Will there be a Euro break-up?

 

          I read the five shortlisted entries for the Wolfson prize yesterday. The essay competition asked authors to assess how to manage the process if member states left the Euro. The five published yesterday showed ingenuity and offered a range of utopian solutions. One suggested creating two new currencies, called  the  New Euro-White, and the New Euro-Yolk. Another offered a new ECU-2 basket currency. A third proposes an Exit task force with a Task Force Charter driven by Germany. It is difficult to take much of this seriously. The media has decided to trivialise the whole topic by concentrating on a picture of a pizza drawn by a 10 year old.  The other two are less fanciful, but do not tackle the big issue of how exit can be arranged at speed and legally when the current Treaty does not have a mechanism for exit, and  when no country is seeking exit.

             Over the next few days as the run of news permits I will set out what I think might happen in the real world of EU politics and fast moving markets. Anyone forecasting the future of the Euro needs to begin with a firm understanding of the nature and importance of the project to EU member governments. The critics of the Euro mainly  lie outside the Euro member states. The governments of the 17 members all regard this as a central political project. They see the economic problems within their economies as being a price worth paying for the progress to political and economic union that the single currency represents. Many,  indeed,  believe the official line, that the problems of state debt and unemployment have solutions within the Euro framework. They do not blame the currency for state spending levels or joblessness on the periphery of the zone.  They believe they  need to work away at Euro discipline for it to come right.

          The Greek, Portuguese and Irish governments are firmly wedded to the Euro. They are not seeking a way out. Whilst there are now some senior establishment figures in Germany and the Netherlands who might like to see Greece leave, their governments still want to keep Greece in if possible and all agree that the Euro must continue.

            The Treaty does not allow the other member states to force a country out, nor does it allow an individual member state a right to exit. Those essayists who have thought of this issue state that it would require Treaty change to allow or force the exit of one or more members. How likely is this?

             It is my view that the Euro members will all wish to keep their currency going for as long as there is any chance of doing so. I detect no wish to plan an orderly exit for the most stressed countries today whilst the markets are temnporarily calmed by the large injection of ECB money. I do not expect to wake up soon to negotiations over the creation of one or two new currencies with the complex Treaty changes that would require, nor for an emergency exit which they did not put in place in calmer times. No-one is clamouring for new currencies based on unscrambling an egg, with easter titles.  Whilst an emergency exit is always a good idea in case a building catches fire, trying to knock one through when the fire has started might just fan the flames more quickly.  The countries that fear they might be forced out would not sign up to any such clause willingly.  They need all 27 EU members to vote Yes, and for positive referenda results in some member states.

             So what would trigger the exit of say Greece or some other country?  I could only see it happening if an unwelcome crisis forces it.  I could see three possible scenarios that might force  their withdrawal. I hasten to add I do not wish any of these scenarios on a Euro member state , and do not think it inevitable that one occurs. It depends how flexible and creative the authorities are to inspire some growth in the economy, and how generous the neighbours are when it comes to loans and transfer payments to weaker members. The scenarios include:

1. Another intense phase of crisis in the markets, threatening banks, underlining the continuing need for special funding beyond the currently agreed  packages, with or without the spread of uncertainty to the Euro itself and with damage to  the credit standing of all Euro instruments  and the value of the currency. If the stronger countries have to pay a much larger sum to keep Greece going, this could cause doubts about the sustainability of the scheme and the credit worthiness of other countries and banks. If calculations of the scale of transfers needed to the weaker members starts to erode confidence in the stronger members that too could force a rethink.

2. A massive move to hostility to the Euro by the  electors in a weaker state, who up to this point have broadly suported the currency and in the case of Greece allowed a pro Euro technocrat government to take over. If the electors refused to vote for parties wishing to keep the Euro that could force a change of approach by a future  government.

3. An intensification of strike and protest action on the streets on a sustained basis so that government reaches the conclusion that it can no longer govern and protect the Euro scheme  policies.

