Is the EU a failed experiment?

[rgbrock1]

With the recent invasion of Europe by "migrants" or "refugees" (neither term which I personally would apply), the bailout of Greece and a few other items of interest, I'm wondering if the EU is a failed experiment and will eventually become dismantled? Discuss.

[Tom Joad]

Yes.

[Pipal Pani]

NO! NON! NEIN!
At least, not yet!

PS. And it's not an experiment as you so very impolitely put it. It's on ongoing project, under construction and in full-swing. Just look at the history of the USA over the past 2 centuries...

[500N]

Absolutely.

I'll re post something I posted in the other thread later but in general, I think this refugee crisis has brought
to a head all the things wrong - dictating to Sovereign nations what they have to do, chopping and changing
rules as the head honchos see fit but criticizing Hungary when it does just two examples.

Trust has been blown away.


Pipal
Under construction and falling down at the same time
You will enjoy the article I post because your beloved President himself said it is failing !

[Pipal Pani]

Well 500N, if or when you ever post this article (or simply take more than 10 seconds reflecting on what you write more generally in replies), I'll be glad to peruse it.

PS. There's a big difference between someone (even a President) saying something along the lines that "the EU is failing to meet the ideals on which it was founded" and your own insinuation that the EU is somehow today a "failed institution". The UK are free to leave the EU whenever it pleases Her Majesty's government, referendum or not. IMHO, the sooner countries like the UK, Hungary and a few other whiners quit, the better it will be for the "core-nations" that remain.

[500N]

Pipal

How can you have a President and leaders of Germany say things about "Rules" - such as criticize Hungary,
and then within a week, throw some of those rules out of the window because they don't fit what they want to do.

[500N]

Pipal, Your thoughts on this ? Published yesterday.

What I was referring to by the President is in bold.

Comments on the rest would be interesting as well.


Europe faces war on two fronts as backlash builds

The European Union is fracturing along multiple lines of cleavage, torn by an emerging Kulturkampf over migrant flows before it has overcome the bitter conflict at the heart of monetary union.

"The bell tolls, the time has come," said Jean-Claude Juncker, the head of the European Commission, in his State of the Union speech.

"We have to look at the huge issues with which the European Union is now confronted. Our Union is not in a good situation," he said.

Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have his fingerprints all over them:

The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis - the "beneficial crisis" as the EMU enthusiasts mischievously supposed.

The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe.

Above all, to destroy trust by overruling the categorical "No" of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras.
Rude shock

One might have thought that the proper conclusion to draw is that the EU can only save itself at this stage by abandoning the Monnet method of treaty-creep and reflexive attempts to force integration beyond proper limits, and retreat instead to the surer ground of bedrock nation states wherever possible.

But no, Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions, or indeed whether or not they think it is highly dangerous given the state of total war that now exists between Western liberal civilisation and Jihadi fundamentalism.

Personally, I think Europe's nations should open their doors to those fleeing war and persecution, with proper screening, in accordance with international treaties on refugees, and in keeping with moral tradition.

Those countries that etched the lines of Sykes-Picot on the map of the Middle East in 1916 as the Ottoman Empire was crumbling, or those that uncorked chaos by toppling nasty but stable regimes in Iraq and Libya, have a special duty of care. But the point is where the final authority lies.

By invoking EU law to impose quotas under pain of sanctions, Brussels has unwisely brought home the reality that states have given up sovereignty over their borders, police and judicial systems, just as they gave up economic sovereignty by joining the euro.

This comes as a rude shock, creating a new East-West rift within European affairs to match the North-South battles over EMU. With certain nuances, the peoples of Hungary, Slovakia, the Czech Republic, Poland and the Baltic states do not accept the legitimacy of the demands being made upon them.

There is a paradox to Europe's crisis. Italy's ex-premier Mario Monti says all three of the immediate dramas eating at Europe involve issues in which people - in a sense - want to cleave more closely to the Union.

For refugees coming in biblical proportions, EU soil is the promised land. The crisis with Russia erupted because Ukraine wanted to join the club. The perennial saga in Greece is dragging on because the Greek people want to stay in the euro.
Structural economic depression

This is true, but it is also meaningless if the project is disintegrating at the core. Marine Le Pen's Front National in France has lost no time seizing on events, insisting that nearly all the refugees are in fact migrants, and claiming for good measure that Germany is letting them in only to work as "economic slaves".

She continues to lead the polls in France, rock solid at 29 per cent in the latest Figaro survey despite expelling her own father from the party in an astonishing spectacle of political patricide.

There is a high chance that her lead will increase as the initial burst of generosity and warm feelings in parts of French society start to fade, and the long slog begins.

The eurozone is still in a structural economic depression. Do not be fooled the short-term cyclical recovery under way. It comes very late in a global expansion that is already long in the tooth, and is too anaemic to stop political revolt festering across much of southern Europe.

The European Central Bank expects growth of 1.4 per cent this year and 1.7 per cent next year. This is thin gruel, given that all the stars are briefly aligned in favour of what should be a roaring boom.

Fiscal policy is neutral after years of pro-cyclical tightening. The ECB is conducting €60 billion a month of quantitative easing. The euro has fallen 24 per cent against the dollar over the past year. Oil prices have dropped by half. Yet even this blitz of stimulus cannot seem to close the output gap.

Teutonic 'morality tale'

The rift between EMU's North and South was on vivid display last weekend at the Ambrosetti forum on Lake Como - a gathering of the EU elites - where a top French official accused the Germans to their faces of conducting "religious war", wrecking monetary union in a Calvinist urge for the moral cleansing of debt.

Even if the Teutonic "morality tale" of what went wrong in EMU were true - and Paris rejects the premise - it is too late to close the 20 per cent to 30 per cent gap in labour competitiveness between the two halves of monetary union purely by forcing retrenchment on the South.

It is precisely such an asymmetric policy that pushed the eurozone into a 1930s contractionary vortex. It has been self-defeating, in any case. The deflationary effects have pushed up debt ratios even faster.

Germany's push for "competitiveness" is a cover for what has in reality been a wage squeeze, stealing a march on other countries within EMU by beggar-thy-neighbour tactics.

The French official said such policies are a zero-sum game in a monetary union. They should not be confused with genuine "productivity" gains, the real measure of economic progress.

Berlin's ideal fix with moral hazard - its insistence that there should be no let up in austerity until reforms are delivered, lest there be back-sliding - flies in the face of the academic literature. Reforms need extra stimulus to cushion the shock.

German officials in the room smiled cherubically, unwilling to concede an inch of ideological ground. Not only are they certain of their moral cause, they also deem EMU policies to be vindicated. Just look at Spain. Shows what a country can do.

The French might retort that Spain has revived its car industry - now working "tres turnos" around the clock, and exporting 85 per cent of output - by luring production away from France to Spanish plants with a 27 per cent cut in wages. This way lies a race to the bottom.
Greece: Nothing is resolved

As for Greece, nothing is resolved. There may or may not be a workable government in Athens after the elections next week. The creditors have yet to clarify what they mean by debt relief, if anything, and the International Monetary Fund refuses to participate in the latest €86bn loan package until they do.

The level of austerity agreed cannot plausibly be achieved. The primary surplus is once again a box to be ticked, a lawyer's concoction. The terms for Greece are even tougher than those rejected by Greek voters in a landslide referendum in July.

"It is impossible to enforce," said Yanis Varoufakis, the former finance minister.

"The IMF does not think it can work, nor does the US Treasury, and I know [German finance minister] Wolfgang Schäuble doesn't think so either because he told me. There is no functioning banking system in Greece. Non-performing loans are 45 per cent, and any recapitalisation will be wasted. In six months we're going to have to go through exactly the same crisis again," he said.

The risk is that the global economy tips into another downturn over the next 18 months, before the eurozone is really back on its feet, with debt ratios much higher than in 2008, unemployment still stuck at almost 11 per cent and investment still 4.5 percentage points of GDP below pre-crisis levels (IMF data)

As the World Bank warned this week, all it will take is a mistake by the US Federal Reserve as it begins to tighten, setting off a chain-reaction through emerging markets.

The European Project has very little economic and political capital left to defend it if anything goes wrong now. As Mr Juncker says, the bell tolls.

[Capetonian]

Fail is hardly a strong enough word.

Two of the central tenets of this experiment, the second (or perhaps third) biggest confidence trick in the history of mankind, that's the Euro and the Schengen agreement, are demonstrably and tangibly failures.

It was clear to anyone with a brain cell that this would be a disaster from the beginning. It's taken a long time for the disaster to strike, but it all seems to be happening now.

[Dushan]

It's been failing since that day in June 1914 when Gavrilo fired the shots..

Just don't ask "Who started WW1?".

[rgbrock1]

It's been failing since that day in June 1914 when Gavrilo fired the shots..

Just don't ask "Who started WW1?".

That's an easy one: John Hill started WWI.

[Pipal Pani]

Pipal, Your thoughts on this ? Published yesterday.

What I was referring to by the President is in bold.

