What’s wrong with a transfer union?

The eurocrisis has introduced a plethora of strange words into our everyday vocabulary: ‘Contagion’, ‘technocrats’, ‘moral hazard’, ‘austerity’ and of course the derisive description, ‘transfer union’. This last term is used by those in Northern Europe who warn that bailing out the economies of Southern Europe will lead to a European Union where money steadily flows from rich states to poor states and the North loses out. Many argue that, in fact, this is what the EU has always been.

Such feelings are at the core of the German public’s resistance to the Greek bail-outs – emotions that have turned what is normally one of Europe’s most pro-EU countries into a relatively more eurosceptic place these days. “Why should we work hard just to see our money flow to lazy people in the south?” some Germans are asking.

Their resentment is fueled by charts like the interactive diagram below, found in the Guardian newspaper’s new ‘Europa’ section (a truly fantastic project with five other papers that I’m very excited about). It shows which countries are net ‘payers’ into the EU, and which are net ‘receivers’. The statistics are familiar and often brought up when people talk about the European Union – the biggest recipients of EU funds are in Southern and Eastern Europe while the biggest contributors are in Northern Europe.
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Europe’s SOPA?

The European Parliament’s website has been shut down by hackers today, allegedly in a denial-of-service attack from Anonymous in protest of imminent anti-piracy legislation restricting internet freedom. But as the IT folks in parliament scramble to fix the problem, the functionaries are sitting around scratching their heads in confusion. Did we pass internet piracy legislation?

Their confusion is warranted. By all accounts the EU has been on the internet-freedom-lovers side during this debate. During the fallout from the Wikipedia ‘blackout’ last week, US politicians weren’t the only ones beating a path to the door to distance themselves from the now toxic SOPA legislation on internet piracy. On Friday the EU’s Digital Agenda Commissioner Neelie Kroes tweeted that she was “glad the tide is turning on #SOPA,” adding “speeding is illegal too: but you don't put speed bumps on the motorway”.

Home Affairs Commissioner Cecilia Malmström also tweeted against the US legislation, noting that ‘sopa’ in Swedish means garbage. Notably, no public statements about the US anti-piracy bills had been made before the Wikipedia blackout. It’s quite unusual for the EU to make comments about US legislation. But such was the effect of the blackout – which was, after all, global (Eurocrats felt quite helpless without Wikipedia last week!), that even politicians not involved in US lawmaking felt the need to make a statement about it.
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Croatians vote to join EU

Amidst all the bad news, the EU can feel at least a bit reassured following the strong endorsement given by Croatians this weekend to their country joining the European Union. Though you'd be forgiven for getting the impression from the English-speaking media that the EU is now a toxic project that few want to be associated with, 67% of Croatians voted on Sunday to join the union.

An accession agreement was already signed by the country's government in December, and they are set to become the 28th member state at the end of this year. But the accession required a public referendum to go through. There were some rumblings of concern last year that the eurozone crisis could deliver a surprise no from the Croatian people. Brussels received a pleasant surprise last night when news came that the referendum had not only passed, it had passed by a large majority.

The vote comes a year after Estonia's decision to join the euro currency. Both decisions show that even in the midst of the eurozone crisis, the European project continues to move forward - not backward. Of course, both of these things were planned and in motion before the eurozone crisis hit. The real test may come next year when the people of Iceland vote on whether to move from their status as a pseudo-member-state in the EEA to a full member state of the EU. Opinion polls are already showing that referendum could have a hard time passing, particularly as the Icelandic economy recovers from their crisis as the eurozone slips further into its much larger crisis. Continue reading

The biggest American political story Europeans haven't heard of

The US presidential primary race has attracted its usual amount of fascination here in Europe, and yesterday’s developments - with the Iowa race being re-called for Santorum and Rick Perry dropping out - were front page material. But behind the spectacle of the drawn-out US primaries, there is a far more interesting story going on in the state capitals.

