Tag Archives: Economics

UK trade, the EU, and the Rotterdam Effect

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XKCD: Duty CallsAs many of you know, I spend far too much of my (increasingly limited) spare time arguing with eurosceptics on the internet. Some are professional eurosceptics (recent discussions have included ones with Declan Ganley, founder of anti-Lisbon Treaty party Libertas, Nigel Farage of UKIP, and someone from American neocon thinktank the Heritage Foundation), others merely passing concerned citizens.

Most of the time, I can point them to a post on this blog where I’ve already covered their concerns in detail. Sometimes I haven’t covered it yet. In a recent discussion with @ArnieEtc, I asked for suggestions of pro-EU myths. He responded with a classic eurosceptic complaint about a perennial pro-EU claim – one that I frequently make myself, but one which I’ve never explored or justified in any detail:

@ArnieEtc, 3rd Nov 2010: “The favourite [pro-EU myth] of mine is where europhiles insist that 70% of our trade is with the EU, so it’d be suicide to leave. This is a myth for two reasons – firstly, you can have free trade with the EU without being a member (EEA). But more fundamentally, it’s a deliberate manipulation of statistics – a lot of our world wide trade goes via Holland, as you get very good shipping links there. But because that involves goods being moved from the UK, to Holland (even though they only stay there for a few days), some pro-EU commentators use that to bulk up EU trade figures, and make it look like there’s more genuine intra-EU trade than there really is.”

I’ll come back to the EEA in another post, as it’s a far more complicated situation to explain – first, let’s take this claim that official statistics over-inflate the UK’s trade with other EU member states.

Is there any truth in it? Well, as with all the best euromyths, yes. Some.

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Pigs fly: Sensible EU-related commentry in a usually eurosceptic British newspaper

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I nearly dropped my copy of today’s London Evening Standard in amazement at the 2/3rds of a page comment piece by Financial Editor Anthony Hilton. He’s got a strong track-record for saying moderately sensible stuff when it comes to European Union affairs, but even so – this is the Standard, a paper that was until a few months ago owned by the same lot who run the rabidly europhobe* Daily Mail, and has tended to continue the old regime’s knee-jerk anti-EU attitude on the rare occasions it bothers with the EU at all.

So this, on the Greek crisis and the Eurozone, came as a rather pleasant surprise. Sums up my take pretty much spot on:

“by modern standards Greece does not need that much money. A loan of €20?billion would do the trick — which is significantly less than we in Britain had to put into either Lloyds or Royal Bank of Scotland. Bailing out countries is a lot cheaper than bailing out banks, so the idea that the euro is under threat from Greece’s domestic problems is absurd.

“After all, in the United States individual cities and states go bankrupt and default on their debts on a fairly regular basis — California doing so quite recently — but no one says it will destroy the dollar. And California is a bigger economy than Greece.”

As I keep saying, context is everything. I’m glad to see that there are at least some British journalists who still get that.

Oh, and good stuff from the LA Times – should California try to join the EU?

Update: This from Eurozone Watch from a year ago, looking at the prospects of bailing out a Eurozone member state, is well worth a re-read

* a phrase I don’t use lightly

EU regionalism on the decline?

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Following my recent posts on national vs European identity and regionalism and the EU (as part of a vague attempt to get an idea of the nature and importance of geographical/cultural identity), this may be of interest – Why the end is nigh for regionalism in Europe, from The Lobby. Quick excerpt:

Up until recently this was very much not the case. The Scottish National Party had just won power in their (regional) Parliament in Scotland, the Basque terrorists ETA continue to plant bombs in Spanish coastal resorts, and Belgium was in danger of being torn asunder by its perennial north-south divide. In the Balkans the newly independent states of Kosovo and Montenegro demonstrate that similar regional aspirations have led successfully to self-determination (although Kosovo is still very much a work in progress).

“This apparently contradictory trend of both centralisation towards Brussels and devolution towards the regions looked to be the way forward – until along comes the biggest financial meltdown since the 1930s. Now it’s all about strength in numbers.”

