European Regional Development Funds

The BBC Radio 4 programme, File on 4, had an episode on the European Regional Development Funds recently. I'd recommend it - you can listen to it here. (Since it's BBC radio it's accessible outside of the UK, unlike TV programmes on iPlayer).

A few points from the programme:

- The programme focuses on the difficulty in local areas getting access to the ERDF due to UK government cut-backs. As 50% of the money needs to be raised to match any ERDF funding, the abolition of the Regional Development Agencies have left local councils to try to scrape the money together themselves, which is harder to do in poorer areas that need it the most. The UK government says that they have set up other funds that can be used to match and access ERDF funding, and that 98% of the EDRF funding for 2007-2013 period is in place with the relevant match funding.

- In crisis-hit countries it's even harder to access the fund, with 26% of Greece's EDRF funding unspent. The co-financing rate has been lowered to as much as 5% for countries in difficulty like Ireland, Romania, Greece and Portugal. One proposal for improving the use of EDRF in the economic crisis is to reform it so it can be used to support government programmes, such as health and education spending, instead of on fixed projects that take a long time to have an economic effect.

- The UK Parliament's Local Government Committee wants reform of the ERDF so that the UK still contributes to an EU pot for poorer EU countries, but with the percentage that the UK gets back from the ERDF retained rather than being cycled through Brussels (though some regions feel that they may lose out if the money is no longer earmarked specifically for regional development). The UK government says that that reform is not on the cards for the next EU budget.

One thing that's clear from the programme is how overlooked some regions are, both due to the UK government and the difficulties in the ERDF rules, and that local councils don't have the financial or political power to achieve some of the things necessary for local areas. Maybe it's time to look at (democratic) regional government in England again? It would be worthwhile to compare the regions within Scotland and Wales, which have devolved government, and the English regions.

Hup Hollande Hup!

Sunday was a big election day for Europe. France elected its first Socialist President in 17 years with Francois Hollande, and the Greek electorate looks like it has given the two main parties a huge kicking.

Hollande will add to the pressure for a change in direction in the EU when it comes to austerity, and Hollande has already set himself up to be the leader of counter-austerity Europe. Though he will undoubtedly clash with Merkel, in the end they’re likely to muddle through unless Merkel sticks to an absolutist vision of austerity Europe. With austerity failing in practical terms – S&P used its report on Spain to critique the front-loaded austerity programme and the EU’s general policy – and countries like Italy voicing the need for a better approach to growth (while endorsing austerity in general), the political winds look like they will shift the continent leftwards to a degree (Europe is still dominated by the centre-right EPP political family).

Within Germany there is more debate on Eurobonds, etc, than I think outside commentators give credit for, though there is still a lack of debate. The opposition Social Democrats and Greens are more enthusiastic on Eurobonds and deeper fiscal integration, but the rise of the Pirate Party makes the German political scene more unpredictable. Germany has been caught up in a lot of comment on the rise of Die Piraten: what exactly are they about? Do they have the kind of leadership structure or policy programme that makes them a credible force? If they remain so unstructured – and wedded to “fluid democracy” (crudely put, where policy is crafted online by activists and then represented in parliament by Pirate representatives) – could they ever be capable of coalition with the other parties?

Sunday brought an election in the Northern German Land of Schleswig-Holstein, where the Pirate Party gained 8.3%, and there was little between the Christian Democrats (CDU) and the Social Democrats (SPD), even if the centre-left coalition is ahead - the rival Christian Democrats-Liberal bloc trial the Social Democratic-Green bloc 39% to 43.4%. It now looks like the Social Democrats will lead a coalition with the Greens and the Danish minority party SSW (which is not subject to the same 5% threshold as the other parties), that may have a majority of just 1. The Liberal FDP is unlikely to do as well at the federal level as in Schleswig-Holstein (honestly, after the bad year they’ve had, being kicked out of one state parliament after another, their 8.2% vote in S-H is a huge victory), but it just demonstrates how the sudden rise of the Pirates could splinter the political field further.

Muddling along will likely continue in Europe, except now the hope is that we’ll start to see a direction with more solidarity develop. The biggest shock to the system will be the Greek elections, where it could be very difficult indeed to form the next government. With the far-right getting into parliament and the collapse in the vote for the two main parties, political instability is going to dog Greece and the rest of Europe for a long time to come. France and Germany can’t afford to squabble for too long: Greece will be bursting back on to the agenda before we know it.