Of course it’s not surprising that the European media is ignoring these huge developments at state level, because the Washington beltway media has also ignored them. They also ignored the unprecedented political revolution in 2010 that the recent events are a reaction to. While in Europe the media tends to ignore ‘federal’ (EU) politics and focus only on member state politics, in the US it is the opposite. The US media (even local state media) tends to focus on federal politics in Washington and there is little interest in what goes on in state capitals.

Thus, when the Republicans enjoyed an unprecedented victory in the 2010 midterm elections, the focus was almost entirely on the fact that they had taken control of the US House of Representatives. What was largely ignored was the fact that they had at the same time taken over state legislatures with unprecedented majorities – giving Republicans the most power in state governments they have had in decades. Republicans wrested six governorships from Democrats, giving them control of 30 of the 50 state executives. Five states saw both legislative chambers (state senate and state house) switch from Democrat to Republican majorities. In seven other states they gave themselves control of the entire legislature by picking up huge majorities in an additional chamber. The elections left Republicans controlling the entire government of half of US states, leaving them with Hungary-like majorities capable of passing whatever state legislation they like.
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Would the EU allow a Scottish secession-accession?

Following the whirlwind events of this week, Scotland now appears to be closer to secession than it has ever been in the 300-year history of Great Britain. This week the first minister of the devolved Scottish Parliament set a date for the first referendum on Scottish independence in history. And according to polling, if the referendum were held today, Scots could very well vote to separate from the United Kingdom.

The discussion of secession has been hanging in the air for some time, ever since the secessionist Scottish National Party won a majority in the Scottish Parliament in 2007. But now with an independence referendum date set, discussion has turned for the first time toward the real practicalities of what a split would entail and the difficult questions it would present. Who does the oil in the UK's territorial North Sea waters belong to - Britain or Scotland? Who would be on the hook for the massive bailouts of Scotland's two banking giants in 2008? Would Scotland use the British pound, the euro, or a new Scottish pound?

Scottish First Minister Alex Salmond took the decision in response to a call from UK Prime Minster David Cameron to call a referendum, which the SNP had promised in their election, now. London knows that with the current economic crisis, Scots would be unlikely to be very brave at the polls. But Salmond balked, saying he would not take orders from London and setting a referendum date in 2014. 

EU complications

Though there have been a lot questions asked in the British media today about what secession would mean, as far as I can tell not a lot of thought has gone into the EU implications of all this. Everyone has been asking whether or not Scotland would choose to use the euro. But there's a leap being made there. In order to use the euro, Scotland would have to be part of the EU. That is not up to them, it is up to the 27 member states. And there are plenty of member states with good reason to block Scotland's entry.
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Azerbaijan could make this an awkward year for Eurovision

It’s a new year, and of course this week everyone’s minds are on one thing – Eurovision 2012! Ok maybe not, but an interesting article in Der Speigel this week details the way in which Azerbaijan is already engaged in a public relations push ahead of their turn to host the world’s largest non-sporting television event in May of this year.

Azerbaijan will host the contest because they won last year. But there are concerns that this could be one the most problematic year in the show’s 56-year history because of the human rights record and military conflicts of the host country. Seemingly aware of this less-than-stellar reputation, the Azerbaijanis have reportedly stepped up a charm offensive in the core members of the European Broadcasting Union – Germany, France, Spain, Italy and the UK. Of course this is all part of a larger charm offensive by the oil-rich country, particularly as the Nabuco Pipeline project moves forward.

But could this year’s contest highlight the awkward relationship between the oil-hungry West and this autocratic regime? Or, as many argue, will an international event like this help to bring Azerbaijan more into line with the West and with Democratic principles? I suspect it may be the former. Even as Azerbaijan pursues its charm offensive, there are reports circulating that they are evicting Baku residents in order to build the 25,000-seat arena that will house the show this year.
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Is Iowa the problem, or is it the primary system?

While I was home in the US over the past few weeks I witnessed the quadrennial spectacle of the Iowa caucuses - shivering reporters in front of the capital dome in Des Moines, candidates eating corn on the cob while clutching plump cord-fed babies, the usual fare. And I was also able to witness the quadrennial griping about why the United States allows “a few hundred farmers” to pick its president.

