Constitutional changes

Karl is quoted here as saying that the Franco-German proposal that we insert borrowing limits into the Irish constitution will not solve our current debt problems. This is obviously correct, as is the point that such an amendment would not have made a blind bit of difference during the bubble years.

There is also the point that a constitutional amendment is a much bigger deal in Ireland than in some other countries, since it can only be changed by means of a new referendum.

Here are two questions:

As per Derek Scally in the Irish Times, is this a taste of things to come, or much ado about nothing?

What are the chances of the Irish government winning such a referendum?

48 thoughts on “Constitutional changes”

  1. If I heard Michael Noonan correctly on Morning Ireland he just stated “the previous government borrowed recklessly and the constitutional amendment might have stopped that from happening”. No, they didn’t! It was the banks who borrowed recklessly. No constitutional amendment would solve the source of Ireland’s fiscal problem: the unsustainable composition of the tax base or its economic problem: reckless behavior by private market actors.

  2. I fully support deficit and debt limits being inserted into our Constitution, and the targets in the Stability and Growth Pact look fine to me – 3% for the former and 60% for the latter (both referring to % of GDP).

    What happens though when a member state suffers a shock? A natural disaster like an earthquake, a man-made disaster like a nuclear mishap, a societal disaster like rioting or social strife, a commodities disaster like oil spiking in price or just a good old common-or-garden fiscal downturn?

    And what happens to member states that have debts over 60%? Remember in our case, almost 20% of our debt is represented by promissory notes which have yet to be honoured. What happens to the excess? Default?

  3. It appears that the French and Germans are trying to achieve two things. Firstly, they want to stop the same problem arising again in 40 years time. Secondly they want to put a measure in place that will pacify their electorates. This proposal will not achieve the former and may or may not achieve the latter. More importantly, it reinforces the view amongst the German and French people that this problem arises purely from profligacy on the part of foreign governments. It fails to address the role that banks, and particularly German and French banks played in the whole debacle. This is a false view and is dangerous in the long run.

  4. I think there’s a fair chance of a win, there’s a broad constituency in Ireland that might not be a fan of Europe but are fans of ceding control to Europe ahead of our local politicians.

    Inexorably this process moves to its final conclusion.

    Ever closer union and I for one, welcome our new overlords.

  5. What are the chances of the Irish government winning such a referendum?

    The small-minded pettiness of the two current right-wing incumbent governments in Germany and France never ceases to amaze.

    Balanced budget rules are nuts unless there is to be guarantee of transfers of wealth between the EU core and the poorer periphery/individual nations in trouble (like in natural disasters, as noted above). The balanced budget rule will of course only ever be applied with the cosh to what those two now clearly consider their vassal nations, while they themselves will skip free should they happen to break it (and does no-one recall the ways in which the Greeks with the aid of Goldman-Sachs and ourselves with NAMA have attempted to game the system?).

    While a tax on financial transactions is to be welcomed in at least giving the appearance that manners can be put on the parasitic banksters and financiers, it’s hard to imagine it going ahead if the main target wasn’t the UK.

  6. For Ireland, the obvious constitutional amendment is one which prohibits the state from taking any responsibility for private-sector debts. If that means all our banks have to be branches of foreign banks (like NIB) then so much the better.

    But for the Eurozone in general, isn’t it about time to get to grips with the idea of cyclically-adjusted deficits and a dual-mandate central bank? 75 years of ignoring Keynes is too much.

  7. We already have debt and deficit limits in our Constitution. They are in the SGP which we voted on at the time of the treaty, and the fact that they had constitutional force makes not a blind bit of difference.

    What are they saying now – that we add a phrase like ‘We really mean it this time?’

  8. As things now stand I think it would turn into a vote on ” Europe” and would probably be defeated… but who knows where things will be in a year’s time.

  9. In agreement with much of the above.

    Also, if you were an MEP this morning waking up to calls for some sort of euro-government, wouldn’t you think, ‘hang on a sec., what are we, chopped liver?’