              If any of these developments occur, the EU could reach the point it reached with the Exchange Rate Mechanism, when it decides the markets have won and will force policy change. In these conditions the EU will need a simple, quick plan for the early exit of say Greece. There will be no time for agreeing and ratifying Treaty changes. I will tomorrow deal with a legal exit under the Treaty.

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58 Comments

  1. ian wragg
    Posted April 4, 2012 at 6:19 am | Permalink

    I think it is inevitable that the weaker nations will exit the Euro. With youth employment at over 50% in Greece and Spain we are getting near a revolutionary situation.
    When the technocrat govenment of Greece is proved to be ineffective I think there will be blood on the streets.
    It is impossible for Greece and Spain (and others) to be competitive within the Euro without a fundamental change in the mentality of the peoople and this is not going to happen.
    Recently on a cruise we called into one of the Greek islands. A beer was 5 Euro and a coffee 3 Euro. Later we called in Tenerife and the same was Euro 2 and 1.50. Tenerife uses the Euro but is not in the EU.
    The Spanish property maarket is forcast to lose 5% again this year with over 30% of the population in negative equity.
    There will be a revolution if tings don’t improve soon.

  2. Mike Stallard
    Posted April 4, 2012 at 6:19 am | Permalink

    ” Over the next few days as the run of news permits I will set out what I think might happen in the real world of EU politics and fast moving markets. ”
    This is some of the best news I have read for ages! Thank you.
    I have now stopped listening to Newsnight because last night it was on about George Galloway. It cannot mention Europe for some reason. And we are now getting Global Wierding on the 10 p.m. news too. Even today is getting quite juvenile – and I do not mean witty like South Park.
    So thank you for putting your blog where it is most needed.

    • Bernard
      Posted April 4, 2012 at 9:02 am | Permalink

      The bbc must not critisize the eu.
      It receives funding from the eu.
      ‘It must not bite the hand that feeds it.’

      • APL
        Posted April 4, 2012 at 11:02 am | Permalink

        Bernard: “It must not bite the hand that feeds it.”

        It is paid to be pro European Union.

      • outsider
        Posted April 4, 2012 at 12:33 pm | Permalink

        Actually, it is the Christian festival of Easter that is taboo.

      • uanime5
        Posted April 4, 2012 at 4:02 pm | Permalink

        The BBC receives almost all of its money from the Government yet seems quite happy to bite them. Care to explain the difference in treatment.

        • Bernard
          Posted April 4, 2012 at 4:53 pm | Permalink

          Yes uanime5. The bbc mainly advertises for staff in the Guardian.
          The readers of the Guardian tend to be on the left side of politics.
          Therefore, there is a leftwing bias in staffing, I would suggest.
          And I’m not sure that it’s true, that it gets ‘almost of its money from the Government’. I would have thought that the greater part would have come from the licence fee payer.

          • APL
            Posted April 5, 2012 at 8:56 am | Permalink

            Bernard: “The bbc mainly advertises for staff in the Guardian.”

            A nice little incestuous cross subsidy for the Guardian, where the BBC uses its tax funds extorted to some extent, let’s not forget, from single mothers on the bread line, under pain of imprisonment to subsidize another left of center media organization.

            Then in large part selects its journalists and management from the Guardian.

            Let’s not forget that that the Guardian, that firebrand of the Left for sixty years had, until recently, two other streams of public money.

            1. It’s the ‘go to’ outlet for public sector jobs, so it’s not just the BBC that cross subsidizes the Guardian with public tax money, but the whole of the public sector.

            2. The Scott trust until recently, was a tax ‘efficient‘ mechanism for the Guardian to avoid ( perfectly legally ) paying tax.

            Meanwhile the Guardian happily trumpets the ‘abuses’ of Michael Ashcroft, because of his legally arranged tax affairs, but for the last seventy five years have been using the Scott trust as a mechanism to avoid UK tax.