Comments on the rest would be interesting as well.


Europe faces war on two fronts as backlash builds

The European Union is fracturing along multiple lines of cleavage, torn by an emerging Kulturkampf over migrant flows before it has overcome the bitter conflict at the heart of monetary union.

"The bell tolls, the time has come," said Jean-Claude Juncker, the head of the European Commission, in his State of the Union speech.

"We have to look at the huge issues with which the European Union is now confronted. Our Union is not in a good situation," he said.

Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have his fingerprints all over them:

The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis - the "beneficial crisis" as the EMU enthusiasts mischievously supposed. I disagree - EU members had 10 years to meet the requirements of a new common currency. The EU has since fulfilled its expectations as another "world reserve currency" to rival the US$, Yen and £. It was unfortunate that some countries were allowed to join the Eurozone prematurely despite everyone knowing that these countries had not yet properly met the requirements to do so. But as with all "great projects", and understandably so, efforts were made to adhere to a "single-speed" Eurozone instead of a fragmented one. The UK understandably were never enthusiastic about the €, having been unable to remain within the ERM etc. and having to go "cap in hand" to the IMF to boot. The UK might not have been able to survive the 2007/8 financial crisis without an independent £ sterling. Had the UK been part of the Eurozone, it's doubtful that the Euro would have survived rescuing the UK banks...?! It maintained its status as a "world reserve currency" then and continues to do so today (thanks to all that quantitive easing in great part), but will it again, were another financial crisis to befall the City of London in the coming years?

The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe. Most people need reminding that an MP (or whatever the elected national politician you vote for is called in your country is first and foremost, a LAW-MAKER. Noone can argue that some laws are best formulated at a European-level - that doesn't mean that they cannot or do not go through a whole process of consultations amongst governments. And it's the national government that "implements" any EU law in their own country. They can always try to ignore them - France and even Germany are especially proficient in these manoeuveres!

Above all, to destroy trust by overruling the categorical "No" of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras. Treaty changes or new treaties? Referendums? Most people (unless they have a special interest) don't ever take the time to properly study the implications of the "simple" questions. And are therefore often easily manipulated, whether by governments, vested interests or the media etc. And thankfully so. Just look how closely the UK came to losing Scotland...?!
Rude shock

One might have thought that the proper conclusion to draw is that the EU can only save itself at this stage by abandoning the Monnet method of treaty-creep and reflexive attempts to force integration beyond proper limits, and retreat instead to the surer ground of bedrock nation states wherever possible. More likely, the time may soon arrive when the "core-countries" within the EU decide to go it alone...

But no, Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions, or indeed whether or not they think it is highly dangerous given the state of total war that now exists between Western liberal civilisation and Jihadi fundamentalism. I completely disagree. You allow your own questionnable opinions and distrust of Muslims etc. to cloud your judgement. "Total war..."?! Maybe that's what you wish. As for accepting refugees, surely that's part of the EU credo? Much like the USA and France's gift of the Statue of Liberty and "Give me your huddled masses etc." Notwithstanding that there are limits. But that does not reasonably consist of for example the UK agreeing to accept 20,000 Syrian refugees over a period of 5 years". That's just nonsense and wholly shameful under the present circumstances.

Personally, I think Europe's nations should open their doors to those fleeing war and persecution, with proper screening, in accordance with international treaties on refugees, and in keeping with moral tradition. Agre generally. What's "moral tradition"?

Those countries that etched the lines of Sykes-Picot on the map of the Middle East in 1916 as the Ottoman Empire was crumbling, or those that uncorked chaos by toppling nasty but stable regimes in Iraq and Libya, have a special duty of care. But the point is where the final authority lies. And the UK should not be allowed to "land" all the migrants the Royal Navy rescues in the Mediterranean sea, only to "dump" them in Italy. Leaving the Italians (and the rest of the EU) to handle them. Talk about reserving all the "kudos" and good publicity, yet taking no responsibility...?!

By invoking EU law to impose quotas under pain of sanctions, Brussels has unwisely brought home the reality that states have given up sovereignty over their borders, police and judicial systems, just as they gave up economic sovereignty by joining the euro. The EU is still under construction. Like the USA, there must one day be a strong "federal" element to unite the individual states. Give it (the EU) as long as the USA has been around. That's only reasonable. And those who want no more part of the EU: please get lost, the sooner the better IMHO!