  10. Has one of the props from the July 21st. Brussels summit (possible EFSF support prior to bail-out) to the Italian and Spanish bond markets been removed? If it is now to be left to the ECB bond purchase programme alone, the next summit could be soon.

    Kevin Donoghue: You could have added that a debt/deficit limit in the constitution would have made no great difference in Ireland.

  11. While the constitutional issue is not a solution to the current crisis, it is also not realistic to expect countries to accept eurobonds with an interest premium, without a robust governance structure.

    I believe the German debt brake would not prevent a hike in spending in exceptional situations.

    Trichet has often made the point several times that France and Germany broke the SGP rules.

    As for the Irish bubble, I assume there will be more than a clause in a constitution in terms of taking action before a bubble burst.

    30% annual growth in private credit?

    Lets not over analyse this constitutional issue; that issue maybe optics for German political support but it’s the other measures of coordination that will matter.

    A more effective measure than a constitutional amendment, maybe a clause where 75% of members could force a country to leave the EMU.

  12. The big question is not whether a referendum would pass or whether a debt break makes sense, but whether these proposals address the current crisis. There seems to be a focus on avoiding future crises while the current one is far from over.

  13. A constitutional amendment based on a debt brake (@ EWI – note, its not a balanced budget amendment like that proposed in the US) i think would pass, having some sort of limits in place simply make sense. There is however the question of whether some ‘get out’ could be employed at a time of national emergency or in the event of a natural disaster. Should we let the EU Council have the tie-breaking vote on it? Does the government have the power to override the debt brake if it declares a state of emergency, which the Supreme Court would have the power to override? Its a complex question, is a deep recession a national emergency, for instance? However, either way, i think a narrow constitutional change would pass, but something more like a new “treaty” i think gets dumped on its behind by an angry electorate pretty sharpish. I don’t see a treaty-level referendum being passed in this country for the next decade to be honest.

  14. @Bond

    Your last line would explain why the government wants to avoid a referendum on the Treaty on the European Stabilisation Mechanism. It commits us to pay €11 billion, and perhaps more, which to me makes it the most costly treaty the country has ever put its name to.

  15. @ All

    I would suggest that what we are witnessing is the fine political art of seeming to go in one direction while actually going in another.

    For political reasons, Sarkozy cannot admit that France is incapable of playing in the same league as Germany and one of the means of pretending that it can is to out-Merkel Merkel e.g. in relation to the issue of E-bonds (implying that, of course, France’s triple AAA rating was beyond reproach and not at risk).

    But the reality is that such bonds exist already in an embryonic state through those issued by the EFSF.

    The other crucial point is that the game is now one of inter-governmental raw politics between the four main contenders, Germany, France, Italy and Spain, the one forum where Germany does not exercise a veto being the ECB governing council of the EZ. Which way will the French voice go in the deliberations of the Council and those of the other member countries other than the minority of hardliners (German, NL, Finland and Slovakia) especially in relation to the purchase of Italian and Spanish bonds? Is the ECB turning into the LOLR, willy nilly?

    As for the rest, it constitutes a very thin smokescreen. What matters is the detail of the amended EFSF framework agreement which is clearly not yet finalised and must subsume the changes agreed in March. Given that it has to be ratified by end September, “sweeping E-bonds off the table” is an obvious political ploy for Merkel to gain a majority (ostensibly) within her own governing coalition.

    However, as Lagarde has just pointed out, markets like a fall in economic activity even less than a fall in budgetary deficits. And, as the FT underlines, the ghost of Keynes is about and the markets know it.

    Nevertheless, we can be assured of the appropriate Pavlovian reaction in Ireland, not just corporation tax but another referendum! What fun!

    To add a little spice, the change to the Treaty of the European Union insisted upon by Merkel to protect her flanks against the German constitutional court, although not requiring a constitutional amendment will, undoubtedly, give rise to a legal challenge.

    Conclusion, “sinn féin agus is féidir linn” is the only appropriate exit for a country with both the pride and ability to stand on its own two feet. An early statement on the budgetary intentions of the government is, at this stage, a sine qua non.

