All change on referenda?

 

          Let us assume Mrs Merkel is telling us the truth. She probably did say on her Greek phone call that the Greek General Election was in effect a referendum on the Euro, not that she wanted them to have a referendum on the Euro as well as a General Election.

             It is still quite a change from her position last year, when she with France helped push a Greek Prime Minister out of office for daring to propose a referendum on European matters. These advocates of greater European integration have usually been against referenda, or have demanded re-runs when they get the “wrong” result.

                  The change of stance is presumably to try to force the Greek people to vote for a pro Euro pro EU loan package government. Mrs Merkel thinks the Greek people will do the right thing and vote the way she wishes if they understand that to do otherwise would mean their early exit from the Euro.

                 She might find meddling in other people’s elections from afar has unforeseen consequences. Greece may be wrong to think they can vote for the Euro and against ther loan package to sustain it. If they persist in this anti Merkel stance, there will have to be a face down between a new Greek government and an old German government over this very point. It is by no means clear who will win. Germany has in the past always backed down over more money and laxer rules.

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58 Comments

  1. Posted May 19, 2012 at 8:09 am | Permalink

    Yes, that sounds right. Merkel is preparing the ground for using her interpretation of the Greek electorate’s decision to justify future actions, now that it becomes expeditious to do so.
    Greece joined the Euro on the basis of becoming more competitive with German support until they did so. Whether we argue that there wasn’t the German investment in Greece compared to say E. Germany or the other former E Bloc, or whether the Greeks didn’t collect their taxes and work in Germanic style, the whole thing has failed dismally. The only question is how to clear up the mess in the least expensive way. Rather like closing a wayward overseas subsidiary which is clearly losing money, in the end it is Germany’s responsibility to shoulder the costs of clearing this up.

    • Posted May 19, 2012 at 9:59 pm | Permalink

      Well they are the chief protagonists, so let Germany pay for it, just as long as we don’t

      Tad

  2. Posted May 19, 2012 at 8:18 am | Permalink

    Facebook in for $20B yet a small country like Greece can bring the world economy down, someone’s telling porkies in the MSM after been briefed by the political elete and their minions.

    • Posted May 20, 2012 at 7:07 pm | Permalink

      I do not think I will be investing in Facebook at that price or even at 25% of it!
      Looks like another dotcom fiasco in the making to me which I avoided. Not convinced on gold either despite the, usually very sound, Delingpole’s advice in the Spectator. Still what do I know even the “investment experts” (often it seems the bankers!) are usually beaten by a copy of the FT share price page stuck on a the wall and a few tossed darts for the share selection process?

  3. Posted May 19, 2012 at 8:52 am | Permalink

    Whilst I recognise that the Euro has some significance to the UKs trading position I must admit to being somewhat tired of hearing about the crisis. I suppose it boils down to the lack of action by the politicians. Greece is bust so just let it leave – there are upsides to this course of action. Following which the remaining political pygmies of euroland can concentrate on saving Portugal Spain and Italy

  4. Posted May 19, 2012 at 8:55 am | Permalink

    Nouriel Roubini writing for Project Syndicate 0n 17th seemed to be saying that a Greek exit was inevitable , possibly in the next one to two years.

    Ireland’s Taoiseach Enda Kenny has had to correct his Jobs Ministers comments on radio about the possibility of a second referendum on the treaty.

    German banking giant Deutche in its 120 page report says that Ireland may need a second bailout because Irish mortgage arrears will rise a further 15%. Moody’s have predicted 25% devaluation on property loans depending on the Personal Insolvency Act .

    In relation to Ulster Bank (RBS) there would then have to be further provisions of £1.7 billion for the next two years. Obviously this would be another fiscal transfer from the UK taxpayer to property owners in the Republic of Ireland.

    Regarding bailouts it also looks like Cyprus will be requiring a bailout given its exposure to Greek debt.

    • Posted May 20, 2012 at 11:32 am | Permalink

      In my view as an outsider it’s a tactical error for the “No” side to protest so loudly about the possibility of a second referendum.

      The Irish government is trying to mislead people into thinking that they must vote “Yes” NOW, or Ireland would be forever excluded from any possibility of ESM assistance should the need arise.

