Tag Archives: european crisis

A Thought on a European Polity

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I wrote about this a bit ago. Daniel Hannan, Conservative Party MEP for South East England, has a more recent thought.

Churchill [as early as 1946] makes clear that this United States of Europe should not include Britain:

There is already a natural grouping in the Western Hemisphere. We British have our own Commonwealth of Nations. Why should there not be a European group which could give a sense of enlarged patriotism and common citizenship to the distracted peoples of this turbulent and mighty continent and why should it not take its rightful place with other great groupings in shaping the destinies of men?

In case anyone had missed the point, Churchill ended with a call for Britain and the Commonwealth, along with the United States and perhaps even Russia, to “be the friends and sponsors of the new Europe, and champion its right to live and shine”.

Hannan and a number of his fellow Center-Right MEPs are working out the details of a new proposal to achieve that:

a European Common Market—a lightly but effectively regulated free trade area, stretching from Iceland and the Faroe Islands to Turkey and Armenia—within which a smaller group of states could form a political union without prejudice to the non-participants.

At this point, it’s a long shot, but today is different from 1946. There’s a better chance. I say good luck to Hannan and his fellows.

The Meaning of the Recent European Union Parliamentary Elections

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Spiegel Online International wrote earlier in the week about the EU’s parliamentary elections. From those elections, there could be a power shift away from the European Council, made up of the heads of the EU member nations, toward the European Parliament, made up of Members of the European Parliament elected by the citizens of the member nations.

This power shift is possible because of two things: one is that the citizens cast their votes for their MEPs based in large part on dissatisfaction with the EU leadership in what in the US would be the Executive Branch—including the European Commission President—with the proximate outcome of a large increase in the number of MEPs representing various euro-skeptic parties at the direct expense of the pro-EU parties.

The other is that these citizens, through their new MEPs, now want their say on who their next Commission President should be, and they have a clear preference. However, the Commission, the traditional determiner of the President with the EU Parliament simply rubber stamping the choice, want to retain that decision, and they want someone else.

That’s a long introduction with which to get to the point of this post. The IOS had this to say, in part, on the matter:

[I]n many countries, the vote’s outcome was more a reflection of domestic political frustrations than a broader statement on European issues.

That, though, is the nature of federations. The constituent states vote their individual interests as determined by the citizens of those states, by design, and compromises among those states’ MEP contingents occur, to be implicitly ratified or rejected by the states’ citizens in the next round of MEP elections—Adam Smith in the political world.

As long as the EU continues to not understand that simple fact, it always will be fraught with the sorts of economic and political failures it has experienced—and still is experiencing— every time there’s even a minor crisis in politics or economics.

It appears as though the misunderstanding will continue for a long and dangerous time.

It comes down to who, in the end, is responsible for choosing the next head of the Commission, a body of 33,000 employees that is in charge of proposing new legislation and monitoring compliance with EU treaties. Is it up to the voters? Or up to the governments of EU member states?

Crimea and Sanctions on Russia

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Promptly opening the export spigot on our own oil and gas production and accelerating our development of those fields, including on Federal land (which will have minimal production effect today; although it’ll have significant effect in the near- to mid-term by significantly expanding the supply of oil and gas on the global market) will produce an immediate spike down in the global price of oil and gas, which will have an associated immediate negative impact on the value of Russian oil and gas exports.

Blocking Russian access to credit on the global banking system—even just on the American banking system—and requiring cash-only transactions will have a negative impact on Russia’s cash reserves.

Seizing the personal banking and physical assets held by the Russian oligarchs and by Putin will remove billions of dollars’ worth of value from these folks—and it’s the oligarchs as much as a mendacious Russian legislature who are the source of Putin’s political power.

Of course, a significant fraction of the success of the sanctions will depend on how well Europe does its part.  Their participation will go a long way toward identifying who truly believes in the sanctity—as opposed to the convenience—of national sovereignty and who just engages in empty rhetoric for personal gain.  Their participation will go a long way toward identifying who our friends are and who are just summertime soldiers.  Their participation will go a long way toward determining who stands with Ukraine and who are willing only to talk about standing with Ukraine.

We can’t let their timidity stand in the way of our acting, though.  Nor can we let the fact that the sanctions will bring Russian retaliatory sanctions on us deter us.

Russian Foreign Minister Sergei Lavrov said Friday sanctions imposed by the West “would inevitably hit the United States like a boomerang.”  Their foreign ministry added they “will not accept the language of sanctions and threats,” and will respond if sanctions are imposed.

What sanctions can Russia impose?  They can block further Western/American investment in Russian oil and gas field development.  They can block further Western/American investment in oil and gas delivery systems (read: pipelines).  They can cease existing Western/American investments throughout their economy, not only in their oil and gas industry.  They can begin dumping their holding of American Treasuries.  They even could deny us access via their territory and airspace to our bases in the ‘Stans from which we support our war effort in Afghanistan.

This will hurt us, to be sure.  But who else will it hurt?  Russia can’t develop its oil and gas industry without us—that’s why we’re there.  What they have developed has been being depleted for more than 10 years; those assets are declining in value.  Their economy is utterly dependent on oil and gas.  Recall the damage done Texas’ strictly oil and gas economy during the first Arab oil embargo and the Nixon price controls.

Dumping their US Treasury holding will devalue the rest of what they hold, decreasing their ability to convert the rest into cash with which to complete the now-demanded cash only transaction.

Our war in Afghanistan is winding down, and those bases already are becoming less and less critical to our efforts.

The oligarchs’ loss of their own overseas assets and their loss of access to non-Russian banking, even to their overseas villas and other assets will hurt Putin’s primary supporters where it hurts the most: in their own pocketbooks.

The sanctions that will boomerang on us will boomerang right back on them, and worse.

And our own actions will determine whether our own administration truly believes in the sanctity of national sovereignty, with whom we are friends, whether we stand with Ukraine.  I’ve no doubt where the American people stand.

Sovereignty and Sovereign Debt

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Josef Joffe, editor of Die Zeit, is upset with Germany’s high court.  It seems that this court has ruled, again, against the European Central Bank’s President, Mario Draghi, and the ECB itself in continuing to note that ECB moves to buy member nations’ sovereign debt not only is a violation of EU foundational law, it violates the sovereignty of those nations expected to put up their peoples’ money to buy that debt.  Germany’s highest court also committed the dastardly deed of kicking the latest matter to the European Court of Justice.  All in the name of protecting German national sovereignty.

So the docket of the German high court in Karlsruhe never clears, and the battle cry never stops: “It’s our sovereignty, stupid!”

And

The German plaintiffs’ key complaint against the ECB comes in Latin—ultra vires. They argue that it would go “beyond the power” of the ECB to buy sovereign debt.

The horror.  The horror.

While cynically ridiculing the idea of national sovereignty throughout his article, though, Joffe missed another point, perhaps caused by his evident lack of understanding of the nature and importance of national sovereignty.

The larger story proclaims: Europe is still far from the United States, a real union.  The EU has neither a real Federal Reserve, nor a common fiscal policy, nor commonly elected leaders to define the common good.  The logic of a “more perfect union” demands these commonalities, but it collides with the logic of nation-states rooted in 2,000 years of history.

Leaving aside the EU’s demonstrated contempt for the common man (recall its formation: some countries rejected the union in national referenda, so the governments involved told those impudent populations to shove it and signed the Maastricht Treaty, which dragged those populations into the EU against their will), Joffe’s remark misses the fact that the EU also has no common culture, nor does it even have a common view of the purpose of money.

Even in the EU—especially in the EU—national sovereignty matters.  A very great deal.