Europe

Sunday

James Forsyth

Barroso’s warning

From our UK edition

José Manuel Barroso’s article in The Observer today is a plea for relevance. When you cut through the usual EU jargon, what you find is the Commission President—predictably—declaring his opposition to German talk of an inter-governmental treaty among the 17 Eurozone members. He’s also warning the smaller Eurozone states that without the Commission’s protection their interests will be trampled on by the Germans and the French. This is what he means when he writes that  “all member states need to support and trust the common supranational European institutions that were created after the second world war.

Daniel Korski

The spectre of populism

From our UK edition

Across Europe, the bien pensant are worried. They fear that the Eurocrisis could lead to the rise of populism — whatever that means — and even extremism. The spectre of the 1930s stalks a lot of discussions, as the FT's Gideon Rachman found out at a lunch with a hedge fund manager who thought the break-up of the Euro would lead to “the next Great Depression and a resurgence of Nazism”. But is there real cause for fear or is this a matter of people projecting a particular history onto the future? Economic dislocation has in the past led to populism but not uniformly, or at least not in numbers that have made a historical difference. It was not the case in the United States in the 1930s or, more recently, during Japan's ‘Lost Decade’.

Saturday

Fraser Nelson

Berlusconi: latest victim of Europe’s reverse Arab Spring

From our UK edition

Berlusconi has finally resigned – and so continues what seems to be the Arab Spring in reverse (a Gnirps Bara). In the Arab world, people rose up against undemocratic juntas and democracy ruled. In Europe, undemocratic juntas are springing up in Frankfurt opera houses and toppling democracy. All Sarkozy had to do was help the rebels who wanted to remove the targeted leader. The cover story of this week’s magazine has a piece by yours truly about the Frankfurt Group of eight people who are calling the shots. Only two members are directly elected: Sarko and Merkel (well, three if you count the Prime Minister of Luxembourg, which we shouldn't as it a population smaller than Leeds). The rest are the heads of the ECB, IMF etc.

Daniel Korski

Who speaks for the euro?

From our UK edition

That's a more relevant question that you might think. Despite European leaders talking for ages about the nonsensical notion of the EU 'speaking with one voice' after the Lisbon Treaty, the situation is much more confused today ever. No fewer than six people purport to speak officially for the Euro, while people actually tend to listen to two different leaders altogether. There is ECB chief Mario Draghi, but also Jose Manuel Barrosso, the Commission President; his colleague Oli Rehn, the Commissioner for Monetary Affairs; Jean-Claude Juncker, the head of the Eurogroup; Klaus Regling, head of the EFSF; and finally Herman Van Rompuy.

Friday

James Forsyth

How European sovereign debt became the new sub-prime

From our UK edition

The New York Times has a great piece today on how banks became so exposed to the sovereign debt of European countries with a history of defaulting. Here’s the nub of the argument: “How European sovereign debt became the new subprime is a story with many culprits, including governments that borrowed beyond their means, regulators who permitted banks to treat the bonds as risk-free and investors who for too long did not make much of a distinction between the bonds of troubled economies like Greece and Italy and those issued by the rock-solid Germany. Banks had further incentive to overlook the perils of individual euro zone countries because of the fees they earned for underwriting sovereign debt sold to other investors.

Daniel Korski

Britain: a European pariah?

From our UK edition

The British government has worked hard to counteract any perception that it is being marginalised in Europe. Before the election, the Tory party went around to different capitals to assuage any fears that may have existed. The message: despite the Conservative departure from the EPP, and their anti-Lisbon Treaty remonstrations, they would not be a problem. They would be businesslike. Once in power, David Cameron unleashed his charm, showcased his polyglot Deputy Prime Minister and sent William Hague out to make everyone feel that they had a partner not a pariah in London. Further, the energetic and amiable David Lidington replaced the combative Mark Francois as Europe Minister.

Thursday

Daniel Korski

The new German Question

From our UK edition

The Eurocrisis has put Germany in a twofold position that it abhors. First, it has forced Germany into a much closer relationship with France than is comfortable. For German policymakers, the great thing about the post-enlargement EU, of 27 countries, was that they and France could not rule supreme — they needed to bring other states on board. Germany prefers it this way, as it dilutes France's dirigiste instincts. But recent events have reshaped Europe's decision-making system, recreating the pre-1973 model in which Paris and Berlin reigned. The second thing Berlin abhors is to dictate things to others. The catastrophes of the 20th Century forced Germany to remake itself. It is a million miles away from the helmet-wearing caricature.

