“The Specter of a Break-up Is Haunting Europe” by Don Quijones

SLL has already said: “Europe is Toast.” Don Quijones says the EU is showing signs of terminal stress. From Quijones, at wolfstreet.com:

Internal Strife and Divisions Blossom in Euro Land.

Since the Eurozone’s sovereign debt crisis began, in 2010, Europe’s leaders have faced a Herculean task: keeping the rickety European edifice intact. Now, five years later, there are much more ominous signs of wear and tear. Everyone is focused on the dire threat posed by a vote later this month for British exit from the Union, but Brexit is just one of a dizzying constellation of threats and challenges the EU faces.

The sovereign debt of many nations on the EU periphery has reached wholly unsustainable levels. Some of the continent’s biggest banks look increasingly shaky. And core nations are witnessing an intensifying public backlash against further bailouts and the EU’s mishandling of the immigration crisis.

Things have gotten so bad that even the staunchest of eurocrats are beginning to express doubts. Many people have lost trust in “entire institutions, whether national or European,” lamented European Parliament Chief Martin Schulz. He warned over a possible “implosion of the EU” due to the blossoming Euroskeptic movements in member states.

Now, the eurocrats are not just falling into despondency and despair, they’re beginning to turn on each other.

European Commission President Jean Claude Juncker tried to convince a hall packed with French mayors of the need for austerity à la carte in France. The linchpin of his argument was that France has been allowed by the Commission to repeatedly break Eurozone fiscal rules, not just due to its size and influence over EU policy but also its “reflexes, its internal reactions, its multiple facets” — an oblique reference to the tendency of its workers to bring the national economy to a halt whenever the government introduces measures that are not to their liking, as is happening right now.

The irony is that Juncker — who is famous for saying that when things get tough, “you have to lie” — is right on this point. Since 1999 France has broken the Eurozone’s 3% deficit limit during non-recessionary years 11 out of 16 times. That’s one more time than Greece and Portugal, three more times than Italy, and seven more times than Spain (which has broken the limit eight times but four of which were during years of recession, with the Commission’s blessing).

But that’s beside the point. What matters is that he broke a cardinal EU rule: never criticize the European Commission, even if you are its president.

“If the Commission President says that things apply differently for France, then this really damages the credibility of the Commission as guardian of the pact,” retorted Eurogroup President Jeroen Dijsselbloem in an interview with German daily Süddeutsche Zeitung and six other European newspapers.

“It would be wise for the Commission to pay a little more attention to its credibility,” said Dijsselbloem, adding that member states needed an “objective arbitrator” who upholds the budget rules manifested in the Stability and Growth Pact.

In direct contrast to Dijsselbloem’s words, recent weeks have seen the Commission offer greater budgetary flexibility to Italy, Spain and Portugal, at least until after Spain’s second round of general elections, on June 26, which are no less likely to produce a functional government than the first one.

To continue reading: “The Specter of a Break-up Is Haunting Europe”