    On the broader issue of the institutional stunts being pulled by this failed duo of politicians, the EU will remain an organisation of nation states and its direction will be decided by the relations between them. But the institutional context withing which these relations are conducted is vital. Germany and France wish to decide the budgetary rules for others but they are unwilling to include themselves in that discipline cf. comment by Colm McCarthy above. Until they are, the prognosis for Europe will remain uncertain.

  16. @ Colm McCarthy

    I think that the answer to your question has to be no. The game of chicken essentially boils down to Germany forcing budgetary changes on Italy and Spain, with France joining in with some considerable risk to her own position. The belief must be that the crisis can remain quarantined to the small fry. But removing the pre-bailout prop would surely weaken this heroic assumption.

  17. @DOCM – interesting. However, while Merkel is trying very hard to keep her junior coalition partners (FDP) on board she is losing support in the backbenches. A number of CDU politicians have come out in favour of Eurobonds (and there has been quite a lot of criticism of the CDU leadership from various quarters inside the party). The German constitution might not be such an obstacle as the Social Democrats have stated that they are willing to play a constructive role i.e. the constitution can be changed.

  18. I would support such an amendment if it was added to a constitutional prohibition on raising the CT rate.

  19. It is total Bull not to blame the Politicians here for the Banking mess and Fiscal Deficit as they have Oversight of the system as a whole through the D of F and the Central Bank both which turned out to be grossly negligent in allowing the Banks here to borrow to the hearts content. So if we need a brake on Government then let it be some legal one as in the US and if they decide to break the borrowing ceiling have it that they pay personally for their incompetence. I would happily vote for such a restriction in the Constitution.

  20. The proposals from yesterday’s meeting stink of a Franco German wishlist rather than a solid plan to get the euro working. Also, it’s a little disturbing that the big two are setting the agenda (I had the impression there were more member states).

    I don’t know if eurobonds are a good idea. The immediate problem is over-indebtedness in the piigs. If these countries lower their level of debt, their cost of raising debt should fall (which somewhat negates the need for eurobonds or at least buys time to introduce them in a well thought out way).

    As no state seems willing to pay the losses of other states, the ECB should do it via QE. This does not need to be an immediate debt write-off for the beneficiaries and require the implementation of appropriate reforms. Such reforms need to be in line with the interests of the country not other member states. For example, Ireland should change its corporation tax rate if it is to Ireland’s benefit. I think the goal of a Euro QE programme should be to reduce debt levels to sustainable levels with a further goal that these states will bring debt levels down to 60% of GDP (/GNP for Ireland).

    Although the biggest beneficiaries of such a programme are the countries that have mismanaged their economies, all members would benefit as eurozone growth prospects would improve and the solvency of the Core’s banks and insurers would be better. It should strengthen the credit ratings of core states (more guarantees will weaken them). The Core’s private sector has a lot of wealth tied up in the periphery, perhaps that’s something to concentrate minds.

  21. @ All

    Can someone please explain why is now sounds rationale to propose a deficit straight jacket within the Constitution when the horse has already bolted? To me this is the same delusional rationale as imposing crazy capital rules on banks (!) at the bottom of the cycle – we don’t need to look too far to see the damage that is doing (just ask the folks in MBNA in Carrick). In markets timing is everything.

    These policy proposals are symptomatic of a novice investor buying at the top and selling at the top i.e. perhaps the right policy choices at some time but definitely not now.

    With virtually all of these large policy proposals the Govts I feel are listening to officials who personify the average retail investor i.e. suckered in at the top and forced to sell at the bottom when the margin man keeps calling. Unfortunately those picking up the losses are the citizens including the taxpayers. I listened to Dr. Constantin Gurdgiev over the last two evenings suggest this very thing – those at the top of the political tree simply don’t get the financial gig or if they do are extraordinarily poor at giving the impression that they do.

    Unfortunately the much maligned ‘markets’ will eventually find them out and these recent attempts at solutions finding will fail until Govts recognise the ONLY way to solve this crisis is to let the losses lie on those who should naturally shoulder them. If this means the French banking system goes tits up well so be it. That’s capitalism and capitalism was never designed to be half baked.

