Europe

Saturday

Daniel Korski

A more German Europe?

Timothy Garton Ash asked an important question in the Guardian recenty - is Europe becoming more German? Or, to put it more accurately, does the EU have to become more German to survive? "If the eurozone falls apart, it will be because Germany did not do enough to save it. If the eurozone is saved, it will be thanks to Germany. This is the greatest challenge to German statecraft since the country was peacefully united 20 years ago." "Yet here is another horn of Germany's dilemma. For half a century, German politicians have repeated, like a mantra, Thomas Mann's call for "a European Germany, not a German Europe".

Friday

Daniel Korski

Iberian blues

I’m finishing a two-day trip to Spain and am about to board a plane, just as the bond markets turn their attention to the Iberian Peninsula. As James wrote yesterday, the gap between Spanish 10-year government bonds and those of Germany has widened to as much as 2.59 percentage points - the biggest gap since the introduction of the euro. For its part, the Portuguese government said it was under no pressure from the European Central Bank or other Eurozone member-states to accept financial aid to ease its debt and deficit problems. That sounds like the noise before the defeat. Portugal was brought to a halt yesterday by a strike in protest at the government’s spending cuts and tax rises, which aims to reduce the budget deficit from 9.

Thursday

James Forsyth

Why Spain matters to Britain

So far Ireland and Greece have been bailed out with relative ease. If Portugal required external assistance, Europe could run to that too. But bailing out Spain would be another matter entirely. As The New York Times points out today, the Spanish economy is twice as big as the Irish, Greek and Portuguese ones combined. Spain’s situation is not yet critical. But as the NYT piece sets out very clearly, there are some extremely worrying signs. The gap between Spanish and German gilt yields is now at the biggest point it has been since the introduction of the euro. Spanish banks are also heavily exposed to Portuguese debt.

David Blackburn

The strange case of Turkey, Islamic history and V.S. Naipaul

Nobel laureate V.S. Naipaul has pulled out of the European Writers’ Parliament in Istanbul, following pressure from Turkish writers who felt ‘uneasy’ about comments he had made about Islam in 2001. Naipaul compared Islam to colonialism, arguing that both had had ‘a calamitous effect on converted peoples. To be converted you have to destroy your past, destroy your history. You have to stamp on it, you have to say 'my ancestral culture does not exist, it doesn't matter.’ Naipaul’s comments concern the factual context of Islam’s expansion between the 7th and 17th centuries, hence the comparison with colonialism.

Wednesday

Daniel Korski

Balkan promises still to keep

One of the many areas that the Conservative Party took a very different line from Labour was on the Western Balkans. William Hague travelled to the region, frequently asked questions in Parliament and had the war-torn region written into the Coalition Agreement as a government priority. Seven months into the government's mandate, how has Britain's Balkan policy changed? How has Britain been able to affect things for the better? The answer is a tad disappointing. There are no more British soldiers or diplomats in the region than there were before the election. Reconstruction funds are slated to decrease.

Tuesday

Daniel Korski

The end of the Wall Street world

Over the last decade, Wall Street has become an important foreign policy actor in its own right, almost as important as the lobbyists on K-Street and the White House on Pensylvania Avenue. The ebb and flow of capital has been a decisive international force in determining the fate of nations - most recently illustrated in the cases of Greece and Ireland. As an aide to President Clinton once said: in a second life he would like to come back as the bond market. But Wall Street has influenced foreign policy in a deeper way too: by changing the way that successive US administrations see the world. Not by focusing on the bottom-line. International relations cannot be reduced to cost/benefit analyses.

Monday

David Blackburn

Cowen will seek a dissolution next year

There has been much consternation and intrigue swirling around both Dublin and Westminster this afternoon about the near-collapse of the governing coalition in Ireland. The Greens, who support Brian Cowen’s Fianna Fáil-led government, pulled out; seeking a dissolution in the hope that it might save their skins from the fate that is likely (though not certain) to befall Fianna Fáil. If the government had collapsed, then IMF would have postponed the bailout. At least now Cowen can formulate a monetary plan, hopefully under the oversight of Ireland's international creditors, to free the country from its current extremis.

