European democracy or euro crash?

Prime minister David Cameron did not get off the Titanic. He blocked the Euro ambulance.

The Titanic metaphor catches the imagination, but it is wrong because the United Kingdom was not aboard the Euro vessel, so it is logically impossible to get off.

Bagehot's notebook offered a more apt simile, Chernobyl. Fixing it, or containing and limiting the continent-wide fallout is in Britain's interest.

Sadly, the UK Parliament instead hailed Cameron, promised more vetoes and rebalanced Britain's EU relationship towards limiting them to economic ties. These formulas are wide enough for those who want the UK pissing in, both on the inside and from the outside of the EU tent.

The Euro ambulance was forced to make a detour, but the team of 17 was joined by up to nine voluntary well-wishers, all except Britain.


Alignment

We should not overrate the success.

We do not know what the fiscal compact will turn out to be in the end. We do not know if even all eurozone countries are going to join. We know even less about how many of the other EU members will participate.

What I see is more of a slow process of alignment by EU countries around the euro core, leaving Britain less able to form and lead alliances.


Far from enough

I think that the eurozone and the other EU members showed more resolve than before, but the Euro ambulance went to fetch only one of the several casualties, leaving the rest on the ground.

The high borrowing costs, the falling euro, the sliding stock markets, the coming downgrades, the troubled banks and the glide into recession show that the structures and powers in place are not robust enough, the agreed remedies are insufficient and moving in slow motion is far from enough.

Just three examples from my Twitter stream yesterday.

@JasonBWhitman (Policy chairman US Young Republicans) asked me about the probability of the euro crashing. @spignal (Stanley Pignal of the FT) tested the waters with a question about how probable a new eurozone summit was becoming before the end of the year. @JSLefebvre (French EU journalist) retweeted a 'complicated' poll showing that the French are attached to Europe, but do not believe the euro summits have brought results.

This leaves us with a number of unanswered fundamental questions about European integration and the future of the eurozone.

To put it plainly:

The common European currency, the euro, needs a sovereign. In the Western political tradition of democracy and fundamental rights, this sovereign must be based on the citizens to be legitimate and accountable (democracy), equipped with robust structures and sufficient powers, as well as providing good governance and transparency.

No taxation without representation, but also a real federal budget and taxes, a lender of last resort (federal reserve) with broad enough mandate.

Foreign policy, security and defence, are among the policies to conduct at the European level.

European democracy or euro crash?

Our leaders have not yet faced up to the challenges, and their national electorates are far behind, but the alternatives should concentrate minds, hopefully sooner rather than too late.



Ralf Grahn