  22. @ All

    Can someone please explain why is now sounds rationale to propose a deficit straight jacket within the Constitution when the horse has already bolted? To me this is the same delusional rationale as imposing crazy capital rules on banks at the bottom of the cycle – we don’t need to look too far to see the damage that is doing (just ask the folks in MBNA in Carrick). In markets timing is everything.

    These policy proposals are symptomatic of a novice investor buying at the top and selling at the bottom i.e. perhaps the right policy choices at some time but definitely not now.

    With virtually all of these large policy proposals the Govts I feel are listening to officials who personify the average retail investor i.e. suckered in at the top and force to sell at the bottom when the margin man keeps calling. Unfortunately those picking up the losses are the citizens including the taxpayers. I listened to Dr. Constantin Gurdgiev over the last two evenings suggest this very thing – those at the top of the political tree simply don’t get the financial gig or if they do are extraordinarily poor at giving the impression that they do.

    Unfortunately the much maligned ‘markets’ will eventually find them out and these recent attempts at solutions finding will fail until Govts recognise the ONLY way to solve this crisis is to let the losses lie on those who should naturally shoulder them. If this means the French banking system goes tits up well so be it. That’s capitalism and capitalism was never designed to be half baked.

  23. We know now, if not before, that monetary union needs a considerable degree of fiscal union. And fiscal union, arguably, requires some form of political union. Which in turn, requires democratic consent. Which stands zero chance of being given. The Pygmy summit of 16 August 2011 marks not just the latest step in the disintegration of the euro but the eu itself.
    In the 500 years to 1945, Germany and France fought 17 wars. It will probably take another one before there is aEurobond issue.

  24. Simpleton,

    This time it looks as if the big two would be on the same side. Although from 1941-43 in the last match up they were on the same side. I doubt the diminutive one would like to be compared to Petain or Laval.

  25. Kevin Donoghue
    “For Ireland, the obvious constitutional amendment is one which prohibits the state from taking any responsibility for private-sector debts.”

    Why not also apply it to wholly-owned state companies that use moneys borrowed (with a an assumed state guarantee) to fund what Minister Pat Rabbitte might describe as “poor decision making, informed by short-term, shoddy and self-serving policy analysis.” http://www.labour.ie/press/listing/13070872464939152.html

    An example is the Bord Gais paid €500m for a portfolio of wind assets that ESB deemed too expensive (see here
    http://www.bordgais.ie/annualreport2009/chief_executives_review.html
    and here
    http://www.thepost.ie/story/?jp=eyeycwidau)

    If we are go to make constitutional changes, we need to go further to design,discuss and implement a series of checks and balances to limit the scope for excess by the powerful, whether they be public or private, elected or appointed in order to both ;
    • ensure competence and moderation in government
    and
    • overcome inertia at government level, both national and local.

    The best example of such incompetence and inertia is the fact that our public authorities had sufficient powers to limit the construction/property bubble, but did not do so.

    If we are going to discuss our constitution, I suggest that we start by regarding it as a framework for a free government that limits, restrains and allows for the exercise of political power, which we as citizens of a Republic own.

    We need to ensure that our way of governing ourselves has both
    • the means to be successful for the common good with increased democratic accountability
    and
    • the capacity and of adapting to the changes that constantly descend upon it.

    To start with, I suggest two changes
    1) making whatever change to the constitution is necessary to implement the majority recommendations of the 1974 Kenny report on the price of building land (see here for full text http://www.irishlabour.com/dublinopinion/Kenny_Report_1974.pdf). If I understand it correctly, similar measures were then in force in the well-managed €urozone pillar Netherlands. Within 5 days of the 2008 ill-considered Government bank guarantee, I argued for this measure see here http://www.irishexaminer.com/archives/2008/1004/opinion/end-malign-influence-of-property-speculation-on-the-way-we-are-governed-73915.html

    2) Adding Swedish-style Freedom of Information to our constitution as I proposed here http://politicalreform.ie/2010/06/21/freedom-of-information-and-corruption/ (and also in a 1996 submission to an Oireachtas Committee on the Constitution). Sweden has such measures since ”1766, when a new young radical government came to power convinced that only transparency could deal with the corruption that was looting the Swedish state and society Freedom of Information Act was passed”, as a London based Swedish journalist pointed out in a BBC R4 broadcast.

