Germany demands a Lisbon III … and the Government and Attorney General Paul Gallagher will come under pressure to obey

It is the Supreme Court, not the Government or its Attorney General, that has the power ultimately to decide whether a referendum will be needed in Ireland if Germany, backed by France, insists on changing the EU Treaties to suit its interests.

Little more than a year since the EU Heads of State and Government assured everyone that no further EU Treaty changes would be needed for the foreseeable future, the same people seem now willing to bow to Germany’s wishes to change the Treaties anew to give the EU more power.

If Treaty changes are agreed in the coming period, the Irish Government, and Attorney General Paul Gallagher SC in particular, will come under heavy pressure to avoid an Irish referendum at all costs, for fear it may be lost.  If Mr Gallagher obliges he can almost certainly expect to face a re-run of the Crotty case.

It was Attorney General Gallagher who advised the Government in September 2008 that a State guarantee of all the debts of Ireland’s private banks was legal and that Irish law required that the creditors and bondholders of the Irish Banks could not be touched in view of such a guarantee.  This opened the way to Finance Minister Lenihan paying €7.9 billion to the senior bondholders of Anglo-Irish Bank just three weeks ago, without any question of them being asked to take a “haircut”, as Irish taxpayers paid up to meet the money foreign investors had lent to Messrs Sean Fitzpatrick and Co.

Elements of the so-called  “bailout fund” for the eurozone that was agreed by the EU Governments last May are almost certainly in breach of Articles 122 to 125 of the Treaty on the Functioning of the European Union. (NB. This is not the Lisbon Treaty, but rather the second of the two basic EU Treaties that were amended by Lisbon and which are currently in force.)

What we see playing out in the current economic crisis is Germany’s attempt, for the third time in a  century, to dominate Europe by means of its dominance of the eurozone –  with France holding on to its coat-tails, as the Vichyist rather than Gaullist tradition governs policy in Paris.

The Irish public should find it instructive to see the Eurofanatics and career-federalistas in Iveagh House, Upper Merrion Street, Kildare Street and the Irish Times positioning themselves in the coming period to comply anew with the wishes of their new Teutonic masters.

The Eurofanaticism that led them to support the Maastricht Treaty abolishing the Irish national currency and to join the euro-zone in 1999 – an area with which we did only one-third of our trade – is primarily responsible for getting the country into its present dire economic and political mess.  It will be interesting to see their spin-doctors turn and twist as they try and justify their disastrous course over the coming months, and engage in the blame-game vis-à-vis one another that has already covertly started.
(29 October 2010)

Daily Telegraph: Will Germany deliver on the Faustian bargain that created monetary union?

DAILY TELEGRAPH
Monday 23.2.08

If Der Spiegel is correct, the German finance ministry is drafting rescue plans to prevent default on the edges of the eurozone leading to a full-blown collapse of Europe’s monetary system.

By Ambrose Evans-Pritchard

This is an entirely appropriate policy in economic terms. One dreads to think what would happen if the world’s twin reserve currency were to disintegrate at this stage.

But what about the solemn pledge to voters by Germany’s political elites – promiscuously given over the years – that monetary union would never leave them on the hook for the debts of half Europe?

The vast imbalances that have been allowed to build up under the seductive protection of EMU leave German taxpayers facing bail-out liabilities that exceed the cost of reparations after the First World War in proportional terms.

The political ground has not been prepared for this. EMU was foisted on the German people without a referendum, in the face of deep public scepticism and scathing criticisms by the professoriat. This failure to secure a mandate for such a revolutionary undertaking is coming back to haunt them.

Berlin is at last having to deliver on the Faustian bargain made by Germany’s political class when it swapped the D-Mark for French acquiescence in reunification. It must either go the whole way towards EMU fiscal union and take responsibility for Italy’s public debt (111pc of GDP by next year), Austria’s loans to Eastern Europe (70pc of GDP), the adventures of Ireland’s ‘Canary Dwarf’ (€400bn or so in liabilities), and Spain’s housing collapse (1m unsold homes), or jeopardize its half-century investment in the political order of post-war Europe. Letting EMU fail at this stage would have far higher costs than never having launched the project in the first place.