Worth a look – though it’s worth noting that now that France and Germany are out of recession (with the Eurozone’s economy declining by just 0.1% in the last quarter), it looks like all the doomsday scenarios predicted by the economic experts (the self-same experts who failed to predict the economic collapse) may not be quite so catastrophically inevitable after all. If the economy starts to revive again, I’d expect a swift return to business as usual – because there’s nothing the EU does better than the same thing it’s always done…

I’m sure there’s more to be said here about how the first port of call for Catalonia is the national machinery of Spain (the example used in the post linked above) rather than the supranational machinery of the EU.

But I’m not sure how much that would necessarily say about the strength of regional identity in Catalonia – it’s more a comment on the relatively tiny amounts of cash the EU has at its disposal. (The EU’s budget? 139bn euros; Spain’s budget? 374bn euros.)

This tiny EU budget, of course, is something set by the member states. Because it’s not in their interests to give the EU too much cash to spread around – not only might they not be able to control where it goes, but it could also (as if the EU, rather than Spain, came to Catalonia’s aid) help bolster regional nationalist movements and undermine the power of the governments of the member states.

At the risk of annoying a second nationalist movement in a week, this is why – in the present circumstances – I can’t see Scottish independence as being a viable option: the EU simply can’t afford to fill the void that would be left by the withdrawal of UK/English funds.

What are the economic costs of the EU?

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You can work out the likely impact of a law liberalising the market for product category x on related industries a, b, c, (etc.) and even make an educated guess about the overall impact that this law may have on the economy as a whole.

But when it comes to the economy you can never understand everything – if we’ve learned nothing else in the last 12 months, we’ve learned that. Hell, with something as complex as a continent-wide economic system, there are so many other factors at play, though it may be possible to make an educated guess about the impact of a piece of legislation (enough to judge if it’s going to be beneficial, at any rate), you’ll never be able to track *all* of its effects – countless other things will be affecting individual parts of the economy in countless different ways, from other bits of EU and national legislation (which still often overlap) through local levels of trades unionism, consumer spending patterns, passing fashions, local infrastructure, and so on and so on.

In other words, to be able to put an actual monetary figure on the costs/benefits of EU legislation *as a whole*, you’d first need to work out a system for tracking all the workings of the entire European economy (or, at the very least, the entire economy of the individual member state you want to study). Because without complete understanding how an economy works both at macro- and micro- levels, it is impossible to judge how introducing variable x might affect it – because who’s to say it’s not actually variable b, h or z instead if you haven’t also studied their influence?.

So even more than with claims about the percentages of laws coming from the EU, *any* claims about the costs OR benefits of the EU must be nonsense. Because the only way we could actually tell is if a) we understood the economy of Europe inside-out (which we don’t), and b) we had a control sample of a Europe in which the EU never came into being to which we could compare our findings. We can put a figure on how much we pay in to the EU in the form of taxes, therefore, but we can’t sensibly do the same for the wider economic benefits or costs.

So although I feel that the EU has done more good than harm to both the British economy and the economy of Europe as a whole, there is no way that I can prove that. There’s also no way that anyone of a more eurosceptic bent can prove that the opposite is true. I could point to individual benefits, they could point to individual costs – we could add up more and more of each until we have a wealth of evidence and can start chucking around figures like 200 or 600 billion. But we’d still have only scratched the surface.

This is not a flaw in the way the EU works, it is just a consequence of the EU’s continent-spanning economy (which exists in a world that has become increasingly globalised, and so increasingly economically complex and volatile over the last fifty years) being an incredibly, vastly, inconceivably complicated system that no one can ever fully understand.

It does, however, mean that arguments about the benefits and costs of the EU are always going to come down to subjective feelings, not objective truths. Chuck onto that the fact that most EU legislation is by its nature quite vague (being in the most part a compromise between disparate interest groups from 27 member states, compromised upon yet further during discussions between the European Parliament, Council and Commission), and is often implemented in vastly different ways from member state to member state, depending on the whim of the local authorities, then proving that the EU is beneficial to those who feel that it is not is, therefore, just about an impossible task.

(Modified from a comment left on this post at The Devil’s Kitchen.)

What percentage of laws come from the EU?

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Last week on the BBC’s Question Time, eurosceptic Conservative MEP Daniel Hannan mentioned 84%; UKIP leader Nigel Farrage said it was 75%, the figure most often mentioned by anti-EU types (such as French National Front leader Jean Marie Le Pen or the Libertas Party) is that 80% of our laws come from the EU, while in a speech elsewhere last week, Conservative leader David Cameron said that “Almost half of all the regulations affecting our businesses come from the EU”.