This comes as a rude shock, creating a new East-West rift within European affairs to match the North-South battles over EMU. With certain nuances, the peoples of Hungary, Slovakia, the Czech Republic, Poland and the Baltic states do not accept the legitimacy of the demands being made upon them. Well, of course they don't want all these migrants (whether in their own countries, or elsewhere in the EU. Where else would their own "economic refugees" migrate to if equally-qualified Syrians could do their jobs for a little bit cheaper? These countries would probably notice the decrease in repatriated earnings by their citizens working in other parts of the EU...

There is a paradox to Europe's crisis. Italy's ex-premier Mario Monti says all three of the immediate dramas eating at Europe involve issues in which people - in a sense - want to cleave more closely to the Union. I've never understood Italians. They use too much hand-language...!

For refugees coming in biblical proportions, EU soil is the promised land. The crisis with Russia erupted because Ukraine wanted to join the club. The perennial saga in Greece is dragging on because the Greek people want to stay in the euro. Too many fascists in Ukraine IMHO.
Structural economic depression

This is true, but it is also meaningless if the project is disintegrating at the core. Marine Le Pen's Front National in France has lost no time seizing on events, insisting that nearly all the refugees are in fact migrants, and claiming for good measure that Germany is letting them in only to work as "economic slaves".

She continues to lead the polls in France, rock solid at 29 per cent in the latest Figaro survey despite expelling her own father from the party in an astonishing spectacle of political patricide. I've no time for French fascists who've "supposedly turned over a new leaf" so as to become more electable whilst (like Ukraine) their core-supporters remain the bigots they are and always will be.

There is a high chance that her lead will increase as the initial burst of generosity and warm feelings in parts of French society start to fade, and the long slog begins. Time will tell...

The eurozone is still in a structural economic depression. Do not be fooled the short-term cyclical recovery under way. It comes very late in a global expansion that is already long in the tooth, and is too anaemic to stop political revolt festering across much of southern Europe.

The European Central Bank expects growth of 1.4 per cent this year and 1.7 per cent next year. This is thin gruel, given that all the stars are briefly aligned in favour of what should be a roaring boom.

Fiscal policy is neutral after years of pro-cyclical tightening. The ECB is conducting €60 billion a month of quantitative easing. The euro has fallen 24 per cent against the dollar over the past year. Oil prices have dropped by half. Yet even this blitz of stimulus cannot seem to close the output gap. Yeah well, the USA, UK and Japan have embarked on a strategies of "quantitive easing". We'll have to wait and see if China's current hiccups and the downturn in countries supplying them with raw materials worsens. And how everyone copes if or when the shite hits the fan later this year or in 2016.

Teutonic 'morality tale'

The rift between EMU's North and South was on vivid display last weekend at the Ambrosetti forum on Lake Como - a gathering of the EU elites - where a top French official accused the Germans to their faces of conducting "religious war", wrecking monetary union in a Calvinist urge for the moral cleansing of debt.

Even if the Teutonic "morality tale" of what went wrong in EMU were true - and Paris rejects the premise - it is too late to close the 20 per cent to 30 per cent gap in labour competitiveness between the two halves of monetary union purely by forcing retrenchment on the South.

It is precisely such an asymmetric policy that pushed the eurozone into a 1930s contractionary vortex. It has been self-defeating, in any case. The deflationary effects have pushed up debt ratios even faster.

Germany's push for "competitiveness" is a cover for what has in reality been a wage squeeze, stealing a march on other countries within EMU by beggar-thy-neighbour tactics. There is some evidence of this. Germany's "economic prowess" has to date been built-on the employment of much cheaper eastern European workers together with always being able to use the "Made in Germany" fallacy and public misconception, even if the cars or whatever were built elsewhere by (non-Germans). Until 2015, Germany didn't even have a minimum wage. Meaning that German companies could easily employ contract workers from mainly eastern Europe for far less than any other ostensibly "high wage" EU country (such as France or Italy). Paying them €700-800 per month or the equivalent of under €5 per hour in many cases. Available on demand and often sleeping in dormitories. It would be illegal for an employer in France or Italy to employ anyone at less than the minimum wage!

The French official said such policies are a zero-sum game in a monetary union. They should not be confused with genuine "productivity" gains, the real measure of economic progress.

Berlin's ideal fix with moral hazard - its insistence that there should be no let up in austerity until reforms are delivered, lest there be back-sliding - flies in the face of the academic literature. Reforms need extra stimulus to cushion the shock. Of course the Germans insist on austerity. They're merely trying to ensure that the 100s of billions they've lent / invested in other EU countries is repaid. And doesn't become worthless before being repaid in proper DMs (sorry I mean't €s)...?!

German officials in the room smiled cherubically, unwilling to concede an inch of ideological ground. Not only are they certain of their moral cause, they also deem EMU policies to be vindicated. Just look at Spain. Shows what a country can do.

