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Wednesday, December 14, 2011

Why the 26 vs 1 narrative is simplistic

In our press summary yesterday, we flagged up how Sarkozy's and Merkel's pact is far from a done deal (if anyone for a second thought so) as Parliaments and governments around Europe continue to struggle to come to terms with its details and content. On their respective front pages today, the FT and the WSJ are picking up on this theme as well (which goes to show that if you have not yet done so, you may want to sign up to our daily press summary featuring the key stories from all around Europe).

Over on the Spectator's Coffee House blog, we take a closer look at the state of play in various EU countries in the context of the "26 vs 1" narrative and the UK isolation hysteria that have swept the UK media over the last few days, following Cameron's veto (the isolation hysteria is sort of the equivalent of the scare story - peddled by some eurosceptics - that Germany is set on becoming the 'fourth reich').

Here's the post:

Judging from much of the coverage in UK media, you would be forgiven for thinking that Britain is on the fast track to becoming the North Korea of Europe — eccentric and completely isolated from the rest of the world. Indeed, the media narrative over the past couple of days has largely treated the agreement reached at the summit as concrete, supported in full by everyone apart from Britain. Or ‘27-minus’, as Commission President Jose Manuel Barroso put it.

The reality, of course, is quite different. Leaving aside whether Cameron could have played his cards better (he could have), as Gideon Rachman pointed out in yesterday’s FT, ‘the picture of an isolated Britain’ will become blurred as the rest of Europe grapples with the Merkozy deal.

So let’s have a look at the level of support in cabinets and parliaments around Europe, for the deal’s main points: fiscal integration, stricter EU budget rules and sanctions, new rules for the euro’s permanent bailout fund (the ESM) and fresh cash contributions to the IMF.

France. For all the Sarkozy rhetoric, his main rival, the Socialist candidate Francois Hollande, leading him by 18 per cent in a hypothetical second round clash, has said that: ‘If I'm elected president, I'll renegotiate this deal...to add to it what it lacks today’, being particularly critical of constitutional limits on budget deficits.

Germany. Scratch the surface and the Germans aren’t overwhelmed either. In addition to the deal being seen as an insufficient to solve the crisis, the Bundesbank has warned that the proposed new IMF contributions could take Germany above the ‘bailout’ ceiling established by the Bundestag.

Denmark. The Merkozy deal appears to have split the newly-elected Danish centre-left coalition. Danish Foreign Minister Villy Søvndal (of junior coalition partners the Socialist People's Party), and PM Helle Thorning-Schmidt ( Social Democrats) have been accused of contradicting each other over whether the pact could restrict the government from pushing through its economic programme. The agreement is now pending analysis and approval in Folketinget, which will also consider whether a referendum is required (it’ll most certainly be avoided). A poll this week found that 54 per cent of Danes want the pact to go to a public vote.

Sweden. The Swedish minority government looks unlikely to get the necessary majority to get the package, as it stands, through the Riksdag. The leader of the opposition Håkan Jurholt has warned against becoming euro members ‘via the backdoor’. The centre-right coalition remains split on the issue, with PM Fredrik Reinfeldt saying that it would be a ‘bit strange’ for the country to join. Meanwhile, Swedes are becoming increasingly sceptical. A fresh poll out this week shows that over 80 per cent of Swedes would vote ‘No’ to the euro in a referendum, compared to 42 per cent two years ago, while support for EU membership has dropped from 55 per cent to 47 per cent in a year.

Poland. Opposition parties Democratic Left Alliance and the Law and Justice parties have warned that the deal would violate the Polish Constitution, and therefore needs a two-thirds majority in both houses of the Polish Parliament, which is far from guaranteed. Law and Justice has even threatened to over-turn the agreement once in power (which, it should be said, can be a while). The government maintains that the pact actually won’t impact on Poland until it joins the euro.

Finland. The Grand Committee in the Finnish Parliament has launched an inquiry into whether the country’s Prime Minister Jyrki Katainen potentially over-stepped his mandate in the negotiations in Brussels last week. In its current form, the deal is unlikely to pass Parliament as the majority rule for the activation of the ESM (meaning Helsinki will be stripped of its veto over future bailouts) will require a two-thirds majority in the Parliament to be compatible with the country’s Constitution. Such super-majority looks unlikely since the main opposition parties the Centre Party and the Finns (previously ‘True Finns’) both oppose the deal.

Czech Republic. Prime Minister Petr Necas told the Czech press, ‘It wasn't possible to sign up to this international agreement for a number of reasons. But the main reason was this – nobody knows what's in it’, saying that the deal will need approval form his Parliament. In addition, the Czech Finance Minister Miroslav Kalousek yesterday said that the suggested additional IMF contribution is ‘extremely high,’ estimated by the Czech Central Bank to be equal to 10 per cent of official Czech reserves, something echoed by Czech President Vaclav Klaus.