And the referendum in Ireland? I don’t know how much Hollande’s election will make a difference until – or if – he makes it clear if he is seeking another treaty to supplement the Fiscal Stability Treaty or a renegotiation. From what he’s said it looks like he wants an extra treaty – it’ll be easier to get this, as it will be easier for Merkel to agree to this without losing face – and Ireland might be in a difficult position if it rejects the treaty to push a joint cause with Hollande... and then have to re-run the referendum in order to get the second treaty too (though it should then be clear that enough’s changed to have a re-run at least). The vote’s not until the end of May, so there’s still some time to read the signals from the Élysée.

"Greece could have had a referendum"

The Danish Minister for Economy and Interior Margrethe Vestager said that Greece could have had a referendum:

""No one else but the elected members of national parliaments can take the decisions when it comes to reducing the deficit, collecting more taxes or being more efficient in doing so."

[...]

Meanwhile, on the state of Greek democracy, where the idea to call a referendum on the second bail-out last year caused panic among EU leaders and led to Prime Minister George Papandeou's resignation and appointment of a technocrat premier, Vestager said: "I think they could have done that if they really wanted to."

"Each politician has to make up his or her mind, because these are very challenging times. People can recognise from their own lives that when you bring yourself in a situation where you have to take a huge loan in order to get things working - the one who's going to give you the loan will have conditions. It is not different on a European level.""

Formally, I think she's right: when Papandreou proposed a referendum, it could have been done, even if it had been quick to have the result before the next tranche of bail-out money was needed (at the time I favoured a general election since it would have given the Greek people a chance to change their government, whereas a referendum on which default to take might just be designed to bounce them into accepting the status quo). However Papendreou sprung this on his cabinet, who said no, and the Greek parliament lost confidence in him, so a caretaker government was elected by the parliament before elections could take place (elections that will take place in April).

Which is a second point: the technocratic governments. I'm not a fan of these technocratic governments and if they're ever put in place they should be quickly followed by an election, but the Greek and Italian governments weren't "imposed by Brussels" - rather it was the economic pressure of the market/debt situation and the lack of political confidence in the Prime Minister and government that led their parliaments to remove them and replace them with technocratic caretakers. (Notably this also happened to the Czech government when they held the rotating presidency back in 2009). Rather the democratic disconnect is the lack of democratic political power at a level that could respond effectively to the economic pressure applied by markets - in other words at the EU level, which has so far only delivered ineffectual summits, bad bail-outs and a Fiscal Stability Treaty that solves nothing and repeats legislation already passed by the European Parliament.

Democracy and the Eurozone Crisis

There will no longer be any referendum in Greece on the new Eurozone deal, and a technocratic-led national unity government will take over before elections can be held in February. (And a good thing that there will be elections - Greece needs to confront its economic future in a way that the Greek people will buy into the responsibility of the decisions that need to be taken). Now that the referendum has been called off, it's taken as a indictment of Europe that France and Germany could pressure Greece to drop the referendum by saying that the money will be withheld unless a referendum would return a positive result.

This is a very strange argument. Surely it wouldn't be taking Greek sovereignty and democracy seriously if the Eurozone continued to loan Greece money and expect them to implement austerity measures regardless of any referendum they held? And the implication that the Eurozone should be willing to loan money to Greece regardless of Greece's commitment to any deal suggests that the rest off the Eurozone deserves less of a say. While a partial default within a Eurozone deal or a total default outside any Eurozone loans isn't an attractive choice, Greece cannot change that choice by elections or referendums: democracy is when people come together to decide what to do in the situation in which they find themselves. Sadly, for Greece and the rest of the Eurozone there are no good options.

Fintan O'Toole has an article in The Irish Times about the disconnect between capitalism and democracy:

"And this isn’t just a simple matter of the Merkozy monster lording it over us little PIGS. For at this historic moment, even the German chancellor is little more than a cipher. She’s caught in the democratic crisis too. Remember this time last year when Angela Merkel started to make noises about bondholders sharing the pain of rescuing the banking system? She had to back down very quickly and make it clear that she didn’t mean present bondholders – heaven forbid. Even the German chancellor isn’t allowed to say certain things."

