Wolf Richter www.testosteronepit.com [9] www.amazon.com/author/wolfrichter [10]
The Eurozone debt crisis is exacting its toll. Convoluted undemocratic taxpayer-funded bailouts of bondholders and banks designed to keep the Eurozone together can’t kick the can down the road far enough. But the price has been huge, and people have expressed their anger in massive protests. Now, these efforts are also tearing up the fabric of the 27-member European Union: the first one out may be the UK.
If offered a referendum [11], 56% of the British would vote for a UK exit from the EU (with 34% definitely and 22% probably). Only 30% would vote to keep the UK in the EU. It wouldn’t even be close! It would be a landslide. Thus, if it came to a referendum today, the UK, a cornerstone of the EU, would bail out.
The EU has little patience with the will of the people. In most member states, decisions such as ratification of EU treaties, scrapping one’s own currency, or bailing out holders of sovereign bonds are made by parliamentary vote. But in instances, when people were finally given a vote, they had a nasty tendency to surprise the elite—the politicians, bankers, and unelected bureaucrats that run the show.
The Lisbon Treaty, the chef d’œuvre of the EU’s political elite, was supposed to repeal existing treaties and replace them with a European Constitution that would transfer significant national sovereignty to unelected EU bureaucrats and their institutions. Negotiations started in 2001, and by 2005, a majority of member states had ratified it by parliamentary vote.
But in France, the people got an opportunity to ratify it by referendum—after parliament had passed it with 93% of the votes. What should have been a cakewalk turned into an epic battle that split the Socialist Party in two. And the people, who loved their sovereignty and wanted to hang on to it, “unexpectedly” killed the thing by a margin of 55% to 45%. In the Netherlands, a similar scenario played out. 2005 was the year that referendum became a dreadful word in the European political lexicon.
The lesson was unforgettable: don’t let the riffraff decide. Such matters should be handled by politicians, bankers, and unelected bureaucrats. And so they did damage control. Many of the measures in the failed constitution were revived as reforms in a watered-down treaty. That was in 2008. As a precaution, the uppity people in France and the Netherlands weren’t allowed to vote on it. Irish voters were, however. And they killed it. They too wanted to hang on to their sovereignty.
But then the financial crisis hit. The Irish got scared. Their banks were in trouble. The economy was going south. So the referendum was re-run after the Irish government had negotiated some concessions, and the people changed their mind (the treaty became effective December 1, 2009).
European politicians dread a referendum more than anything. It threatens their power. Early November last year, at the margin of the G-20 meeting in Cannes, Greek Prime Minister George Papandreou tried to use that fear to extort more bailout money from taxpayers elsewhere. So he lobbed a single sentence with the most powerful threat he could think of: a referendum in Greece. He wanted to let the people vote on the austerity measures that would strangle them.
The threat knocked financial markets around the globe into a tailspin. The Euro plummeted. Italian and French yields spiked. It gave birth to a new word: papandemonium.
But it was dealt with swiftly. German Chancellor Angela Merkel and French President Nicolas Sarkozy summoned Papandreou to a French dinner. Afterwards, a dour-faced Merkel and a grimacing Sarkozy set out to squash the referendum. They’d cut off bailout payments, they said. And for the first time, they verbalized Greece’s exit from the Eurozone. It was a tour de force.
Parliamentary chaos broke out in Greece. Politicians in Papandreou’s own party rebelled against him. He got kicked out of office. And by the time the caretaker government took over, the referendum had been buried. Politicians just hate the idea of giving people an opportunity to muck up their delicate plans that had been hashed out with such finesse behind closed doors and had been laced with beautiful side deals.
That hasn’t changed. Not even in the UK. In one of the innumerable EU ironies, Prime Minister David Cameron, like all reigning EU politicians, would do everything in his power to stymie the efforts to hold a referendum. And if unable to stop it, he’d campaign with all his might to keep the UK inside the EU, though it would alienate a big part of his own voter base and much of the public.
The British have their reasons for being leery of EU governance that is encroaching more and more on their turf. Yet the EU has united 27 countries whose people had been waging war on one another long before the concept of nation state had even been invented. In that respect, and in many other respects, the EU has been a phenomenal success. Then the debt crisis erupted. And now that family of nations is threatening to tear itself apart over the euro that has become a religious dictum, and no price is too high to save it. Read.... The Curse Of The “Irreversible” Euro [12].