These figures (or, at least, figures in this rough ballpark) are widely accepted, with everyone from universities to charities seeming to accept them at face value.

But are any of them actually true? And which is it? 84%? 80%? 75%? 50%? Or some other figure? Because they can’t ALL be right.

Daniel Hannan: 84% of all laws come from the EU

Let’s take the biggest figure first. If 84% sounds ridiculously high, that’s because it is. Even eurosceptic thinktank Open Europe have dismissed this claim as unrealistic – explaining in detail where the calculation originated.

In short, it comes from a reply by the Parliamentary Undersecretary of the German Parliament, Alfred Hartenbach, given on 29 April 2005 – relating specifically (and exclusively) to Germany, where he stated that from 1998 until 2004, 18,187 EU regulations and 750 EU directives were adopted in Germany. During the same period the German Parliament passed in total 1,195 laws (as well as 3,055 “Rechtsverordnungen” – which are like Primary and Secondary legislation). This was seized on by former German President Roman Herzog and Luder Gurken of the Centrum für Europäische Politik, who used these figures to work out 84% of all German laws originate in Brussels. As Open Europe explains:

750 (directives) + 18,187 (regulations) = 18,917 EU legislative acts
1,195 (Gesetze) + 3,055 (Verordnungen) – 750 (directives) = 3,500 German legislative acts
= 84%.

The 750 directives were substracted as they require seperate implementing laws in Germany (assuming a directive/implementing law ratio of 1:1).

Open Europe goes on to explain why this figure is, at best, misleading. And remember, Open Europe is a eurosceptic thinktank:

to conclude that 4 out 5 laws originate in Brussels is probably a step too far. Germany, for instance, is a federal system, meaning that the individual Lander has substantial powers to legislate autonomously. The many laws adopted on the Lander-level would have to be included in any all laws count, which isn’t the case here. In addition, this count says nothing about the nature of the laws.

It’s also important to keep in mind that the EU’s powers are mainly regulatory, as opposed to budgetary. This means that most issues that relate to spending and taxation (health bills, crime bills, educational reform, pensions, welfare, etc) – the “wallet” issues if you will – are mostly beyond the realm of the EU, but must also be included in any count that includes all laws.

So, the 84% figure is based on a calculation about German laws (and is therefore not directly transferable to Britain, as Hannan and others would like us to believe), and that calculation in any case left out a huge chunk of German legislation, rendering the final figure utterly obsolete.

So the 84% figure can safely be discounted.

UKIP: 75% of all laws come from the EU

Next up, the second highest figure. Where did UKIP get their 75% claim from? Well, handily they provide a video on YouTube which shows it comes from Hans-Gert Pottering, EPP MEP and President of the European Parliament from January 2007 to June 2009:

“If we were not that influential,” the subtitles show Pottering as saying, “then we would not be the legislator of 75% of all laws in Europe.”

But where it suits UKIP’s purpose to interpret this as literally meaning that, EU-wide, 75% of ALL laws stem from the EU, had they included more of Pottering’s speech the context – and therefore the meaning – would have become far more apparent. For what Pottering was actually saying was that the European Parliament (not the EU) legislates on 75% of laws *passed by the European Union*. Not passed by EU member states – just by the EU itself, at EU level. Because the European Parliament has little say in something like 20-25% of EU legislation (something the Lisbon Treaty would rectify, but that’s for another day). German speakers will also be able to confirm that the subtitles on UKIP’s video of Pottering are not 100% accurate.

So the 75% figure does not apply to the percentage of laws in individual member states that stem from the EU, but the percentage of laws that stem from the EU that the European Parliament has a say in. That’s an entirely different kettle of fish – and so the 75% figure can safely be dismissed as based on a (deliberate?) misunderstanding.

David Cameron: “Almost half”

It is worth noting again here that Cameron says “almost half of all regulations affecting our businesses come from the EU”. Some laws may be regulations, but not all regulations are laws, so we need to tread a little more carefully here. Where did Cameron get his figure from? I genuinely have no idea. I can’t track down an original source for it anywhere – though it is a claim made on the website of the Institute of Directors – albeit with the qualification that “estimates vary”, something Cameron neglected to mention.

