It is no longer possible to deny the Grossdeutschland “business friendly” agenda in Europe
Although the process has gone largely (and very likely deliberately) ignored by the old Robber-Baron media, in a series of moves over the last few days, the German Federal Republic has given out the message loud and clear: the eurozone project will be pursued, but not in a way that even remotely risks German solvency. The Bankfurters, it seems to me, have won…as I always suspected they would. Mario Draghi – for all his initial political skills in the ECB job – now looks cornered. The Greeks must accept that they’ll be hung out to dry….and the Schäuble dream of a Germanised ‘business friendly’ Europe is on the verge of coming true.
In Germany’s emergent post-election CDU/CSU/SPD Grand Coalition, red lines have been clearly agreed on banking union. Alongside this sits a united decision to reject the proposals of the European Commission and ECB on banking union, and to anchor the resolution fund to the Ecofin on a purely inter-governmental basis. Several sources involved in the coalition talks have confirmed the story, which ran at Reuters. The 3 major German Parties also agreed that no funds from the ESM should be made directly available for the recapitalisation of eurobanks.
Wolfgang Schäuble will present the proposals to the Ecofin on Tuesday, but this is essentially a German diktat. All told, it trades the CDU’s wish not to involve the Commission in the decision-making with the SPD’s wish not to involve the ESM in the funding. It is win-win for Germany.
Before this decision, however, it was obvious that Draghi’s rate cut had been a bridge too far for Frankfurt and Berlin. Weidemann voted strongly against the cut. And although the ECB is becoming openly critical of Germany’s position on banking union – and will be incandescent with rage at Schäuble’s deal with the SPD – its previous insistence that “Coordination between national resolution systems has not proved sufficient…By pooling resources, the (fund) will be able to protect taxpayers more effectively than under national arrangements, and thus break the adverse nexus between banks and their respective sovereigns” now enjoys dead duck status.
A trusted US source for The Slog comments, “Without a common backstop – and also without an implicit fiscal backstop once the resolution fund is complete – it would be dishonest to talk about banking union. Common resolution and deposit insurance is the essence. Without it, it degenerates into a bureaucratic exercise of job reshufflings”.
Berlin has made it clear: ‘it’s our ball, and if you don’t use our rules, we’re taking it home’.
But the final move by Berlin may prove to be the most decisive: the increased constitutional role in the German constitutions for the referendums – especially on EU issues. The dominant eurozone member State subjecting the banking union process of eurozone integration to a referendum is bound to introduce huge uncertainty. The further development of the eurozone must surely involve important treaty changes in the coming years – and after even a year or two, it will become obvious that Germany will be dictating the terms….as it did from 1938 onwards under Hitler.
I was amazed just over a fortnight ago when Olli Rehn’s blithe admission that Greece would get no debt relief before May 2014 went almost unnoticed in the Western media. But this too was a sign of the EC basically doing Berlin’s bidding. Effectively, that decision was and is a death sentence for the Greeks: without that interim help, they must default.
Germany has really done nothing less than force the rest of Europe to sue for peace. I got it wrong in 2012 when I wrote that Francois Hollande’s election shifted the EU balance of power away from Germany. This was partly because I did not have the remotest inkling of just how ineffectually hopeless Hollande would be. The degree of this can be measured by the increasing likelihood that France could have a Front Nationale President within three years. But I also must confess to having underestimated the talent that Wheelchair Wolfie has for regrouping ready for counter-attack.
The one thing I did nail however (when most didn’t) was the unstoppable power of the Deutschland über Alles Bankfurters as an institutionalised power base in Germany. Those who laughed at the Bankfurt Maulwurf (and often claimed I’d invented the bloke) have been proved spectacularly wrong. He may have decided that I am a dangerous radical these days, but everything he told me about German financial culture was spot on. I raise a glass of schnapps to him tonight.
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It would be hard to overestimate the geopolitical and diplomatic importance of these moves. Although I had always thought (as did most informed observers) that a different, more aggressively decisive Germany would emerge from the Bundesrepublik elections, I don’t believe anyone knew for sure what the exact shape of that change would be. Now I think it is much clearer: there is only one group of people the Germans trust to run Europe, and that is the Germans. What we can see here is a remarkable level of political consensus in Germany, and it is saying this: under the guise of increased democracy, we will hold everything up until we hold every one of the purse strings. And we alone will decide who is good, and who must be banished to the naughty step.
This New Order in Europe will not, of course, be democratic in any real sense. The fulcrum of elected power will shift from Brussels to Berlin, and the EC will meekly assume its new role: that of spinning German foreign policy as being European Union policy. But this German policy will itself be answerable to the same econo-financial desires that every other Sovereign State in the West has to obey. We are heading for the application to Europe of that awesome and deadly trend being whipped up by Camerlot in Britain: a more “business-friendly” environment.
If you think this to be a cavalier judgement, then kop a load of this: in an unprecedented and united call published by the Sunday Times in the UK, the front page of Dagens Industri in Sweden and Frankfurter Allgemeine Zeitung in Germany, the entrepreneurs and business leaders – many of whom have never spoken out in the Europe debate before – urged policymakers to construct a more business-friendly, internationally competitive and democratically accountable Europe. Cutting across different sectors and countries, the initiative’s supporters have helped lead companies employing close to a million people across Europe and the world.
Signatories to the initiative – who have all signed in a personal capacity – include Karl-Johan Persson, the CEO of Swedish retail giant H&M, Dr. h.c. August Oetker, Chairman of renowned German food producer, Dr. Oetker, and head of one of Europe’s largest family-owned businesses, Douglas Flint CBE, Group Chairman of HSBC Holdings, Joanna Shields, Chief Executive of Tech City, and Sir John Peace, Chairman of Standard Chartered Bank.
Open Europe Advisory Council Member Maria Borelius is quoted in the Sunday Times saying “This is the first serious attempt to reach across the Channel and engage like-minded entrepreneurs and business leaders across Europe to form a coalition for change in the EU – it is a definite sign of the growing momentum for EU reform across the continent. If the UK is going to achieve meaningful reform of the EU, the case must be made across Europe and not simply argued out within the UK.” The letter is also cited by Die Welt and City AM.
As the Slogger who pointed this out to me pointedly comments, “Does anyone seriously believe such “signatories” as the CEOs of HSBC or Standard Chartered really give a toss about democracy?”
Quite: of course they don’t. In fact, I would go further: when a Newscorp Sunday paper run by a monopolist psychopath joins forces with FAZ (the German financial powerful’s inhouse magazine) to get something moving, you know that citizen liberties and genuine democracy stand ready to be annihilated.
Does the team around (and behind) David Cameron worry about this? No, not a chance: they know all about it. They’re in on it. This sort of crap is music to the ears of Fallon, Hunts, Schapps, Osborne and all the other cretins who think that the pursuit of money and power is infinitely more important and relevant to our species than the re-civilisation of society.
This has not been a good day for life-balanced freedom and socio-economic mutuality. The Bad Hats have their ducks in a row. The Left is dumbstruck, and the blogosphere is splintered every which way. I take but one small solace from all this: is is very often true in history that, on the eve of what appears to be unassailable victory, the uncontrolled hubris of power-mongers trips them up. We shall see.
The Slog 