My initial reaction to the Merkozy statement was one of supreme indifference. The proposal for a treaty change, with tighter fiscal rules and automatic sanctions, seemed to include a guarantee for some form of fiscal sovereignty for member states. Under the plans the EUnion does not have the power to veto a national budget. Rather, automatic sanctions are triggered when the ECJ judges the budget being in breach of the 3% deficit rule.
No proposals were made that further threaten national sovereignty. The proposals that were made are of the ‘beneficial crisis’ kind, seeking to cement the EUnion. What they don’t do is address the immediate situation (even Ambrose Evans-Pritchard says so).
Which normally would mean that by the time Merkozy have their precious treaty changes, the market will have long taken care of the unsustainable construct that is the EUnion. On the face of it, Merkozy seem to have left the EUnion wide open to a disorderly break-up.
What was completely missing from their statement, however, was any mention of banks taking a part of the pain, any mention of possible haircuts. Moreover, that pair of useless specimens of Sus Scrofa had absolutely nothing to say about debt, or how to remedy the debt situation in the EUnion.
The logical reaction to this was not long in coming. Tonight S&P have put the entire eurozone, all 17 members of it, on “credit watch negative”. Which means that the Netherlands is now looking at the real possibility of a downgrade of its AAA status. Which means we are now looking at a real and looming risk of higher interests on government debt, which, by earlier estimates, would put a dent in government expenditure of at least 8 billion euros YEARLY.
It was when I read that, when a distinct sinking feeling came over me. And then I happened on Mary Ellen Synon.
The chancellor has called for a full fiscal union and automatic punishments for any state which exceeds fiscal limits defined by the Germans.
Mr Sarkozy has called for further erosion of the power of any small EU state to stop any of this: for example, at a speech in Toulon last week he said there must be more council decisions by qualified majority voting. This policy is meant to destroy the veto power of small states.
Merkozy want all these new powers over the budgets of member states to be established by the ‘intergovernmental’ method. That means the muscle of the governments of Germany and France will direct all future decisions on fiscal policy in member states.
But fortunately we have in NL a healthy, right-wing government that looks out for the well-being of its citizens, don’t we? I mean, neither Mark Rutte, nor Jan-Kees de Jager nor Maxime Verhagen would support anything that threatens our independence, that would destroy our democratic say in how we are governed, would they?