        • libertarian
          Posted April 4, 2012 at 6:34 pm | Permalink

          The BBC gets all its money from the taxpayer in the form of a licence fee, not from the government

  3. lifelogic
    Posted April 4, 2012 at 6:38 am | Permalink

    Needless to say the BBC focused on the Child’s drawing of the pizza (under guidance from the EU paymasters I assume) or perhaps because their lefty presenters could just not understand the more serious suggestions.

    You analysis seems right to me.

    Meanwhile the government still wants to further enslave us with yet more secret courts (so we will have more outrages against justice as we do all the time in the family courts all the time). They also want to hold all our emails and similar.

    Why not go the whole hog and tag everyone with a device to record our movements, communication and thoughts 24 hours a day even our thoughts. It can only be a matter of time with Clark & the Libdems in power? Clearly we would need to pay for this great new government “service” and for any use we make of the pavements, our houses and the roads but the device usefully pass all the data over and help itself to our money. Perhaps it could also administer some mild electric shocks should we miss any “service” payments.

    • lifelogic
      Posted April 4, 2012 at 6:56 am | Permalink

      Doubtless the government will argue the tax will be of great use in “preventing crime, terrorism, paedophiles and morally repugnant tax avoidance” as they do routinely for almost anything nowadays.

      • lifelogic
        Posted April 4, 2012 at 7:58 am | Permalink

        Sorry I meant tags (not tax) as above.

    • BernieInPipewell
      Posted April 4, 2012 at 9:13 am | Permalink

      lifelogic

      The tracking device is called an Identity Card, (probably injected under a shoulder, your at liberty to choose which shoulder) coming shortly to a person like you, me, everybody, but not the elites.

      • lifelogic
        Posted April 4, 2012 at 10:23 am | Permalink

        Might in not be a tag stapled through the ear – like EU controls on cows perhaps.

        • alan jutson
          Posted April 4, 2012 at 12:57 pm | Permalink

          Lifelogic

          No its a label for all those with a chip on their shoulder.

    • David Price
      Posted April 4, 2012 at 11:36 am | Permalink

      You already own the tracking device and pay for it and the tracking and monitoring service3. It is called a mobile phone and the network architecture and device functions have been around for 15 years or so.

      Look up “CALEA” for a gentle introduction, the specs for the 3G mobile telecoms are much less accessible to non-techies but basically do the same thing.

      This latest bit of invasive bureaucracy allows the law enforcement agency to monitor anyone at any timewhereas before they needed a warrant to monitor specified individuals.

      If you are an iPhone user it also incorporates an advanced money sucking function.

    • dick thornton
      Posted April 4, 2012 at 11:55 am | Permalink

      At least it would stop crime – would that not be worth it?

    • norman
      Posted April 4, 2012 at 12:22 pm | Permalink

      It is amazing that everything we do isn’t taxed yet. What isn’t? you cry. Breathing. I often think that as CO2 is now classed as a dangerous pollutant that is going to kill us all we should tax breath.

      There are numerous advantages. The fat, unhealthy, and smokers breathe more, so they should be punished for their lifestyle choices more than they already are. No one can avoid it, we must all breathe. Sex, which the government has yet to control fully, can be monitored and registered so that potential ‘deviants and offenders’ can be caught at an early stage. Terrorists may be nervous, and so the monitoring software can pick up on them too. At airports, we can catch drug smugglers by their fast, shallow breathing as they approach customs.

      You’d have to be mad (or a terrorist or sexual deviant yourself!) not to want to have some device installed in all our throats.

      Think of all that lovely tax flowing in and in, in and in. Utopia!

      We’re taxing food and water, why not?

      Politicians would naturally be exempted, the amount of useless hot air expelled in SW1 would bankrupt the nation if it went on expenses. Even Merv couldn’t print the stuff fast enough to keep up.

  4. Posted April 4, 2012 at 6:45 am | Permalink

    Edward Hugh examines the political issues in a pdf linked here:

    http://www.acting-man.com/blog/media/2012/04/Wolfson-Essay-revised.pdf

    The original concluding paragraphs from last January, even more pertinent today were:

    J.K. Galbraith observed: “Politics consists in choosing between the disastrous
    and the unpalatable”. To see disaster looming before choosing the unpalatable
    is a dangerous strategy”.