I don't entirely agree with him, but I do think that markets and globalisation has grown and proceeded to such and extent that it benefits us to make some market and economic decisions collectively in the EU. Yet the EU, despite the almost co-equal power of the European Parliament, has a huge democratic disconnect. With the Treaties unequipped to deal with the Eurozone crisis, the approach to solving it has been intergovernmental, which has caused tensions between small Member States and non-Eurozone states who have the most to loose politically from governing the Eruozone from the Eruopean Council, and big Eurozone Member States (primarily France and Germany) who are better placed to have the most influence.

It might take ages to finalise a new treaty to equip the EU institutions to better deal with fiscal union issues, but it is most likely to be produced after the major crises are solved (or stabilised, if we're lucky enough). European issues have never been so widely discussed in Europe than they are now: since the Euro and the future of the EU is such a major issue, and the European Parliament has gained more powers since the last election in 2009, it might be worth having another European election. It would provide an opportunity to involve citizens more directly in the debate over what needs to be done and can also focus on the Parliament's new power. Though the EP isn't in a prime position over the EFSF or future fiscal union, an election would give the Parliament (and the Europarties) a stronger mandate in their proposals, and could be a useful way of gauging (informed) public opinion before embarking on further treaty change.

Papandreou's Gamble: a tale of two defaults

It's clear that Papandreou's decision to hold a referendum on the latest Eurozone agreement, without even informing his cabinet of his decision, is a massive political gamble to restore his authority. The further reduction of the government's parliamentary majority, and the firing of the entire chiefs of staff reveal the instability of the government.

On the European level the problem with the referendum is not so much that people are being given a say - though there are probably elements that argue that, there needs to be a democratic buy-in of the Greek people into any plan for it to work properly - rather that it crystalises the issue. When presented with the referendum the Greek people will be asked to say yes or no to the deal: a yes would mean buying into the process so far and imply support for however it evolves; a no would mean the end to the loans, complete default (along with the instant austerity that the inability to fund the deficit implies) and probable exit of the Eurozone.

While this could be a clever move by Papandreou to bounce the electorate into supporting the government in a choice between two defaults, for the Eurozone it raises the spectre of a non-negotiatable stance, and a toxic debt fallout that will force a decision over Italy. Though Greece probably needs more haircuts over time and a plan for growth so it can service its remaining debts and rebuild its economy, this slow evolution of the Greek Crisis (though not necessarily inevitably moving in that direction) has been short-circuited by the referendum announcement. A "No" would mean that Greece would be dropped so the Eurozone could deal with Italy.

There has to be a real buy-in by the Greek people in the solution to the crisis: with all the strikes and the uncollected taxes, Greece can't recover unless there is a majority for reforming the state and the economy. With, as EUObserver reports:

"Polls over the weekend put Greek popular opposition to the new EU deal at 60 percent and the viability of the government is under threat from rolling general strikes and frequently violent protests that reach almost every quarter of the country.

At the same, polls put support for retention of the euro at 70 percent."

the binary choice of default within or outside the Eurozone might pass, and offer the Greek public to decide whether or not they want to be part of the Eurozone deal - and how much they want to be part of the Eurozone. But in the absence of a real debate about other options - however workable - that a parliamentary election might allow (essentially forcing the government and opposition to set out their alternatives), it's hard to see how much a "yes" vote would signal acceptance of the Eurozone's direction, and how much it would constitute a democratic buy-in by the Greek people.

It may turn out to be a masterstroke by Papandreou: giving the people a greater say and building a wider consensus in society, or it could backfire, either as a No, or as a Yes with no real substance to it. In any case, the Greek people are caught in a tale of two defaults, with an unenviable decision.

Edit: While I'm slightly sceptical of the referendum because of its limited choice, Polscieu has written a great post in favour of it.

Once again the day is saved...

...At least for now. It's hard to escape the feeling that each time an agreement is made at a European Council summit, it's only a matter of time (usually 3-6 months) before we're back in superhero mode again. Still, there seems to be something more to this deal than the simple bail-outs (or loans as they're normally called). The agreement's outline can be found here (PDF).

