The likelihood of any new EU treaty passing in an Irish referendum must at this point be nil. It would take some doing to argue both sides of the core/periphery chasm around to further intgration
On the Irish (peripheral) stage, the likes of Pat Cox, ex-president of the Parliament, are promulgating the argument that there was no fault in the European institutions structures and protocols and that Ireland needs now more than ever to turn to Europe. He says we were not good Europeans during the boom years and now sentiment is against us so what can we expect. We mis-spent our opportunity. This is being referred to as the “we all partied” line of argument, as that was ex-Finance Minister Brian Lenihan’s unfortunate way of putting it. Now we must reform and recommit.
On the German (core) stage Habermas and Fischer round on Germany and Merkel for their current behaviour and their lack of collegiality, that they are acting too self-interestedly and have forgotten their European vocation they claim. They say that at the very point at which they could realise that calling they are instead myopically acting in their own limited interest. To which the German man on the street who reads Bild, might say why not; when do we get to become a normal nation like the Finns who are also in favour of punishing the periphery?
The stresses are still mounting. The ECB’s interest rate rises are worrying. Wages in the Eurozone are unlikely to follow the inflation in price of oil which is what the rate rise nominally seeks to counter. If they do to any extent it will be in the core. In the periphery wages and salaries have dropped like stones. In the Irish case average income has dropped from being top in the EU15 in 2007 relative to the average income of the group to 2nd last in 2010. That’s some serious volatility. Now the ECB signals wage “restraint”. When incomes have already been cut to the bone, the only thing that results is redundancies. So central bank policy is now functioning to alleviate inflationary pressure on employed core workers rather than avoiding increasing the burden on struggling peripheral workers whose income has dropped, or who are suffering high unemployment. This in countries needing bailouts. The ECB are required to take this narrow view by design. And while Central Banks should be above political interference it remains that the design of the institutions is either faulty, being incapable of holistically adressing problems, or the economic integration of the Eurozone is a sham that is being slowly and painfully exposed.
Mortgages, which have already been supported by forbearance measures etc will continue to grow as a problem, and the next two ECB meetings appear to be heading for further rises. This against a backdrop of a banking crisis which everyone suspects is not over. That they did this the same day that a peripheral Eurozone member sought a bailout is nearly blackly funny. Portugal’s mortgages are virtually all variable rate. The price stability doctrine of the ECB was rigidly built in when the Germans gave up the DM. Now we are all learning just what it means to be peripheral to Germany. The very word “peripheral” is embedding itself in the discourse, in news reports and debates.
I cannot foresee any drive to deepened integration succeeding. It can only happen when, or rather if, the Eurozone can declare victory over these grinding problems. That would be when the window for integration would open. As it stands the very thing that was supposed to drive integration by knitting economies together is being destroyed by the institutions who are trying to isolate Eurozone problems in peripheral economies, and in turn is undermining the EU. May you live in interesting times indeed.
