By Susan Sachs, Globe and Mail, December 10, 2011
Germany and France, the two biggest economies in the euro zone, were the driving force behind the move for greater EU fiscal regulation.
Just 23 of the 27 EU countries signed on outright to draft a new treaty binding them to a uniform regime of deficit controls and budget regulation. Only one country said no: Britain. Three more say they are open to the idea.
The splintered decision raised the obvious question of whether EU solidarity has been gutted for good.
At one post-summit news conference, a journalist jokingly wondered how many members the EU really has. Jerzy Buzek, the Polish president of the European Parliament, stumbled for an answer. “Certainly one member state wouldn’t agree on further European integration,” he said, but the others are in favour or might be.
“That’s 26 versus one,” said Mr. Buzek, “so we have good results.”
All 17 countries that use the euro currency, signed on outright to draft a new treaty binding them to a uniform regime of deficit limits and budget monitoring.
So did another six countries that were on track to join the euro zone, most of them in Eastern Europe. The Czech Republic and Hungary, where antipathy to euro-meddling is strong, went along reluctantly.
Three others, including economically robust Sweden, which fears contamination from the euro-zone problems, conditionally accepted the fiscal compact although they have no plans to switch to the euro.
Britain, after failing to win an exception for its financial sector, refused to join at all. Prime Minister David Cameron, declaring his country would never adopt the euro, said he could not accept a treaty that might eventually give the EU power to regulate financial services.
The summit agreement also pledged up to €200-million in bilateral loans from EU countries to the International Monetary Fund for propping up the most debt-ridden countries, like Italy, in the euro zone.
And this by Doug Saunders, Globe and Mail, December 10, 2011
But most of all, David Cameron failed. The British Prime Minister will be applauded by his more isolationist backbenchers for his decision to pull out of Friday’s euro-rescue treaty, making Britain probably alone among the 27 European Union countries in refusing to participate in the pooling of resources and common sacrifice necessary to put the continent’s finances back on track.
His withdrawal is a serious blow to Europe, the world’s largest single economy – making a collapse of investor confidence in the continent far more likely, and forcing the bloc into an imposed Franco-German solution rather than the sort of larger arrangement that Britain could have helped organize, if it had been constructive instead of destructive.
This is not a localized matter: All major economies, including Canada’s, are highly exposed to the euro; a fall could collapse banks in North America, too. This was the worst imaginable moment for nationalist isolation. Yet, that was what we got.
So it’s almost certainly a disaster for Britain. It’s hard to imagine a scenario where, in the wake of a 26-country agreement to create a fiscal and financial regulatory union with one dissenter, Britain doesn’t end up more isolated from Europe.
While Mr. Cameron’s Euro-skeptic MPs argue that Britain should withdraw into a trade-only relationship with Europe along the lines of Norway or Switzerland, they don’t understand: Britain’s trade ties with the continent are built on six decades of common laws, standards and regulations, all of which are now jeopardized. The British exemption could only result in less trade, not more.
The stakes are huge. This is a country, remember, whose annual trade with its 26 EU neighbours is between £140-billion and £185-billion, somewhere between 50 per cent and 60 per cent of all imports and exports. By comparison, it does £33.5-billion in business with the United States (15 per cent), £5.1-billion with China (2.3 per cent) and £3.6-billion with Canada (1.6 per cent).
The crippling of that relationship – the rejection of a country of 60 million by a continent of 500 million – would be a noticeable loss for Europe’s exporters, but a near total one for Britain’s. As every British prime minister learns within days of taking office, almost everything depends on good relations with the European neighbours.
Within Britain, Mr. Cameron will get a warm response: Europe is unpopular with voters, and there’s constant talk of Mr. Cameron’s facing a challenge from his party’s anti-Europe starboard flank. That’s pretty implausible. While many Tory MPs call themselves Euro-skeptics (and who, these days, isn’t somewhat skeptical about the euro?), the caucus of MPs that actually wants Britain to pull out of the EU, the “Better Off Out” group, has only 10 members. Let’s presume there’s a similar number hiding in the closet. In a party with 306 seats, that’s hardly a challenge.
The idea that this was necessary to protect the City of London from European regulations also holds no water. The threats will be worse with Britain outside, as it won’t be able to veto them (and they can still be imposed).