    I wish I could believe Europe’s leaders will prove able to see the disaster
    coming while there is still time to choose the unpalatable, but with every passing
    day this belief gets harder to summon.

  5. nero
    Posted April 4, 2012 at 7:40 am | Permalink

    To simplify the argument, in order for the break up of the euro there will have to be blood on the streets in an EU country. The only real life example of this is Greece and they have recently been bailed out again and are still in the euro. The bail out fund has or is in the process of being increased to bail out any other EU nations that may be a problem, also since democracy is slowly being undermined technocrats can be flown in to further dampen down any future disturbances.On present and recent evidence I do not see any change in the next few years and the collective political will to maintain the EUSSR is strong. The superstate continues remorselessly through the process of engrenage and the majority of politicians and people do not oppose it. In the UK parliament there is a majority for the continuation of federalism in the EU.Democracy is quietly being destroyed in Europe and technocrats are beginning to govern countries.this has, of course, all happened before and is being repeated again, do we ever learn from the lessons of history?I totally oppose the whole entity of the EU and would leave immediately,but realistically how are we going to escape?The only saving grace at present is that we are not in the Euro and that we have 81 so called rebel MP’s and UKIP-it’s a start.

    • uanime5
      Posted April 4, 2012 at 4:15 pm | Permalink

      Given that only two countries (Italy and Greece) have had their prime ministers replaced with technocrats while other countries with financial problems (Ireland, Spain, and Portugal) have not I wouldn’t describe it as democracy being destroyed. Especially since elections are still being held in these countries.

      A technocrat trying to fix a state with problem is little different from a new CEO trying to fix a company with problems.

      Reply: Where they have elections each main party has to offer the same economic policy!

  6. Martin
    Posted April 4, 2012 at 8:13 am | Permalink

    You mentioned the other day that in Greece cash transactions are popular. This implies to me that the currency isn’t the problem and that people like a low inflation currency.

    Indeed if any country gave up the Euro and went to a new currency they might well be heading into a sort of Argentina like world of make believe inflation figues and politicians using old boundary disputes to divert attention from domestic problems.

    reply: It is a monopoly currency – they have n o choice!

    • Martin
      Posted April 4, 2012 at 12:30 pm | Permalink

      The point I was making was that if confidence in the Euro was low then either barter or other currencies would be used (albeit unofficially). (e.g. US Dollar is a defacto second currency in some Latin American countries with weak currencies.)

  7. Brian Tomkinson
    Posted April 4, 2012 at 8:26 am | Permalink

    Are we planning an orderly exit from the EU? No? I don’t suppose we are; just like the governments in the Eurozone we have a government which has neither the confidence nor the ability to act in any way other than as a junior subordinate to their political masters in Brussels. One day the whole edifice will collapse. In the meantime if about 70%-80% of our legislation eminates from Brussels why not reduce the membership of the Commons by 70%-80%? If you have given away the powers with which you were entrusted(without our consent, incidentally) why should so many of you still be paid by the taxpayer?

    • BobE
      Posted April 4, 2012 at 7:01 pm | Permalink

      I agree, we no longer require MPs. MEPs should be implimenting the superstate decisions now. House of lords can go to. Palace of Westminster can become a hotel.

  8. Posted April 4, 2012 at 8:33 am | Permalink

    and I shall shut up about education and listen.

    • Susan
      Posted April 4, 2012 at 11:19 am | Permalink

      Rebecca,

      I am not sure what that comment means. However it would be rather helpful if teachers in the State system did start to listen. It would also be rather helpful if they taught instead of trying to be social workers and passing their vision of the World onto their pupils.

      Michael Gove is making some excellent improvements to the standard of education in this Country and not before time.

  9. alan jutson
    Posted April 4, 2012 at 8:41 am | Permalink

    JOhn

    It will only end when either politicians realise that money (the Euro) is less valuable than freedom (ability to govern temselves) to make their own decisions, or when the population decide for them, either at the polling stations or in the form of civil unrest.