      That’s not true: the Irish could vote “No” now, and then if at some point in the future it became certain that ESM assistance would be needed there could be a second referendum, and if the answer in that referendum was “Yes” then Ireland could ratify the “fiscal pact” and thereby qualify for aid.

      In effect the Irish government is not just saying that there “would” be no second chance, but that there “could” be no second chance, which is completely untrue as the government could call a second referendum any time it chose.

      Yesterday:

      http://www.irishtimes.com/newspaper/ireland/2012/0519/1224316359031.html

      “TAOISEACH ENDA Kenny has paid tribute to “the courage and the manliness” of Minister for Enterprise Richard Bruton for admitting his mistake in suggesting in a radio interview that a second referendum on the fiscal treaty could be held.”

      ““Let’s be categorically clear about this. This is the only opportunity that the Irish people will have to vote on the fiscal stability treaty,” said Mr Kenny.”

      Unfortunately the “No” side have failed to pick up on the difference between the possibility that a second referendum “would” be held at the behest of the EU, and the possibility that one “could” be held at the discretion of the Irish government.

  5. Posted May 19, 2012 at 8:55 am | Permalink

    Meanwhile may it not be the financial markets and the Greek public which will decide the issue more promptly? If the local banks are bled dry of deposits and nobody outside Greece is prepared to lend to the country, it seems that decouple and default may need to be done urgently and before the election date, in which case Merkel will become irrelevant.

  6. Posted May 19, 2012 at 9:20 am | Permalink

    “…  She probably did say on her Geek phone call … ”  Skype, I presume.  Ho, ho!

    On a geeky point:  please might we have, especially from an educated writer, a proper distinction between plebiscite – the process – and referendum – the matter at issue?

    ~ · ~

    On the substantive matter

    The reality is that the proponents of the single currency will spend the whole of the several states’ treasuries on tying to prop it up:  the only losers here are the peoples of those states;  the politicians – proponents and silent opponents alike – will still walk away from the scene with gold-lined pensions.

    ΠΞ

    • Posted May 19, 2012 at 10:12 pm | Permalink

      I know, and doesn’t that make you sick!

      And the politicians say of the bankers, they shouldn’t be rewarded for failure!

      Tad

  7. Posted May 19, 2012 at 9:21 am | Permalink

    “She probably did say on her Geek phone call ”

    Who was the “Geek”?

  8. Posted May 19, 2012 at 9:30 am | Permalink

    “Austerity” and “You can’t spend your way out of debt”, go together and is coalition policy. In the interest of balance JR, there is a school of thought that maintains that if you are the ISSUER of a SOVEREIGN currency, you can. The USERS of a currency – households; private sector firms and local government, have to save; borrow; sell assets and/or work for income to generate LIQUIDITY. The Treasury/ Central Bank that ISSUES the currency has no such constraints; but, they do adopt some voluntary ones for the less economically minded – politicians and financial journalists – to worry about.

    As there was some confused theories in yesterday’s comments, perhaps a read of the following will help. http://neweconomicperspectives.org/2012/05/playing-monopolis-monopoly-an-inquiry-into-why-we-are-making-ourselves-so-miserable.html

    PS. If you are wondering why Merv King has a problem targeting inflation, well back in 2005, he was hanging out with the wrong crowd http://www.bankofengland.co.uk/publications/Documents/speeches/2005/speech245.pdf .

  9. Posted May 19, 2012 at 9:48 am | Permalink

    Perhaps Mrs Merkel thought she was offering the Greek politicians a way forward to try and highlight the fact that if they want to keep the Euro, then they have to accept EU rules.

    The two are linked. You cannot have one without the other.

    Shame the threat/promise of a referendum was not carried out by the then Greek Prime Minister a year ago.

    At the moment both the Greek people and their politicians think they can have the best of both Worlds, and that other Country’s will continue to bail them out, no matter that they cannot afford to pay back the current bill, let alone a larger one.

    • Posted May 19, 2012 at 10:09 am | Permalink

      I see in todays Daily Mail that they have two reports on our own debt management policy.