Greece.

First of all, Greece will get more loans - and more cheaply - to help fight its economic crisis: €109 billion. Structural funds and European Investment Bank funds will be directed towards helping Greece stimulate growth, and there will be some voluntary private sector involvement which will be for Greece only (a bizzare situation where creditors are seemly asked to take a partial default on the basis of what they can afford out of the goodness of their hearts).


And the rest...

All three countries will benefit from a interest rate reduction on the loans to 3.5% (for Ireland this is a 2% reduction), and the loans will have to be paid off in 15 years (at a minimum) rather than the previous 7.5 years. This should make it easier for the countries to implement their austerity programmes as it eases the economic and political pressure on the governments.

In Ireland the interest rate reduction is a great victory for the government. During the election campaign the (now) coalition parties had been campaigning for a negotiation of the EU/IMF deal for lower interest rates and for the burning of some bondholders. The restriction of voluntary private involvement in the scheme to Greece means that partial defaults on the private debts in Ireland are unlikely for now. I say for now because there's resentment in Ireland at having to pay back all the private debt and that the private sector is not taking any hit, and now it will be harder to argue morally, and politically, why there should be movement on this in Greece but not elsewhere. It gives the impression that being the golden pupil of the bail-out class doesn't win you any rewards. I wonder if the market will really see private investor involvement in the Greek deal as a one-off.

Also important is what Ireland might have conceded for this interest rate reduction, and hat it means for the Eurozone's economic policy. The Eurozone heads note:

"[W]e note Ireland's willingness to participate constructively in the discussions on the Common Consolidated Corporate Tax Base draft directive (CCCTB) and in the structured discussions on tax policy issues in the framework of the Euro+ Pact framework."

Since Ireland's corporate tax rate has become iconic and synomous with Irish economic success, the scale of this concession will be heavily debated: is it just a commitment to negotiate? Does it commit us to common tax policies?

I actually think that this is a victory of sorts for Irish diplomacy (well, good use of circumstances at least). It seemed like a raise of Irish corporate tax might have been a condition for a drop in interest rates - in other words, Ireland would unilaterally raise its tax rates without European harmonisation. Since this would have been Ireland and not the EU deciding this, no referendum would need to be held. However, if it comes to a EU Directive, then the Irish government could hold a referendum on the subject, citing it as a constitutional requirement (although I doubt the extent to which it might be one). It's hard to know if that's exactly the case yet, but by having the discussion at a pan-European (or pan-Eurozone) level, Ireland's diplomatic position is improved, not least because it can try to build coalitions around its positions.


Biggest loser: ECB?

The Europeans Financial Stability Fund willbe given several new powers. It can:

"- act on the basis of a precautionary programme;

- finance recapitalisation of financial institutions through loans to governments including in non programme countries;

- intervene in the secondary markets on the basis of an ECB analysis recognizing the
existence of exceptional financial market circumstances and risks to financial stability and on the basis of a decision by mutual agreement of the EFSF/ESM Member States, to avoid contagion."

If the EFSF is able to intervene in non-programme countries to be a lender of last resort to the banks,* then this would dilute the power of the European Central Bank. It's been widely noted that the ECB's loans of €120 billion to Irish banks gave it a lot of power, and that it was a big player in the events leading to the Irish EU/IMF deal. With another institution, created without treaty change, able to provide alternative credit in a crisis, it could be a way of Member States preventing the ECB gaining a strong hand in their economies during times of crisis. It will be interesting to see if this will change the institutional balance in the Eurozone.


*Technically it can't lend directly to the banks, but it lends to the Member State who then lends to the banks. This would also be done at a higher interest. It also means that there are aspects of EFSF loans to banks which make them less attractive than ECB loans, but it does show how wary the Member States are becoming of the ECB's power if they've created a way of circumventing its role as a lender of last resort, even in non-programme countries.

The Gloom of having no Good Options

The Greek government has survived the vote of confidence, and now its next test is passing more austerity measures. Austerity has little - if any - support among the Greek electorate simply because it hasn't delivered the goods yet. It seems obvious that Greece will default at some point, but would it be better to do it sooner rather than later?

There doesn't seem to be any good solution here.