    I hope should anyone leave, then it will be orderly, the alternative would not be nice place to be.

    Talking of the EU. I see France has deported some of its rather more radical visitors.
    No waiting for appeals, no waiting for the human rights solicitors to turn up, just a national court judgement, then straight on a plane back from where they came.
    Same as the action of Italy a few days ago as well.

    Have they broken any rules ?
    Will they be fined?
    Will they be told to have them back?

    Why do we not take the same simple action, why do we allow similar people years and years of taxpayer funding to argue their case, when many of them came here illegally in the first place.

    • alan jutson
      Posted April 4, 2012 at 8:49 am | Permalink

      I see it is reported in the Press today that we are to expect more chaos and waiting at immigration control areas this Easter, due to too few members of staff being on duty.

      If this is true, what message does this send out to the World.

      Do we have enough staff to do the job properly or not ?

      Will we just let people in without proper checks as before, just to speed things up and shorten the waiting times ?

      How will we cope when the expected Olympic visitor rush gets moving ?

      We have had plenty of notice. ! 6 years in fact !

    • norman
      Posted April 4, 2012 at 10:43 am | Permalink

      Those undesirables missed a trick, they should have boarded a plane to London as soon as the French government made their intentions known. Now that the first lot have been processed though we can expect any future troublemakers to make straight for these shores at the first sign of a tap on the shoulder.

      • alan jutson
        Posted April 4, 2012 at 1:05 pm | Permalink

        Norman

        One already has, he came direct from France, he has been here for 9 years whilst we still decide what to do with him.
        Funded by the taxpayer of course during all of this time here.

        Will probably find someone to marry him eventually, then he will probably appeal again on grounds of family ties/right to family life.

        Difficult to take any government security measures seriously when this is still allowed to go on, and on, and on.

        One day our Government may wake up, but do not hold your breath.

  10. Caterpillar
    Posted April 4, 2012 at 9:17 am | Permalink

    Should President Sarkozy lose to Mr Hollande will French debt become more expensive? Could this not be an important factor in the Euro’s future?

  11. Acorn
    Posted April 4, 2012 at 9:38 am | Permalink

    It has to break up and the “Simultaneous Exit” strategy is the only way I can see it working. http://www.bloomberg.com/news/2012-04-01/euro-was-flawed-at-birth-and-should-break-apart-now.html . The use of a “European Transition Currency” a la Lombard Street, is the best idea I have read.

  12. Denis Cooper
    Posted April 4, 2012 at 9:45 am | Permalink

    It would be extremely complicated for a country to leave the euro, but as far as the necessary EU treaty changes are concerned they could be relatively simple statements of principle in the main body of the treaties, with details elaborated in a protocol, and with the final detailed execution being delegated to a Commission-led taskforce established for that specific purpose.

    Once it had been reluctantly acknowledged that euro membership might not be forever then I imagine it would be easy to agree a statement of principle that if a country wished to leave the euro voluntarily then it would be allowed to do so, and other EU member states would fully co-operate in that process “in a spirit of solidarity”, as they say.

    Much more difficult would be a statement of principle on the compulsory ejection of a country from the euro: under what circumstances, through what voting procedure, and would the decision rest just with the other eurozone states or would all the other EU member states be involved, as arguably they should be?

    In both cases it should be made absolutely clear that leaving the euro would NOT mean also leaving the EU.

    However I think the best time to think about EU treaty changes to permit a country to make an orderly and legal withdrawal from the euro has come and gone.

    In the summer of 2010, after EU leaders had agreed on May 9th to break the present treaties and illegally bail out Greece, Cameron could have reasonably insisted that such plans be drawn up and put into the treaties as part of his price for agreeing to the radical EU treaty change which was being increasingly mooted by Merkel and which was formalised as European Council Decision 2011/199/EU of March 25th 2011, but he didn’t.