But what is the real figure? How much say does the EU have in business regulations? Well, handily enough, last month the British Chambers of Commerce produced a report (PDF) investigating precisely this issue, “Worlds Apart: The British and EU Regulatory Systems” – their seventh annual report into the subject, and the fifth comparing the British and EU systems. Their conclusion?

In terms of the number of regulations, the EU this year accounted for only 20%. The reduction from the previous EU level of about 30% is the primary reason for the overall decline in 2007/8.

Hmmm… Only 20%, you say? And the proportion of EU regulations is declining, you say? So where did Cameron get his “almost half” from?

The House of Commons Library’s 9.1% claim

Also on Question Time last week was Europe Minister Caroline Flint, who trotted out the usual defence against the above eurosceptic claims about the EU’s influence that just 9.1% of UK laws stem from the EU. the report in question can be found as a PDF in the depths of the UK Parliament site.

The study was conducted by the (politically independent) House of Commons Library between 1998 and 2005, based on the statutory instruments passed with references to European legislation, because “The vast majority of EC legislation is enacted by statutory instruments under section 2 (2) of the European Communities Act.” It also helpfully breaks these laws down by department – the most affected of which are Defra – which deals with the Common Agricultural and Common Fisheries Policies, so no surprises there – and the Department of Trade and Industry – hardly surprising with the Common Market and all. Both departments saw about 50% of their legislation having some kind of EU origin – which could, via the DTI, be where Cameron got his “almost half” figure from, perhaps?

But is the 9.1% figure accurate? Is just looking at statutory instruments fair, when this means that normal legislation, via parliament itself, can be left out? Open Europe (in the same post where they discussed and dismissed the 84% claim) make four key points:

1) They do not seperate between budgetary and regulatory legislation, therefore comparing apples and oranges.
2) They also compare apples and oranges in another respect: Directives are usually far-reaching measures with a big impact on the economy. SIs, in contrast, can cover a variety of issues, including public administration – for example a road closure or changing arrangements for parish elections.
3) EU Regulations (as opposed to Directives) usually don’t give rise to a new UK law but are directly applicable. Therefore, most EU Regulations are not included in the 9% figure.
4) One Directive does not mean one SI. The Motor Vehicles Regulations in 2007 implemented four different Directives, for instance, making a one-for-one comparison tricky.

On point 1), of course, the EU has no say in the British budget and has no revenue-raising powers, so I’m not sure what they’re trying to say. On point 2) they have a point – but how do you measure the “far-reaching” implications and economic impact of a directive, exactly? On point 3) they also have a point – which might explain why the British Chambers of Commerce have a higher estimate of 20%. Point 4), if we’re hunting down the percentage of British laws that have an EU origin, is irrelevant.

But considering that we’re looking for a percentage of the *number* of laws that stem from the EU, it is worth bearing in mind that Statutory Instruments make up the bulk of all UK legislation, with an average of around 3,500 passed every year for much of the last two decades. In 2008, 3,389 Statutory Instruments were passed, while the UK Statute Law Database lists 2,414 results for the same year. With no study (that I’m aware of) having been conducted on how many of those have an EU origin, it is hard to tell the percentage.

However, with Statutory Instruments making up the bulk of UK legislation, and with most EU legislation brought into force via this method (having already been passed at EU level, there’s generally no need for EU legislation to then be re-enacted at national level, after all), it’s no great leap to suggest that the final percentage wouldn’t be that much higher than 9%. Indeed, Labour MEP Richard Corbett has noted other studies in other EU member states:

6.3 percent according to the Swedish parliament, 12 percent according to the Finnish parliament and between 12 and 19 percent according to the Lithuanian parliament

This would suggest that something in the region of 10-20% would be a fair guess for the UK as well (a range that has the added benefit of being backed up by the British Chambers of Commerce’s recent study of regulations).

Bonus: How much does the EU cost us?

I’ve already discussed the actual costs of EU membership based on the UK’s annual contribution, showing that the net cost is around £4 billion a year. But what about the cost to business and to the economy?

This is, of course, a hugely complex issue. How to estimate the impact of legislation on an entire country’s economy? It’s practically impossible, as without a control sample we can’t tell how beneficial or detrimental any individual piece of legislation may be – let alone the impact of other pieces of legislation that may affect the same general area.