Greece cannot pay its debts, but the default and decouple option, as advocated by Daniel Hannan, among others, would be disasterous for Greece and for the EU. Defaulting would unleash a tidalwave of debt back into the European banking system and European taxpayers in the Eurozone would take a big hit at the same time that their governments (particularly in Germany, France and the UK) would be forced to decide whether or not to bail out their bad-Greek-debt-holding banks. For Greece, it would be locked out of the international financal markets (as it is now), and without an alternate line of credit. Since it takes in less in taxes than it needs to finance its expenditure, the resulting austerity could be much, much worse. Leaving the Euro at such a time could lead to extremely high inflation.

Just leaving the Eurozone (and not defaulting) is unlikely to help either, as the devalued New Drachma would make it harder for Greece to pay off its debts, most of which are in Euros.

Continuing austerity doesn't seem to be working either. Greece needs time to restructure and reform its economy, but the time-frame is extremely short for the task that faces the country, and the refrain of "tough love" from Northern Europe is not endearing for the Greek public, to say the least.

Further integration is the call of others, and interestingly also of the IMF, urging the Eurozone to integrate economically and politically. However, these calls still seem vague to me on detail, and I'm not sure how much they are aimed at solving the current crisis rather than on preventing it from happening again (or both). The blue-and-red bonds (where there are some Eurobonds and some national bonds) or the Eurobonds idea is attractive, and could ease some of Greece's problems, but it could also raise some others. Regardless, there is little political will for more integration, and as no attempt by any Eurozone government to really make the case for further integration, it doesn't look like that will change soon.

At the moment the best option seems to be to accept the bad austerity and bail-out deal and forge ahead with reforms in Greece with at least the thin cushion of EU/IMF loans rather than no loans at all and hope that either (a) the EU gets its act together; or (b) the painful austerity will help Greece just enough so that it can partially default in a more managed way in a year or two when the prospects are better for it and the EU. Neither option is an inspiring or very sellable one.

The protests in Greece will continue, but I wonder what the historical legacy would be if they won and Greece defaulted unilaterally - both for internally and in Europe?

It's not a bail-out, but it might need to be

Jon Worth has a good post (and also pointed to this great post by Henning Meyer) on why the bail-outs are not actually bail-outs: they are loans to countries which will be paid off, with the creditor countries getting a profit at the end of the process. However, a problem with this can be seen in Meyer's post when he explains this:

"It is a widespread myth for instance that the European bailout fund is giving away money for free to countries such as Ireland and Greece. This is simply wrong! The ‘bail-out’ is a lending facility that lends money at rates with which the underwriting countries will make a profit if the debtor countries do not default. This is far from giving away money for free from presumed ‘responsible’ countries to ‘irresponsible’ countries to support their luxurious lifestyle."

"If the debtor countries do not default" looks like a big if to me. The structure of the bail out is such that it reinforces the austerity model that the debtor countries have been trying to enforce. This has been done with varying degrees of success when it comes to sticking to the programme. However, the plan is to change the EU structure so that countries can have a managed default after 2013, which means that there will be many voices (as there is currently in Ireland) questioning why they have to go through the harsh readjustments of austerity when after 2013 default would be the accepted option. Surely only a fool would go through that pain for no real reason?

It doesn't help that the rescue loans are structured so that they have fairly high interest rates, even if they are below the market rate - Europe seems to be caught in between solidarity and ensuring the hair-shirted redemption of the debtor states through some cleansing punishment. With the rates higher than the growth rates of the debtor countries, it may be that their debt could grow - particularly in Ireland. The Irish case seems to be different from the Greek case, in that the European system has stepped in to prop up the Irish banks to ensure that their debts to British and Eurozone banks are repaid. As they cannot be bailed out directly, the loan facility means that essentially the Irish government borrows money from the EU to give to the banks to pay off their loans to private continental banks, and the Irish taxpayer picks up the tab at the end of the process.

Allowing the private banks in Ireland to fail now is not an option as the ECB ensures that the banks keep running as the lender of last resort, but it is widely accepted that Ireland cannot pay off the debt, and the Irish government is looking to renegotiate parts of the EU-IMF deal, starting with the interest rate on the loans. Eventually Ireland may ask for some restructuring of the debt - which seems to essentially mean that some of it simply isn't paid back. Now that part would be a bail-out.