Simon Less

Carbon omissions

With the latest round of international climate change negotiations at Cancun less than a week away, Policy Exchange has published research showing that the UK’s and EU’s performance in reducing carbon emissions is not quite what it seems.   According to the official measure, used to determine performance against the Kyoto agreement, the UK’s emissions have fallen.  The UK is set to exceed its Kyoto target of 12.5 percent reduction from 1990 levels.  But, in our new report Carbon Omissions, Policy Exchange has estimated that total UK carbon consumption emissions in fact rose by 30 percent between 1990 and 2006.

David Blackburn

Ireland’s crisis is the fault of Fianna Fáil, not just the euro

In all likelihood, George Osborne will rise this afternoon to groans if not jeers. Britain looks set to lend Ireland £7bn as part of multilateral and bilateral bailouts. Many, particularly the Eurosceptic right, question our involvement, given our straitened financial circumstances and the apparent fact that Britain is sustaining the eurozone’s monetary and debt union, and will have to borrow to do so.     George Osborne has been adamant throughout: Ireland is too important to Britain’s recovery to risk collapse – British and Irish banks are closely linked, debts and borrowing are often co-dependent, trade is very profitable. That the bailout should strengthen the euro is a natural consequence of Ireland being a member of the euro.

Sunday

Fraser Nelson

The death knell for the Euro?

Are we witnessing the start of a very long death scene for the Euro? Asked if the Euro will survive, William Hague replied simply: “who knows?”. The new president, Herman Von Rompuy, has said that the Euro faces an “existential test”. We are looking at the very real prospect of the Euro’s collapse. And that “if we don't survive with the eurozone, we will not survive with the European Union”. This would, by necessity, require a new treaty - and give Britain an unprecedented opportunity to renegotiate its membership on terms the public regard as acceptable. In my News of the World column today, I say (£) that this presents Cameron with what would be the greatest foreign policy opportunity of his premiership.

Saturday

David Blackburn

Progress towards an Afghan solution?

Nato has agreed to the Afghan plan, or so they say. As Lieutenant-Colonel David Eastman says, Afghan security forces are deemed to be sufficiently capable for the handover to begin next year, as Obama and Petraeus hope. There are those who disagree - some doubt the Afghans, some doubt success itself. Nato secretary general, Anders Fogh Rasmussen may have to be added to that former group of dissenters. He said earlier today: ‘If the Taliban or anyone else thinks they can wait us out, they can forget it.’ The problem for those of Rasmussen’s thinking is that the Taliban can wait; Nato can’t.

David Blackburn

Nato – from the glass half empty point of view

Nato leaders are in Lisbon and Daniel Korski has argued that the most successful military alliance in history isn’t done yet. Writing in the Independent, Patrick Cockburn gives an alternative. He contends that Nato will never recover from the Afghan mission, and he has three substantive points: 1). Nato's solutions are the problem. ‘It is not just that the war is going badly, but that Nato's need to show progress has produced a number of counter-productive quick fixes likely to deepen the violence. These dangerous initiatives include setting up local militias to fight the Taliban where government forces are weak. These are often guns-for-hire provided by local warlords who prey on ordinary Afghans.’ 2).

Thursday

Mats Persson

Britain may not be able to avoid bailing out the Irish

This morning, it sounds as though Ireland has finally buckled to demands that they accept a bailout from the EU. Their central bank governor, Patrick Honohan, has said that he expects a "very substantal loan" from Europe – although the details, and debtees, are yet to be clarified. In the UK, of course, backbench MPs and others have been quick to condemn any move which would force British taxpayers to cough up cash under the EU’s various bail-out arrangements. Only problem is: the UK may not have a choice. The part of the eurozone bail-out package which Britain could be underwriting to the tune of £6-7 billion - the so-called European Financial Stability Mechanism – is not protected by a UK veto.

Wednesday

Alex Massie

Blaiming the Euro for Irish Woes

On the other hand, Philippe Legrain makes the case that too much blame is being apportioned (perhaps opportunistically) to the euro and not enough is being fixed to the Irish government: The problem is not that savings flowed from Germany to Europe’s periphery. It is that they funded property bubbles rather than productive investment. But the blame for that lies with herd-like investors, flawed banks and foolish governments, not the euro. After all, America, Britain, Iceland and other non-euro countries all had huge property bubbles too. Granted, joining the euro did slash Irish interest rates, creating cheap borrowing that fuelled the boom. But at a macro level the Irish government could have tightened fiscal policy – in effect, run large budget surpluses.