  13. Graham Brack
    Posted April 4, 2012 at 10:22 am | Permalink

    “Another intense phase of crisis in the markets, threatening banks”

    Banks in general, yes; but does it actually matter if a particular bank is threatened? I’m not entirely clear what exactly the Central Bank of a Euro state is needed for now.

    From the business point of view, there is much to welcome in a unified currency that simplifies accounting and – in the good times – mitigated exchange rate risks. And even though the Euro has been less stable lately, those of us who remember the days when we had to predict what the peseta and lira would do may feel that matters are no worse now.

  14. APL
    Posted April 4, 2012 at 10:23 am | Permalink

    JR: ” .. arranged at speed and legally when the current Treaty does not have a mechanism for exit, and when no country is seeking exit.”

    We have no need to worry about the legality of the Treaties. The treating parties don’t seem to care. The constraints and privileges of the treaties are ignored by the very signitatories why should be care about the legal nicities?

    The treaties have been abrogated as a result of chronic failure to perform and outrageous attempts to exceed the powers already assigned.

    Therefore we should simply announce that treaties no longer have force in the United Kingdom.

    You make a ‘big thing’ of the rule of law, a country that claims to be concerned for the rule of law cannot treat with such a lawless group.

  15. MajorFrustration
    Posted April 4, 2012 at 11:01 am | Permalink

    I think the writing is still on the wall as to the future of the Euro and its membership. Ok there is supposedly an uplift in the EFSF funding to e800bn but is this real money and where and whence will it be provided. Could it just be “promise money”
    Whilst Greece is still in a pickle – and is likely to need yet another bailout Portugal is also looking a basket case. Growth and retail sales down, inflation up and wages down.
    When will these politicians face reality.

  16. MajorFrustration
    Posted April 4, 2012 at 11:05 am | Permalink

    What time zone is this web site on?

  17. oldtimer
    Posted April 4, 2012 at 11:10 am | Permalink

    I agree with your analysis. It seems to me, as it does to nero above, that the political will to sustain the euro and all its members withing it will only be shaken by blood on the streets. It will probably need quite a lot of blood too.

  18. dick thornton
    Posted April 4, 2012 at 11:50 am | Permalink

    All politicians want is to stay in power. For some reason most have nailed their flags to the Euro mast, so they feel they must support it, even if all other Europeans realise that it does not work. Even an 11 year old boy can see what is wrong with the idea. I can only conclude that it is due to their intellectual dishonesty that EU politicians refuse to recognise the obvious. If you really cannot grasp what the boy is getting at with his reference to a pizza, you do not deserve to represent anybody. If you are pretending not to understand, you are intellectually dishonest like the rest of them.

  19. Posted April 4, 2012 at 12:23 pm | Permalink

    A legal exit is possible, through a state’s using article 50 of Lisbon to leave the union itself. They then might have associate-status as part of the EEA and even apply to rejoin the union. Shall be interested to see how you think a nation might legally leave just the €, since the treaty on that doesn’t allow it.

  20. Alan Wheatley
    Posted April 4, 2012 at 1:16 pm | Permalink

    Re “The governments of the 17 members all regard this as a central political project”, indeed more of a political project than a financial one.

    The rules for administration of the euro have already be wilfully ignored by the politicians as suited their convenience at the time; that is ignored by those with the political clout to safely ignore those who might object. Such behaviour illustrates the autocratic dictatorship within the EU. The EU always has been and always will be fundamentally undemocratic.

    No doubt, irrespective as to what it might say in any treaty, if push comes to shove a politically expedient way will be found to solve any situation that might arise, up until the whole pack of cards comes tumbling down.

  21. Posted April 4, 2012 at 1:46 pm | Permalink

    “If the stronger countries have to pay a much larger sum to keep Greece going…”
    Greek Central Bank already raided accounts of universities and hospitals last week to pay some of English-law bonds, and last Sunday it said to the rest of bondholders “there is no money left”. When the institutions can no longer trust the Central Bank, what course of action there remains apart from popular uprising and wiping out the corrupt political system? And how EU institutions find it more convenient to look the other way at such injustice and ruinous actions, while they concentrate on prisoner’s voting rights and the rights of convicted terrorists?

