CRIPPLED EU IS NO LONGER THE "ANARCHO--IMPERIAL MONSTER" WE ONCE FEARED / THE TELEGRAPH

Crippled EU is no longer the 'anarcho-imperial monster' we once feared

The European Project flamed out as a motivating force in history long ago and is descending into existential crisis. All illusions that the EU can run as a centralised political union have died

By Ambrose Evans-Pritchard

The high-water mark of the European project was a constitutional convention modeled on Philadelphia in 1787. Europe's version ended in failure

 

 

The point of maximum danger for British parliamentary democracy was 13 years ago, the high-water mark of EU hubris and triumphalism.

Events moved with lightning speed from the Maastricht Treaty in 1992 until the rapturous closure of the EU's "Philadelphia" Convention in June 2003, and always in the one direction of ever closer union. Whether or not you care to speak of a "superstate", the thrust was entirely at odds with the principle of sovereign and self-governing nation states in Europe.
 

Nobody can say the European elites lacked panache. In a fever of treaties they vaulted from the creation of the euro to a nascent foreign policy and defence union at Amsterdam in 1997. An EU intelligence cell and military staff were created in Brussels, led by nine generals and 57 colonels, with plans for a Euro-army of 100,000 troops, 400 aircraft and 100 ships to project power across the globe.
 

They launched a European satellite system (Galileo) so that Europe would no longer have to be a "vassal" of Washington, in the revealing words of French leader Jacques Chirac. They set up a proto-FBI (Europol) and an EU justice department, replicating the structures of the US federal government one by one. They were equipping the EU with the apparatus of full-blown state.
 

     The Union flag hangs next to the EU flag   Photo: EPA/ANDY RAIN

When Ireland voted no to the Nice Treaty - legally rendering it null and void - the Irish were swatted away. Nothing would stop this juggernaut.

The furthest reach was the EU Convention gathered to draft “the Treaty to end all Treaties”, the European Constitution. It was supposedly launched in order to bring Europe closer to its citizens after anti-EU rioters set fire to Gothenburg, and as we began to hear the first drumbeats of populist revolt.
 
The forum was immediately hijacked by EU insiders and used for the opposite purpose, a drama I witnessed first-hand as Brussels correspondent. The text asserted in black and white that "the Constitution shall have primacy over the laws of the member states".

The document was to bring all EU law - as opposed to narrow "Community law" - under the jurisdiction of the European Court (ECJ) for the first time, creating a de facto supreme court.

The Charter of Fundamental Rights, described by one British minister as having no more legal authority than the "Sun or the Beano", would become legally-binding, and with it Article 52, allowing all rights to be suspended in the "general interest" of the union - the Magna Carta be damned.

         It is now obvious that the EU had bitten off more than it could chew


It was to give the EU "legal personality", enabling it to agree treaties in its own name. It would create an elected president. It was the jump from a treaty club of sovereign nations to what amounted to a unitary state, or an "anarcho-imperial monster" in the words of ex-commission official Bernard Connolly.

When the early drafts began to circulate I sent a message to Charles Moore, then editor of The Telegraph, alerting him that in my view Britain faced a national emergency.

In hindsight, I need not have been so alarmed. It is now obvious that the EU had bitten off more than it could chew, and the Ode to Joy anthem at the closure of that giddy Convention marked the moment when the European Project flamed out as a motivating force in history and began descending into the existential crisis we see before us.

The proposals were rejected by French and Dutch voters. Although EU leaders slipped most of the text through later by executive Putsch under the guise of the Lisbon Treaty, this was a step too far. It has come back to haunt them. The refusal to accept the emphatic verdict of the people crystallized a long-simmering suspicion that the Project had escaped democratic control.

Monetary union has proved malignant and incurable


By then the east Europeans had arrived, followed by the pre-modern polities of the Balkans, finishing off all illusions that the EU could ever be run as a centralised, close-knit, political union.

A decade later Hungary's Viktor Orban and Poland's Jarosław Kaczyński simply do as they please, seizing control of the state media and packing the courts, nonchalantly shrugging off pro-forma warnings from Brussels.

Above all, monetary union has proved malignant and incurable, splitting the eurozone into bitterly opposed camps of creditors and debtors. It had long been an article of faith in EU circles that any eurozone crisis could always be bent to a higher purpose, enabling the next leap foward towards fiscal and political union.

This too has been a misjudgment. Germany has blocked any move towards shared budgets or debt mutualisation. The banking union belies its name: the burden still rests on the shoulders of distressed sovereign states, leaving in place the "doom-loop" between banks and governments pulling each other down in a crisis. When Berlin speaks of "Fiskalunion" it means only one thing: the power to monitor and punish sinners.

George Osborne


George Osborne was wrong in Davos when he spoke of an "inexorable logic" of euro integration along the lines of Alexander Hamilton's fiscal federalism in the late 18th century. It is certainly logical, and should be inexorable, but it is not in fact happening. The eurozone will have to limp on with a sharp stone in its shoe until the pain proves too much for somebody, probably the Italians.

One thing has changed. Berlin agreed to let the European Central Bank act as a lender-of-last-resort in July 2012, instantly ending the sovereign debt crisis. But by then damage was irreversible. Years of fiscal and monetary contraction had turned recession into depression, ultimately dragging on longer than in the 1930s. Debt ratios are now higher, dangerously so when adjusted for the cycle. The "hysteresis" effects of mass unemployment have broken the springs of recovery.

Do not be fooled by the short-term cyclical rebound, driven by cheap oil, a cheap euro, the end of austerity and quantitative easing (five years late). The region is ankle-deep in debt deflation, defenceless when the next global downturn hits.

A new paper by the International Monetary Fund - "Risks of Stagnation in the Euro Area" - warns that the legacy effects of the crisis will amplify any negative shock, "creating a bad feedback loop and keeping the economy stuck in an equilibrium of stagnation", it said.
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Christine Lagarde, head of the IMF


Written by Chinese economist Huidan Lin, it argues that Europe is at serious risk of a second lost decade, lasting deep into the middle of the 2020s, with the greatest stress in the high-debt crisis states of the South. Does anybody think that the European political system could possibly withstand such an outcome?

David Cameron's exchanges with Brussels seem oddly irrelevant in the face of Europe's self-inflicted catastrophe - and I refer only to monetary union, not the parallel failure of Schengen.

There is nothing wrong with his menu of demands. It is useful that Britain's special currency status has been nailed down, if only to keep the European Court honest. The EU's Donald Tusk has shown goodwill.

Yet the decision "to be or not to be together" - as Mr Tusk put it - cannot be decided on such formalities. What matters is how we preserve the concord of these Isles, both with Scotland and with Ireland, and whether we can save our sovereign democracy under the Lisbon Treaty and an imperial court.
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Donald Tusk  Photo: Bloomberg

 
We must decide whether we are better off managing the eternal headache of our relations with the Continent inside or outside the EU, and how best to handle a rising China and a revanchist Russia.

Ultimately we must decide whether this dysfunctional union is worth saving at all, or whether it might not be better to let it die and fall back to the surer ground of the democratic nation states.

The distraction over Mr Cameron's four footnotes has gone on too long. The sooner we can grapple with the strategic imperatives before us, the better.