The Birth of a Two-Speed Europe

[scooterscot]

Protectionism shall not do us any favours whatsoever.

[lilelvis2000]

Anything that get the UK out of the massive (and expensive) bureaucracy that is the EU will be great. Anything that allows the UK to get out of the HRA will be a bonus. Anything that allows us to reasonably remove people who are here without leave will be just desserts.The UK on its own will be great.

But I wonder if DC really was thinking about all that. Or was he thinking about dozens of knifes in his back (some from bankers) if he didn't whip out the veto.

[Doggy Styles]

BBC News - Euro crisis: UK alone as Europe agrees fiscal compact

It seems that the basis is that the new accord is if a country has too much debt compared to their GDP they will issue a monetary fine to a country that already has no money!?

I thought it was deficit rather than debt but yes, that sums it up.

The irony is that they already had such a rule, the maximum allowed deficit being 3% of GDP, but it was never enforced because Germany was the first country to break it.

[SimonMac]

BBC News - Euro crisis: UK alone as Europe agrees fiscal compact

It seems that the basis is that the new accord is if a country has too much debt compared to their GDP they will issue a monetary fine to a country that already has no money!?

[DodgyAgent]

Nothing.

In fact, one should ask what the EU is supposed to be speeding towards. Only then can you say whether you want to go there at full speed, half speed, or indeed go there at all.

The clue is this. We've seen that the common currency cannot work without fiscal union, and fiscal union cannot work without political union. Political and fiscal union is a United States of Europe.

Imagine all the work that would come out of say an EU Identity card system

[Doggy Styles]

What exactly is wrong with a two speed Europe?

Nothing.

In fact, one should ask what the EU is supposed to be speeding towards. Only then can you say whether you want to go there at full speed, half speed, or indeed go there at all.

The clue is this. We've seen that the common currency cannot work without fiscal union, and fiscal union cannot work without political union. Political and fiscal union is a United States of Europe.

[sasguru]

Absolutely there'll be a two-speed Europe: in the slow lane, a large, slow supertanker, Germany, dragged down by the weight of the degenerate PIIGS, on the periphery mobile and dynamic destroyer-like countries free to make their own mistakes and correct them fast to take advantage of a globalised world.

[DodgyAgent]

What exactly is wrong with a two speed Europe?

[hyperD]

Dr North has an interesting perspective on this.

[original PM]

It will be interesting to see what happens in the eurozone - when half the countries using the euro are bankrupt

Bet you a tenner by the end of 2012 the Euro will have been replaced by the 'mark'

[doodab]

This is going to be fun.

[Support Monkey]

Isolation is just leftie alarmist bullsh1t. Look at the facts.

The UK will not be involved in the things it doesn't want to be involved in - like the euro, schengen

The UK will still be involved in the things it does want to be involved in - like trade, defence

That sounds like a good place to be, and closer to what the European Common Market was supposed to be in the first place.

Incidentally, regarding the treaty, the UK is distancing itself from a crock of sh1te. That treaty won't resolve the eurozone problem.

[Doggy Styles]

Isolation is just leftie alarmist bullsh1t. Look at the facts.

The UK will not be involved in the things it doesn't want to be involved in - like the euro, schengen

The UK will still be involved in the things it does want to be involved in - like trade, defence

That sounds like a good place to be, and closer to what the European Common Market was supposed to be in the first place.

Incidentally, regarding the treaty, the UK is distancing itself from a crock of sh1te. That treaty won't resolve the eurozone problem.

[scooterscot]

So what's being said on the other side of the fence?

Split Summit: The Birth of a Two-Speed Europe - SPIEGEL ONLINE - News - International

At their Brussels summit, European leaders were able to agree on a fiscal union surprisingly quickly. But the new pact, which Chancellor Merkel had strongly advocated, has a crucial flaw -- Britain is not on board. Prime Minister David Cameron will not be able to prevent his country from becoming a second-class EU member.

