Eurobloat #0016 • August 2011
August 2011 was the month the eurozone caught fire and Brussels reached, as ever, for the same extinguisher: more Europe. Two heads of government held a summit for seventeen countries, a central bank wrote a sovereign nation its shopping list, and the answer to a debt crisis built on too much central control turned out to be more central control.
Folly of the Month: A true European economic government, drawn up by two people
On 16 August Angela Merkel and Nicolas Sarkozy met in Paris and emerged demanding a true European economic government for the seventeen euro states, to be chaired by the unelected Herman Van Rompuy and to convene at least twice a year. They also called for every member to write a balanced-budget golden rule into its constitution and floated an EU-wide financial transactions tax. The cause of the crisis was a currency union welded together without a treasury, and the proposed remedy was to weld it tighter and have Brussels grade the homework of national parliaments. Nothing says democratic legitimacy like two leaders designing the government of a continent over lunch.
1. The unelected central banker who posted Italy its reform list
On 5 August Jean-Claude Trichet and Mario Draghi sent the Italian government a confidential letter ordering liberalisation of public services, cuts to pensions, a balanced budget by 2013 and privatisations, with ECB bond support quietly conditional on compliance. A central bank with no electoral mandate dictating the labour and pension laws of a sovereign country was sold as technical advice. The letter was meant to stay secret, which is generally how one treats advice one is proud of.
2. The bank that started buying the bonds nobody else wanted
On 7 August the ECB reactivated its Securities Markets Programme and began hoovering up Italian and Spanish government debt, having bought none since March. A treaty that forbade monetary financing of governments was reinterpreted into a treaty that merely frowned upon it. Markets duly calmed, on the understanding that the printing press would always be on standby.
3. When in doubt, ban the people betting against you
From 12 August France, Italy, Spain and Belgium banned short selling of financial stocks, a move blessed by the new pan-European watchdog ESMA. Falling bank shares were blamed not on the banks but on the rumour-mongers, so the cure was to forbid anyone from noticing the problem. The bans dragged on into February 2012 and the banks were no healthier for it.
4. Eurobonds rejected, so naturally a new tax appeared
At the same Paris summit Merkel and Sarkozy firmly rejected jointly issued eurobonds and an expansion of the bailout fund. Having said no to one form of integration, they reached for another and proposed a Tobin-style financial transactions tax instead. The instinct that survives every crisis intact is the one that asks who else can be taxed.
→ mg.co.za
5. Lights out for the sixty-watt bulb
Under the ecodesign rules the clear 60-watt incandescent bulb, the most common one in Europe, was banned from sale from 1 September 2011, the next instalment of a phase-out begun in 2009. Brussels decided that the wattage of the lamp in your own front room was a matter for the Commission. Nothing illuminates the European project like being told which bulb to read by.
6. Denmark dares to check its own border
Denmark spent the summer of 2011 stationing extra customs officers at its crossings with Germany and Sweden, a modest attempt to control who entered the country. Brussels warned that no member may unilaterally guard its own frontier and stay inside Schengen, treating a sovereign border as an act of insubordination. The folly was never the checkpoint. It was a system that treats a nation policing its own door as a treaty violation.
7. Famine in the Horn of Africa, debate in the autumn
As the United Nations declared famine across southern Somalia in early August, the Commission topped up its humanitarian funding for the eleven million people affected. The European Parliament, true to form, scheduled the debate and resolution for its September session, after the summer recess had been observed in full. The hungry, it seems, can wait for the timetable.
8. Galileo, the satellite that keeps eating money
By mid-2011 the EU's flagship Galileo navigation system needed an extra 1.9 billion euros on top of its existing budget just to finish, with completion slipping years past every promise. A project once defended by the Commission against the word stupid had run at least fifty per cent over its estimates. The stars, at least, are free.
→ phys.org
9. Sanctions on Minsk, business as usual everywhere else
The EU spent 2011 layering travel bans and an arms embargo on Belarus over its rigged elections and jailed opponents, a rare moment of principle. It sat awkwardly beside the Union's parallel habit of cutting migration deals with regimes no more savoury, so long as they agreed to hold the borders Brussels would not let members hold themselves. Principle, like everything else, was applied selectively.
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