Hungary. Hungarian PM Viktor Orban will let the Hungarian parliament decide whether to agree to the deal, although with his Fidesz party enjoying a solid two-thirds majority, he could in theory easily push it through should he want to.

Netherlands. The situation is not fully clear, with the Social Democrats appearing to have backtracked on their previous request for early elections to be called if further transfers of sovereignty to the EU were to take place under last week’s agreement. With the Social Democrats, the government would have the majority needed to push through the agreement.

Ireland. Ireland will decide whether it needs to be put the agreement to a referendum when the details of the agreement are clearer (probably March), with chances for a vote seen as 50-50. Deputy PM Eamon Gilmore also said that ‘I believe there will be a lot of discussion on that between now and March. I will be surprised if Britain is not involved in that discussion’.

The Finance Ministry has said that the country will not contribute to the agreed €200 billion IMF capitalisation, even though the country is a member of the eurozone.

So is it fair to reduce this myriad of opinions and political positions to a 26 versus 1 discussion? You decide.


Anonymous said...

This exercise by Open Europe is misguided. It is quite obvious that there would have been, in all probability, a majority of Member States in favour of the compromise proposal tabled by Van Rompuy - i.e. to use the capacity of the Council by unanimous decision to convert elements of Protocol 12 on the Excessive Deficit Procedure into legislative instruments which would have applied only to the EA17- had Cameron decided to run with it (despite the curious sabotage of the idea by Berlin ahead of the summit through references to "legal trickery" etc.). But he chose not to or was too blinkered in his approach, with his advisers, to see the value of it.

Most of the institutional crockery can be repaired by what has now been agreed. But it is hard to see how the political damage can be undone, assuming that the benighted trio that caused it would even admit that such damage has occurred.

Rounding up opposition to a deal which can go ahead without the opponents being rounded up is as pointless as the presentation by Cameron of his shopping-list at precisely the wrong moment because it is based on an equally mistaken assessment of the negotiating situation.

Open Europe blog team said...

Thanks Anonymous, but this isn't an assessment of Cameron's negotiation position vis-a-vis Protocol 12 - as we've mentioned several times in our coverage, there are legitimate questions to be asked about that. Rather, it's showing how, even absent Cameron's veto, the deal is politically complicated, riddled with uncertainties with several countries, also inside the eurozone have reservations and concerns. A large chunk of these concers don't stem from the situation created by the UK veto, ie Finland (ESM voting weight), France (ECJ jurisdiction and Hollande's remarks), Ireland (referendum question), Estonia (IMF contribution). If anything, to reduce this important discussion about the interaction between domestic politics across Europe and EU-level attempts at solving the crisis, to 26 vs 1 is, misdirected.

Rollo said...

The 26 to 1 comment is not simplistic: it is simply false. No one has authorised Merkel and Sarkosy to speak for the continent or for the Eurozone. They do not do so. Merkel speaks to try to reduce the amount the Germans will have to pay out to save the Euro. Sarkosy speaks to try to save the French banks and AAA rating; and to attempt to look like a big player. The other nine non Euro members will not end up agreeing to help either of them. And the 16 eurozone countries, on reflection, will not agree to hand over their sovereignty to this jumped up pair of ignoramuses.

Anonymous said...

The comments do not meet the central point that I am making. From the outset, it was made clear by both Sarkozy and Merkel that if they could not proceed at the level of the 27 they would proceed at the level of the 17 with it being open to others to decide whether or not to follow. That remains the situation. It is even true of laggards within the 17 as the ESM "will enter into force as soon as Member States representing 90% of the capital have ratified it" (paragraph 13 of Euro Area statement).

It remains to be seen what the ratification arrangements will be for the "stability union" treaty but it seems to me to be highly unlikely that it will be subject to unanimous adoption.

Team; it is time to wake up and smell the coffee!

By the way, Cameron did not exercise "the veto". He simply did not agree to a step requiring unanimous agreement. The "veto", if it still exists, is the "Luxembourg compromise" which simply stipulates that, when a matter is the subject of a decision by QMV, a Member State can demand, if a very important national interest (usually described as vital) is at stake that no vote be taken and that discussion continue until the state concerned is happy with the situation. If enough Member States to constitute a blocking minority think that this position is reasonable, a vote is obviously not taken. Some, indeed, notably the French who invented the compromise, think that the test of reasonableness does not apply and will support the state in question in all circumstances. The other large countries take the same position. They recognise that it is an emergency cord that they themselves might need to pull.