One Day to Go

President Sarkozy missed the birth of his daughter yesterday in order to try again to persuade Chancellor Merkel to release German wealth to support something close to the present situation in the eurozone. All the signs are that he has failed: though Mrs Merkel again said that they would reach an agreement by Friday evening; which is likely to mean that the French will have to accept something close to the German position.

Meanwhile the streets of Greek cities have been defaced by increasingly violent protests against the relatively low-key measures that the Greek government has so far announced to meet some of the demands that have been made by their partners as the price of subsidising them. Many Greeks have already experienced real hardship, and the idea that the worst they have experienced is just a first tranche of the misery to come is infuriating.

Germans who read about it in the papers or watch the television pictures of the Greek riots could well feel that the Greek situation is irresolvable on the terms that have been offered by the eurozone countries, and that a more draconian solution - Greek default on their debts, probably accompanied by their withdrawal from the euro - is the only available resort.So the Germans' position could well harden against any thought of compromise.

The French and the Germans have promised to bring proposals for consideration by the other EU Finance Ministers [not just the eurozone seventeen] this weekend. The portents as to what they will agree upon are doom-laden; which scares the US Administration and has caused the Chinese to make it clear that they would be unwilling to contribute to any bail-out in Europe in the absence of some credible comprehensive provision [with the implication that China's Sovereign Wealth Fund would buy EU bonds if the context had been stabilised]. The overwhelming probability is that there will be a blatant fudge, followed by panic-as-usual. The medium-term outlook is stormy.

In the distant background to the Grand Continental Eurodrama is a delightful vignette of the fundamental rottenness of British politics. The 2010 intake of Conservative MPs are predominantly 'Eurosceptic' to various degrees, meaning that a majority of the Parliamentary Conservative Party is now of that mindset. They have used some of the Commons timetable that is allocated for Members' own motions [as distinct from Government time and time granted for formal Opposition motions] to propose that there should be a Referendum in the UK offering people various options. First, do they want Britain to stay in the EU, or to leave it? Second, should there not be a total breach with the EU, would they want Britain to be able to re-negotiate its relationship with the EU, including the repatriation of significant powers that have been ceded to
or arrogated by EU institutions? Both the Prime Minister and the Foreign Secretary have in the past indicated that they favour renegotiation; but in the Coalition agreement the Tories were committed to keep the issue off the agenda because their Lib-Dem partners are abjectly pro-EU. The vote has been brought forward to Monday so that the Prime Minister can quell the 'revolt' himself before he flies off to Perth [Western Australia] for the Commonwealth Summit Meeting. If he succeeds in whipping the great majority of the Tories into betrayal of a strong and often fervently-held position the shredded credibility of the political class will be further damaged; and Cameron's chances of winning a majority of seats in the next General Election will recede even further.

The Lib-Dems' treachery on student fees, and the Tories' betrayal of their Eurosceptic rhetoric will not be forgotten: and so the puerile Labour Party could form a government by default, in or before 2015. So much for integrity. 'Democracy' entails no integrity. Millions will see their options as lying between support for minority parties or abstention - staying away from the poll.

The next election will, however, be the occasion when millions of voters  could bestir themselves to go to their Polling Stations, get their ballot forms and mark them with bold writing 'NONE OF THESE'. If the 'spoilt' forms represent an overall majority of all the votes cast, the knell of the stinking corpse will at last be sounded.

Three Days To Go

On Sunday last the US Treasury Secretary said that the leaders of the Eurozone - France and Germany - had 'six days to save the world'. That leaves today, Thursday and Friday before the European Summit meeting convenes.

Chancellor Merkel has said that they are approaching a solution 'millimetre by millimetre' with no hurry to move towards the reputed French ambition to draw upon Germany's assets and strong reputation in an effectively unlimited bail-out fund for the whole of the Eurozone, including Greece. Mrs Merkel knows that her electorate are furious at the extent to which their assets have already been committed for the resuscitation of the common currency; and the significant Turkish minority are not reluctant to stress the idle and exploitative reputation of the Greeks. Merkel's government would face an electoral massacre next year if she risks ruining all that has been achieved since the foundation of the Federal Republic in order to rescue olive farmers who have been subsidised by the Common Agricultural Policy for implausibly-large numbers of trees whose 'existence' the overpaid bureaucrats vouched-for during their ten-hours of weekly attendance in the office between coffee time and lunch. It does not matter how far this is an unfair caricature of Greece: it is the embedded image that rests in sufficient truth to be sustainable.

Nobody can tell whether or not a domino effect would happen if Greece was simply shoved out of the Eurozone and given modest assistance from the IMF and the EU to soften the landing that would nevertheless be very hard indeed. With Greece out, would global speculators put so much 'pressure' on Portugese, Spanish or Italian state finances that they might also be pushed out, one by one? The apprehension that this could be so is a major factor in the consideration of options that have to be made by the European  leaders this weekend: the negative prospect of a serial unravelling of the Eurozone, the European Union and the 'European Dream' is strongly canvassed.

But there is an alternative vision that should quickly get more exposure. This begins with the fact that the Greeks have been vastly more untruthful and self-indulgent than Italians, Portuguese or Spaniards. Those three far-from-spotless countries have adopted stringency programmes that must be pursued rigorously, and possibly extended as the rest of Europe's governments also cut their 'systemic' public indebtedness while they all take specific short-term measures to stimulate sufficient economic impetus to break the depressive trend that at present is threatening to descend into another Great Depression. Dumping Greece would give the three most exposed countries the necessary shock to ensure that they really implement the undertakings that they have given. The more hardship the Greeks experience outside the eurozone, the more evidence there would be to encourage their Mediterranean neighbours to stick with the discipline that will be necessary to consolidate the bodged and ill-founded common currency into a valid international medium of exchange. The expulsion of Greece can mark the rebirth of the Euro. That is a desirable objective: a thoroughly good thing.

But if Greece is 'rescued' and fails to meet the almost-certainly unattainable targets that will be necessary to remain in the eurozone, there will be a huge temptation in Italy and Spain to soft-pedal on their austerity programmes: then the dominoes will begin to fall and the Euro will either collapse altogether or become the local currency for a hard core of Germany, Austria and the 'northern' Eurozone states whom the Germans trust.

In summary, if the Greeks are evicted, the Euro can have a future. If Greece is 'rescued', the chances of its survival are massively reduced.