  22. Atlas
    Posted April 4, 2012 at 1:49 pm | Permalink

    Any student of Chaos Theory will be aware that just before a system makes an irreversible change (sometimes known as a tipping point) there are warning signs of the event (eg earth tremors before a volcanic eruption). So it is with systems like the EU. The nursery rhyme of not being able to ‘put Humpty Dumpty back together again’ shows that good science underlies old words of wisdom.

  23. David Langley
    Posted April 4, 2012 at 1:57 pm | Permalink

    I am with Nero above on most of his views, De Gaulle said in his ‘Veto’ speech in 1963:
    “England in effect is insular. She is linked through her trade, her markets, her supply lines to the most distant countries…. she has in all her doings, very marked and very original habits and traditions. In short Englands nature, Englands structure, Englands very situation differs profoundly from those of the Continentals”.
    Too right, and John you have painted a picture of weakness and defeatism on the behalf of countries whose electorates were conned into the project and the Euro. I am not interested in Monnets Political and economic and financial vision of a Federation of European States. To my mind it ranks as treasonable to sell out to the ambitions of non elected and non accountable European EU project politicians and I will surely support any organisation including UKIP that spells out the plan to leave the Aquis Communitaire as soon as possible by the will of the people and the will of our elected Parliament.

    Reply: Indeed – but as I keep reminding people, voters have chosen another federalist Parliament.

    • Alan Wheatley
      Posted April 4, 2012 at 6:52 pm | Permalink

      Re reply.

      Reminders are, of course, by their vey nature backward looking. Do you have a forecast?

    • APL
      Posted April 7, 2012 at 9:58 pm | Permalink

      JR: “Indeed – but as I keep reminding people, voters have chosen another federalist Parliament.”

      But you always seem to omit to mention that the selection of candidates presented to voters are carefully screened by the Party.

      In truth we have next to no choice!

      Reply: You can join a party and help choose the candidate

  24. i.stafford
    Posted April 4, 2012 at 1:58 pm | Permalink

    Although the Treaty on the European Union provides, since the Lisbon amendments for a state to give 3 months’ notice to leave the Union, this does not apply to denouncing part of the treaty. The Vienna Convention on the Law of Treaties does not provide for partial denunciation (as opposed to partial reservation). While the three months’ notice is applicable to the TEU it is not necessarily applicable to the stabilisation pacts. So it may that technically a state could denounce these pacts but that would be without practicality. It is also arguable that a country which leaves the Euro breaches not only the provisions regarding the use of the Euro but the provisions requiring the member state to bring its economic polities into conformity with other member states (since reason for leaving is to do the opposite). Therefore the question arises as to whether a state which unilaterally leaves the Euro has breached such a fundamental part of the Treaty that it has left the whole EU.

  25. Ferdinand
    Posted April 4, 2012 at 4:39 pm | Permalink

    I agree with all you say but the final cause that will trigger one of the scenarios will be the reluctance of the northern states to fund the deficits of the southern. Whatever papering over of the cracks occurs the original and perpetual cause of the single currency’s problems will remain – the differential efficiencies of the 27 states.

  26. sm
    Posted April 4, 2012 at 6:28 pm | Permalink

    off-topic but what can you say…

    http://www.abc.net.au/news/2012-04-05/chinese-pm-calls-for-banking-breakup/3933634

    Reply: If only we could do a break up of state owned banks here!

  27. BobE
    Posted April 4, 2012 at 6:52 pm | Permalink

    John, What happens when Greece goes bankrupt?

    Reply: It did recently and refused to repay some of its debts.

