New EU deal faces multiple referendum threats

A recent EUobserver article has highlighted how the 'fiscal compact' deal agreed at last week's EU summit could yet be scuppered by referendums and legal delays in numerous participating countries.

The deal is designed to extend EU control over the tax and spend policies of the elected national governments of its member countries by transferring greater power over national budgets to EU institutions.

Due to David Cameron's veto, the deal will now have to be agreed between the 'euro-plus' group of participating countries outside the institutions of the EU.

But according to EUobserver, "serious obstacles are beginning to materialise in Ireland, the Netherlands, Austria, Romania and Denmark, while Finland, Latvia and the Czech Republic may also present the process with additional hurdles."

Treaty hurdles

In Ireland, aspects of the deal are being put to the country's attorney-general for a verdict on whether a referendum is required, but the Irish Europe minister, Lucinda Creighton, has fed speculation by saying there is a 50/50 chance of a public vote.

Today the Irish government has said that a decision on a referendum will not be made until March, once a final text of the deal is agreed.

In the Netherlands, prime minister Mark Rutte has insisted that a referendum would not be needed. But with a highly EU-critical party as his partner in a coalition government and the opposition Labour party saying that new elections would be required if the deal amounts to a transfer of power to Brussels, Mr Rutte may face problems getting the deal through the Dutch Parliament. The country's Socialist Party and the Greens have also called for a referendum.

In Austria, government officials have also indicated that the creation of a fiscal union would require a referendum and, in Romania, while supporting the deal, President Traian Basescu has said that a new treaty would need a two-thirds majority in the Romanian parliament and approval in a public vote.

In Finland, prime minister Jyrki Katainen has dismissed any talk of problems in ratifying the deal. But the country's constitutional committee has ruled that replacing unanimity by majority voting on the EU's bailout funds would be unconstitutional, since it could result in a loss of parliamentary control over Finland's financial contributions. According to EUobserver, a Finnish official has said that it would be "impossible" for the government to negotiate this problem away.

Denmark’s new prime minister, Helle Thorning-Schmidt, has so far not commented on whether the deal would provoke a Danish referendum, but leaders of the other two parties in her governing coalition have said that a vote might be needed. Crucial to a Danish decision may be the Red-Green Alliance, a key part of the governing coalition, which is a strong opponent of the EU’s "neo-liberal policies".

Denmark rejected euro membership in a referendum back in September 2000, so moves to allow the EU to govern the country's economic policy may be seen as a breach of this settlement.

In Latvia, the government has signed up to the 'fiscal union' deal, but many politicians have voiced a sense of betrayal over the imposition by the EU of strict austerity measures and cuts in EU structural funds. Raising the spectre of a referendum as a bargaining chip to win additional EU aid would only take the votes of 50 of the 100-member Latvian parliament.

Finally, the Czech Republic is of course home to Vaclav Klaus, the national president who caused the EU so much trouble over the Lisbon Treaty. While a referendum would not be automatically required on the changes, President Klaus has the power at least to delay the law-making process by holding back his signature, which must be applied to all new legislation.

Navel-gazing

It looks like the EU could well be in for yet another lengthy period of introspection over their bid to create 'fiscal union' and, even if the hurdles above can all be overcome, the deal still does nothing to address the core underlying problems of the scale of debt and low growth causing problems in several eurozone economies.

It's precisely because the EU seems far more interested in itself than in advancing the measures European countries need in order to prosper in the fast-moving, 21st century world that calls in Britain for an EU referendum - such as are being advanced by groups like the People's Pledge campaign - and support for a new deal with the EU are only likely to grow.

Cameron's veto will feed demand for an EU referendum

Why should the EU be given the right to govern and tax (arguably out of existence) what is, in Europe at least, a predominantly British-based industry that makes a huge contribution to our economy?

That's the question critics of David Cameron's actions at the recent EU summit will have to answer, if they hope to make a case against the Prime Minister's use of Britain's veto.

In a remarkable move during the EU's latest bid to resolve the bloc's debt crisis, Nicolas Sarkozy and Angela Merkel have chosen to risk their ability to quickly implement measures that would increase eurozone fiscal discipline over an attempt to impose EU regulation and a transaction 'Tobin' tax on Britain's financial services industry.

Confronting Britain in this way and provoking use of our veto over a bid to gain control over, and income from, the majority of Europe's financial sector that is based in Britain is an extraordinary demonstration of misplaced priorities from the EU at a time when the urgency of eurozone restructuring is paramount.

If the EU is serious about finding quick solutions to the eurozone debt crisis, they would surely have dropped such intrusive demands to interfere in another country's affairs in order to use the far speedier existing treaty mechanisms available?

But instead of coming away from this latest summit with a deal to calm market fears of national defaults and the disintegration of the euro, the determination of the 'Merkozy' partnership to regulate Britain's financial services industry has introduced a delay of more than three months for replacement 'fiscal compact' structures to be planned.

UK industry

A look at how vital financial services are to the UK economy shows clearly why David Cameron had to resist this arrogant 'Merkozy' push to take over and tax the City.

Referencing a PriceWaterhouseCoopers report, a recent Open Europe study highlighted that in the 2009-10 tax year the UK financial services sector made a tax contribution of over £54 billion, or 11.2% of the government's income from all taxes during that year.

The industry also contributed a £35bn trade surplus in 2010, playing a critical role in Britain's trade balance and, according to TheCityUK - an independent membership body promoting the UK financial services sector - nearly 2 million jobs are at stake.

Euro greed

But it's also clear from the same Open Europe report why other EU leaders want to force Britain to concede to EU government in this area. The City hosts a huge proportion of European and indeed global activity in many financial markets.

It's home to the largest foreign exchange market in the world, the largest insurance market in Europe, dominates the private equity industry and around 80% of the European-based hedge fund assets are managed in the UK.

There is clearly little point in a European financial transactions tax, the proceeds of which EU institutions hope to pocket, and proposed regulation if the UK is excluded.

New structures

Unless the EU relents on its stubbornness over financial services, a separate deal outside the EU's architecture will now have to be established by the countries who wish to participate in the new eurozone 'fiscal compact'.

This will not just set down new rules imposing stronger EU controls over national budgets but also how to enforce them. No mean ambition.

Either other EU leaders will realise the scale of the task ahead of them in respect of putting together such an inter-governmental deal and will conclude that it was stupid to push Britain away over financial regulation.

Alternatively, the countries who have expressed a wish to participate in the new 'fiscal compact' will forge ahead regardless and the result will raise new questions about how that will affect the balance of power between Britain and the other 26 EU members.

Should such a new voting block, doubtless also working informally within the European Union institutions as well as outside, be willing to consistently out-vote Britain in a range other EU policy areas, this will only feed demands for a proper reconsideration and referendum on the totality of Britain's membership of the EU.

If it becomes clear that we have even less influence over EU law-making than is already the case, then there is no remaining reason why we should wish to accede to the rules that come out of the EU nor pay the billions of pounds every year that Britain contributes to the EU's budget.

Beneficially, the result of this latest summit could be that holding an 'in/out' EU referendum - such as the one demanded by the People's Pledge campaign - and forging a new, 'free trade plus voluntary co-operation' deal will start to look all the more appealing.

New euro 'masterplan' already showing flaws

The EU is this week limbering up to reveal a last-ditch 'masterplan' to save the euro.

Over many months, a succession of summits have invented ever bigger sums of money the EU intends to throw at the eurozone debt crisis without any concept of how to achieve them.

So far the EU's only strategy seems to have been to try to intimidate the markets into submission rather than come up with a coherent solution to the euro's glaring flaws.

Clearly, and unsurprisingly, that hasn't been working. Not only has the lack of detail behind every EU pronouncement failed to convince, but the perpetual indecision by the EU has demonstrated amply what has for some time been a central tenet of eurosceptic thought.

Namely, that the EU as a decision-making structure is too rigid and incapable of acting with the dynamism required to secure Europe's success and prosperity in our fast-moving 21st century world. The EU, being a 1920s idea founded on a 1950s view of the world, has never looked more out of date.

In this context, it's hardly surprising that the ratings agencies have continued to criticise and downgrade the credit-worthiness of euro member countries.

Flawed auto-sanctions

But this week, the EU has finally changed tack. Talks led by the 'Merkozy' partnership of the French and German leaders have shifted from broadcasting fantasy funding plans to discussing 'refounding' the EU through treaty changes that will enforce 'fiscal union'. The plans are being touted as what the eurozone needs to survive in its current form.

More details will emerge later this week, but one of the key measures already being proposed is the idea of automatic sanctions against those countries that breach eurozone borrowing rules - particularly the rule that budget deficits should not exceed 3% of GDP.

Yet, 23 EU countries, including 14 eurozone members, are already in the EU's 'excessive deficit procedure' as a result of breaching this 3% rule which, under the current Stability and Growth Pact, should already have provoked sanctions.

This is despite the fact that the rules of the original Pact were softened in 2005, with 'exceptional circumstances' being permitted for deficits above 3%, 'other relevant factors' allowed to be taken into account before a deficit is considered excessive, and longer deadlines for corrective action.

According to the EU Treaty, sanctions can include requiring euro countries to publish additional information before issuing bonds and securities; inviting the European Investment Bank to reconsider its lending policy towards the country; requiring the country concerned to give the EU a non-interest-bearing deposit until the excessive deficit has been resolved; or, finally, imposing fines of an "appropriate size".

If auto-sanctions are approved in the looming negotiations, unless made retrospective, only Finland, Luxembourg and Estonia would potentially be subject to them as only those countries are not currently in the excessive deficit procedure.

This would render the proposal effectively usless towards having a short term impact on problem countries nor, in any case, will they be any solution to the underlying debt and growth problems of economies in difficulty. They simply punish, don't resolve.

Key questions

Now EU leaders are lurching back towards toughening the Pact up again, this provokes a series of further questions.

Firstly, given sanctions for excessive deficits have been available to the EU since the euro launched, why exactly have none ever yet been applied under the current Stability & Growth Pact rules?

Secondly, will the 14 euro countries already suffering 'excessive deficits' be let off auto-sanctions until they get back on track and then fined only after future transgressions? How much will future breaches cost them?

More broadly, how will automatically imposing financial sanctions on these countries help them get out of their debt and low growth problems that tend to provoke excess deficits in the first place? Won't such sanctions simply make their economic problems worse, and is that why none have ever yet been applied?

Referendum unlocked?

Finally, this proposal also provokes a key political question for David Cameron on the question of a referendum, since what is being proposed, in respect of auto-sanctions at least, is basically a beefing up of the existing EU Stability and Growth Pact.

Despite not being in the euro, Britain is subject to the Stability Pact rules and committed to "endeavour to avoid an excessive government deficit", although we are not bound by the penalty clauses should our endeavours fail. This was a key element of our opt-out from euro membership. We are, however, one of the nine non-euro countries also currently listed as being in the excessive deficit procedure.

If the mooted treaty changes centre on amending the Stability Pact clauses, the Prime Minister had better ensure our euro opt-out protocol is amended to exclude Britain from the new measures. If we are drawn into the new auto-sanctions, it will impossible for David Cameron to avoid holding a treaty referendum, since his 'referendum lock' will have been prised open.

Reality check

As Conservative MEP Roger Helmer put it this week, asking whether the euro can be saved "is like asking a cancer patient how we save the tumour. The euro is the disease, not the patient."

Prosperity and democracy on our continent are what needs to be saved and that's more likely if the rigidity of the euro is abandoned for at least several of its current members.

It's time for Europe's political leaders to drop attempts to save their ill-judged euro project, admit it's doomed at least in its current form, and start instead planning how to mitigate the effects on the financial system of several departures.