The alleged bail-out options include “bilateral bonds” where big brother countries agree to shoulder the credit risk for siblings, (who vouches for Italy and Spain?), or some form of EU bond.

[…]

For now, the bail-out talk has cowed speculators. The euro has rallied after weeks of sharp descent against the dollar. Credit default swaps (CDS) on Irish debt have fallen back below the red alert level of 400 basis points. But it has not been lost on the markets that Germany’s own CDS spreads have risen to a record 86. Are traders starting to ask whether Berlin is in a fit state to rescue anybody?

The German economy contracted at an 8.4pc annual rate in the fourth quarter as exports to Eastern Europe, Club Med, and the Anglo-sphere collapsed.

[…]

Last week chief economist Jurgen Stark attempted to head off the bail-out plans, reminding Berlin last week that rescues are prohibited by EU law. This is not strictly true – Article 100.2 allows aid in “exceptional circumstances” – but it gives powerful cover to anybody wishing to oppose the Steinbruck policy.

But whatever the legal theory, the political reality is that 700,000 Germans are going to lose their jobs this year as unemployment rises to 4.3m (IFO Institute). Voters are not going to look kindly on any party seen to divert German savings to Ireland or Club Med.

Architects of EMU were well aware that a one-size-fits-all monetary policy for vastly disparate nations would create serious tensions over time. They gambled that this would work to their advantage. The EU would be forced to create new machinery to safeguard its investment in the euro. It would be a “beneficial crisis”, bringing about the great leap forward to full union.

We are about to find out if they were right.

⁂ European Central Bank capitulating in face of crisis

Two similar articles from newspapers on the political Right and Left forwarded for your information by Anthony Coughlan:

TELEGRAPH
Tuesday 24.2.09

ECB faces mutiny from national bank governors as recession deepens
– The European Central Bank is capitulating.

By Ambrose Evans-Pritchard

For months the ECB held sternly to the high ground of orthodoxy as the US, Japanese, British, Canadian, Swiss and Swedish central banks slashed rates towards zero and embraced quantitative easing, but a confluence of fast-moving events is now forcing it to move.

The credit default swaps that measure bankruptcy risk on the debts of Ireland, Austria and a clutch of Latin Bloc states have vaulted to dangerous levels. In the case of Ireland, the slump is spilling on to the streets. Some 120,000 marched through Dublin over the weekend to protest austerity measures.

The slow fuse on Eastern Europe’s banking crisis has detonated, leaving Austrian, Belgian, Italian and other West European banks with $1.5 trillion (£1 trillion) in exposure.

It is happening just as industrial output collapses in the eurozone’s core states. Germany’s economy contracted at 8.4pc annualised in the fourth quarter. ECB president Jean-Claude Trichet said on Monday that “a process of negative feedback” has set in where the banks and the real economy are pulling each other down in a self-reinforcing spiral. Eurozone credit is contracting. Banks are rationing credit as deleveraging gathers pace.

Rob Carnell, global strategist at ING, said the ECB has been painfully slow to acknowledge the global deflation tsunami sweeping across Europe.

“It seems divorced from reality. It is clearly nonsense to talk about inflation now: it has been negative on average for six months. The eurozone purchasing managers’ index has fallen twice as fast as in the US, so the ECB should be acting even faster than the Fed,” he said.

Mr Trichet said the ECB has increased its balance sheet by ¤600bn (£525bn) since the Lehman collapse in September. The bank is providing “unlimited liquidity” in exchange for a wide range of collateral, including mortgage bonds issued for the sole purpose of extracting ECB funds.

But the ECB’s leading voices have adamantly refused to contemplate going to the next stage: buying bonds and other assets with “printed money”. They see that as the Primrose path to hell. This week the tone has abruptly changed, suggesting that a majority of the 16 national bank governors on the ECB council are having second thoughts.

