Europe

How much longer should the IMF be run by a European? The job of the fund is to assist any member country which is in trouble, not to advance the dream of European integration. So far, since it all began after the war, the IMF’s managing directors have been Europeans, most commonly French. The current one, Christine Lagarde, is a French former politician, as was her predecessor, the socialist sex-maniac Dominique Strauss-Kahn. In her opinion, the needs of the EU trump everything, but that is a political view, not a financial one. It must be annoying for the scores of poorer, non-European IMF members — e.g. the Philippines, Mexico, Jamaica — to be paying for this.

This time tomorrow, we’ll have had the first projections from the Greek referendum. We will have an idea as to whether the country has said Oxi or Nai. At the moment, the polls make the referendum too close to call. Whatever the result, there’ll be no quick deal between Greece and its creditors. But if the Greeks vote Oxi, then the country could be forced out of the Euro by the ECB cutting off assistance to its banks. If that were to happen, then the Eurozone would have to move to integrate very quickly to prevent Portugal, Italy, Spain and even France being pushed towards the Euro exit the next time there’s a fiscal crisis. This would almost certainly require a new EU treaty, which would provide Cameron with quite an opportunity.

Could Greek voters back austerity measures to keep their country in the eurozone this weekend? Today’s papers cover a poll by GPO which put ‘Yes’ on 47.1 per cent and No on 43.2 per cent. This result would see resignations at the top of Syriza, but effectively no Grexit.

After much speculation that the Greek referendum was about to be cancelled, Alexis Tsipras has just appeared on Greek television to confirm that it is going ahead and to urge people to vote No. He said that those saying a No vote would mean Greece leaving the Euro were telling lies. He argued instead, that a No would strengthen his negotiating hand and allow him to achieve a ‘social deal’ which would be easier on the poor and pensioners. Everything now turns on the result of the referendum. If it is a Yes vote, the Syriza-led government will almost certainly resign and one can see how the country’s creditors could do a deal with a new government. But if it is a No, then it is not clear what will happen.

The question that will be on the ballot paper in Greece on Sunday is rather wordy, so European leaders have been trying to simplify it for Greek voters today. Their message has been vote Yes to the bailout deal to stay in the Euro and No for a return to the Drachma. Their logic is that however much Greeks may dislike imposed austerity, they don’t actually want to leave the Euro. It has become clear today that the Eurozone’s strategy now is not to try and put together a last minute agreement but to instead rely on a Yes vote on Sunday. This would lead to the fall of the Syriza-led government and the Eurozone’s hope is that a deal could then be done with a new, more emollient Greek government. Indeed, there seems to be little hope of a last gasp compromise by either side.

Tonight, it is still not clear how the Greek situation will be resolved. The European Central Bank--which is desperate to avoid being dragged into the politics of this situation--has chosen a middle way on its emergency assistance to Greek banks. It has neither ended it—which would have crashed the whole Greek banking system—nor extended it, which would have enabled the banks to stay open and eased the pressure on the Syriza-led government. Greek banks will definitely be closed tomorrow and probably until the referendum on Sunday. The next big question is what happens on Tuesday when the bailout programme ends and a payment comes due to the IMF which Athens will not be able to make.

The Greek Prime Minister Alexis Tsipras has just announced that there will be a referendum on the proposed bailout deal next Sunday, July 5th. He will ask for the current bailout to be continued until then to allow the Greek people to have their say. The signs from Athens are that Tsipras will campaign for a No vote unless the creditors offer Greece a radically better deal at tomorrow’s meeting. This move from Tsipras will infuriate Greece’s creditors.  It will also, almost certainly lead to the introduction of capital controls for Greek banks until the referendum. If the creditors don’t blink tomorrow and improve the terms they are offering Athens, then it is hard to see how the current deal can win a referendum in Greece.

It is unfashionable to quote polls these days but one recent finding went unremarked even though it is remarkable. It showed that only 15 per cent of members of the Conservative Party want to pull out of the EU. From the noise surrounding the debates on the Referendum Bill you might believe that this is a surprise. In reality the vast majority of Conservatives at all levels of the Party want Britain to stay in a reformed EU. We believe it is now time for the silent Conservative majority to get behind David Cameron and start to make the case for the UK’s continued membership of the EU and the eventual Yes campaign.

Will the country be torn apart by the EU referendum? That’s the argument made by Chris Deerin on the capitalist running dog website CapX. Deerin, a Scottish Unionist, says it’s now Great Britain’s turn to go through the same painful and divisive process that Scotland endured last year. Personally I doubt that will happen, although it’s possible that a slender vote in favour of remaining in the EU may in the long term be divisive. The main problem with the analogy is that there is just no Ukip equivalent of the aggressive Scottish nationalists who shouted at Jim Murphy. There is a Kipper version of the Cybernats, but even online they are proportionally smaller, and less demented.

Jacob Rees-Mogg told the House on Thursday that his favourite activity is making speeches on Europe and 'if the House isn't sitting, I do it at home'. That's not the only place he opines on the subject. Mr S was enjoying some supper at the Savile Club on Wednesday evening, with his comrades from 'Conservatives for Liberty'. The noble sounding group is made up of your average Tory boys, with facial hair that would not have looked out of place in the Continental Army circa 1776. While the evening was meant to be a celebration of the Magna Carta, with David Davis and John Redwood in attendance, the conversation in the room kept going in one direction: Europe.