STAFF NEWS & ANALYSIS
Silent Coup: EU Takes Over Europe?
By Staff News & Analysis - March 18, 2011

EU ushers in 'silent revolution' in control of national economic policies … The new framework constructs unprecedented new intervention in national budget and economic decisions … After months of often bitter back-room negotiations, European finance ministers have finally given the green light to a radical new centralised EU oversight of national budgeting processes and, broader still, of all economic policies – both of countries that use the single currency and those that do not. – EU Observer

Dominant Social Theme: The EU boot descends. And about time!

Free-Market Analysis: The EU took over Europe the other day. Did you read about it? Perhaps you know former TV entertainer Charlie Sheen just sold out Radio City Music Hall and that Lady Gaga has a brand new single out about gender tolerance. Oh, yes, by the way, the EU has just engineered the single largest legislative power-grab in the history of humankind.

It was front-page news – wasn't it? Wasn't it? Not really. Such a massive grab has nonetheless gone fairly unreported by the mainstream media. Internet blogs have covered it so far, especially those predicting the incipient arrival of the Rapture. Major, definitive coverage, fortunately, has been provided by the EU Observer (see excerpt above), which calls it a "silent revolution." A fitting description.

In fact, the low-key nature of this extraordinary legislative coup is typical of the way the EU conspiracy has operated from the very beginning. The leaders of this enormous enterprise have never been honest either about its scope or ultimate ambition, which is apparently to rebuild Charlemagne's Holy Roman pan-European empire, stretching from Britain to Eastern Europe and beyond but without the bloodshed – not upfront anyway.

Why the current crop of Eurocrats believes they can build such a powerful project via misdirection, back-room dealings, secret political pressure and outright lies is puzzlement to us. Such manipulations usually end unhappily. The larger public – in its hundreds of millions – eventually perceives such structures as having no legitimacy. This doesn't seem to bother Brussels however, or not at the moment.

It is part of a larger pattern, then. When countries vote against EU projects, they have been forced to vote once more. When too many resist, Eurocrats simply remove the democratic process from public venues and gain their acquiescence via parliamentary procedures. When proposals are definitively defeated, Eurocrats reconfigure legislation as treaties to gain efficient passage. When public sentiment turns powerfully against EU programs, Eurocrats have floated (in the past) soothing statements about the EU's relative powerlessness and lack of ability to move beyond trade agreements.

It was sold originally, of course, as a pan-European "market" that would allow an easier flow of goods (and people) from one country to another. A hundred treaties and 100,000 regulations later, those assurances can be seen for what they were: cynical manipulations on the road to empire. The EU juggernaut continues to roll along, measuring its progress by prerogatives gained. The direction is unmistakable.

These days Eurocrats are actually less apt to hide their ambitions. Europe may be ablaze with resentment over austerity but those at the top seem more confident, or at least bolder. The decision by the EU to reduce the ability of countries to write their own laws (their "policy space") was hailed by EU economics chief Olli Rehn. "Today the EU member states are endorsing the basic thrust of the six legislative proposals by the commission" – the so-called "Six Pack." More from the Observer:

Ministers were not endorsing a light work-out of economic sit-ups, but a different sort of regime entirely – a half a dozen new far-reaching laws that the commissioner said ‘will lead to a quantum leap of economic surveillance in Europe.' … Although much of the often very technical discussion, aimed at convincing markets of Europe's commitment to tighter fiscal decision-making, has been buried in the back of the financial pages of newspapers, those at the heart of the EU are under no illusion about the profound transformation the bloc is about to undergo.

What is going on is a silent revolution of ever-more powerful economic governance "by small steps." President Jose Manuel Barroso understands the import. He was emphatic even last June after the EU Council approved the initial language that would result in the Six Pack. "The member states have accepted – and I hope they understood it exactly – but they have accepted very important powers of the European institutions regarding surveillance, and a much stricter control of the public finances."

On Tuesday, March 15th – mark the date – European finance ministers approved draft laws for the Six Pack. It still needs various premier approvals and the OK of the European Parliament, however approval at the level of finance ministers is said to be a "very important step indeed." New rules will attack two aspects of national spending: annual government budgets are now to be examined by Brussels and "all economic policies" as well. The new regime will emphasize reductions in overall government debt.

"Countries with debts over 60 percent of GDP, will now be expected to diminish this situation by five percent a year over a period of three years," the Observer cheerfully informs us. There are considerable financial penalties involved. "If countries are in the eurozone, this oversight is backed up by the imposition of stiff new sanctions. Scofflaw states will have to fork out cash amounting to 0.2 percent of GDP into a non-interest bearing deposit account. If a country does not correct its situation in line with the recommendations of the commission and Council, this cash will be snatched away as a fine. This process can be repeated up to a maximum of 0.5 percent of GDP."