Nonetheless, the more enthusiastic among you may have noted, in the Open Europe piece quoted above, that the same post also gives Open Europe’s own estimate that “72% of the cost of regulation is EU derived”. Is this fair? Well, it’s only an estimate, and I haven’t seen their workings, so it’s hard to tell.

However, let’s return to that British Chambers of Commerce report, also linked above. What do they have to say about the costs of EU regulation?

By value, EU legislation was only responsible for about 0.1% (£1.9m) of regulatory net costs in 2007/8 and virtually all business burdening regulatory activity can be attributed to Whitehall.

Oh… would you look at that?

Conclusion

No one agrees on how much legislation and regulation stems from the EU. The 9.1% figure stated by the House of Commons Library is too low, as it only covers Statutory Instruments, not ALL laws; the higher figures of 84%, 75% and even 50% claimed by the likes of Hannan, Farrage and Cameron are based on miscalculations, misunderstandings, or sources unknown, and often derive from parts of the EU other than just the UK – and so with no hard evidence to support them must be dismissed as either too high or inapplicable to the British situation.

What is the true figure? No one knows. So any claims that state hard and fast percentages should – if we’re being intellectually honest – be treated with equal suspicion.

Not that any of this is likely to change the opinions of those eurosceptics convinced of the malicious and all-pervading influence of the EU on our daily lives, of course. But still. I’ve looked for the evidence, and this is what I’ve tracked down. If you know different, please do let me know – I’m interested in the truth of the situation, as without total transparency, such misinformation, misunderstandings and resentments are only going to grow.

Update, October 2010:

The House of Commons Library has published a new, much more comprehensive study of the percentage of UK laws that originate from the EU. It is freely available as a PDF and despite running to 59 pages I’d strongly recommend reading it in full.

Its conclusion? The true figure is around 15%.

(Rather sweetly it also references this post in the footnotes.)

If you’re interested in this topic, you may also be interested in these old posts:

- What are the economic costs of the EU?
- UKIP’s £40 million a day claim vs the REAL costs of EU membership
- The dishonesty of the EU debate
- Why legislating and regulating at an EU level is almost always a good thing

UKIP’s “Britain paying the EU £40 million a day” claim vs the REAL costs of UK EU membership

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This has been on various UKIP election leaflets, so it’s evidently a claim they’re proud of – but does it stand up?

Simple maths tells us that Britain paying £40 million a day to the EU would mean an annual contribution of £14.6 billion. However, the most recent Treasury Report on the UK’s EU budget contributions (PDF) shows the following GROSS figures:

2005 – £12.5 billion
2006 – £12.4 billion
2007 – £12.5 billion
2008 – £13.7 billion (estimated)

£13.7 billion divided by 365 = £37.5 million, so UKIP are, at the very least, rounding up by £2.5 million a day. Not much to round up by? That works out as £912,500,000 a year – I hope UKIP won’t be that out with their sums if they ever get near power…

But what about the rebate? What about the EU funds that are paid back to the UK in the form of things like the European Regional Development Fund, European Social Fund and the like? What’s the NET contribution? (Again from the most recent Treasury report)

2005 – £3.6 billion
2006 – £3.9 billion
2007 – £4.6 billion
2008 – £3.6 billion (estimate)

UKIP deliberately using gross rather than net to make the situation seem worse is to be expected, of course, but still – let’s be generous and take the highest figure of £4.6 billion – that’s still a lot of money, right? It may only work out as £12.6 million a day, but that’s still a lot of money.

Well, yes. But big figures are nothing without context, so let’s see how much the UK government spends on other things:UK government expenditure breakdown, shamelessly leeched from Wikipedia

Would you look at that? The UK may be forking out a net figure of around £4 billion a year for EU membership, but at the same time we’re having to pay £31 billion a year merely to service the INTEREST on our debt. That’s not *pay off* our debt – just keep up with the interest. Christ!

In other words, the EU costs us 7.75 times LESS than it does to keep the international bailiffs from the door. (And that £31 billion was BEFORE the most recent round of government borrowing, and before the collapse of sterling, both of which will have hugely escalated the figure for this year, as and when it’s released.)

So, £31 billion in interest payments, for which we see no return whatsoever, versus £4 billion in payments to the EU, from which even its harshest critics must admit that we get *some* benefits – even if they will only admit to cheaper mobile phone charges or ease of travel. I don’t know about you, but I’d say that’s not too bad a deal, in comparison.