The threat of an emergency financial services tax imposed by the EU was also non-existent: Britain already has such a tax, the only one in Europe (its stamp duty), and it hasn’t prevented the Square Mile from becoming the world’s premier trading destination.
Reports suggest Mr. Cameron had genuinely wanted a 27-country pact but froze at the prospect of facing voters with an agreement that didn’t offer exemptions to Britain. His country has always been the European exception, ever since Margaret Thatcher negotiated lower EU membership fees in 1984. In this case, Mr. Cameron knew full well he was trading a momentary political gain for a long-term loss.
“I think I did the right thing for Britain,” Mr. Cameron told the BBC on Friday, claiming that Britain could take or leave pieces of the EU – a cafeteria common market. No serious observer believed him. Nick Clegg, the Liberal Democrat Deputy Prime Minister, certainly didn’t: “Any Euro-skeptic who might be rubbing their hands in glee about the outcome of the summit should be careful for what they wish for.”
What is especially distressing, to this observer, is the reluctance to interfere with the Financial Services sector of the economy on both sides of the Atlantic.
In the U.S. legislators seem to be virtually "in bed" with the financial services sector, bailing out large financial service companies that sold bundles of bogus mortgages to investors around the world, thereby seriously disabling the world's fragile economy, still strugging to adapt to the vagaries of globalization. Subsequently, there have been no prosecutions, no arrests and no court hearings for those responsible. Meanwhile, the Republicans and Tea Partiers in Congress continue to block any attempt to remove the Bush tax cuts for the rich, while also taking a hands-off approach to serious financial regulations. They are even withholding approval for the White House nominee to head the Consumer Protection Bureau that seeks some leverage for ordinary Americans.
Now we learn that David Cameron, Prime Minister of Great Britain (however ironic that name has now become), has withdrawn from the new EU negotiations which will require member countries to limit their debt and deficit spending, in a continental approach to the problem, following the recent near collapse of more than one member country...Greece, Italy, potentially Portugal, Ireland, and some even suspect Great Britain herself.
Are we witnessing the capitulation of governments to the financial services sector's power and influence over their "political puppets"? Is this another indication that politicians are afraid to "bite the hand that feeds them"?
Do we have an emasculation of the "truth-to-power" axiom on which all democracies depend?
When presidents, prime ministers and chief executives of governments bow to the will of the financial services sector, who is in charge of the hen-house?
If the large economies of the western world are now under the thumb of right-wing politicians and their financial services sector cheque-writing backers, leaving the latter controlling the political actors, then what hope is there for the 99% who do not belong to the world's power cabal?
Fortunately, both Merkel and Sarkozy are trying to provide leadership, but without Cameron and the UK on side, their hands are tied behind their backs. Obama has tried on several occasions, but his hands, too, are in hand-cuffs bearing Tea Party monikers, behind his back.
In Canada, where a right-wing conservative government has no effective opposition, except one that rants and raves loudly, without holding enough votes to restrain government stupidity, there is no Merkel and no Sarkozy.
And then behind the financial services sector, looming with their "bond ratings" like a piano examiner waiting to pounce on tiny children who did not practice enough, Standard and Poors bond raters salivate to bring a tripple A rating down to a Double A or even lower.
Is the world now beholden to both the financial services behemoths, and their libertarian deregulation-fighters, with their impotent political Charlie McCarthy's and their script-writing Standard and Poors?
The reason for the question is that at the core of this industry is a single human motivation: GREED!
And contrary to the words spoken by Michael Douglas in the movie Wall Street, we do not agree that "Greed is good!"
When personal self-interest trumps the good of a nation, or in this case the European Union, or the United States, or Canada, then hope for equality of opportunity for all flies out the window, like the moths that have accumulated over the winter, when windows are opened first in Spring.
In 1912, Teddy Roosevelt told us the same story in the speech in Iowa.
This week, Obama told us the same story in the same small town in Iowa.
In Brussels, by his intransigence, David Cameron beamed another light on the same story.
A week or two ago, the former leader of the Liberal Party of Canada, Michael Ignatieff, repeated the same story, on a TVO interview on Big Ideas.
We all know the truth of the story. And we all watch, virtually in silent disgust, powerless, as leaders trample on the larger truth, missing in our political discourse.
Reminds one of the completely emasculated Durban Conference this week on the Environment....
Powerless leaders, frightened leaders, emasculated leaders....fiddling while Rome and many other cities "burn"...