The long running Euro crisis is set to run and run. This week’s summit of EU leaders is no more likely to fix it than all the previous ones, each billed as the crunch summit to save the Euro.
This time on the agenda is the prospect of a Euro area Finance Minister and Treasury. The Germans are making the perfectly reasonable demand that if they are to back up the credit card for all the Euro nations, they want a say in how much they spend using it. Euro area countries are being reassured that this is no great loss of power. After all, they are told, you the member states can decide how and where to make the cuts. All the EU authorities will wish to do is to set a limit on how much you can spend, and a total for you to raise in tax. The rest is your call!
To do this properly will take Treaty changes. That is a long and arduous process, requiring ratification by all the states signing the new Treaty. It should trigger the odd referendum in a country like Ireland, and Parliamentary ratification everywhere involved. It does not sound like a quick fix.
The last summit offered a banking union as the answer. We are told there will be more progress towards this. Here again, Germany will want some guarantees that she will be able to control or influence the policy of banks in faraway countries, if her credit card is to stand behind all the main banks of the Euro area.
The truth is simple. Too many countries in the Euro area have spent too much, borrowed too much and have now run out of money. Too many banks in the Euro area have overexpanded their balance sheeets, are losing money on too many of their loans, and now need more capital.
The rest of the EU would like the UK to put some money in to help deal with the cash shortfall. There is no reason why we should do any such thing. Nor should the IMF, but they are now fully engaged with a cause they should avoid. There are no signs that the Euro crisis is about to be solved. There is no evidence that the German people are ready to put the German credit card fully behind the troubled areas and banks of Euroland. If they are not willing to do so, why should we?
The Euro remains an orphan currency in search of a country to look after it and support it. Creating a country called Euroland is taking too long for the good of its currency. The rich areas and countries are not willing to prop up all the poorer and weaker countries and institutions. There are now five countries needing special measures and special subsidised loans. It cannot go on like this. The UK government has a duty to ensure not a penny of UK taxpayers money is wasted on this scheme. It now looks as if the obligations of Euroland are also too big for the German state to taqke on, even if she wanted to.