Update, October 2010:

If you’re interested in this post, you may also be interested in:

- What are the economic costs of the EU?
- What percentage of laws come from the EU?
- Why legislating and regulating at EU level is almost always a good thing
- The dishonesty of the EU debate

The EU’s weekend emergency

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One of my other reasons for pondering a change in direction here (beyond boredom with party politics in the run up to the summer’s EU elections) is that the other big story in the EU – hell, everywhere – is the ongoing economic crisis. What I know about economics could be written on the back of a postage stamp, so comment is best avoided. (Of course, even the supposed experts have been shown to know precisely tit all about what’s going on with the global economy over the last year, so perhaps economic illiteracy isn’t such a handicap after all?)

However, people who know infinitely more about economics than I do reckon that this weekend could be the economic crunch point for the EU – the moment when the sheer extent of the current crisis becomes insurmountable. The Economist is even suggesting that this weekend’s emergency EU summit could mark the start of the breakup of the Eurozone, and perhaps even of the EU itself. The Guardian’s David Gow has more along similar lines.

That Economist article and leader have been followed up by a couple of posts at Fistful that are well worth a gander – the first containing proposals to get the EU out of this mess, the second looking at the wider, global context.

It’s also worth having a look at this piece at Eurozone Watch from last week (rather heavy-going in places, mind) looking at the theoretical/legal arguments for bailing-out a collapsing Eurozone member, and an overview of the case for relaxing Eurozone entry criteria to provide a way out of the current crisis from Central Europe Activ (with considerably more detail about how this approach might work from Edward Hugh here). And for those who still haven’t had their fill of EU economics, Alphasources has a very useful look at why it has got so urgent to have a unified European response after what seems like months of prevarication.

The Euro and the credit crisis

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Interesting analysis from European Voice today:

Some members of the European Monetary Union (EMU) – Ireland and Greece obviously, and Italy, too – are discovering that what the International Monetary Fund (IMF) adjudges a global recession is cruelly exposing their failure in the past ten years to adjust to the rigours of membership of a currency union…

But the idea that any country will quit the EMU unilaterally, while it remains a hard-currency club, is mindless.

Long before the printing presses could be greased up to produce reams of new lira, drachma or punt notes, or ‘secretly’ asked businesses and financial institutions to re-programme their computers for a new era of monetary independence, the stampede of deposits from the banks to safer havens offshore would have triggered an economic meltdown. Forget it. The mechanics of leaving the single-currency area unilaterally and out of weakness, notably the pain of the transition to a new currency regime, make it all but inconceivable.

We are, however, already witnessing the beginnings of a process through which the bright hopes for the single currency of a decade ago could begin to dim. One expert calls it the “re-nationalisation” of EU financial market regulation…

Gordon ‘beggar thy EU neighbour’ Brown, the UK prime minister, has led the way in implementing a 1930s-style competitive devaluation to back up his “British jobs for British workers” jingoism…

Protectionism is rife and Neelie Kroes, the European commissioner for competition, is finding she does not have enough fingers to plug the holes in the dyke that the EU constructed long ago to prevent illicit state aids swamping free competition.

Naturally enough, worth reading in full.

How will the downturn affect the EU?

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Interesting post from new EU/US politics blog Entangled Alliances, taking a look at the fate of European integration during times of recession, worth a look in full:

Economic slowdowns have historically – almost without exception – led to greater protectionism as each country faces demands from its electorate to shield them from the rising storm of global financial turbulence. This can certainly be applied to the history of European integration; the 1970s and 80s saw a halt to further integration, as well as protectionism…

For European integration itself, the 1970s and early 1980s were termed the ‘doldrum years’, as they saw virtually no new advances in integration during this time. Nevertheless, it still saw the accession of the UK, Denmark and Ireland in 1973, followed by Greece in 1981 and Spain and Portugal in 1986. This suggests that, while deeper integration is off the cards, a widening of the Union is a still a possibility.

This therefore raises two questions: firstly, does a nasty economic downturn really preclude deeper integration? And secondly, should we look forward to another enlargement in the next couple of years?

Nice, handy overview for anyone wanting to catch up.