      Simon Heffer
      “When it comes to ideas for saving the economy, our leaders are as bankrupt as Greece. No wonder all they offer us is lies”

      Stephen Glover
      “Cuts? What Cuts?”

      • Posted May 19, 2012 at 9:07 pm | Permalink

        Indeed and it could all be so different. Just cut the state and stop killing the private sector with over taxation and other insanities.

  10. Posted May 19, 2012 at 9:49 am | Permalink

    Germany should let the ECB print some more money for the PIGS. They could call it the “Special Transitional Investment for Europe Scheme (STIES)”.

    • Posted May 19, 2012 at 8:27 pm | Permalink

      This would be a further loss of sovereignty because what you are suggesting is a sort of combined unallocated national treasury is it not?

    • Posted May 19, 2012 at 10:15 pm | Permalink

      LOL DW

      Tad

  11. Posted May 19, 2012 at 10:47 am | Permalink

    John, our moment has come. For the euro to work, the wealthier eurozone members will now have to transfer additional structural funds to the poorer members in order to ease the pain of austerity. Now is the time for Britain to offer to financially support Germany in this important matter.

    In return Britain should seek a final negotiated acceptance that although Britain is committed to the Common Market and wholeheartedly wants to be in the EU bloc with open trade, business and common financial regulation (albeit with autonomy in taxation matters). Britain does not want to be in the eurozone or involved in the political side of the European Project.

    In return for a repatriation of certain important powers and a restoration of our political sovereignty, Britain should contribute to the structural funds now required. Although costly, if done properly it could prevent a eurozone break-up and avoid the need to further re-capitalise the banking sector and for additional liquidity provision.

    Britain, Germany and others should then help to ease the pain in Greece. British and German bureaucrats could even work together going forward to help a future Greek government to collect its taxes.

    • Posted May 19, 2012 at 7:16 pm | Permalink

      Sadly , it does not have a chance of working , the numbers simply don’t add up, in fact Germany can’t afford to underwrite the EURO, accept the logic it is all a busted flush and then we can go through the inevitable pain and move on!

    • Posted May 19, 2012 at 7:28 pm | Permalink

      Not a single penny more……We should take back what is rightfully ours as a sovereign state. For that, there is no price to pay….

      zorro

    • Posted May 21, 2012 at 11:35 am | Permalink

      So what you want to do is for us to buy our sovereingty back? You sir, are mad!!

      We should tell them where to go and accept the Greeks defaulting as they have done multiple times!

      We should then put the money that goes to the EU towards fostering a stronger commonwealth. Something the EU should have aspired to rather than the political disaster they became!

  12. Posted May 19, 2012 at 11:12 am | Permalink

    Like the Labour Party, led by Mr Balls here, the Greeks seem to want to live in the past. The Labour party seems to want to live in 1997 when there was lots of money sloshing round and they could play Lady Bountiful all over the place. So do the Greeks. To make matters worse, they are determined to show that they are in no sense Middle Eastern, but true Europeans too.

    Mrs Merkel comes from East Germany where she was brought up as a Lutheran living in the poverty of the genteel. It was a place where you were honest, where you paid your bills, where your word was your bond and where you behaved like Honest Heidi.

    Incompatible.

    We have seen on several occasions what happens when the Sovereign People get the wrong answer in referenda in Europe have we not?

    • Posted May 20, 2012 at 12:23 am | Permalink

      we want to live in the past too. very few politicians are saying that the current system only being sustained by the selling of assets (qe) and mortgaging our futures. and so few of the public are aware of the true state of affairs it’s understandable.

      we could easily maintain a comfortable and slowly growing improvement thanks to technology and advancement but we seem to want it all now and by not having to earn it.

  13. Posted May 19, 2012 at 11:50 am | Permalink

    If only I could see the advantages of the system the Europhiles are trying to create by stealth. It surely isn’t greater democracy. It certainly isn’t a good standard of living for everyone, because it’s all crashing in around their ears. It isn’t a green agenda, because our seas have been plundered to depletion. It isn’t to combat crime, because the most appropriate measures to deal with criminal vermin are denied us. It can’t be peace on the European continent, because there looms a crisis of civil insurrection not seen for 80 years.