    Neither form part of the EU-ECB-IMF nor Government programmes.

  26. Personally with details of the latest Sarko/Merkel fudge as stands, I’d organise and vote against any change. The fudge doesn’t seek to deal with the monetary/banking problems, and as such is a political power grab.

    Especially odious is the ‘financial transaction tax’. This will likely be a flat tax, and as such will be passed to consumers. It won’t target specific risks, and thus will institutionalize the abnegation of moral hazard…in fact with the surety of such a bailout fund, it will likely increase reckless behaviour.

  27. @Desmond Brennan – the biggest question about the financial transaction tax is whether this tax will only be levied in the Eurozone or the entire EU (Michael Noonan touched on this on Morning Ireland).

  28. @Kevin Donoghue at August 17th, 2011 at 9:26 am

    For Ireland, the obvious constitutional amendment is one which prohibits the state from taking any responsibility for private-sector debts. If that means all our banks have to be branches of foreign banks (like NIB) then so much the better.

    I imagine that this kind of referendum would pass everywhere in Europe. How odd that no one in the commission has suggested every country pass one in order to foster solidarity.

    @Edgar Morgenroth at 10:12 am

    The big question is not whether a referendum would pass or whether a debt break makes sense, but whether these proposals address the current crisis. There seems to be a focus on avoiding future crises while the current one is far from over.

    Worth repeating. The latest announcement from the King and Queen of the Eurozone has little to do with improving the current situation and everything to do with improving their political fortunes.

  29. The last paragraph in my post at 12:40pm was my own work and not Edgar’s, also close your html tags.

  30. Found this comment in a German forum:
    “Once we are all in a fiscal union (that none of us voted for), everything will be just fine and the evil mountain of public debt will suddenly disappear, as if by magic and everyone will live happily ever after. ”

    I think it might be sarcasm 🙂

  31. I don’t understand – the credit has already been spent on highways to nowhere that have linear towns & trophy houses straddling their crazy dreams & ambitions.

    If you decide not to default on private deposits & bonds the fiscal money must expand to service these deposits , if the fiscal debt does not expand you starve / emigrate / hunt & gather.
    The least that can be done is to give us enough capital to try to stitch the remaining parts of the rational built envoirment using the early 20th century rail system as a template.
    The foregin banks will get nothing back if they decide to not utilise our remaining albeit few advantages.
    Contrary to dead meat , credit rots from the inside out when it is frozen.
    Same as it ever was same as it ever was.
    http://www.youtube.com/watch?v=-io-kZKl_BI

  32. @zhou

    “More importantly, it reinforces the view amongst the German and French people that this problem arises purely from profligacy on the part of foreign governments”

    It is remarkable that nobody seems to be interested in the fact that high beta economies should not have the same deficit / gdp limits as more boring ones. People don’t seem capable of understanding the logic of this.

    Similarly the idea of their position during a boom being policed by a deficit / gdp rule is idiotic.

    However if you replace profligacy of foreign governments with profligacy of foreigners – fingering the debt-financed owners of Spanish holiday villas and BMW cross-country runabouts – then they might have a point.

  33. @Edgar Morgenroth
    Brown was spouting this nonsense a while back too, claiming it as a variant of the Tobin tax. Unless Zurich, London…and probably the whole world buy into it, all it will do is drive trade from the Eurozone.

    A much more sensible solution would be countercylical modifications to cost of credit in various regions and investment sectors.

    This ‘tax the traders, they’re wot caused it’ stuff is gettihng quite prevalent in Europe: bans on short selling, mooted bans on rating agencies…and indeed the ECB bond buybacks are another effort to mute the problem.

  34. @The Dork of Cork – nice choice of music but perhaps ‘road to nowhere’ might better summarise this summit.