The French might retort that Spain has revived its car industry - now working "tres turnos" around the clock, and exporting 85 per cent of output - by luring production away from France to Spanish plants with a 27 per cent cut in wages. This way lies a race to the bottom.
Greece: Nothing is resolved

As for Greece, nothing is resolved. There may or may not be a workable government in Athens after the elections next week. The creditors have yet to clarify what they mean by debt relief, if anything, and the International Monetary Fund refuses to participate in the latest €86bn loan package until they do.

The level of austerity agreed cannot plausibly be achieved. The primary surplus is once again a box to be ticked, a lawyer's concoction. The terms for Greece are even tougher than those rejected by Greek voters in a landslide referendum in July.

"It is impossible to enforce," said Yanis Varoufakis, the former finance minister.

"The IMF does not think it can work, nor does the US Treasury, and I know [German finance minister] Wolfgang Schäuble doesn't think so either because he told me. There is no functioning banking system in Greece. Non-performing loans are 45 per cent, and any recapitalisation will be wasted. In six months we're going to have to go through exactly the same crisis again," he said.

The risk is that the global economy tips into another downturn over the next 18 months, before the eurozone is really back on its feet, with debt ratios much higher than in 2008, unemployment still stuck at almost 11 per cent and investment still 4.5 percentage points of GDP below pre-crisis levels (IMF data)

As the World Bank warned this week, all it will take is a mistake by the US Federal Reserve as it begins to tighten, setting off a chain-reaction through emerging markets.

The European Project has very little economic and political capital left to defend it if anything goes wrong now. As Mr Juncker says, the bell tolls.

See my responses in red italics above. Apologies for not commenting on all the issues raised. But I'm hungry and should stop here.

[500N]

Pipal

I didn't write that, it was a piece from the Media.

BTW, you talk about French fascists, er, the EU is becoming that way in it's Authoritarian way.

[Pipal Pani]

Pipal

I didn't write that, it was a piece from the Media. I should have expected that...

BTW, you talk about French fascists, er, the EU is becoming that way in it's Authoritarian way.

I'm not going to bother with you anymore. I'm not your personal "sounding board". Or ready and willing to answer your spur-of-the-moment thoughts with serious replies. Find yourself another idiot. Or go pick on John Hill. Good day!

[500N]

Talk about a dummy spit !

BTW, you are not my personal sounding board !


If you simply take more than 10 seconds and actually read what I posted,
you will see it says " Published yesterday" which most intelligent people
would understand it was published in the media.

[West Coast]

The EU has far too many differing priorities to allow for a United States of Europe. Something with less structure would suit Europe better.

[probes]

The UK are free to leave the EU whenever it pleases Her Majesty's government, referendum or not. IMHO, the sooner countries like the UK, Hungary and a few other whiners quit

When Greece was discussed, I understood there's no procedure for this (=leaving)?
Also, I can't quite understand the category "whiners". Germany and Sweden want lots of migrants. That's ok, let them do it. Hungary says they can't do it (mass immigration) - and that's whining? Because they happen to locate in the bottleneck and have to act immediately? Take a look at some data- GDP per capita - fifth lowest.

[500N]

It's whining when those who disagree with the leftist agenda do it.
When the left do it, it's not whining.
Typical hypocrisy.


Everyone talks about Germany, the Nazis, extermination etc. Everyone seems to forget
that is was only 20 years ago that the last mass genocide occurred and IMHO Europe
is heading for another one - just not sure which side will be doing the killing.

[Fox3WheresMyBanana]

EFTA worked, still does.
The EU was bound to fail because of its legal authorities on matters other than trade, and the differing attitudes to "following the rules", especially in the Mediterranean countries.
And yes, I have been saying this since the Maastrict Treaty.

[SOPS]

Spot on 500. The left are so good at shutting down debate, when it does not suit their agenda.

[Tom Joad]

EFTA worked, still does.
The EU was bound to fail because of its legal authorities on matters other than trade, and the differing attitudes to "following the rules", especially in the Mediterranean countries.
And yes, I have been saying this since the Maastrict Treaty.

There are indeed many organisations within the EU that are highly successful and examples of what cooperation can provide. However, I believe the EU was bound to fail due to its inevitable destination. Since the formation of the EEC, full political integration has been the final destination. In many ways it makes sense, but we are simply not ready for that. Without political integration the stress and strain of holding the EU together will begin to show. My objection to the EU, in its current form, is that I believe it undermines the democratic interactions that we should enjoy with our government.