Eurocrats, in typical fashion, have fiddled with the voting. Sanctions will be levied by a 'reversed majority' system. This means penalties will be generated automatically unless a Council majority explicitly votes against them. Germany and other Northern countries are said to be enraged that the penalties can be subject to a vote at all and have stated their desire to have the larger European Parliament remove even this potential "loophole." The president of the ECB, Jean-Claude Trichet, is also concerned. "The improvement in governance that is presently envisaged is in our opinion insufficient." And yet according to the Observer, the overall package is endlessly ambitious:

Under the second major aspect of the new framework, the more open-ended surveillance – of every single one of a nation's economic policies and not just of annual budgets – imposes a similar set ‘corridors' of acceptable behaviour by member states to prevent what are labelled 'macroeconomic imbalances' over the longer term. These imbalances may cover such issues as trade deficits, 'excessive' wages, levels of private and public debt, housing bubbles, the 'misallocation of resources' and 'unsustainable levels of consumption'.

But in theory, these imbalances could be anything. This is because definite, quantifiable indicators – specifying precisely at which point and in which policy area a country has reached a macroeconomic imbalance – have yet to be written and, crucially, because the commission has argued that the importance of different imbalances varies over time. So although a broad set of parameters is to be assessed using a 'scoreboard' of economic indicators, the details will only be defined on an ad-hoc basis after the commission and Council find that a member is guilty of this crime. For eurozone members, being found guilty will once again result in fines, although in this case 0.1 percent of GDP annually.

Is it all a fait accompli? Has the Empire prevailed? Well … there are yet questions. Just yesterday the Observer, seemingly in sudden alarm, published an article entitled "Irish bail-out terms endanger EU's future." The article pointed out just what we did several days ago in our article entitled, "Ireland Hammered to Raise Corporate Tax," that the current intransigent attitude of Eurocrats, especially those representing the Northern flank, may be laying the groundwork for a full-on rupture.

Note that the Irish, in their misery and fury, just reduced their leading political party to rubble. Ireland's new chief, a cipher named Enda Kenny, laid down two non-negotiable points in his initial address to the nation. He vowed that he would gain at least a one-percent drop in the ruinous interest rate that Ireland is currently being charged on the loan provided to it by the EU bailout fund. And he maintained that the low Irish corporate tax that has lured multinationals to its shores would not be compromised.

A few days later – last week in fact – Kenny travelled to Brussels where the Germans informed him that he would not receive a one-percent reduction; the French explained that it was imperative that Ireland raise its corporate tax. Kenny came away with nothing and has been silent ever since. Yet the Irish may not be still for long. The Observer points out the following:

Recent discussion of the terms of the EU bail-out for Ireland has focused on the preferences of the Irish, French and German governments and the likely impact on international bond markets, but largely neglected the effect of this issue on the Irish public's attitude toward Europe. This blind-spot could have disastrous consequences whenever the EU next seeks to revise its treaties. According to its constitution, Ireland may not ratify any significant amendment to the EU's treaties without amending the constitution itself, which requires approval by a public referendum.

The Irish may have had enough, and this not an academic matter. By law it seems the Irish must vote on the new powers that the Eurocrats are celebrating. And as we understand it, a vote against these new powers by just one country could scuttle the whole affair.

Last time, Brussels leaned hard on the Irish elite and the country was massively propagandized. The Irish had the temerity to vote against the Lisbon Treaty, giving the EU additional powers that it had once sought to acquire via its scuttled Constitution – and thus the Irish were forced into a "do over." The Irish complied the second time; the Lisbon Treaty was law. Will the Irish be so complaisant this time around? The Observer:

Irish voters' support for new EU powers cannot be taken for granted. And there is now good reason to fear that Irish voters would be even less forthcoming in future referenda … The Irish public remains more distrustful of public authorities than at any time since the country's independence in 1922 … The terms of the 2010 EU-IMF bail-out are considered illegitimate by the vast majority of Irish voters. This sentiment is only partly focused on the high interest rate premium that the EU imposed on its loans to the already-overburdened Irish state.

After Thoughts

The EU, in the fullness of its ambition and power, may have to attend once more to a tawdry nation of five million that it has spent the past year thoroughly abusing. If so, the irony is fairly substantial in our view. Quem deus vult perdere, dementat prius. "Whom the gods would destroy, they first make mad." Such ancient aphorisms are apt.

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