    @desmond brennan “all it will do is drive trade from the Eurozone” – that’s my point. Indeed if it were implemented EU wide it would drive trade out of the EU. Does this look like a well thought out plan?

  35. It seems obvious that the advisers to both heads of State would have worked out the reaction to a non event like yesterday’s Summit. Something more is brewing and it may well be the EFSF as mentioned by CMC above.

    As for getting a constitutional amendment passed in this climate there are two chances (nasfa). A deficit amendment will be linked to our CT rate and the harmonious Franco/German tax regime can only lead to a full assault on our rates when we are at our weakest.

  36. @ Edgar Morgenroth

    The attitude of the CDU members will probably reflect the division which I understand exists between the exporters association, which I assume represents large industry, and the chambers of commerce, which I assume represent the famous “mittelstand” of small German firms that are past masters at finding niche internationl markets and dominating them. The latter are less open to international economic downturns than the former and would, for that reason, one assumes, not be favourably disposed to E-bonds, apart altogether from the fact that they are largely funding by German banks, notably Deutsche Bank, also opposed.

    I agree with your point on the constitutional issue. Indeed, it is relatively easy to change the German constitution, other that its so-called “eternity” elements (introduced to guard against a repetition of the loss of democracy). However, the constitutional court had the brass neck to conclude in its Lisbon judgement that Germany would need a NEW constitution were the conditions set by the court in its Maastricht judgement regarding the euro – also open to considerable legal doubt – not met!

    I would agree with the analysis of Karl Whelan to a very large extent other than in relation to the relative weight to be given to the various participants. This is a knock-em down, drag-em out fight between the four major powers with the fifth – the UK – dashing in and out of the fray trying to land the odd punch and avoid getting permanently damaged.

    The message for Ireland is, as the old African proverb has it, “when elephants fight, the grass gets trampled”.

  37. @Edgar
    “I would agree with the analysis of Karl Whelan to a very large extent other than in relation to the relative weight to be given to the various participants. This is a knock-em down, drag-em out fight between the four major powers with the fifth – the UK – dashing in and out of the fray trying to land the odd punch and avoid getting permanently damaged.”

    A little rebellion today…..

    “Education Minister Ruairi Quinn has said that the Taoiseach needs to make it clear to the German and French leaders that they won’t be allowed to “call the shots” with regard to resolving the eurozone debt crisis.

    Minister Quinn was reacting to yesterday’s proposals to strengthen the governance of the eurozone.

    “They (Merkel and Sarkozy) have to be told in no uncertain terms that this is a European problem and it has to be solved at a European level,” Minister Quinn said.”

  38. @ Ceterisparibus
    Surely Minister Ruairi Quinn realises that they who have the gold make the rules – particularly for entities in receivership.

  39. Karl is quoted here as saying that the Franco-German proposal that we insert borrowing limits into the Irish constitution will not solve our current debt problems. This is obviously correct, as is the point that such an amendment would not have made a blind bit of difference during the bubble years.

    On the other hand, it would have been downright useful in 2H 2010, wouldn’t it? “So sorry, lads …” But it’s very easy to believe that whatever borrowing limits are proposed will include an exception for unusual and exigent circumstances such as financial-sector bailouts.

    @Kevin Donoghue

    If that means all our banks have to be branches of foreign banks (like NIB) then so much the better.

    The problem is that the Irish banking sector has a powerful lobby which doesn’t see things like that. The other problem is that it this lobby is a very shy creature which doesn’t like to be seen in public. Oh, sometimes you will catch a glimpse of it in the middle pages of the Irish Times or the comments here, where it will pop up, baldly make a confident assertion, and scamper away. “A strong native banking sector is vital to the development of the Irish economy” it will squeak, or “We must do nothing to increase the future borrowing costs of the Irish banks”. (It has even been caught on video, briefly preening about its glory days.) But try to ask a question in reply, like “Why does the Irish economy require a native banking sector, any more than it requires a native aircraft manufacturer?” or “Why is it obvious that giving a public subsidy to bank credit is better than subsidising any other economic input? Especially now that providing this subsidy is becoming pretty expensive? Has this subsidy notably benefited our economy over the last decade?”, and – nothing! Silence! It has already disappeared.