  28. stephen kirkham
    Posted April 4, 2012 at 7:15 pm | Permalink

    I think it is unfair to describe the suggested euro exit mechanisms put forward by the Wolfson prize short-listed authors “fanciful” and “not to be taken seriously”. I think they have added some very valuable ideas to the debate. They were not asked whether a break-up is either likely or desirable, but to suggest mechanisms by which it could be achieved. There is recognition of the political realities, aswell as the need for expediency, and that the law may need to follow rather than precede events. I think the ECU-2 idea is particularly interesting.

    Reply: Their ideas are fanciful because they are unlikely to be adopted by the EU political machine. That is why I am making a proposal which would work in a crisis, the only background to a likely exit of a country or two

  29. Chris
    Posted April 4, 2012 at 8:26 pm | Permalink

    While I admire the obvious competence and expertise of Mr Redwood and find his analyses on various issues very informative, there is one thing that seems to be lacking in what I perceive to be an academic approach to the problems viz. a consderation of the people themselves, and the effect of the EU and eurozone project on individuals. I read of another suicide in Greece today, so tragic, and brought home so starkly by the words/reasons that the elderly gentleman gave for his actions. I believe it is high time that politicians should bury their differences (there seems to be a significantly damaging amount of antagonism between Conservatives and those who have moved to UKIP) and confront exactly what is facing them with the disaster of the eurozone project, and say “enough is enough”. I believe it is amoral to subject a people to abject poverty and humiliation with no realistic hope of ever recovering economic viability, and yet so many of our politicians in the UK (except for UKIP) seem to feel that this is acceptable, or feel at least that there is nothing that they can do about it, except comment. I believe that whatever the political persuasion of individual MPs, they should unite in condemning the flawed eurozone project (and the life to which this project is condemning the people of the poorer countries such as Greece and Spain) and acting to start redefining our relationship with the EU. This would in effect be a trigger for change in the nature of the whole European project.

    Reply: I quite agree. I have often made speeches decrying the impact of the Euro on people who end up with no jobs or low living standards because of its bad impact on various parts of the Euroland economy.

  30. rd
    Posted April 5, 2012 at 1:10 am | Permalink

    Parliament just revokes the 1970s legislation – as you said to me. Of course in reality it will be a mixture of all three of the triggers you mention. Possibly even the Germans realising their bread is buttered if they leave.

  31. Chris
    Posted April 5, 2012 at 10:08 am | Permalink

    While I admire the obvious competence and expertise of Mr Redwood and find his analyses on various issues very informative, there is one thing that seems to be lacking in what I perceive to be an academic approach to the problems viz. a consderation of the people themselves, and the effect of the EU and eurozone project on individuals. I read of another suicide in Greece today, so tragic, and brought home so starkly by the words/reasons that the elderly gentleman gave for his actions. I believe it is high time that politicians should bury their differences (there seems to be a significantly damaging amount of antagonism between Conservatives and those who have moved to UKIP) and confront exactly what is facing them with the disaster of the eurozone project, and say “enough is enough”. (Continued in next comment).

  32. Chris
    Posted April 5, 2012 at 10:09 am | Permalink

    Continuation of my comment above:
    I believe it is amoral to subject a people to abject poverty and humiliation with no realistic hope of ever recovering economic viability, and yet so many of our politicians in the UK (except for UKIP) seem to feel that this is acceptable, or feel at least that there is nothing that they can do about it, except comment. I believe that whatever the political persuasion of individual MPs, they should unite in condemning the flawed eurozone project (and the life to which this project is condemning the people of the poorer countries such as Greece and Spain) and acting to start redefining our relationship with the EU. This would in effect be a trigger for change in the nature of the whole European project.

  33. Lindsay McDougall
    Posted April 5, 2012 at 12:35 pm | Permalink

    If they won’t bend, they’ll just have to break. It won’t be pretty.

2 Trackbacks

  1. By Debt crisis: as it happened, April 4, 2012 on April 4, 2012 at 9:19 pm

    [...] John Redwood, MP for Wokingham, has written on the Wolfson Economics Prize on his personal blog this [...]

  2. [...] John Redwood, MP for Wokingham, has written on the Wolfson Economics Prize on his personal blog this [...]

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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