Ok, so I do have something to say about the stability pact.
The pact was so flawed that this may have been preferable to actually doing what was supposed to be done, but that does not mean this new “pretend it ‘s raining” policy is anything short of terrible. This is astunning failure of political leadership and the citizens of the Eurozone countries should be outraged.
First of all, let me say I’m flattered to be invited to guest-blog on Fistful of Euros, which I’ve long thought was the coolest name of any blog ever.
I’d hazard a guess at two big reasons nobody has much to say about the security pact unraveling: First, there’s simply not that much to say at this moment beyond the bare facts of the case (although neither The Economist nor US bloggers Daniel Drezdner and Atrios have really captured the outrage that European editorialists have spewed at Paris and Berlin over this). The message from Germany and France is pretty clear: Do as we say, not as we do. End of story.
Second, this is a pretty difficult topic for a layperson (such as myself) to get his head around. Hence the usage of compact but vague phrases like “Europe Rips Up the Rulebook,” the headline given my recent press review on Slate covering this topic. (Feel free to read that if you want a review of the basic facts of the case from a non-economists’ perspective, plus a dose of what the European papers have said about the topic; but naturally I can’t compete with The Economist‘s coverage.)
So they tore up the rulebook. Seems a little back-to-basics is in order here: What was the rulebook for anyway? And what does this mean for the future of the euro?
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No one here have said anything about the recent unraveling of the stability pact. That felt after a little weird after seeing that US bloggers Daniel Drezner and Atrios, of all people, have both commented on the issue.
(Edward did write about it on Bonobo Land though)
Drezner links to this article from the Economist, which is a must-read, it says just about everything I might have said.
Not long ago, I asked Where’s Publius?
Today’s Frankfurter Allgemenine reports:
The European Convention Talks Back
Appeal to the Intergovernmental Conference
Modeled on the “Federalist Papers”
Call by 63 Parliament Members
Brussels, Nov 13. Four months after the end of the EU Reform Convention, members of the body that was entrusted with working out a draft constitution are attempting to exercise greater influence on the work of the intergovernmental conference (IGC). Herald of probably increasing common efforts is an appeal to the Italian presidency presented on Thursday by 63 parliamentarians from various EU countries and parties. In addition, MEPs reported on Thursday that MPs from member states and MEPs are planning an appeal for retaining as much of the Convention’s draft as possible. The effort is planned for the week preceding December 12-13, dates expected to bring a compromise in the IGC’s work at a summit in Brussels. Part of the push has been undertaken by Convention president Val?ry Giscard d’Estaing and his deputies Jean-Luc Dehaene and Giuliano Amato. It will have the title “The Papers of the European Convention” and take as its model the Federalist Papers of 1788. At that time, the “father or the American constitution,” James Madison wrote essays together with Alexander Hamilton and John Jay in an effort to influence the debate over the draft constitution that had been presented in Philadelphia the year before.
Not a bad idea.
File this one under People Who Ought to Know Better. Odder than the fact of the argument is the frequency with which I see it.
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I don’t know why I hadn’t seen it before, but it was only while talking with a colleague this afternoon, and being asked what I thought about the unwillingness of the candidate countries to reform that it came to me: with all this coming and going on the Pact, what kind of message is being sent to the new members? Obviously if you give the impression that agreements are not to be complied with, you can get reactions you aren’t expecting, and that you don’t like. The Financial Times article you can find below, begins to give an idea of the size of the looming problem, whilst this one informs us that Standard and Poor’s has just downgraded the Polish currency rating because of concerns about deficits and rapidly growing government debt.
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I found this article from Dagens Nyheter (temporary link) very interesting.
“‘If anything, I think we work more effectively now than we did before, even though we’re almost twice as many’ an EU diplomat tells Dagens Nyheter.
‘People stop to think one more time, if what they’re going to say really adds something new or is just a way of [looking good?] in front of their colleagues, says an experienced negotiator.
Since the new arrivals signed the accession treaty in Athens this April they get to participate in the Council of Ministers as observers. They attend all meetings, on all levels. They have access to all documents. They have complete freedom of expression, and may also bring up issues they want to dicuss on their own. In short, they have everything except the right to vote.
The thinking is to give them the possibility to learn what’s on the agenda, and how things are done.
[..]
‘In the beginning it was the same old countries that dominated and the newbies were mostly quiet. But now they’re picking up steam. In questions of importance to them they’re active, and both can and want to influence decisions, even if they can’t be a part in making them.’
The Poles are among those that most often speak up. They’re big, they’re many and they’re hard bargainers. Representatives of the Baltic countries are also fairly active, as well as Hungarians and Czechs.
[..]
With 25 [delegations] around the table, everyone realizes that they can’t be too longwinded. Even if every country only would speak for three minutes there would be an hour and a half of debating. Just to do one item on the agenda.
