Publications

The Euro cardinals

To the euro system central bankers are what cardinals are for the Vatican: indispensible for the system. They talk in mysterious and coded language. Reports of the Governing Council of the European Central Bank (ECB) are not published, unlike reports of the American Fed and the Bank of Japan. To grasp the policies and motives of the ECB one has to resort to the skills of Vatican Watchers or retired Kremlinologists. Conflicts between cardinals are fought with venom and intrigue, as between central bankers.

There is a cold war raging between the German central bank, the Bundesbank, and the ECB. The core of the conflict is the euro crisis in which, according to the Bundesbank, the ECB is operating outside its legal mandate: price stability. Instead, the ECB gets increasingly involved in operations to save the euro. On July 26, Mario Draghi, President of the ECB, said in London that he will do 'whatever it takes' to save the euro. At the Bundesbank in Frankfurt all alarm bells went off. Jens Weidmann, President of the German central bank, gave a shot across the bow on the website of his bank: 'We are not just one of the 17 central banks. We are the biggest and most important.'

Whatever it takes requires, according to Draghi, massive ECB intervention on the state bond market. In the past the ECB purchased state bonds on the primary market, directly from countries like Greece, Italy and Spain to keep their borrowing costs down. That policy met the wrath of the Bundesbank. This time around, under fierce German pressure, Draghi had to backtrack. On August 2, following the Governing Council of the ECB, Draghi announced that the ECB will intervene on the secondary market of state bonds, only after a member state in trouble has invoked the support of one of the EU rescue funds: the European Financial Stability Mechanism (EFSF) or the European Stability Mechanism (ESM).

The Romney trip

Mitt Romney traveled to traditional U.S. allies, while his candidacy for president is gaining momentum. Three months before the presidential elections, it is a very close race between Romney and Obama according to a Gallup poll. The polling agency Rasmussen, which is normally very reliable, estimates: Obama at 44%, Romney at 47%. Foreign policy is not the main theme of the campaign - the state of the U.S. economy is - but it can certainly have an influence, in particular mounting stress in the euro zone.

A traveling American presidential candidate runs risks. George Romney, Mitt's father, immersed himself into the struggle for the presidential elections of 1968. In the primaries he was up against Richard Nixon. George, governor of Michigan, traveled to Vietnam and said afterwards that he had undergone “brainwashing” at the hands of military leaders. The seasoned Nixon did not pass on the opportunity to use this. Romney was portrayed as a brainwashed candidate with no experience in foreign policy. With Vietnam as the “main dish”, Nixon, the former vice president under President Eisenhower, got the ideal profile.

Mitt knows his family history and is instinctively cautious. Before his trip he said he was not going to criticize Obama. Obama himself did not show the same courtesy to the incumbent President Bush when he traveled to Berlin in 2008, calling himself a “citizens of the world”. Last month I paid a visit to some of Romney’s foreign political advisers, who mainly come from the foreign political establishment of the Republican Party.

Britain Bashing

Bashing the United Kingdom is the most popular parlour game of Brussels. Recently the President of the European Parliament, Jose Manuel Barroso, performed a theatrical act in the European Parliament, accusing the British of 'Schadenfreude' with the demise of the euro. The self-proclaimed pro-European Groups showered him with praise. While Brussels' frustration with the euro crisis grows, so does its aversion to the British. London is becoming the scapegoat of Brussels' failure. But London is in a state of confusion. There is no convincing concept on the future of the UK in the EU. In the meantime, its euro sceptic population is kept at bay with promises of a referendum.

Within the EU, power relations are changing along two fault lines. The first one is a gap between the members of the Eurozone and those who do not (yet) belong to it. Apart from the UK and Denmark, from a legal perspective all EU member states are either in the Eurozone or a candidate for becoming one. Most countries not (yet) in the Eurozone do not seem to be in a hurry to join. For the UK, resisting the euro was a matter of principle, automatically turning London into a target for the European elites who regard the euro as a crowbar to force a political union. The second fault line is a North/South gap within the Eurozone, featuring Germany as the prime northern country versus Southern Europe demanding transfers. The Dutch are in the same boat as Germany. The UK positioned itself outside this fault line, but at the same time its economic recovery is linked to the fate of the euro. London is a global financial centre and the British economy is suffering from the euro crisis. Prime Minister Cameron fears for his re-election because of the stagnating economy.

