Sunday, 5 October 2008

A first crack in the EU edifice?

First Ireland, then Greece, now Germany. Unlimited government guarantees of bank deposits have become all the rage. What is so interesting about the announcement from Germany today is that it came as heads of government of the EU member states are meeting to agree a one-size-fits-all policy for dealing with collapsing banks. As we know, the French had a hissy fit at Ireland's decision to protect its people's savings. Anti competitive, they said; a fundamental attack on the truth that is EU supremacy, they hinted; unacceptable placing of the national interest first, is what they really meant.

Germany was relatively quiet about the Irish decision, perhaps they knew what was coming. The imminent collapse of a massive German bank, undermined by bad lending (yes, I'm on about that again), required the German government to follow the Irish example. Refusal to do so would have been interpreted as a lack of faith in the ability of the Hypo bank to cover its liabilities and a run on the bank could well have followed. They could not wait for the talking shop of Prime Ministers to issue a half-baked plan which would have suited no one, they had to act because they perceived it to be necessary in the national interest.

We can debate whether such guarantees are a good or bad idea in principle, but that debate will not prevent queues forming when people fear their savings might be lost. The German government did what it judged to be appropriate in the circumstances and cast a cheery two-fingered wave in the direction of EU laws in the process. Over the next few days we will see other countries doing exactly the same even if they have no real fear of runs on their banks; politically they cannot afford to be seen to be protecting their citizens less than the Irish, Greek and German governments are protecting theirs.

Because EU law is not really a system of law at all but a system of power politics we might see all complaints about anti-competitiveness sent to the great back burner in the sky, after all no one can sensibly complain about another country being anti competitive if everyone is doing the same. The EU law will not change but the political climate might. No longer can it be said that EU law takes precedence over narrow national interests. For the first time in half a century the relentless march towards centralised power and the kneeling of national governments before their supra-national master will have been reversed. Not just halted, reversed. A precedent will be set that at times of crisis national governments have the right to look after their country's national interest whether or not it suits the EU plan and whether or not it complies with established EU edicts.

This is an extraordinary opportunity to question the suitability of EU governance, extraordinary because it has nothing to do with the endemic corruption in the EU machinery or the meddling of the EU in the minutiae of everyday life. It is about something much more important, responsibility. For all their faults (and they are legion) only national governments are held responsible by their people. When a national government says "there is nothing we can do, it's EU law" the answer of the people is not "we blame the EU" it is "we blame you for handing power to the EU". The prosecution of greengrocers for selling bananas by the pound rather than the kilo generates a degree of ire, but nothing compared to what would happen if the government said "we cannot protect your savings, the EU won't let us". They know any such statement would run the risk of the Prime Minister being strung up by the neck. They have no option but to defy the EU and take steps to reassure the people that their money is safe.

At long last an issue of sufficient seriousness to the public has led to a direct conflict between national interests and the interests of the EU Superstate, and national interests have prevailed. Time will tell whether it will lead to a wholesale re-think of the EU's one-size-fits-all philosophy, but it is a start. The first crack has appeared in the castle wall.


Mark Wadsworth said...
This comment has been removed by the author.
Mark Wadsworth said...

(deleted first comment as it had a silly typo)

It's not the first crack!

The Irish 'No' to the Lisbon Treaty will go down in the history books (rightly or wrongly) as the High Water Mark of the EU, from here on in it'll gradually crumble.

A bit like the folk myth that the Boston Tea Party was the start of the American independence-war-thingy. The real start may have a particular hour on a particular day at any time in the preceding or succeeding few years, that doesn't really matter.

And in the next few years, the EU will either disappear completely, like proper Empires do, or it will limber on as a overfunded bureaucracy without a mission, intent only on self-preservation (like UN, NATO, GATT, IMF etc) to which all members pay lip service but ignore completely on the ground.

TheFatBigot said...

Well, yes, we could treat the Irish No, and the Danish and French votes on the constitution, as cracks but there has been little sign of them interrupting the centralisation process because there was insufficient practical effect from those votes alone.

The current situation seems to me to be different in substance because there is a direct conflict between the national interest (as felt everyday by the little people) and the interests of the Euromachine.