Martin Callanan MEP's EU Diary: The 'Euro at all costs' mentality in Brussels has run its course

Martin Callanan is an MEP for North East England and leader of the Conservative group in the European Parliament. This is his latest monthly report for ConservativeHome readers.

THE EUROZONE

Albert Einstein once defined insanity as, 'doing the same thing over and over again and expecting different results.' I wonder then what he would make of the Eurozone crisis.

The 'Euro at all costs' mentality in Brussels has run its course. A second bailout for Greece, with numerous austere conditions attached, is showing no sign of stemming the bleeding - the markets see through it.

However, the prospect of the contagion spreading to Italy and Spain and the ongoing concerns about Portugal make for very grim reading and if they do follow the other "PIIGS" then surely the current policy of
bailouts cannot be sustained.

Portugal's new centre-right government has taken early initiatives to tackle some of its debts and to make its economy more competitive yet the markets are still not satisfied as we saw last week when the ratings agencies downgraded them once again.

The ire that the ratings agencies attracted from the commission, and particularly President Barroso, shows how - as usual - the commission flaps around trying to find any scapegoat possible to blame rather than addressing the underlying factors that have caused the agencies to downgrade them in the first place. It's akin to blaming the weather forecaster for the heavy rain!

As ECR chairman Jan Zahradil recently told President Barroso just before the last EU summit:

"This European Council should send a clear signal that if a country's position is unsustainable within the Euro zone then, unless it makes dramatic changes, the Euro zone should not hesitate to raise the possibility of restructuring its debt or even - however cruel it might seem - of it leaving the club.

"Mr Barroso, if you do not do that, then I will tell you what will happen next: your opponents - or rather the opponents of your successor - will not be nice, decent Eurosceptics like me, but really nasty anti-Europeans. And why? Because they will be elected by angry German taxpayers and by desperate French and Dutch private entrepreneurs fed up of paying other people's debts, and I know that neither you nor I want this to happen. ...This is not a crisis of Europe. This is just a crisis of one wrong, outdated concept of European integration, and that is all."

THE EU BUDGET

This ostrich mentality has also been prominent over the EU's budget. A few weeks ago the commission brought forward its proposals for the next seven-year EU budget (known as the MFF), which include a budget increase, proposals for new EU directly levied taxes and an end to the completely justified UK rebate. ConHome covered my comments at the time.

Since the announcement was made, we have seen nothing but disparaging remarks from the commission aimed at countries like Britain, France and Germany who wrote to the commission last December asking for budgetary restraint. When you consider that any country has a veto on this long-term budget, you would think the commission might show a slightly more conciliatory attitude towards the countries that pay their bills.

The European Parliament held a debate with Commission President Barroso last week on the budgetary proposals and, true to form, the most outspoken federalist in the chamber was the leader of the Liberal group, Guy Verhofstadt. You may recall he launched a tirade last month against the UK government's concerns regarding a parliamentary report, which called for the next MFF to increase the EU budget, scrap the rebate and introduce EU taxes. Last time my colleague Richard Ashworth responded to him but this time I decided to have a go. The exchanges are here.

THE POLISH PRESIDENCY

The following day we heard from the Polish Prime Minister Donald Tusk on his country's priorities as it takes over the six month rotating Presidency of the Council of Ministers. The council is supposed to be the intergovernmental body within the EU institutions, which has its feet more or less on the ground compared to the commission and parliament. However, the speech we heard from Prime Minister Tusk was an enthusiastic call for 'more Europe'.

Tusk's Civic Platform party is facing a general election halfway through its Presidency and of course the main opposition party is Law and Justice, who sit with us in the ECR group. I fear that we saw in the chamber last week what Tusk thought everyone wanted to hear - so that his domestic media could report how well his speech was received by the Euro-elite.

Had a British Prime Minister made a similar speech, he or she would be out of a job pretty quickly.

Tusk's speech was extremely disappointing. The council needs a Presidency that will stand up for the strength in diversity of national governments in the EU. Unfortunately I fear that Civic Platform will be so eager to please Brussels that they will forget about anyone's national interests, not least their own.

GILES CHICHESTER MEP

Tuesday afternoon saw the ECR group gain a Vice-President in the parliament. As the fourth largest group in the parliament we are entitled to one VP, who deputises for the President and chairs the sessions. With the resignation of a German Liberal Vice-President there was an opening and the position was filled by my deputy leader of the Conservative MEPs, Giles Chichester. Although he will only hold the position until the half-way point in the parliament (at the end of this year), I am sure he will serve the parliament in an exemplary manner and I wish him well.

CARBON EMISSIONS

Finally, I want to mention the non-legislative vote in the European Parliament on whether the EU should move to a 30 percent unilateral target for CO2 emission reductions. Some of you may have read that the Guardian has sought to make this a much bigger issue than it really is and to suggest that there's some enormous chasm between our government and MEPs on the issue. This is simply Guardian mischief making assisted by left-wing pressure groups and NGOs who are heavily funded by the European Commission themselves.

The reality of the situation is that we would certainly support a 30 percent cut so long as it forms part of a deal with major industrialised nations across the world. Otherwise we believe that the EU will simply export both its heavy emitting industries and its jobs to other countries where there are no targets and no immediate efforts to tackle CO2 emissions. We were not defying London as we both support 30 percent but we did have slightly different views on how we should go about it. We were far more in touch with government policy than the LibDem MEPs who voted to scrap the British rebate and give the EU tax-raising powers last month - but strangely the Guardian didn't choose to focus on that!

That rounds off the last plenary before the summer so I wish you all a good summer break. I look forward to September when just some of the major issues on the table are the economic governance package, fisheries reform and of course, the EU budget. It's going to be a fraught autumn and winter!