More importantly, though, the summit's outcome will seal the status of a two-speed Europe. Back home, Cameron is already being accused of driving his country into isolation. Unyielding euroskeptics aside, most people in Britain can't be pleased that their country will now play second fiddle in Brussels. The British leader is likely to come under particularly harsh criticism for abandoning the kind of pragmatism that is so highly valued in his country, instead caving in to anti-EU ideologists within his party -- just as other Tories before him have done.

Oh dear - this is all starting to sound very ugly.

British Foreign Secretary William Hague sought to limit the damage on Friday morning, telling the BBC that Britain would continue to play a major role in foreign and economic policy. Formally, Britain will remain a fully fledged member of the EU -- and it will zealously insist on its rights. But Cameron will not be able to prevent his country from increasingly becoming a second-class member. That's because European economic policy is likely to be determined in the future by the euro zone and its associate members.

Nor is the loss of importance in Europe that Britain has now brought upon itself in the country's geopolitical interest. Indeed, its trans-Atlantic partnership with the United States will suffer as a result. In the eyes of politicians in Washington, Britain has been particularly useful because of its ability to assert influence in Brussels.

No Reason for Merkel and Sarkozy to Be Pleased

But Merkel and Sarkozy can't be pleased with the outcome either. True, they have achieved their aim: The currency union will now be equipped with a balanced budget measure and automatic sanctions. On top of that, they have also succeeded in avoiding the protracted ratification process that revisions to the Lisbon Treaty would have required.

However, Berlin and Paris haven't heeded the ground rules of diplomacy. They didn't seek any compromise with the British and instead stuck the political equivalent of a knife right into his chest. Were his demands really as "unacceptable" as Sarkozy portrayed them early Friday morning? Or is it not a legitimate right that a country doesn't want to be overruled when it comes to issues pertaining to one of the main branches of its economy? If Sarkozy's main intention was to save the financial transaction tax, then he certainly shouldn't feel victorious, because it is still not going to be implemented in London now.

The German government justified its categorical "no" to any special wishes by warning that it could open up a Pandora's box, with other EU member states then making additional demands. Memories are still fresh in Berlin of the decision made this summer to increase the funds available to the euro bailout fund, the European Financial Stability Facility (EFSF). The decision threatened to unravel only a few days later as Finland, the Netherlands and Slovakia demanded, one after the other, that additional guarantees be provided.

That argument carries a certain amount of weight, but the rigid position comes at a price. The prospect of a Europe that is drifting apart is not exactly the signal of unity that euro-zone leaders wanted to send at the crunch summit. They can take some comfort in the fact that six non-euro countries are planning to join the pact and that two others, Sweden and the Czech Republic, may still follow suit, subject to parliamentary approval. That would leave the United Kingdom and Hungary as the sole refuseniks.

The pact between the 23 states also represents a shift of power in their favor at the EU level. The "economic government" of leaders of these countries can make decisions via euro summits and would not need to seek the approval of the European Parliament. Merkel and Sarkozy will likely view that fact as an additional benefit of this approach.

Just a Sideshow

From the perspective of the financial markets, however, the dispute over the treaty amendment is a mere sideshow. They are only interested in the question of how the firepower of the euro backstop fund can be boosted and what role the European Central Bank will play in combating the crisis.
On this front, European leaders have made little progress. The start date of the permanent rescue fund, the European Stability Mechanism (ESM), has been brought forward to mid-2012 from 2013. Leaders rejected, however, a proposal to combine the temporary rescue fund EFSF and the ESM in order to increase the volume of funds available, as well as the idea of a banking license for the ESM. Nevertheless, the heads of state and government committed themselves to reviewing the total lending capacity of the EFSF and ESM, currently capped at €500 billion, in March 2012. During the talks on Thursday night and Friday morning, there had been disagreement over whether to lift the cap.

It's already clear that there will be further conflict within the bloc. Cameron has warned of legal problems with the new pact. There were always dangers, he said, when "agreeing a treaty within a treaty." If anyone had been hoping for a quick solution to Europe's problems, it looks like they will be disappointed.