The EU after the credit crisis

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Journalists seem to be contacting me almost daily at the moment. Below the fold are my full answers to the following questions from the UK Correspondent of Brazil’s biggest newspaper O Global about the EU’s response to the current financial woes. All largely off the top of my head…

1) Has the financial crisis exposed the EU’s institucional limitations in your opinion?
2) How tempting it will be for eurosceptics to pounce on the keep the pound motto in terms of the so-called sovereignity?
3) In a year where the Lisbon treaty collapsed, is there a need for a lot of soul searching within the EU?
4) What can be done in regards of more integration within states?

If any of my fellow Eurobloggers and/or readers fancy having a bash at answering some or all of these, I’d be intrigued to see the results. The short version of my approach?

This recession is going to be the major test of the idea of the Euro – if it fails that test, it won’t just be the UK that gets cold feet.

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A bit of weekend reading

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A few bits and bobs that have caught my eye over the last week or so:

Robert Amsterdam on Donald Rumsfeld’s legacy to Europe:

he was the original master artist of disaggregation – a man who saw and skillfully exploited the very fissures of the contemporary European Union which today threaten its purpose and continued existence as an alliance of nations… And this week, the Rumsfeldian conception of “old and new Europe” is making a comeback in the debate over how to handle Moscow’s threat to put missiles in Kaliningrad”

It’s not just over Russian missiles – old vs. new Europe seems to be an emerging theme in the ongoing confusion over how to tackle the growing economic storm, according to Eurozine:

Even if a common set of regulations and measures were to be reached, differences would be manifest between member states, and above all between West and East: unemployment, inflation, budgetary deficits would affect each country differently. The problem is that a recession would have more severe consequences in the fragile and unpredictable eastern European countries, including at the political level.

Also on the economy, Obsolete is (as ever) really rather good on the bizarre collapse of the Tory poll lead during the current crisis:

The man who promised an end to Tory boom and bust has succeeded in abolishing boom, while the prospects for the bust look increasingly ominous. The economy which he boasted was among the best placed to deal with the global downturn is in actual fact one of the worst placed to deal with it, according to the IMF and the European Union. Unrelenting, the Labour party believes that the solution is to borrow more to fund the tax cuts to stimulate the economy. As Larry Elliot has pointed out, this is a direct contradiction of what Gordon Brown formerly believed. At the weekend the same man attended a conference which he claimed would back up his solution to the downturn; it did nothing of the sort, and predictably only agreed to more or less meet again. Gordon Brown, by rights, ought to be finished.

Elsewhere, Jon Worth asks do you think Barroso is rubbish? With more in a similar vein from Jean Quatremer:

Si, jusqu’à présent, les voix critiques étaient rares, elles commencent à se faire entendre, ce qui montre que la campagne pour le renouvellement de la Commission a bel et bien commencé.

Complementing Quatremer’s overview, the Financial Times’s (new look) Brussels Blog asks

why are political parties of the left in such poor shape across much of Europe? It’s the worst financial crisis since the early 1930s, the worst economic recession since the early 1990s, if not the 1970s – and where is the left?

And finally, a very promising signal from the European Parliament:

MEPs today overwhelmingly backed calls to strengthen the EU’s anti-fraud unit OLAF to enable it to tackle fraud more effectively…

[report author Ingeborg Grässle MEP] said that the Parliament’s zeal to strengthen OLAF and how it worked was not shared by the member states. “The Council [of Ministers] doesn’t want to strengthen OLAF,” she said… She said the Council did not want awkward discussions about the fight against fraud.

Once again, one of the EU’s biggest problems and PR disasters can be blamed nice and neatly on the reluctance of the Council of Ministers – on the governments of the member states – to press ahead with reforms to increase both efficiency and transparency.

Pre-US election links and the like worth a look

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- As that all-important US election looms ever closer, EU foreign ministers are meeting today to discuss how to rebuild those battered ties between Europe and America that conventional wisdom sees as having been so badly damaged during the Bush years. Across Europe – hell, across the world – everyone is waiting for Wednesday’s result. But pretty much every prediction is just speculation.

- Meanwhile, on the other side of the pond, is Barack Obama (a half-Kenyan, half-American born in Hawaii and raised in Indonesia) just too European? Well, according to (some) Americans, perhaps.

