Tuesday, June 17, 2008

Europe could disintegrate after Lisbon

The trouble with Europe is that it just keeps going on and on. Countries vote against treaties, like Ireland last week, but it rarely seems to make any difference in the stuffy corridors of Brussels. Which, of course, is one important reason that the Irish voted against the Lisbon Treaty.

Another was the ?Bertie? factor ? the recent resignation of the pro-Lisbon Taoiseach after a financial scandal. Final nail in the coffin was the housing crash, which has caused panic in a country where people had come to see ever rising property prices as a kind of natural right. Voting down Lisbon is hardly going to do anything about that, but it was a way of giving the politicians a kicking nevertheless.

This is the trouble with referendums. People don?t always vote on the issue before them. As the financial crisis deepens, and people see their standard of living fall as inflation rises, they look for an opportunity to register their discontent. Which doesn?t mean the vote is invalid, or that it can easily be dismissed by the eurocrats. The Irish NO has been a devastating blow to the ambitions of Brussels to create a more coherent and, yes, centralised European Union. Not a superstate, but a union which is able to speak with a common voice. Clearly there is no common voice.

It probably wasn?t an anti-European vote as such ? Ireland has done so well out of the EU that no serious politician there proposes actual withdrawal from the Union. The euro has been a great success. But Europe certainly arouses deep suspicion. There was a fear that under the new treaty, which entrenches majority voting on the council of ministers, Ireland might lose some of its opt outs ? such as its right to cut corporation taxes to improve competitiveness. Or its military neutrality ? some no voters apparently believe that the EU wants to conscript young Irish into a European defence force. These were not realistic fears, but there is no doubt that people feel that Brussels is too remote, and not sufficiently attuned to Irish sensibilities.

But is there any way that the EU can be sufficiently attuned to the national attitudes of 27 countries? This is the challenge to those, such as the UK Conservatives, who rejoice at Irish rejectionism. Kick the bureaucrats where it hurts, they say, frustrate the ambitions of the politicians; show that the people won?t be taken for granted. Well, and good. But what is the alternative now for Ireland and for Europe? We are entering a very different economic and political climate to that in which the EU was born and evolved into the dynamic economic zone we see now.

The 60 year post war boom is now coming to an end. Look how inflation is returning with a vengeance, particularly in the recent accession states in the East, like Latvia, Estonia. See how Spain is being crushed by the collapse of its construction boom. The party is over, and countries like Germany, which have not indulged in irresponsible personal and governmental indebtedness will be expected to bail out countries like, well Britain, which have spent like there is no tomorrow.

The Mediterranean countries, like Spain and Italy are looking to a relaxation of the Maastricht rules on public spending so that they can head off a recession. The European Central Bank is not happy with this and is threatening to put up interest rates. The Eastern countries suspect that the West just wants their cheap labour. We face a Eurovision-style fragmentation of Europe, with a sun-belt block, an Eastern European block, a Franco-German axis, and an increasingly isolated UK. This is not a recipe for economic cohesion. There is a very real possibility that Europe could begin to unravel if the economic instability continues. Our cosy assumption that, whatever happens, the EU will just go on and on may be about to suffer a realty check.

No comments: