Greek bailout sets Europe on collision course with Tories

There's an aspect of the eurozone crisis that has yet to register with the British public.

The leaders of eurozone member countries did a deal to bail out Greece for the simple and compelling reason that failure to do so would have indicated that the entire single currency project was unsustainable. It doesn't take much effort of imagination to picture how financial markets would have responded to that revelation. Few things concentrate the mind like the threat of total economic meltdown.

So, for their European leaders' ability to recognise imminent catastrophe and avoid it at the last minute two cheers at most. Greece will be allowed to default in a relatively orderly fashion; its creditors will be cajoled, bribed and strong-armed into sharing some of the pain. (A good summary, of the deal, not too laden with technical jargon, is here).

Bear in mind that a lot of Greek sovereign debt is held by European banks, so while everyone is calling this a bailout of Athens, really Germany and France are staving off a financial crisis in their domestic markets too -- indirectly they are bailing out themselves.

That fact underlies an aspect of the eurozone crisis that has yet to register with the British public. The essential flaw that has been revealed in the architecture of the single currency is the lack of institutional mechanisms to correct economic imbalances between member states. Or, in English, you can't have a currency union without much closer coordination of economic policy. In that respect, the eurosceptics were right about one big thing: this was a political project from the start, demanding something like a European federal system to work.

That is now surely what will start to emerge. The systems being put in place to bailout Greece are only meant for Greece - in theory. In reality they provide the basis for a longer term structure for transfers between euro members in difficulty. The question then becomes: what are the penalties for those members that end up needing bailing out? The answer, inevitably, is some surrender of control over economic policy. This has already happened in Greece. Athens is implementing a brutal austerity package designed according to the demands of financial markets and foreign creditors, not the will of Greek politicians or voters.

In other words, if euro members collectively want to retain some control of their economic affairs and not be constantly reacting in disorderly panic to the whim of global capital markets they need to pool more sovereignty. They need to form something like a euro finance ministry and you don't have to be a fanatical eurosceptic to see in that the birth of a euro state.

Where does that leave Britain? The EU now looks very likely to head towards the "two tier" model that some French and German politicians, endlessly frustrated by British ambivalence, have long advocated. We would have an inner core with a single currency and closer political integration and an outer layer with different money but still a single market. To many Conservatives that sounds like a dream come true -- the open trade part of the EU but without the constant nagging of Berlin and Paris to harmonise every law and policy in sight.

But the idea that Britain could customise a perfect semi-detached relationship with Europe is a bit of a fantasy. Most of out integration with Europe -- those legendary regulations that Ukip and the Tory right seem to think render us all in perpetual bondage to Brussels -- are driven by the demands to harmonise standards and thereby allow free movement of goods within the single market. In other words, forget the single currency. Even as an "outer tier" member we'd want to retain a seat at the top table in order to have a say in the drafting of regulation. Brussels as the political bogeyman wouldn't just go away -- and our relations there would be tougher because the eurozone "inner tier" countries would (quite reasonably) try to exclude Britain from all sorts of crucial decisions.

In particular, it is hard to imagine Berlin and Paris accepting the continued dominance of European finance by the City of London. There is already a lot of muttering in the City to the effect that France has tried to use the credit crunch and banking crisis as an excuse to pursue a longheld agenda of smothering Britain's competitive financial advantages in regulation. That is bound to become a fault line in the next few years as European leaders try to build new institutional remedies to the crisis out of the short-term fixes agreed in relation to Greece.

What this all means is that there is going to be (yet) another round of negotiations over political integration. Britain might want to look on from the sidelines, but it will have to get involved in some capacity. That in turn will give the Tory right ample opportunity to demand the referendum it has always wanted on the whole question of EU membership. Like it or not, this Greek bailout has started a chain of events that brings European politics to the door of 10 Downing Street, via backbench Conservative MPs in a frenzy of righteous indignation. When that happens, David Cameron will be nostalgic for the phone-hacking scandal.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

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There are sinister goings-on in the race to become the UN's next Secretary-General

The United Nations can and must do better than this, says David Clark. 

2016 was meant to be a year of firsts for the United Nations as it prepares to choose a new Secretary-General. Optimism was growing that the top job would go to a woman for the first time in the world body’s seventy-year history. There was an emerging consensus that it should be someone from Eastern Europe, the only region never to have held the post, provided a candidate of the right calibre was put forward. Above all, the selection was supposed to break new ground in openness and transparency after decades in which decisions were stitched up in private by a handful of the most powerful countries. Innovations like open nominations, public campaigning and candidates hustings were introduced in a bid to improve public scrutiny.
 
All of that now threatens to be turned on its head as the battle to succeed Ban Ki-moon becomes embroiled in intrigues and plots, according to stories that have surfaced in the Belgian and Portuguese media in the last week. Allegations centre on the activities of former European Commission President, Jose Manuel Barroso, and ex-Portuguese MEP turned lobbyist, Mario David. Both are said to be promoting the undeclared candidacy of Kristalina Georgieva, the serving European Commission Vice-President from Bulgaria. Barroso reportedly arranged for Georgieva to participate in a recent meeting of the Bilderberg group in order to boost her profile with world leaders. David is said to be touring the capitals of Eastern Europe to canvas support.
 
While there is nothing necessarily unusual about senior European politicians supporting a colleague in her bid for a major international job, there are two things that make this case very different. The first is that Bulgaria already has an official candidate in the person of Irina Bokova, a career diplomat currently serving her second elected term as Director-General of UNESCO. Reports suggest that Barroso is among those pressing the Bulgarian government to switch its nomination to Georgieva, while David’s role has been to find another country in the region willing to nominate her in the event that Bulgaria refuses to budge. The second piece of the puzzle is that Portugal also has an official candidate – its former Prime Minister, Antonio Guterres – who Barroso still publicly insists he is supporting.
 
It is in the nature of the way these matters are often decided that there is no necessary contradiction between these facts. Georgieva’s candidacy would appear to stand no real chance of success. She lacks diplomatic experience and news reports suggest that the Bulgarian Prime Minister’s decision not to support her was based on information linking her to the communist-era intelligence services. And while there is nothing to stop another country nominating her, precedent suggests that a lack of domestic support will be fatal to her chances. Georgieva is highly unlikely to end up as UN Secretary-General, yet she could still have a significant role to play as a spoiler. Bulgaria’s official candidate, Irina Bokova, is frequently described as the frontrunner. As a woman from Eastern Europe with heavyweight UN experience, she certainly has an edge. A rival Bulgarian woman candidate would create doubt about the strength of her support and potentially open the way for other candidates. The aspirants who stand to benefit most are men from outside Eastern Europe. Step forward Antonio Guterres.
 
Those with the best chance of preventing these manoeuvres from succeeding are the governments of Eastern Europe. Although the principle of rotation does not confer on them the automatic right to have one of their own chosen to run the UN, a degree of unity and professionalism in the way they approach the contest would make their claim much harder to resist. Unfortunately there has so far been little evidence of the kind of collective solidarity and diplomatic co-ordination that helped to deliver the top UN job to Africa and Asia in the past. The strongest advocate for Eastern Europe is currently Russia, although it has stopped short of threatening to use its veto in the way that China was prepared to do for Asia when Ban Ki-moon was appointed in 2006.
 
In addition to casting doubt on Eastern Europe’s chances, the descent into private plotting is an ominous warning to those campaigning for the UN to become more open and representative – the appointment of a new Secretary-General may not prove to be the turning point they had hoped for. What is the point of public hustings for candidates when the real discussions are taking place at a closed meeting of Bilderberg group? Why bother to encourage women candidates to put forward their names when the power brokers of international diplomacy already have their man? Seventy years after it was established, the UN should have found a better way to do this. It still can.

David Clark was Robin Cook’s special adviser at the Foreign Office 1997-2001.