Plan B for the Eurozone

Tomorrow, European leaders will yet again convene for a summit in Brussels. It will be the summit of blackmail. In the midst of a political vacuum, Greece steers towards bankruptcy. Greek politicians blackmail the EU: 'more money, or else you'll see a chaotic default which triggers the end of the euro'. France blackmails Germany: 'no fiscal pact without a growth pact'. Spain and Italy demand euro bonds guaranteed by the AAA countries. German chancellor Merkel is isolated. All the spend thrift countries are ganging up against Germany (and the Netherlands) hoping thus to force a continuous monetary life support while confining future German (and Dutch) generations to a European Debt Union, to fiscal slavery. It is time for Plan B.

In his book 'War and Peace' the American economist John Maynard Keynes writes about the economic consequences of the Versailles Treaty. He quotes Lenin: 'There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency'. This is precisely what is now happening in the euro zone. Not brought on by Lenin, but by the euro itself.

There have been hidden structural deficiencies in the monetary union from the outset and now they emerge to haunt the EU. The euro has generated divergence because the monetary zone is comprised of too many countries with conflicting views on economic policy and too many wide-ranging monetary traditions. The cheap money flow- Mediterranean Europe borrowing money at German interest rates- increased labour costs, fuelled debts and crippled competitiveness. In addition, it also created a Spanish real estate bubble.

Muslim Brothers: are they really not that bad?

Koert Debeuf, an employee of the European liberals in Cairo, is preparing us for the rule of the Muslim Brotherhood. "They will take the political leadership in the Middle East," he writes in the Flemish weekly magazine Knack. But that's not too bad, because according to him, "we have to compare Muslim Brothers to US Republicans."

Last month I happened to have lunch with members of the Republican National Committee (RNC) in Washington DC and I did not feel like I was sitting with the equivalent of Muslim Brothers. The Republican Party is, like the Democratic Party, an electoral association through which candidates for office - from Governor to President - must fight their battle of ideas in the primaries. Republicans and Democrats do not have an omnipotent party chairman as Belgium does. Registered party members decide. Is religion an exclusive Republican feature? Democratic Conventions also open in prayer. Do only Republicans stand with the US Armed Forces? Marines also carry the American flag into Democratic Conventions. Are Republicans shunning women? I have the impression that a majority of the American conservative movement are women. Look at opinion leaders such as Ann Coulter, Laura Ingraham, Michèle Malkin, Liz Cheney, Bay Buchanan etc. Egyptian Muslim Sisters I have not heard that much about.

There is Always an Alternative

Brussels and the Vatican always offer the same standard answer whenever there is a call for change: TINA (There Is No Alternative). In the European Union this expression is always heard with regards to the Euro. Anyone who sets out to search for alternatives, to reform the Eurozone, is dismissed as a doomsayer. A report titled "The Netherlands & The Euro", requested by opposition party Partij voor de Vrijheid (PVV) and conducted by the British 'Lombard Street Research Institute', disappeared unread into the paper shredder. Even though it was a very thorough study. The Euro-Pope, Herman Van Rompuy, had the study banned before it was even published. Brussels spreads no greater deception than in the debate about the Euro, fueled by endlessly-repeated false arguments:

Argument 1: "The Euro promotes properity in Europe". In the 20 years before the Euro, the Netherlands recorded average growth of 3% annually. In the 10 years since the Euro was introduced, this percentage fell back to 1.25%. Germany saw absolutely no growth between 2002 and 2005. In Italy, growth has stagnated. Sweden, which declined to join the Euro following a referendum, has flourished in the past 10 years.

Argument 2: "Without the euro, the EU will fall apart". In the European Union there are 17 Eurozone countries and 10 EU countries that retained their own currency. The non-Euro countries enjoy good relations with each other and are full members of the internal market. The Eurozone on the other hand has become more of a 'quarrel-zone'. 10 years ago, Germany was the most popular country in Greece. Now it is hated.

The Brussels bunker mentality

Greece has brought doom unto itself, but the European elite have now also begun to derail. The European Union governs its Greek protectorate by dictat. Soon Brussels will demand the return of the colonel's regime to push through the austerity package.

