise its budget for the coming years.

This leaves the EU only two options:

·    Either it accepts a budget at the same level or even lower than currently and it moves on like a lame duck for the coming decade.

·    Or it issues an ultimatum to PM Cameron (and the UK) to get his act together, or run the risk of being kicked out of the EU. People, who think this is a longshot, should consider how much more patience with the UK you can expect from the EU. Just like David Cameron plays for keeps, so does the European Union.

So far about the Waldorf and Statler of the EU, who played their usual role to perfection during last Thursday’s failed EU meeting.

Still, I was dissatisfied with putting the full blame on Waldorf and Statler alone and thus with the theme of this weekend’s article.

The question was whether this EU failure could be fully written at the account of both PM’s?! The answer is unfortunately: ‘No’. Last week’s failure had many mothers and fathers.

In the first place, the timing of the EU’s request for a budget raise, although probably unavoidable from a planning point-of-view, has been miserable.

How can you explain to half a billion voters in Europe that the executive institutes in the EU need substantially more money and budget, while governments and European citizens suffer from economic hardship and a vast array of austerity measures and tax increases?!

Secondly, the executive board of the European Union, the European Commission and the government leaders didn’t try hard enough to abolish the image of the EU as a bureaucratic, money-consuming, indecisive and undemocratic monster that decides for the people, but not with the people. At this moment, the EU is not a democratic institute and it doesn’t seem to become democratic within less than ten years.

The European Parliament is a toothless tiger, while the government leaders, who should in fact represent all European citizens, first represent themselves, than their country and only in the end the rest of the European citizens… a little.

People are not stupid and therefore they smell the lack of democracy and the indecisiveness of the European Union. As these are pessimistic times, the people get disappointed in and alienated by the EU and turn back towards their country and their hometown. The grim outside world begins behind their white picket fence and Greece could have been on Mars, as far as they are concerned. Solidarity?! To hell with it!

In the third place, all countries remain looking at the EU as an “eternal slot machine” that pays back €2 for every euro that is thrown in:

·    The UK and The Netherlands demanded their usual multi-billion euro discounts on contributions to the EU budget.
o    Still, The Netherlands had the nerve to be disappointed that a few Dutch infrastructural projects had been removed from the EU subsidy shortlist.

·    France refused to abolish one cent of agricultural subsidies and contributions, although these subsidies have been used to keep an obsolete agricultural system alive.

·    Germany refused to be the sugar daddy of the whole EU, when push came to shove, although it had arguably profited more from the Euro-zone than any other country in the EU.

·    The southern and eastern European countries didn’t want to abandon the European structure funds that they need in order to rebuild their societies and create more jobs.

·    Almost nobody wanted to pay for a higher EU budget, in spite of the increased number of tasks that the EU institutes have to deal with in the foreseeable future.

Looking at all these demands individually, they all make sense. There is no doubt about that.

The point is, however, that we can’t expect the EU to do more work with less money: especially if we consider that the EU works quite cost-efficient, when compared to the national governments.

Besides that: when everybody wants a bigger slice of the pie, then the pie needs to be bigger. And somebody has to pay for this bigger pie. Nowadays, it seems that everybody wants the bigger pie, but nobody feels responsible to pay for it. That’s just impossible.

This brings us to arguably the most important questions: what should be the future of the EU and who’s going to decide on this?!

Should the EU have a future ahead of being a loosely connected union of economically cooperating countries that help each other when they can, but follow an individual course when they must?

Or should the EU be much more economically, financially, fiscally and politically integrated in the near future, in order to prevent the individual European countries (except Germany) from being ‘ground to dust’  by the must larger Chinese, Indian, Brazilian, Japanese and US economies.

Russia, for instance, has still a very weak economy, but it doesn’t mind that very much. The country sits on some of the world’s largest reserves of oil, gas and many more minerals. If it can’t play the economic game fairly, it doesn’t mind to rig the cards. Doing business with this country on your own is like playing Russian Roulette. You could succeed, but there is a considerable chance that everything goes horribly wrong.

The fact that Europe has become an economic force to be reckoned with can be thanked to that same despised EU. While the UK always takes pride in its special relation with the United States, this relation would not be worth a dime from an economic point-of-view, when there wouldn’t be the EU as a backup.

This brings us to the final question: do we entrust the European citizens with making a final decision on the future of Europe and the European Union? For instance, by having a pan-European referendum on the future of the EU?

When looking at past referendums, held in a.o. The Netherlands and France, this is not an obvious ‘yes’ for most European politicians.

Still, these are the questions that need to be answered very soon in order to prevent from a second disaster during the next EU budget meeting: a disaster that now still seems inevitable.

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