The complaining about the Iowa caucus, where the first nominating primary for both political parties’ presidential candidates is held, is both predictable and legitimate – even if the language used sometimes smacks of regional snobbery. The Iowa caucus makes or breaks politicians running for the presidency. Barack Obama owes his presidency to winning the Iowa Democratic caucus in 2008. This year, the result of the Republican caucus will force Michele Bachman and Rick Perry to drop out of the race. And the Iowans have elevated Rick Santorum from obscurity to be the main challenger to frontrunner Mitt Romney.

But the Iowa caucus is a big deal only because it is first. And being first means presidential candidates promise Iowa all sorts of lovely things (just look at the corn subsidies of the past four decades – and you wonder why Americans have corn syrup in most of their food for no reason?). The Iowans go through outrageous lengths to make sure they are first. When South Carolina and New Hampshire tried to move their primaries ahead of them this year, Iowa moved theirs to the earliest possible day in 2012 – 3 January.

This year the criticism went perhaps a little too far. A professor at the University of Iowa (himself a transplant from New Jersey) wrote a column for The Atlantic about a much-asked question – why should a state that is not ethnically or ideologically reflective of the country as a whole be given such a prominent role in selecting the nation’s president? But he asked it in a way that was incendiary to say the least, calling Iowa a place that's "culturally backward" and teeming with "slum towns”, where the 96% white population “clings to guns and religion.”
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Protest over Ikea meatballs - welcome back to Absurdistan

I’m back in Brussels after spending the Christmas break home in the US. It was yet another trip where I spent most of the time regaling people with the insane stories of the strange place I now find myself living in. I’m pretty sure most of my American friends think I’m making this stuff up. I only wish.

After describing the impromptu general strike three days before Christmas which forced me to pay $500 to rebook my flight home, I moved on to describing to my friends the other union strikes I have witnessed since moving here. From the impromptu metro driver strike that was called after a driver claimed he was punched by a passenger (it turned out the driver had punched the passenger) to the October garbage strike in which the garbagemen went around town lighting the trash bags on fire and throwing them into the street, there’s plenty to describe. And let's not forget the time the taxi drivers blockaded Brussels Airport because an unlicensed taxi driver had been grazed by a bullet while he fled from police during a high-speed chase.

Today I learned about a whole new anecdote of insanity I could have described to my perplexed American friends. According to this story by Belgian news station RTL, the restaurant owners association in Belgium (Horeca) is busing homeless people to Ikea as a protest against their low meatball prices. When I first saw this story I assumed it had to be a joke. Clearly I’ve been in the US too long! Because I forgot that when you hear about something this absurd happening in Belgium, it’s probably true.
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An itinerant decade

I came to a startling realization yesterday. 2011 will be the first year in a decade that I have not moved to a different city during the course of the year. Since 2001 I have packed up and moved to a new city at least once each year. And there has actually never been a year in my adult life where I haven’t moved to a new apartment! 2001 and 2011 have the exception of being years where I moved to a new apartment, but in the same city.

I say ‘startling’ because it’s a kind of bizarre way to live one’s life, constantly moving to new cities. Of course not all of those moves were to unfamiliar cities I had never lived in before – a lot of this was moving away from New York, then returning, then leaving again. But now that I’ve managed to stay in one city for an entire calendar year, does it mean I’m settled here in Belgium? If it does, I don’t feel it. I’m in a good place in my life here – I’m enjoying what I’m doing, have an interesting job, good friends and a good apartment. So I think I’ll be here at least another couple years. But could I live the rest of my life in Belgium? Absolutely not. So when will I know when it’s time to leave?

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This isn’t about the UK any more

The markets have returned to panic mode today as their confidence in national governments to approve the new Eurozone financial consolidation treaty wavered. Ratification has hit some bumps in the road, with Finland’s prime minister expressing dissatisfaction with the transfer of authority over national budgets to the EU on Tuesday. In Ireland, the opposition parties seem keen to force a referendum on the issue even if the country’s legal services rule that one is not required.