The apparent ring-leader is Cypriot member Anastasios Orphanides, a former Fed official and a world authority on deflation traps. He said on Monday that the ECB may have to go beyond “zero-bound” rates and revealed that an “internal discussion” was under way.

Italy’s Mario Draghi is in the “activist-easing” camp. “The experience in the US in the 1930s and Japan in the 1990s suggests that it is necessary to fight, in the early phases of the crisis, the tendency for real interest rates to rise,” he said.

Finland’s Erkki Liikanen is of the same opinion. “We are facing the worst financial crisis in our time. It is important not to exclude, ex ante, any measures.”

Julian Callow from Barclays Capital said 10 ECB governors are now doves.

This amounts to a mutiny against the Bundesbank-dominated executive in Frankurt. It is no great surprise. They have to answer to their democracies. The plot is thickening.


The Euro, an Illusory Shield against the Crisis ?

L’Humanite, Paris , Thursday 19 February 2009,

by Isabelle Metral (Translated)

Most political leaders of euro-zone countries make it sound as though the single currency has shown its capacity to play a protective role as the financial crisis sweeps across the Old Continent. So much so that today, even the staunchest of the Euro-sceptics (the British, Icelanders, Swedes, or Danes) are supposed to have suddenly realized the advantages of joining the euro…

The claim was made by Joaquin Almunia, European commissioner for economic and monetary affairs, on Tuesday last.

The EU leader’s statement actually betrays a growing concern in the face of signals showing increasing divergences between the different regions or countries of the euro zone. These divergences might eventually lead some countries to consider opting out of the single currency.

The crisis shows up the very serious defects in the original conception of the euro.

Entirely obsessed as they were with the stability criteria put forward by financial markets, those that championed its creation in 1999 were aiming first at a “strong euro” in the hope of luring as much capital as possible to the European market.

Hence the curb on public spending (with the Maastricht treaty), the pressure on wages through the deregulation of labour markets that diminished labour’s negotiating power. “The euro has brought war over exchange rates to an end, but it has exacerbated competition over prices,” rightly claimed Jean-Paul Fitoussi, president of the Observatoire français des conjonctures économiques

Today, the deepening crisis and the effect of the competition between states that sink deeper and deeper into debt have the additional effect – a refinement on the earlier stages – of bringing the pressure of competition to bear on the States’ capacity to meet their debts (in treasury bonds).

Indeed, if euro zone countries are united by the single currency and the European Central Bank, the rates at which they get loans, and the conditions attached to them, vary from one country to the next. Before the crisis, the spreads remained quite limited. But with the plunge into recession, and the gigantic assistance granted by the various states through bank bail-outs or economic stimulus plans, this is no longer true.

Spain and Ireland, for instance, which until a short time ago, were still praised as models of economic success by pro-marketers in Brussels and elsewhere, are now going through a period of fierce turbulence. As a result, they are at a disadvantage on financial markets and find it difficult to raise money.

Sovereign loans in the euro- one consequently tend to be widely spread. The risk premiums demanded from the frailest countries are soaring, unlike those demanded of Germany, which is still considered an exemplary borrower. The benchmark rate for German (Bund) loans over 10 years last Monday stood at 2.98%, much lower than that of France (3.50%), or of Spain (4.13%) or, above all, of Greece (5.47%).

The over-rated credit rating agencies were not slow in down-grading Madrid and Athens. Downgrading a state amounts to casting suspicion on its ability to pay back its debts as settled, in the best conditions.

In such circumstances, some countries that are strangled by the service of an increasingly heavy debt might be tempted simply to leave the euro ship. To ease the stranglehold, they might try devaluing their restored national currency as a last resource, in order to boost their exports.

This prospect has made the fortune of the managers of the Intrade site where, for the last few months, it has been possible to bet on one or several of the sixteen euro-zone countries opting out of the euro. The contract expires at the end of 2010.

[28/02/2006] German unemployment over 5 million

*** GERMAN UNEMPLOYMENT OVER 5 MILLION

The number of German uemployed has risen by 408,000 to over 5 million in
January, pushing up the unemployment rate by 1 point to 12.1 percent. So
much for the job-generating powers of the euro-currency in Europe's bigest
economy.