    I guess that doesn’t leave much else, so could it possibly be to create an elite where all the power and wealth is placed in the hands of but a few?

    That isn’t scaremongering, that is merely looking at the evidence.

    Tad Davison

    Cambridge

    • Posted May 19, 2012 at 6:54 pm | Permalink

      If you get a lot of people who all roughly think the same thing and they only meet like minded people (as on this very blog) then the views are reinforced.

      If I were to say, for example on this blog that the Conservative Party and UKIP ought to back down and let Ed Balls get on with it, I would be instantly dismissed as a Troll.

      It is the same for Roger Helmer and Dan Hannan in the Hemicycle.
      I don’t think it is so much about money as about KNOWING YOU ARE RIGHT.

      • Posted May 21, 2012 at 3:44 pm | Permalink

        Mike Stallard

        I agree with your point that if you are with like minded people your views will be reinforced. The difficulty with what is being said however, is that the Citizens of the EU want to be part of the Eurozone not just the Politicians. Therefore it is one thing to say that the Eurozone is not right for the UK it is quite another to say it is not right for people who actually support it. This may change of course if things become economically more difficult.

        As dire as things are for the Greeks they still want to stay in the Euro. It is just unfortunate they are not prepared to pay the price for doing so and that Germany is not prepared to help them to.

        I would suggest the citizens of the EU cannot understand the British contempt of for the Eurozone project.

    • Posted May 19, 2012 at 7:36 pm | Permalink

      One could certainly argue that the actuality is creating that situation….

      zorro

    • Posted May 19, 2012 at 8:01 pm | Permalink

      “the advantages of the system the Europhiles are trying to create by stealth”

      I do not think these are intended to accrue to the citizens but to the bureaucrats.

  14. Posted May 19, 2012 at 12:34 pm | Permalink

    Indeed you are right but why:

    “Let us assume Mrs Merkel is telling us the truth” why is she not a politician (like cast iron Cameron) who will say whatever suits the time, place and voting arithmetic and then change stance just a minute or two later.

    The EU and democracy are clearly in direct opposition as usual. From Ted Heath to Cameron. From 1971 to date the position is the same.

    “There is no question of any erosion of essential national sovereignty.””There are some in this country who fear that in going into Europe, we shall in some way sacrifice independence and sovereignty. These fears I need hardly say are completely unjustified”
    Ted Heath, British Conservative Prime Minister and noted Europhile. White Paper on the implications of joining the EEC, July 1971. Proven by later release of documents to be outright lies.

    • Posted May 19, 2012 at 4:19 pm | Permalink

      The more I listen to Cameron, wittering on about his parent training on the state, the Boots vouchers, his unisex insurance rules, no retirement, unisex maternity laws and his absurd, sham green bling and Europhile stance, he seems even worse than Heath to me and by some margin.

      • Posted May 19, 2012 at 5:56 pm | Permalink

        The point I made earlier about maternity leave for fathers is that it it is unpaid, so who will be able to take it in the real world?

        • Posted May 20, 2012 at 12:28 am | Permalink

          yep, more nonsense dreamed up by analytical and strategic geniuses to target a specific group, women on this case who are abandoning the tories in droves, but of very little impact to people in the real world and certainly wont improve anything in meaningful way.

      • Posted May 19, 2012 at 7:38 pm | Permalink

        That’s saying something….!

        zorro

    • Posted May 19, 2012 at 10:28 pm | Permalink

      Yes, and Heath later admitted to Peter Sissons on the BBC’s Question Time programme in 1990, that a federal Europe was in the back of his mind all along!

      Then some Europholes who frequent these pages insist there wasn’t a conspiracy. Talk about denying a glaringly-obvious inconvenient truth!

      Tad Davison

      Cambridge

    • Posted May 20, 2012 at 10:03 am | Permalink

      During his single term in office, Ted Heath agreed with German Chancellot Willy Brandt to implement full economic and monetary union by 1980.

  15. Posted May 19, 2012 at 1:24 pm | Permalink

    Unless Greece leaves the Euro it will all end in tears. Massive unemployment is on the cards with a breakdown in law and order and nowhere for the Greeks to go other than receiving a gift from Germany equal to the bulk of its indebtedness which, of itself would only buy time.