- For Europeans there are a number of signs that Obama may not be quite as sympathetic to this continent as his famous trip here a few months ago might suggest. These are also hardly new concerns – and despite some promising signs that Obama realises the EU’s potential importance, there remains much we don’t know. So why is Barack Obama so popular in Europe?

- Shifting off to random bits and bobs, via Pubic Affairs 2.0, a long-overdue and most welcome addition to the European Parliament website: a handy range of RSS feeds. (Ignore the podcasts for now, though – they don’t seem to be overly regular…)

- The old straight bananas row seems to be back:

A leading supermarket has been forced to ditch a healthy eating campaign at the eleventh hour after discovering its staff could be individually prosecuted under EU regulations.

This, methinks, is worth looking into in more detail, especially as the Commission is set to rethink various fruit and veg regulations later this month.

- Will the credit crisis see the Eurozone expand, rather than contract? It may look attractive at the moment – but is the single currency a sensible option?

Italian racism – not just against Roma

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After the worrying moves against Italy’s Roma population back in the summer, it seems that racial tensions are on the rise Italy-wide. After all, if the state’s going to sanction the persecution of one ethnic minority, why not start having a crack at the rest? In times of growing economic hardship (and it’s not like Italy’s economy’s been doing too well in the last few years anyway), finding scapegoats is always popular. And so:

In recent weeks, a Ghanaian man, Emmanuel Bonsu Foster, 22, was injured in Parma in a scuffle with the police; a Chinese man, Tong Hongsheng, 36, was beaten by a group of boys in a rough neighborhood in Rome; and a Somali woman, Amina Sheikh Said, 51, said she was strip-searched and interrogated for hours at Ciampino Airport in Rome. Last month, six African immigrants were gunned down in Castel Volturno, a stronghold of the Neapolitan Mafia…

Last week, Parliament debated whether Italy was facing what newspaper headlines referred to as a “racism emergency.”

Now that the governments of Europe seem to have decided to act in tandem to stem the credit crisis (joined around the world by countries from Japan to Brazil), the economic nationalism of the 1930s that did so much to exacerbate the Great Depression seems not even to be an option this time around. Could this in turn prevent a rise in the less savoury, more personal forms of localist resentment that caused so much trouble 70 years ago? Or is Italy, just as it became the first fascist country back in the 1920s, leading the way once again? If the current economic crisis doesn’t sort itself out soon, will such attacks against “foreigners” become more common throughout Europe? It’s not like there’s not already a sizable fear and resentment of foreigners knocking around…*

* See, for example, the European Union Agency for Fundamental Rights‘ Annual Report for 2007 (PDF), noting a general upward trend in racist attacks EU-wide. Some of this is certainly due to increased awareness and greater levels of reporting and recording over the last decade or so, but still.

The Great Depression: A reminder amid the ever-increasing hyperbole

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“about a quarter of the entire population, some 30 million Americans, were without any income at all. Two million vagrants… roamed the country looking for work. Twenty per cent of the nation’s school children were under-weight; in the poorest communities… over 90 per cent were affected… Bread lines stretched under choking grain elevators. Malnutrition and associated diseases like rickets and pellagra were commonplace… there were cases of starvation.

“Half Chicago’s working population… were idle… In Detroit… two thirds of the population were either out of work or on short time… In Kentucky miners ate wild greens, violet tops, forget-me-nots and ‘such weeds as cows eat’. In Pennsylvania they devoured roots and dandelions… Others consumed leftovers from restaurants, as recommended by Secretary of War Patrick Hurley. In Kansas farmers burned wheat to keep warm… In Washington lumberjacks started forest fires to earn money fighting them. In Arkansas families lived in caves… Nearly 30 states established systems of barter and in Washington State stores issued and accepted wooden currency…

“In Trieste women kept alive by eating pigeons which their children killed with stones. Peasants in Lucania lived almost exclusively on bread…

“Tax payers revolted in Burgundy, Normandy and Languedoc… Students clashed with gendarmes on the left Bank. In Chartres farmers and peasants, some carrying pitchforks, attacked the Prefect and engaged in running battles with the police…

“In Lancashire… so many mills went out of business that the smut wore off buildings: to the amazement of its inhabitants, Blackburn began to look clean. Former mill-owners were reduced to picking up cigarette ends in the street.”

From Piers Brendon’s The Dark Valley: A Panorama of the 1930s