Hamish Macdonell

Euro crisis knocks Salmond off course

From our UK edition

A few years ago, SNP strategists coined the slogan 'independence in Europe'. They don't champion it too much now, for obvious reasons. To put it bluntly: they are in a pickle over Europe. Scotland's progress towards independence, which had seemed to be serene and almost unstoppable just a few months ago, has hit so much euro-induced turbulence over the last few days that it could be knocked off course for good. The First Minister had to fend off question and after question at Holyrood this afternoon as opposition leaders – including a notable first performance by the Tories' new Scottish leader Ruth Davidson – tried to get Salmond to answer two very simple questions.

Daniel Korski

Going soft

From our UK edition

One of the greatest threats to British security is not whether the government opts for Tornadoes over Harriers, but whether we have credible, militarily-capable allies. So the fact that so many European countries have lost the will to fight — cutting defence budgets while the popular backing for ‘hard,’ as opposed to ‘soft,’ power declines — is a problem. To address this, Europeans need first and foremost to redevelop a narrative of power. In a new pamphlet, former MoD official Nick Witney tries to lay out the required narrative. He argues that Europe’s future security and prosperity now depends on success in a global competition.

Wednesday

Clarissa Tan

Angela we have heard on high

From our UK edition

As Italy and Greece implode, and the pressure increases for Germany to do something, anything, Angela Merkel has made a call for 'structural changes' in the EU. In other words, in what's bound to get eurosceptics' hackles up, she's pressing for Treaty change and an even more tightly-knit union. At a conference known as Falling Walls, which commemorates the end of the Berlin Wall, she said: 'This is the time for a breakthrough to a new Europe. This is a time for a change toward more sustainability. That is the problem we have to contend with in Europe. And that means it is about more than declarations of intent but rather implementing structural changes.

Tuesday

James Forsyth

Osborne gets frank with Europe

From our UK edition

George Osborne’s attack on the European Commission and his fellow finance ministers, for wasting time talking about a financial transactions tax when it is not going to happen, is quite a significant moment. It marks an attempt by Britain to knock this idea, which would hit this country far harder than anywhere else in Europe, off the agenda.   The Treasury, the Foreign Office and Number 10 have become increasingly exasperated about how this issue keeps coming up again and again. This feeling has been intensified by the fact that this issue is being discussed even as the crisis in the Eurozone is worsening by the hour.

Clarissa Tan

Who will bail out the EU bailout fund?

From our UK edition

While all eyes are fixed on Italy's ever-increasing borrowing rates, a far larger problem may well be emerging. The EU bailout fund, set up to help countries who can't borrow, may itself have trouble borrowing very soon. A sale this morning of 10-year bonds by the European Financial Stability Facility (EFSF) had a very muted response, barely bringing in the €3 billion it was meant to. This despite the fact that the offer was priced at a much more enticing yield, some 90 basis points (or 0.9 percentage points in non-market lingo) above a previous sale. Mind you, that's better than last week's sale, which had to be postponed due to lack of interest. The EFSF was set up as a fund that lends to eurozone companies that are finding it hard to raise money.

Jonathan Jones

Crunch time in Italy and Greece

From our UK edition

Reports of Silvio Berlusconi's imminent resignation yesterday may have been exaggerated, but it remains to be seen how greatly. He faces a big test today, in the form of a crucial vote on the Italian budget. Berlusconi has proved adept at surviving such confidence votes throughout his time as Prime Minister, but today's opposition may be too much even for him. In the words of Italian academic Roberto D'Alimonte to the Telegraph: "Nobody knows what the result will be, I think even Berlusconi doesn’t know." In the last few minutes, Umberto Bossi – the leader of Berlsuconi's coalition partners Lega Nord – has said that he called on the Prime Minister to step down.