[23/05/2005] German “Eurobully” French voters

GERMAN POLITICIANS SEEK TO "EUROBULLY" FRENCH VOTERS ... For your information:
_________________________

" I have always found the word 'Europe' on the lips of people who wanted
something from others which they dared not demand under their own names."

-  German Chancellor Otto Von Bismarck, Gedenken und Erinnerungen,1880

*   *   *

Former German Ambassador to France, Dr Immo Stabreit, summarised how he saw
European integration as follows: "It is only natural that the eastern part
of the continent will become our preoccupation for years to come, because
Germans see this as  a matter of historical destiny. The most fundamental
priority we have is trying to integrate all of Europe. But for France the
underlying issue is all about coming to terms with its loss of influence in
the world" (International Herald Tribune,11-12 September 1999).

In this assessment the retiring Ambassador echoed the views of his
superior, German Foreign Minister Johschka Fischer, whose speech of 12 May
2000 at Humboldt University, Berlin, launched  the process that led to  the
proposed  EU Constitution which French and Dutch citizens will vote on this
coming week.

"Creating a single European State bound by one European Constitution is the
decisive task of our time," said Foreign Minister Joschka Fischer (Daily
Telegraph,London, 27-12-1998).

The "Treaty Establishing a Constitution for Europe" would  achieve a
central goal of German Foreign policy by establishing a new European Union
in the constitutional form of a supranational EU Federation, of which 450
million Europeans would be made real citizens for the first time. If the
Constitution is ratified we would all owe this new European Union, now
founded on its own State Constitution, the prime duty of citizenship,
namely obedience and loyalty, over and above our own national citizenship.

As German Minister for Europe,  Hans Martin Bury, said in "Die Welt" on 25
February last:  "The EU Constitution is the birth certificate of the United
States of Europe."

A century and a quarter after Bismarck's remark quoted above, it is now
Germany's State interests and German political hegemony  over the European
continent that the proposed EU Constitution would primarily  advance - at
the expense of the national democracy of Germany's own people,and of the
peoples of France, the Netherlands, and all other EU Members. The EU
Constitution  would also serve the interests of a small but powerful
political, bureaucratic and ideological elite in Brussels and other
national capitals.

The completion of Germany's ratification of the EU Constitution by the
German Bundesrat on Friday next 27 May, following approval by the Bundestag
on 12 May last, has been timed to put maximum pressure on French voters to
vote Yes on Sunday next,and Dutch voters on Wednesday week.

It is ironical that German Chancellor Schröder should break the norms of
diplomatic protocol by intervening in France's referendum to call for a Yes
vote  on the eve of his own party being rejected by the voters of North
Rhein-Westphalia by 45% to 37% in favour of the CDU.

If the German people had had a referendum on on the euro-currency as France
had   in 1992, they would almost certainly have rejected it. Now having
denied a vote to the German people on giving the EU the constitutional form
of a supranational Federation, Germany's politicians expect French voters
to follow their lead by agreeing to subsume France's national democracy and
independence in a German-dominated Europe. That this is their ambition, the
sequence of quotations from leading German politicians below makes
clear(The quotations are listed in chronological order backwards):-

___________

"European monetary union has to be complemented by a political union - that
was always the presumption of Europeans including those who made active
politics before us. . .What we need to Europeanise is everything to do with
economic and financial policy. In this area we need much more, let's call
it co-ordination and  co-operation to suit British feelings, than we had
before. That hangs together with the success of the euro."

- German Chancellor Gerhard Schröder, The Times, London, 22 February 2002

__________

"The currency union will fall apart if we don't follow through with the
consequences of such a union. I am convinced we will need a common tax
system."

- German Finance Minister Hans Eichel,The Sunday Times, London, 23 December
2001

________

"We need a European Constitution.  The European Constitution is not the
'final touch' of the European structure; it must become its foundation.
The European Constitution should prescribe that ... we are building a
Federation of Nation-States. . .The first part should be based on the
Charter of Fundamental Rights proclaimed at the European summit at Nice. .
. If we transform the EU into a Federation of Nation-States, we will
enhance the democratic legitimacy ... We should not prescribe what the EU
should never be allowed to ... I believe that the Parliament and the
Council of Ministers should be developed into a genuine bicameral
parliament."