    Greece must cut loose, default and print its own currency. No matter how fast it prints it will eventually learn that unless some nutter is willing to lend money then they will have to accept that they can only import up to the amount of their exports and their government can only be sustained at a size that will not adversely inpact on their private sector.

    Not just a lesson for the Greeeks of course.

    • Posted May 19, 2012 at 6:29 pm | Permalink

      We are already at the tears stage. The Greek economy has already contracted 20% and continues to shrink. It will take 40 or more years to rebuild the Greek economy. What I do know is that this wicked project is bringing nothing but ruin to Europe.

  16. Posted May 19, 2012 at 1:28 pm | Permalink

    She is up for reelection and so will say anything to try to improver her chances. Luckily the Germans will dump her. She can join Sarky in oblivion.

    • Posted May 20, 2012 at 12:31 am | Permalink

      unluckily for the Germans, as we have found out and the French are going to, it wont make a Whit of difference. the levitation rumbles on toward the precipice.

  17. Posted May 19, 2012 at 1:41 pm | Permalink

    I don’t know about you John, but I find the way the democratic process is rapidly being torn up in the EU worrying. Are we sliding back to the 1930s politically as well as economically?

    • Posted May 19, 2012 at 6:51 pm | Permalink

      Well, we need some anger too to rein act the 1930s properly.
      I reckon the inflation and the austerity programmes ought to do that.
      (etc)

    • Posted May 19, 2012 at 7:19 pm | Permalink

      yes – a mixture of the 30s and 70s as I have said for the last 10 years!

  18. Posted May 19, 2012 at 3:43 pm | Permalink

    My guess is that the Greeks will probably cave in.

    In Ireland, the government’s threat that otherwise the state might run of money not in a few weeks, but in a few years, has been enough to swing support behind a “yes” in the referendum on Merkel’s “fiscal pact”:

    http://uk.reuters.com/article/2012/05/12/uk-ireland-referendum-idUKBRE84B07Z20120512

    Nobody really believes that it will do any good, and many people believe that it will actually be harmful; but Merkel had the ESM treaty reopened to insert a “blackmail clause” so that failure to ratify her “fiscal pact” disqualifies a country from getting any ESM bailout should it be needed.

    This kind of message will be hammered home to the Greeks again and again during the election campaign and they may well capitulate.

    That wouldn’t rule out Greece eventually leaving the euro, but it would be deferred for some time.

    • Posted May 19, 2012 at 6:02 pm | Permalink

      I don’t think the markets will be convinced. I also suspect the run on the banks in Greece and Spain could accelerate very quickly, and the date of the new election in Greece will then prove irrelevant.

    • Posted May 19, 2012 at 7:40 pm | Permalink

      Germany will bail them out but demand collateral….(my beach hut theory)

      zorro

  19. Posted May 19, 2012 at 4:04 pm | Permalink

    Even Liebour are discussing openly the prospect of an in/out referendum on the EU here in blighty should they be returned to power. I’m not a fan of the Red Ed’s, but his advisors are clearly weighing up the public mood. EU membership seems to be guilt by assocaition to the Eurozone.

    Rumours abound that Dave and his advisers are saying the next Conservative manifesto will include one, possibly two referenda on EU renegotiation and memebership. But why then did he face down his own backbenchers only a few eeks ago ?

    Too little too late me thinks. If I was advising, looking at what is happening to Greece, Spain etc and the new stance from Hollande and Germany seemingly isolated in calls for more austerity, I would advise at least the renegotiation referendum before the next election to ‘Save Dave’.

    If two buffoons such as the Ed’s can put Liebour in front, then drastic action is called for and Dave’s popularity bounced on his EU veto.

    • Posted May 19, 2012 at 6:10 pm | Permalink

      Why should anyone still believe any pledge about the EU from any party?

      Tory MP Mark Reckless on October 24th 2011, Column 36 here:

      http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm111024/debtext/111024-0001.htm

      “The Prime Minister tells The Daily Telegraph today that we should use any treaty change to shore up the euro to get powers over employment and social policy back, yet on 25 March, he agreed to precisely such a treaty change, but did not ask for anything in return.”