Monday

James Forsyth

Cameron defends the IMF

From our UK edition

David Cameron's statement to the House of Commons on the Cannes summit was dominated by the question of increasing Britain's dues to the IMF. Cameron stressed that his message to the Eurozone countries was "sort yourselves out and then we will help". He also tried to offer reassurance that the IMF would not contribute to any eurozone-specific bailout fund. But after Ed Miliband's response, the Prime Minister tried to counter-attack. He began by saying of the Labour leader's speech, "I don't know who writes this rubbish" which drew one of Ed Balls' infamous calm down gestures. Cameron then offered an aggressive defence of the IMF, calling it an "organisation that rescued us from Labour in the 1970s".

Daniel Korski

After the EU

From our UK edition

If the EU comes crashing down as a result of the Euro crisis, one thing is certain: the UK will be at the forefront of re-creating the bloc. Not exactly the way it is now, but not a totally different entity either. The reasons for this are three-fold, simple and are about Britain's interests. First, Britain derives benefits from being part of, and determining the rules for, the world's largest market. When the world is entering a "no-Doha" future, where pressure for protectionism will rise, there is no substitute for access to a relatively open market of some 400 million people. Neither transatlantic trade, commerce with the Commonwealth or links with the BRICS can substitute for it. Check the figures.

Clarissa Tan

Berlusconi may quit presto

From our UK edition

The word sweeping across Italy is that the PM may be forced to step down in a matter of hours, even "minutes". Ex-minister Giuliano Ferrara says: "That Silvio Berlusconi is about to resign is clear. It is a question of hours, some say of minutes." And he couldn't leave too soon. The Italian bond yield busted the 6.5 per cent threshold to reach 6.58 per cent this morning. It's now close to what some traders call "bailout territory". News of Berlusconi's imminent resignation has sent Italian stocks soaring though – the FTSE MIB is up 2.4 per cent. Berlusconi's scandal-ridden premiership and bunga-bunga antics have caused political deadlock in Rome and stalled the path of much-needed economic reform. Still, with Papandreou's "will he? won't he?

Jonathan Jones

Papandreou to go, but uncertainty remains

From our UK edition

The eyes of Europe, which have been focused on Greece all week, will see a slightly brighter picture today – albeit one still engulfed in heavy fog. The good news: a new coalition government will be formed – the government of "national unity" that EU leaders wanted – to approve the bailout package ahead of new elections. Prime Minister George Papandreou will step down, following his aborted call for a referendum on the bailout terms last week. His future had been a major part of the uncertainty surrounding Greece: reports of his resigntion on both Thursday and Friday turned out to be premature, if only by a matter of days.

Sunday

Daniel Korski

Crisis a la Milanese

From our UK edition

If Italy's a country on the brink, it doesn't show it. At least not in Milan. Along the city's rainswept streets, thousand of designer-clad people hit the shops this weekend, unperturbed at the prospect of the government's likely collapse and the risk of a financial meltdown. At a small deli called Pack overpriced but delicious pieces of Bresaola and Parmegiano are sold in green-and-gold Harrods-like wrapping. La Rinascente, the city's upmarket department store, is packed with high-rolling shoppers and the nightclub under the main Armani store is heaving with models and their male accoutrements. Here life remains dolce. Of course Milan is not Italy – it is the country's commercial heartland, a little Germany south of the Dolomites.

Daniel Korski

A belaboured EU position

From our UK edition

While the Coalition is split over Europe, Labour does not look like they are in a much better position. Ed Miliband told the BBC that he was in favour of the Euro; Ed Balls would presumably tackle anyone to avoid that becoming the party's policy. Meanwhile Douglas Alexander, Labour's brainy Shadow Foreign Secretary, has yet to make a game-changing intervention. Their predicament is obvious. Should Labour accept the narrative of renegotiation but opt for different areas to opt out of than those favoured by the Tories? Or should they, like William Borroughs, stand astride history and scream "stop", arguing for a pro-European position? Seemingly caught between the two views, the party's criticism of the government is like those two old-age pensioners in Woody Allen's joke.

Saturday

James Forsyth

Papandreou wins no confidence vote, but appears set to stand down

From our UK edition

The political situation in Greece remains unclear this morning. George Papandreou’s government survived last night’s confidence vote. But the main opposition party has rejected the idea of a national government and Papandreou’s finance minister appears to be maneuvering to replace him. Papandreou’s victory in the no confidence vote means that there probably won’t be elections in Greece this year. But the huge difficulties involved in implementing the austerity plan remain. The measures continue to command little public support and the opposition will continue to criticise them.