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Martin Callanan MEP: Europe has put an expensive sticking plaster on the €urozone but its fundamental weaknesses remain

Martin Callanan MEP is Chairman of the European Conservatives.


Euro meltdown
A month ago the president of the European Central Bank said that the worst of the euro zone crisis was over. Of course, his words were certain to come back to haunt him. It was inevitable that the crisis would return, and return it did - with a vengeance.

This is because, fundamentally, nothing in the euro zone has changed.

We have seen a partial default by Greece, and a flood of cheap ECB money. But all of these are simply very expensive sticking plasters. The fundamental problems still remain.

Against this backdrop, the European Parliament held a debate with European Commission President Barroso on the crisis. Apart from the usual comments that those who want Greece to leave the euro hate Europe, Barroso offered us nothing. I used the opportunity to set out the options available to the euro zone as I saw them: as an observer from a non-euro nation. I said that euro leaders need to make a decision. Either northern states (particularly Germany) accept that they must inexorably allow money to flow from northern Europe to southern Europe; or Greece should be allowed to leave the euro, default, and devalue its way back into the marketplace.

As Germany is understandably not willing to pay, and southern Europe is understandably not willing to hand over more of its economic sovereignty to Berlin and Brussels, it seems that only one option remains. Behind the scenes, this opinion garners a great deal of support. In public, such an acceptance would be seen as heresy against the political project.

You can see my full speech here.


There is a far more serious long-term crisis occurring: our falling competitiveness and weak economic growth. The 'jobs and growth' agenda is continually talked about in the corridors of Brussels. Indeed we have already had two EU summits this year to discuss it, with some positive ideas being brought forward for Free Trade Agreements, a digital single market and so on. Much of this agenda is being driven by David Cameron in the council and by Conservative MEPs. For example, Robert Sturdy drove through a Free Trade Agreement with South Korea worth billions; Malcolm Harbour is leading a number of initiatives on the single market, including a review of how public bodies use their enormous spending power to drive innovation and save taxpayer money.

However, the commission has failed to present any radical proposals that would really help to kick-start our economies. Take, for example, last week's publication of the EU employment package. This was meant to present some fresh ideas for how the EU can stimulate job creation. Unfortunately, it contained little but suggestions that taxation on labour should be shifted, subsidies should be set to create new jobs, and 'decent and sustainable wages' should be offered (which we are concerned is 'Eurocratese' for an EU minimum wage - watch this space).

The jobs strategy is of little use because it fails to realise that the EU is a major part of the problem. Until it understands this, it can never be part of the solution. The mentality within the commission's directorate-general for employment is that only more EU action can create jobs. If labour markets aren't working, a new directive is needed. More Europe is the only answer.

Of course, we all know that politicians and civil servants cannot create jobs. They destroy them as an unintended consequence of their actions.

The commission's DG employment cannot decree, 'let their be jobs'. However, it can start to look at its own legislation and ask if it is bringing about more rigid labour markets. It could ask whether we still need the working time directive, the agency workers directive, the equal treatment directive, the parental leave directive, the informing employees directive, the collective redundancies directive, and a corporatist manner of setting employment policy between the EU-funded trade unions and business groups. Would we be able to create more competitive labour markets if we repatriated these laws and allowed national governments the ability to set labour conditions according to their practices and what their economies could afford? Of course we would.

This is one of the biggest problems facing the EU economy: the prevalence of harmonisation over competition. But it is causing the least competitive to act like concrete shoes, weighing the rest of us down in a fierce global marketplace. The commission fails to realise this. As I said in a letter to the FT a few weeks ago, if the commission were to get its way we would have the greatest worker protection in the world, but no workers.

As well as the economy, we also had a number of debates regarding human rights in the parliament. In particular, a debate on the EU's accession to the European Convention of Human Rights saw my colleague Ashley Fox draw some fire from the Liberal Democrats.

Under the Lisbon treaty, the EU has its own legal personality. This means that it can sign up to international agreements in its own right, and in Lisbon it states that the EU should accede to the ECHR - in addition to its 27 member states remaining members. However, as Ashley pointed out, Conservative MEPs did not support the Lisbon treaty being passed without a referendum so we feel no need to be bound by its legal niceties. But, more importantly, given the feeling many of our constituents have over the ECHR and ongoing court judgments, we believe that the little chance of reforming the court would be completely removed if the EU were to join too.

Ashley soon realised that our concerns were justified, as Liberal Democrat MEPs Andrew Duff and Sarah Ludford attacked him in the chamber on his position. Ashley's excellent speech and the LibDem interventions can be seen here.


Of course, the UK's membership of the ECHR is still a political hot potato thanks to the ongoing Abu Qatada farce. I am firmly of the opinion that he has taken our country for a ride for long enough and we should put him on an airplane at the first opportunity. I have no doubt that when he supported the creation of the Council of Europe and the ECHR, Winston Churchill had in mind the enormous atrocities of the first half of the 20th century. Do we honestly believe that he also had in mind the ability of well-heeled lawyers to get very rich on taxpayer money by defending a terrorist? I doubt it.


Finally, there was much incandescence in the parliament towards Argentina. The weekend before our session, the Argentinean government decided to nationalise and expropriate the YPF oil company, which is majority owned by Spain. This unilateral action throws into doubt all of the EU's investments in Argentina, and provoked a sharp response from the usually meek Baroness Ashton. Of course, British MEPs have been saying for some time that Argentina is not a place with which we can do business, and I drafted a letter to Baroness Ashton calling on the EU to propose expulsion of Argentina from the G20. If you look at the past decade, Argentina has become an economic pariah state. If it cannot live by the same rules and norms as the rest of the international economic community then it should be expelled from the international economic community. You can read my full letter here.


We have a 'mini plenary' at the start of May (when we sit in the chamber in Brussels, rather than Strasbourg). By then we will know the results of the French election, and the Greek elections. If Hollande is elected he wants to renegotiate the fiscal pact treaty and introduce an aggressive socialist agenda. In Greece, the two pro-bailout parties, Pasok and New Democracy, will struggle to form a majority, according to the current polls. The Dutch government has just fallen, raising serious questions over its AAA rating, and its support for the fiscal compact. With all of the 'politics' going on in some of the EU's major member states, is it any wonder we cannot find a solution to the crisis? I hope to give you all a special update around May 9th on what these elections could mean for the future of the EU. Incidentally, on the same day we will also have a debate with Barroso and Van Rompuy in the parliament on the 'future of Europe'. Unfortunately, in the short term, only one person can answer that question - Angela Merkel.


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