      E-petition calling for a referendum on that EU treaty change is here:

      http://epetitions.direct.gov.uk/petitions/33825

    • Posted May 19, 2012 at 8:29 pm | Permalink

      Events may overrun all this political speculation I suspect.

    • Posted May 20, 2012 at 12:37 am | Permalink

      Cameron promising anything of the sort would most likely lose votes. its one thing to suspecta politician its lying but when he brazenly does it to your face for a second time I doubt many will take it well. and why wait? if so keen do it same time as Scottish one, he is pm, not miliband. and if the lib dems thwart it ask the better then the right can no longer doubt camerons conservative credentials and 2014 so close to election the coalition could survive it

  20. Posted May 19, 2012 at 7:35 pm | Permalink

    I suspect Greek People will be offered smoke-and-mirrors concessions which will amount to nothing much and they will be conned by their own politicians and media into voting for more of the same.

    However, even if Greece is stitched up, surely we are now running out of road anyway. France, Spain and Italy will surely not hold up, regardless of what happens in Greece or Portugal.

    Also, let us not forget smaller, richer countries like the Netherlands. My impression is that the Dutch are increasingly asking each other why they are paying everyone else’s bills but having very little say in anything.

  21. Posted May 19, 2012 at 7:47 pm | Permalink

    There will be a change of policy both by the eurozone and by the UK. This will not be overt but covert. Greece will definitely stay in the euro and Germany will definitely change its policy direction. To me its glaringly obvious all euro-politicians will change direction only because they have to and call me dave will follow suit. There will be no catastrophes and things will improve later this year, as I’ve always said the worst never happens. Please stop all this scaremongering, and focus on the fact that all politicians are only interested in one thing the next election and all of them will do anything it takes to get re-elected and that means the solution to the eurozone crisis. Always remember monetary policy trumps everthing else.

  22. Posted May 19, 2012 at 8:36 pm | Permalink

    If the Greeks do not get what they want from the Germans then the old cry will go up. I think we all know what that will be…don’t mention the war!

  23. Posted May 19, 2012 at 9:07 pm | Permalink

    Just seen DC lecturing the world on what they need to do to obtain growth….perhaps he could put it into action in the UK?

    Mind you, he seems to think that the emergency interest rates we have at the moment are as a result of his government’s policies and are a good thing/sign of success……does he not understand that they are a sign of economic weakness and akin to being in intensive care?

    zorro

    • Posted May 20, 2012 at 12:46 am | Permalink

      I don’t doubt for a second he doesn’t understand it. I know no one can have a good knowledge of more than a handful of subjects and a superficial of the rest but he doesn’t even seem to have a superficial knowledge of one. what actual original ideas has he came up with? I can’t think of one.

      he looks nice for the camera, speaks well but is an empty shell. even brown had a philosophy and was capable of coming up with ideas. all in the wrong direction in my opinion but not in his but Cameron can’t even. OK forgot one the big society, no one seems to know what it is or even if we’re still pursuing it but at least it was something, however ill thought out and practically useless.

  24. Posted May 19, 2012 at 10:51 pm | Permalink

    Thanks, John. I guess governments all over the Eurozone are realising that people want referenda on the project, even if they are politically unpopular. But, as Labour are starting to realise, whoever get a referendum through in Britian won’t be able to lose the next election except through an act of God.

  25. Posted May 20, 2012 at 12:51 am | Permalink

    Well the Greeks can either maintain austerity, receive bailouts, and stay in the euro; or stop complying with austerity, no longer receive bailouts, and go bankrupt. Though the next election may be too little too late.

  26. Posted May 20, 2012 at 9:51 am | Permalink

    I am not too keen on referenda either. The question is usually asked until the right answer is obtained. When will the Irish have a third referendum on the Lisbon Treaty? When will the Irish hold another referendum on divorce?

    There is no substitute for the Conservative Party, a Party capable of forming a national government, going into the next General Election with a well thought out policy on Europe, and implementing it soon after taking office.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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