    The truth is that at home in its burrows under Merrion Street, it is a fearsome creature which wins all the fights. (In fact its network of tunnels is extensive, even stretching as far as the Stillorgan Road.) A canny beast, it knows that it has nothing to gain by being lured into a scrap out in the daylight. It also feels it has little to prove by trying to impress surface-dwellers, when it is acclaimed as king in all the places that matter. So that is why, even though we both know that its beady little eyes are watching your comment, and my comment, it will not be rising from the bushes to take the bait. It’s much too cute for that. But it will emerge again, any day now, to once more assert that we must do nothing to increase the future borrowing costs of Irish banks, just when everyone least expects it.

  40. @ All

    I do not often agree with the views of Ambrose Evans-Pritchard but in this instance I find that I hace to make an exception.

    http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100011624/in-defence-of-pigs/

    @ Ceterisparibus

    The quote is, in fact, from a post by me. Ruairi Quinn is, of course, right.

    Guy Verhofstedt, leader of the Liberals in the European Parliament, has pointed out on Belgian Radio that a proposal from the Commission in relation to E-bonds, or at least a policy paper, is expected from the Commission in the Autumn. This would be the correct institutional procedure (although the spokesmand for the Commission – French – denied that anything was afoot, contradicting Commissioner Rehn earlier this month).

    This battel is being fought on many fronts and it is to be hoped that those respecting the institutional principles which are the foundation of the EU, and the gurantee of its survival, will win. (M. Noonan, please note!).

  41. @Edgar

    Yes. The Social Democrats have taken the FPD from Dr. Merkel’s back – this gives her the freedom to act in her own near time – question, of course, is what she does with it?

  42. Hey, look I was right.

    ‘MEPs criticise Merkel-Sarkozy plan for eurozone’

    “Sharon Bowles, a British Liberal MEP, said the proposals aimed at strengthening the eurozone made by the leaders of France and Germany offered “too little, too late”. She also condemned the way policy was being drawn up in talks between national leaders rather than through EU institutions.”

    http://www.europeanvoice.com/article/2011/august/meps-criticise-merkel-sarkozy-plan-for-eurozone/71868.aspx

  43. @ All

    Quentin Peel has a very good piece, including a link to the Merkel-Sarkozy grand plan in their letter to the chosen one, Van Rompuy, in today’s FT.

    http://www.ft.com/intl/cms/s/0/00049f5e-c9b1-11e0-b88b-00144feabdc0.html#axzz1VT2RiaZt

    Sarkozy, unfortunately, is no De Gaulle and Merkel is but a sad shadow of German leaders since the war (Schroeder excluded). According to German press reports, she chose an election meeting in deepest former East Germany to re-state her veto of E-bonds.

    Derek Scally’s piece in the today’s IT is also excellent but it fails, fatally, to draw the distinction between budgetary equalisation between laender in Germany and the several and joint guarantees – which I believe is the technical term – of E-bonds, which is quite a different matter.

    As Donal O’Brolchain points out, he that pays the piper calls the tune. But the payer in this instance are the countries borrowing repeat borrowing from the creditors countries who, it must be assumed, are lending not out of the goodness of their hearts but because it is in their own interest to do so. Fairness does not figure among the elements involved in inter-state relations.

    @ Edgar Morgenroth

    On the pending judgement by the German constitutional court, you may find this link of interest. It suggests that the judgment likely in September may not be as earth-shaking as some fear. The legal expert consulted evidently anticipates a retreat on the pattern of other more recent judgements from the more bizarre elements in the court’s judgement on the Libson Treaty, notably the argument that the European Parliament lacked democratic legitimacy because elections to it did not take place on the basis of one man one vote. This view conveniently ignores the fact that the present system of elections to the European Parliament mimics that of elections to the Bundesrat, whose representation is not directly linked to the population of the laender.

    http://www.europeonline-magazine.eu/verfassungsrechtler-haelt-euro-bonds-fuer-unzulaessiggespraech-jochen-neumeyer-dpa_148776.html

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