The euro fell below $1.30 today, its lowest point in a year. Yields on Italian bonds widened to new highs. It’s a familiar pattern we’ve seen repeated several times now: markets rally upon news of a new European Council agreement, but then crash a few days later when they look at the details and realise it’s not as strong as they’d hoped. The UK's abandonment of Europe may have been the big story on Friday, but now the more important story sets in - the markets have not been satisfied.

But there seems to be some confusion in the British media though about what this all means vis-à-vis the UK’s decision to veto the attempt at treaty change on Friday. The Spectator has run a column from the Eurosceptic think tank Open Europe scolding the British media for describing the UK as isolated as a result of the 26 vs. 1 outcome last week. There isn’t really any such divide, Open Europe insists, because many other member states support the UK’s reticence. As evidence that all is not what it seems, they run through the list of objections to the new treaty being expressed in national capitals this week.
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Last-minute surprise deal in Durban to save Kyoto

Chaos may be erupting at home in the European Union, but in South Africa news came this morning that the EU has scored a surprising success in international climate talks. A binding roadmap for a globally binding agreement by 2015, which the EU had demanded in exchange for continuing the existing commitments of the 1997 Kyoto Protocol, was signed this morning by all greenhouse gas emitters – including the US and China. It is the first time all major emitters have agreed, in principle at least, to binding emissions reductions.

It was truly surprising news. As of Friday (the day the talks were supposed to end) it looked like they were going to collapse in failure. Though the EU had been able to convince Brazil and South Africa to sign the roadmap, the US, China and India were still refusing. There was fear that Durban would end with no deal, which would mean the end of any internationally binding emission reduction commitments. It would have essentially taken climate talks back to 1995 and made a mockery of the UN process.

The US and China did not participate in the 1997 Kyoto Protocol, which committed nations to binding emissions reductions by 2013. The Clinton Administration signed the Kyoto Protocol, but by the time it came up for ratification in the US the George W. Bush administration had taken over - and they refused to ratify it. They said they would not participate in a binding protocol that did not include China, now the US’s biggest competitor.
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9 December 2011: The day Britain left Europe

David Cameron emerged as the villain of the hour in the early hours of this morning as news broke that after tense all-night discussions, the UK has vetoed treaty change to save the faltering euro. The meeting then went to plan B, forging ahead on a new treaty with just the 17 countries of the eurozone. But nine non-eurozone countries then said they would also sign the new treaty, leaving the UK as the lone one out. This may sound like a small detail, but in reality it is huge. As the world press is reporting this morning, this effectively means the UK has begun the process of leaving Europe. And even the UK’s usual allies in the American media were aghast.

“UK Threatens Eurozone” headlined ABC News this morning. “UK to Euro nations: We’re out, good luck” heralded CBS News this morning. The reason for Cameron’s veto is bound to make him even more unpopular globally. In order to give his assent to the treaty change, which would not have affected Britain but only the countries using the euro, he demanded that the UK be given an opt-out from proposed increased regulation on banks and financial traders. That financial transaction tax (or 'banker tax') proposed by the EU earlier this year had nothing to do with last night's negotiations.

France and Germany balked, and Cameron walked. As one journalist friend noted last night, "The UK has refused to help solve the crisis because it wants to help the banks who started the crisis." Because the other 26 members walked away and went ahead without Britain, it means the financial transaction tax is still on the table, and the situation on that issue is unchanged from what it was before the summit. Cameron walks away with nothing.

Putting the global economy at risk in order to protect London City traders may not be the most popular stance given the current economic crisis. And Sarkozy emerged from the meeting this morning eager to exploit this. “You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised,” Sarkozy declared to the press after emerging from the meeting at 5:30 this morning. It took Cameron a full half-hour after Sarkozy spoke to comport himself and figure out what he was going to say in his own press conference.
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