This is very different from the situations in Portugal and Greece, but with the domestic political pressures building up, it should be borne in mind that default only seems a scary prospect for debtor countries for so long. Once the pain of austerity becomes too much, with too little reward, then the option of default - which would turn the loans into lost money - becomes more realistic.

The current plan for the Eurozone has failed - it doesn't seem to be working in the Member States it's supposed to help out, as it forces them into narrow austerity plans that do a lot of damage to their economies and therefore damage their ability to pay the loans back; and it has failed to stop the debt crisis spreading. The loans have bought time to deal with the Eurozone more comprehensively, but there doesn't seem to be many good or imaginitive ideas on the table.

So while offering - and accepting - the loans was a good idea in order to buy time, if it's not followed up with effective action, then things could get worse. Not offering the loans, however, would have brought about default in the debtor countries, which would have meant that their debt would wash back into the economies of the creditor countries. This would have had an immediate effect on the economies of all the Eurozone members, since the credit originally came from their private sectors, or they would be simply affected by the damaging effects of the debt washing back into Germany and the Netherlands, etc. Which is why I think that mainstream European political parties need to put forward a realistic and effective vision - or at least start vigourous debates on options* - to combat the platforms of the populist parties. There's no excuse not to.



* I know, that will be the day.

Europe in 2010

The 14th December symbolised Europe in 2010 for me. Berlusconi, despite all the scandals, won two confidence votes (in the lower house by just 3 votes!), and outside the protesters took to rioting. A few days later there would be a European Council summit where it was decided to dig in: there will be a Treaty amendment to make the Eurozone's bail-out facility permanent, but no increase in the facility's funds, nor any moves towards closer fiscal union through Eurobonds. Outside rages anger and uncertainty about the future, but inside there is little vision, and fear for the alternatives.

European solidarity now has a figure: €750 billion, and a few interest rate percentage points. At the heart of the matter lie questions of blame and responsibility as well as solidarity. Why should the German taxpayer - or Dutch, or Finnish - pay for the poor economic management of other Eurozone states? Or, from the other point of view, why should Greek and Irish taxpayers support a harsh austerity programme that bails out German, British and other private banks; why should these taxpayers pick up the tab for the reckless private sectors in other countries? Both are understandable viewpoints and have good arguments, but they reveal the extent of the "European integration" of the private sphere, and the need for a strong, coherent Eurozone response. I agree that countries like Ireland have mismanaged their economies and a great deal of the responsibility lies with them. But does it make sense to aim to penalise these countries' economies and demand penance, while at the same time advocating their rescue by the very same measures to ensure that their economies revive and cease to threaten the stability of the European economy?

The Eurozone needs a vision for how it will be run to benefit the whole, yet we hardly hear the arguments on Eurozone governance, and we don't debate the different viewpoints across borders. How can we be in a position - how can our leaders even be in the position - to make the rules for living together in the Eurozone when we are intent on having conversations with ourselves in fragmented groups, and trying to extract short-term advantage at each summit instead of trying to build a consensus on how to proceed together?

Though the economic crisis dominated 2010, there was much more to the year than that.

It was the first year of the Lisbon Treaty, which changed EU politics - you might even say it was the year the European Parliament. Whether it was the EU-US SWIFT Agreement on terrorist financing being shot down for a lack of safeguards, with US Vice President Biden imploring Parliament to accept it before a modified form was adopted, or the battle over the budget, the Parliament has been exerting its influence constantly. Victories weren't total, and I didn't always agree with the legislation passed, but the Parliament managed to make its mark on 2010. For me the greatest Parliamentary victory was over the formation of the European External Action Service, were it got a lot of its proposals accepted and heavily shaped the new institution despite only having the right of consultation under article 27(3) TEU - if anything symbolises the Parliament's new-found power, it should be this.

Politics of government and opposition strengthened in the Parliament this year, with the EPP generally supporting the Commission and Council with the help of the Liberals (where the right are in the majority), and a motley alliance of the PES, Greens and Liberals managing to upset the EPP's plurality on occasion. Though voting alliances remain fluid, the increasing coherence and importance of European parties with clearer policy platforms begs the question: why aren't we doing more to hold them to account and to use them to make a difference?