- Dr Johannes Rau, President of the Federal Republic of Germany, European
Parliament, 4 April 2001

_________

"We already have a federation. The 11,soon to be 12, member States adopting
the euro have already given up part of their sovereignty, monetary
sovereignty,and formed a monetary union, and that is the first step towards
a federation."

- German Foreign Minister Joschka Fischer, Financial Times, 7 July 2000,

___________

"The last step will then be the completion of integration in a European
Federation ... Such a group of States would conclude a new European
framework treaty, the nucleus of a constitution of the Federation. On the
basis of this treaty, the Federation would develop its own institutions,
establish a government which, within the EU, should speak with one voice
... a strong parliament and a directly elected president. Such a driving
force would have to be the avant-garde, the driving force for the
completion of political integration ... This latest stage of European Union
... will depend decisively on France and Germany."

- German Foreign Minister Joschka Fischer, speech at Humboldt University
Berlin, 12 May 2000

___________

"The introduction of the euro is probably the most important integrating
step since the beginning of the unification process. It is certain that the
times of individual national efforts regarding employment policies, social
and tax policies are definitely over. This will require to finally bury
some erroneous ideas of national sovereignty ... I am convinced our
standing in the world regarding foreign trade and international finance
policies will sooner or later force a Common Foreign and Security Polic
worthy of its name. . . National sovereignty in foreign and security policy
will soon prove itself to be a product of the imagination."

- German Chancellor Gerhard Schröder on "New Foundations for European
Integration", The Hague, 19 Jan.1999

____________

"Our future begins on January 1 1999. The euro is Europe's key to the 21st
century. The era of solo national fiscal and economic policy is over."

- German Chancellor Gerhard Schröder,31 December 1998

___________

"The euro is a sickly premature infant, the result of an over-hasty
monetary union."

- German Opposition leader Gerhard Schröder, March 1998

___________

"Transforming the European Union into a single State with one army, one
constitution and one foreign policy is the critical challenge of the age,
German Foreign Minister Joschka Fischer said yesterday."

- The Guardian, London, 26 November 1998

____________

"In Maastricht we laid the foundation-stone for the completion of the
European Union. The European Union Treaty introduces a new and decisive
stage in the process of European union, which within a few years will lead
to the creation of what the founding fathers dreamed of after the last war:
the United States of Europe."

- German Chancellor Helmut Kohl, April 1992

________

"There is no example in history of a lasting monetary union that was not
linked to one State."

- 0tmar Issing, Chief Economist, German Bundesbank, 1991; now with the
European Central Bank, Frankfort.

__________

"A European currency will lead to member-nations transferring their
sovereignty over financial and wage policies as well as in monetary
affairs. . . It is an illusion to think that States can hold on to their
autonomy over taxation policies."

- Bundesbank President Hans Tietmeyer, 1991

_________

"On the basis of repeated meetings with him and of an attentive observation
of his actions, I think that if in his own way W.Hallstein (ed:first
President of the European Commission) is a sincere 'European', this is only
because he is first of all an ambitious German. For the Europe that he
would like to see would contain a framework within which his country could
find once again and without cost the respectability and equality of rights
that Hitler's frenzy and defeat caused it to lose; then acquire the
overwhelming weight that will follow from its economic capacity; and,
finally, achieve a situation in which its quarrels concerning its
boundaries and its unification will be assumed by a powerful coalition."

- General Charles de Gaulle, Memoirs of Hope, 1970

*******************************

Compiled and disseminated for  the information of French and Netherlands
voters by Anthony Coughlan, Secretary, The National Platform EU Research
and Information Centre, 24 Crawford Avenue, Dublin 9, Ireland, and Senior
Lecturer Emeritus in Social Policy,Trinity College Dublin; +00-353-1-8305792

******************************
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