Negotiations are therefore more to the point. The elaborate flowery language has been cut down, and silence has increasingly come to signal agreement. This is true on all levels, from the working groups to the ambassador’s preparatory meetings to the ministers’ Council meetings.”
(Crap translation by me)
This suggests that people like for instance Chris Bertram were wrong:
“But getting back to enlargement …. My take on this, for what it’s worth, is that it gives the UK everything that lukewarm Europhiles/moderate Eurosceptics have always wanted. EU will now be so large and will vary so much in cultural and economic conditions that a thoroughgoing federalist project is dead in the water. The centre – Brussels and Strasbourg – will be fatally weakened vis-?-vis the component parts of the union because twenty-five (or more) states will find it almost impossible to reach agreement on anything but the most anodyne proposals.”
And that I was right.
And hey, seems I was right about this too. DN writes: “How the countries line up depends more on the issue and where one can get support than old bonds and allegniances.”
Update: Slightly edited.
“When the proposed Constitution issued from the Constitutional Convention at Philadelphia on September 17, 1787, Alexander Hamilton foresaw that opposition to it would be great, and though he thought the document would probably be adopted he couldn’t be sure. Three members of the Convention, all of them prominent, had refused to sign it, and others, including Hamilton’s two fellow delegates from New York, had left before the end of its deliberations. Indeed, the form in which the Constitution was approved gave it the appearance of unanimity: the delegates subscribed to it in the name of their states. This covered over defections and absences; for example, Hamilton alone signed for New York, and at least one delegate would have been unwilling to subscribe in his own name.”
So begins my edition of The Federalist, the collection of 85 essays written by Hamilton, James Madison and John Jay under the name Publius. (The authors went on to become the new nation’s first Secretary of the Treasury, fourth President and first Chief Justice, respectively.) The essays were written at a speed that would put many bloggers to shame and distributed by the most advanced technology of the time. They address the toughest criticisms leveled at the proposed Constitution, from the charges that a unitary government would trample citizens’ rights and well-established prerogatives to the supremacy of federal law to the separation and blending of powers.
The title of the final essay sums up the argument: “Not perfect but good. Should adopt and seek to amend.”
Europe has had its Convention, and Europe’s governments are now having their Conference. Soon, there will be referenda, with high stakes and uncertain outcomes.
Where’s Publius?
My Bulgarian ‘assistant’ still won’t let me forget Chirac’s last faux pas: that the biggest favour the candidate countries could do for themselves was to stay quiet. It looks like we’re going down the same road one more time. I really don’t think it is possible to effectively ‘buy’ opinions. I mean in the short term it may work as a tactic, but long term this will lead to more, not less, resentment and tension. I already feel that the Swedish euro vote was more a political statement than an economic one. The Netherlands are getting louder and louder in their denunciation of stability pact ‘flexibility’, and now the aid-recipients are effectively being told to put up and shut up. This is not a very auspicious start for a new constitution, nor does it offer a very encouraging insight into how it might work.
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Gregg Easterbrook of the New Republic writes:
MOSCOW LOST THE COLD WAR, BUT DREAMS OF WINNING THE GLOBAL WARMING WAR: Why won’t Russia ratify the Kyoto Treaty? It would seem very much in Moscow’s interest to do so.
The United States has dropped out of Kyoto negotiations, but most other Western nations remain in. Russia now holds the swing vote on whether Kyoto goes into effect for most Western nations except the United States. If Kyoto actually did take effect, requiring most Western nations to make dramatic reductions in greenhouse gases, Europe would inevitably end up involved in “carbon trading” with Moscow. The European Union would invest in modernization of Russian industry, in order to reduce Russian greenhouse-gas emissions; then Europe would buy the reduction credits so created. The European Union also would reduce its use of greenhouse-offender coal, substituting lower-carbon natural gas from Russia. Thus it seems Moscow and its industries would come out a winner under a Kyoto regime. Yet the Duma has been resisting ratification of Kyoto for two years, and yesterday, Vladimir Putin said he is also opposed.
Possible reason for Russian resistance–Moscow wants global warming! Much of the world might suffer, but the freezing former Soviet states might be better off. The agricultural region of Russia might expand significantly, while Siberia became reasonably habitable. If Siberia and other ice regions became reasonably habitable, global warming would effectively be expanding Russian territory by climate change, not war. And what government doesn’t want more territory?
Sidelight: Why does Germany favor the Kyoto Treaty? Not so much for greenhouse reasons but so that Berlin can shut down the country’s subsidized, politically powerful coal-mining industry. German leaders have wanted for decades to cut subsidies for coal production–even the presumably pro-labor current government wants this–because coal mined in Germany costs more than twice the world price, mainly owing to featherbedded work rules. Every move to reign in the German coal industry has been greeted by public howls. But if Berlin could blame a coal shut-down on an international obligation, and polls show the Kyoto accord is very popular among Germans, the equation would change.
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The sidelight is even odder and even more interesting. Hmm.