Matthew Sinclair

The British taxpayer should not be bailing out Ireland

Everyone is talking about the royal wedding today.  It will be a great occasion but the public finances are tight and people are already asking about the cost.  There is a bigger issue for British taxpayers, though.  Our politicians have arranged for them to get hitched to the bride from hell: the ongoing fiscal disaster in the eurozone.   Under current plans it is reported that we could be liable for up to £7 billion in any Irish bailout.  At the TaxPayers’ Alliance, we have just this morning started a petition against British taxpayers’ money being put at risk for a euro-bailout of Ireland; you can sign it here.   The eurozone is fundamentally broken.

Alex Massie

To Solve The Irish Question, Ireland Must First Admit there Is a Question

Alas, poor Hibernia. According to RTE, Brian Cowen Denies Any Bailout Talks. The rest of the world is not so easily fooled, however. These may be "technical" discussions but they're not discussing the finer points of hurling, are they? Among the more creative solutions to Ireland's predicament: rejoin sterling. According to Mark Reckless, Tory MP for Rochester: Every MP I have spoken to says they would be happy for Ireland to have a guaranteed seat on the Bank of England’s monetary policy committee. This would mean that, unlike before 1979, Ireland as a sovereign country would have a proper say in setting sterling interest rates.

Peter Hoskin

Sovereignty, and the loss of it

The superb Slugger O'Toole blog highlights what is certainly the most resonant quote if the day: "When you borrow, you lose a little bit of your sovereignty, no matter who you borrow from." Those words were uttered by the Irish finance minister Brian Lenihan this morning, and they capture his country's grisly predicament perfectly. The Irish government has been fighting the European attempt to bail them out because they believe, quite understandably, that it would mean a final handover of control to Brussels and Berlin. But their loose economic policy – built on debt, and structured around a stubborn currency – has already seen them lose control to the point where the IMF is dispatching its observers to the scene.

Monday

Alex Massie

Another Irish Loser: Alex Salmond

There are precious few heroes in Ireland today and no gods either. But not all the losers are Irish either. Some are Scottish. Chief among them, Alex Salmond and the Scottish National Party. Not because an independent Scotland would necessarily have been destroyed by the financial tsunami that swept the globe (though, to put it mildly, it would have been "difficult" to cope and might well have required a humiliating begging-trip to London) but because an independent Scotland would have made some of the same mistakes and unfortunate assumptions that have helped cripple poor Hibernia. Europe, you see, was an important part of the SNP's slow rise to power. At the time, it seemed a masterstroke: "Independence in Europe" offered the best of all worlds - sovereignty and safety.

Daniel Korski

How different will Sarkozy 2.0 be?

After months of rumours, plummeting approval ratings, and battles with anti-reform protesters, French President Nicolas Sarkozy reshuffled his Cabinet yesterday. With a new government in place, the worst of the reforms behind him and the G-20 chairmanship in the offing, President Sarkozy is hoping to rebuild his profile before the next presidential election. But will it work? The popular François Fillon continues as Prime Minister despite a strained relationship with the Élysée. But Defense Minister Hervé Morin and Foreign Minister Bernard Kouchner have been replaced by Alain Juppé, a former prime minister and protege of former President Jacques Chirac, and Michèle Alliot-Marie, a former justice minister in the last cabinet.

Peter Hoskin

Ireland’s nightmare becomes Europe’s problem

"We certainly haven't looked to Europe." That was the message spilling from the mouths of Irish Cabinet ministers last night – but, as Alex suggested in a superb post on the matter this morning, their utterances may come to naught. After all, Europe has certainly looked to Ireland – and it doesn't like what it sees. Already, Brussels' moneymen are urging a bailout on the country, and Ireland's moneymen are thought to be in "technical discussions" about how that might work. The upshot is that a financial intervention from Europe is now considerably more likely than not. And with that come European demands over how Ireland should manage its public finances – and raise its taxes. There are plenty of lessons for all sides in this.