Van Rompuy…petrol-can Man
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Traders and markets despair of leadership fiasco
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German Cabinet Minister calls van Rompuy ‘a disaster’
The Slog has been out and about again over the weekend in an effort to gain more real sentiment against which to view increasingly lurid EU headlines. Those normally based in the UK or US may not be au fait with the depth of confusion currently being displayed by the EU’s leaders and bureaucrats, but it is certainly getting through to the people with their hands on the borrowing and investment levers.
“A joke” is how one Madrid-based trader described the five-way battle for supremacy going on between the UK, Germany, France, van Rompuy and Brussels in general towards the end of last week.
“More calming releases will go out tomorrow” said a senior German banking source Sunday, “but nobody believes any of it. Only we and the British are seeing life as it is at the moment.” This source also alleged that his Government close neighbour in Berlin described EU President Herman van Rompuy as ‘a complete disaster who must be stopped’.
FT Deutschland headlined its front page story last Friday, ‘EU prepares for Spanish bankruptcy’, a claim totally corroborated by the Slog’s weekend interviews. Van Rompuy himself gave the game away to some extent by telling the media he “could of course imagine bailouts exceeding the €750 billion already earmarked”.
Meanwhile, his colleagues in Brussels remained adamant that their budget was sacrosanct at the level of a 6% increase, to which the UK Treasury minister Justine Greening responded with a flat refusal to supply any such increase from the UK: “We mean a cash freeze. In cash terms there will be no increase to the EU budget. It is just not tenable for us to increase the EU budget when we are hard at work trying to cut costs. We want the budget to be frozen.”
Angela Merkel has also lobbed in another treaty-change grenade, telling newspapers “I am of the opinion that we need a change of the treaties”, adding, “I believe that such a Treaty change could bring certainty to the markets”. This is the diametric opposite of what van Rompuy thinks, and Friday afternoon he countered Merkel’s assertion with a blunt, “We do not need new institutions, we need action”.
A senior credit management source based in London told The Slog on Saturday that he saw van Rompuy as “a sort of Nazi wearing slippers. Every criticism is deflected with calls to action. There’s no blitzkrieg, but the guy is clearly gathering power and pushing ahead with quiet but firm determination.” The remark was echoed by French press reports that the van Rompuy team wants the obligatory budget surveillance in place by January 1st 2011.
In Paris itself, a well-connected Slog source expressed the view that ‘Sarko’s [President Sarkozy’s] standing is at an all-time low. Van Rompuy is a stooge who has turned into a ‘con’ [arsehole]. Sarkozy doesn’t want Treaty changes, but he doesn’t want a Belgian vrai dur [hard-case] running the show either”.
The Dutch elections should be all the evidence Brussels needs that national feeling everywhere is turning against centralised power in Brussels: the two parties with the largest gains in the Dutch elections, Geert Wilders’ PVV and Mark Rutte’s VVD, are both highly critical of the EU. But from the beginning of the Constitutional process four years ago, both Brussels and national leaders have been showing signs of chronic selective deafness.
European EU administrative waste remains a key issue for many national finance ministers, especially those in the UK. Late last week Britain’s National Audit Office (NAO) made an emphatic plea for EU bureaucrats to get real. A report last Friday blamed the ‘sheer complexity’ of EU funding schemes for ‘billions’ in waste, adding ‘There remain seemingly intractable problems with reducing the high levels of error in some significant areas of EU spending.’ How somebody must have slaved over at the NAO trying to make that conclusion look polite.
The Slog’s going to watch the next developments before framing an opinion piece on this appalling mess. But as our last foray into this showed all too clearly, Brussels is heading for a brick wall in the UK: as we predicted, yesterday Nick Clegg also went on message with the Coalition/Treasury/Hague* line. It’s not playing well in the markets. Stay tuned.
*I must apologise for constantly spelling William Hague’s name Haig. I do know how to spell his name, but in my youth there was a famous Scotch Whisky tagline ‘Don’t be vague, ask for Haig’. I think this is what’s confusing me.
The Slog 