Greece is about to be sacrificed on the altar of European federalism that pursues an ever closer union; an ever closer European entity. The euro serves that purpose as a political tool. With the exceptions of Denmark and the United Kingdom, EU Member States that do not yet belong to the euro zone are automatically candidate members. They are supposed to enter the euro zone. Once in, one cannot get out. This is the European version of the Brezhnev doctrine: in the Soviet Union, joining the 'socialist family' was an irreversible process. The European Union does not have an army (fortunately), but financially blackmails towards the same goal.

Everyone outside Brussels knows that Greece will not recover within the euro zone. The country is collapsing without gaining competitiveness. For tourists Greece remains too expensive. They go to Turkey. Rich Greeks flee, as do young talented Greeks. The country is left with strikers and demonstrators. The weak state cannot be kept in a state of austerity for years on end, and the country remains the festering wound of the euro zone.

The European elite are in a state of denial. An exit from the euro zone is seen as capitulation of European federalism. European integration could become 'reversible'. The European Commission, guardian of this ideal, declared that an 'exit clause' is not consistent with the dogma of the ever closer union. This is remarkable because the Lisbon Treaty contains such a clause for the European Union, designed to blackmail Ireland in case of referenda.

Obama's European Dream

The summer of 2011 displays a remarkable paradox. To escape the debt crisis, European politicians call for a political and fiscal union, the 'United States of Europe', while their model, the United States of America, is facing its biggest debt ever. European federalists state that a functioning monetary union presupposes a political union. The United States, however, show that this is anything but a panacea. On the contrary: by next year, President Barack Obama will have piled more debt on his nation than all his predecessors combined.

During their last summit in Brussels, European leaders decided to let the Greek debt problem 'summernate'. The core problem of the eurozone, the competitiveness gap between the north and the south, keeps on ulcerating. The euro is good for Germany, but too expensive for Greece, Italy, Spain and Portugal. These countries cannot devalue within the eurozone, resulting in stagnation and recession. The European Union tries to reconcile the irreconcilable in the eurozone. As a consequence, crises succeed each other at an increasing pace.

Press release: New study: The European Parliament’s budget can be reduced by 24% annually

The cut would save nearly half a billion euros

The main increase of costs is due to the massive inflation of bureaucracy

Brussels, 12 October 2011 – While nearly all national governments have implemented austerity measures to reduce debt and promote growth, the European Parliament is asking to increase its own budget. A study published today by New Direction – The Foundation for European Reform demonstrates that the parliament’s budget does not only need to be increased but it can be substantially decreased.

The study ‘Ending Excess – Cutting the European Parliament’s costs’ proposes concrete cuts that would reduce the EP budget by some € 400 million per year or approximately 24%. Funds saved should be returned to the exchequers of EU net contributor states.

Launching the study, the president of New Direction Geoffrey Van Orden MEP, MBE commented: “Proposed costs would save nearly half a billion Euros without damaging core functions of the institution.”

According to Van Orden the driving force in cost increases has been the massive inflation of the Parliament’s bureaucracy. Since the enlargement in 2004 the number of staff has grown from 3,946 to 6,245. There are only 4 more MEPs now then in 2004 (increase from 732 to 736). Over 1,000 Parliament officials also disproportionally earn more than the MEPs. By comparison, just 83 staff members of the British House of Commons were paid more than Members of the Parliament.

“If the European Parliament does not cut excess swiftly, it will lose all confidence of voters who have to cut basic needs,” said the vice-president of New Direction Derk Jan Eppink MEP.

Selection of costs and proposed cuts:

The trap of an EU tax

The launch of a grassroots campaign to halt an EU tax.
 

During the European Council on 28 October, Jerzy Buzek, the president of the European Parlia-ment, hoped to sway the argument by saying that a cut in the 2011 EU budget would be “anti-European”. In the Parliament, the label ‘anti-European' is used to stifle criticism. That is harder in the real world.

Buzek's statement was thrown back in his face. Government leaders such as Angela Merkel, David Cameron and Mark Rutte are cutting their national budgets. As Merkel asked, are they anti-German, anti-British, anti-Dutch?

The battle for the 2011 budget is just a prelude to the battle for the multi-annual budget framework (possibly) covering the period 2014-20. The battlelines about how the EU should be financed are similar.

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