Barroso's second Commission was formally installed early in the year, and he tried to inject some vision into his second term in his hyped "State of the Union" speech. Generally the Commission was the least visible of the institutional triangle, though it did have a moment of glory when it temporarily grew a backbone to speak out over the Roma crisis in France.

Rights were very much an issue - civil liberties in SWIFT, citizenship and human rights for the Roma, human rights and elections in Belarus, and freedom of speech and the media in Hungary. If this is any indication, we will need to remain vigilant at home and across Europe for the next year and beyond.

Like Jon Worth, I'm not so optimistic for the future: there are too many narrow interests pulling in too many different directions. In September I heard a speech on the development of the EU. Europe, it was proclaimed, advanced through crises and managed to muddle through; we should not be worried or optimistic. I can't see that way of doing business working in the future. We need to make greater use of what is there to make the EU more inclusive and representative so that clearer arguments and vision can form and shape the Europe we live in. But it won't happen just through institutional reform and more information campaigns. It's a long road, but promoting debate between people and not just governments is essential if the EU is to become more democratic and joined-up. But this would require people to actively participate, rather than just being passive subjects.

Will European bonds translate into Eurobonds?

There are, we are told, no plans to bail out Greece, which has come under a lot of pressure and scrutiny for its government debt. However there seems to be a general feeling that if it came to it, Greece would be bailed out: see the Irish Times and A Fistful of Euros. A few months ago, when the pressure was more focused on Ireland, I had the impression that, in the end, Merkel would relent and accept the need to bail out Ireland to prevent the Euro from being damaged. In terms of the Euro, any state is probably too big to fail, and so there probably needs to be some mechanism for supporting Eurozone states.

If Greece is bailed out by the EU, then there’ll be a strong precedent and expectation to do it again – and it could be called to do so again, as AFoE seems to suggest when you consider its articles on Spain. Of course, it may not come to a bail out, but already the EU is setting precedents through checking the Greek government’s figures and offering advice on the economy. Granted, the EU isn’t yet setting fiscal policy or writing Athens cheques, but it does show a growing need for greater formal economic co-ordination – and a certain willingness to do something about it.

There have been calls for more co-ordination in tax (which would be resisted by Ireland, among many member states).

Also, the Eurobond issue has been raised again, as it was when Ireland was the focus, and with the S&D group coming out in favour of its creation. It would make borrowing cheaper for countries like Ireland and Greece, but more expensive for countries in a better position, which in political terms looms large as Germany. Germany rejected the idea back when Ireland was the issue, and Berlin remains an obstacle to the idea. But if idea proves resilient and keeps coming back – as it probably will during what will likely be a long recession, and particularly if Greece does need to be bailed out – it could happen. Is it a necessary element of a stronger Eurozone?

The S&D group is also advocating the EU adoption of Obama-like plans for the banking sector. Given the UK’s unease with the prospect of financial regulation at a European level in the guise of a simple oversight system, and the dominance of the right generally, it isn’t really a serious prospect. Except... It is interesting that in the UK the Conservatives have, strangely, enthusiastically adopted Obama’s ideas and David Cameron has called on the Prime Minister to clearly come out publicly in favour as well. I doubt they adopt the same position in the EP.

Could Gordon Brown turn around and say, “Why, yes, of course we support such a plan – and we’re part of an EU-spanning political party that advocates it too. Given the international value of banking, and the single market, it would make sense to have common rules on the matter – and we’re the only party in the UK that has the political clout in Europe to make it happen.”? Well... no. Besides Britain’s euroscepticism and the government’s continued awe of the City, it would be too risky to support it at a European level because the S&D are in opposition, so there’s no guarantee that it would pass in the EP, never mind in the Council and Commission; the Commission, which would need to introduce any draft legislation on the matter, may not back the idea; it could end up playing as a victory for the French and a result of their “winning” an economic portfolio, even if it was originally Obama’s idea, etc.
Pity: the thought of Labour turning its European-dimension to its advantage on an issue (to show coherence and effectiveness on several levels compared with the Tories) is a nice thought, but still a fantasy.

Will European bonds translate into more co-ordinated action and a more structured way of working together in the future? Necessity might demand it, but there may not be the supply of political will.