The news that The Slovakian Parliament has vetoed the bail out plan for the Euro has so far been taken quite well by the markets. They know how EU democracy works. If the EU authorities do not get the answer they want from a vote, they expect the vote to be taken again and again until the answer is Yes.
Proponents for the Euro say that one small country’s Parliament should not be able to hold up their project. They will deduce from this event that there will have to be changes, to stop democratic votes and wayward Parliaments from having a different view from the political core of the project.
Most sensible people would conclude from the ability of one small country to stop the policy of pretend and extend that now is said to be necessary to preserve the Euro that the whole single currency scheme had been wrongly designed in the first place. They might agree with those of us who said at the outset that you need one country with one set of political decision takers if you are to run a single currency.
Meanwhile Mr Barroso has said it would be good if the UK contributed to the bail outs. That has provided a welcome target for some UK Eurosceptics to attack. The government will say No, and will claim credit for resisting such “pressures”. The truth is the UK is contributing to this foolish policy of bail out through the IMF and directly in the case of the Irish loan. We were asked to approve more of the documents for it last night. Labour abstained and a few of us voted No.
The Euro establishment thinks the Euro 440 billion fund must go through. They know, however, it is not big enough. They also should by now realise that there is no point recapitalising the banks against sovereign loss unless they can also take action to stop all future sovereign loss. The banks and the sovereigns of Euro area are hitched together. Solving the sovereign debt crisis is crucial to success. There are still no clear commitments to do so.
Most of those involved in “saving” the euro do now think it rests on agreement between Germany and France, who will become the principal bailers of the damaged zone. The big issues are discussed in hectic meetings between the big two. The other countries are awaiting an answer to their disagreements. How much longer will the democracies of the others put up with this? When will the people and MPs of the other countries start to assert themselves and say they want to be involved in the decisions?
The Euro is still a single currency looking for a single country to love it. The leaders of the EU disagree about how far and how fast they travel towards the single state their currency needs. Even if they got to their destination, they would still need to cut spending or raise revenue to tackle their debt crisis.