Birthplace of democracy experiences Brussels 'regime change'

by Marc Glendening

The European Union has always boasted that it is a force for democracy; a guardian against a return to the authoritarian politics that have haunted various parts of our continent.

This, of course, as recent events in Greece have confirmed, is total nonsense. The EU elite power system is, and always has been, the major post-war threat to liberal, democratic values.

The whole edifice was designed, as John Laughland demonstrated in his seminal book The Tainted Source: The Undemocratic Origins of the European Idea, to limit the capacity of citizens to hold their rulers to account.

The idea of a pan-European government was driven in its early, post-war days by prominent individuals who had been associated with the fascist politics of the inter-war period. People such as Robert Schuman, who was an official in Petain's Vichy government, and Paul-Henri Spaak (active in the Belgian fascist movement).

The European Commission's original name, revealingly, was 'the Higher Authority'; a non-elected body that was meant to preside over the elected member governments; as indeed it does, albeit together now with the European Council, the grouping that brings together the political heads of government.

Post-democracy

The EU is now returning the peoples trapped within it to a pre-democratic situation. Recently, the French president, Nicolas Sarkozy, has articulated very directly what is expected of the governments and the peoples within the Eurozone.

Referring to the short-lived decision by the Greek prime minister to consult his people in a referendum as to whether or not they wanted to proceed with the EU/IMF bailout programme, he came out with this piece of typically Euro-Orwellian 'double-think';

"Giving people a voice is always legitimate, but [here we go] the solidarity of all Eurozone countries is not possible unless each one agrees to measures deemed necessary."

Deemed necessary by who? EU leaders who have no electoral mandate whatsoever in Greece? Further demonstrating the thinking inside the Brussels machine, an EU official who refused to be named commented in a similar vein;

"We are at war. The crisis is that bad. And its time that Greece put party politics aside and demonstrate national unity."

The logic of these sinister authoritarian statements is that no electorate should be given the ability to contradict the priorities of the Euro-elite, who will decide all the key policies relating to public expenditure levels, which industries should be in the state and private sectors, rates of taxation and so on.

'Party politics' must be put aside, apparently. Where and when did we last hear these sentiments in Europe?

Regime change

BBC Newsnight's Paul Mason also alluded to the fact that the Euro-elite is now explicitly engaging in 'regime change' when he took on the French president at a press conference last week over the democratic implications of what was taking place. He asked Mr Sarkozy;

"It's evident that you and Angela Merkel, the two most powerful governments in Europe, are trying to change the governments of Italy and Greece. How is that just? And once started, where does it stop?"

This was met with an outraged response from Mr Sarkozy about Mason coming from an island and "not understanding the subtleties of the European construction". It would only have been marginally less crass had Mason come back with insults about Sarkozy sharing an obsession for pan-European government because he comes from the same country as Napoleon.

Mason also revealed rumour that, during the week prior to Italy accepting IMF oversight of its public finances, German Chancellor Angela Merkel had phoned the Italian president to explore the possibility of a change of government and that, according to Mason;

"EU officials have certainly been in contact with the Greek opposition to explore the creation of a national unity government."

EU placemen

Not content with imposing an austerity programme on the Greek government, the Euro-elite have also evidently been intervening to help to manufacture a revolt within the Prime Minister's centre-left PASOK party designed to remove him from office and bring about a new coalition government.

The aim was clearly not just to block the bailout referendum that George Papandreou had announced but also to prevent an election being called that might have thrown up results inconvenient for the Euro project.

To replace Papandreou, the EU elite have been pushing for Lucas Papademos, a former official in the European Central Bank and also wants another of its trusted old boys, former commissioner Mario Monti, to replace Signore Bunga-Bunga in Rome's hot seat.

The plan is now to concentrate new powers with the Euro-elite and to do this in a way that means there is no requirement to hold referenda or even, in most countries, debates and votes in national parliaments.

No say

Article 352 of the EU treaty will be invoked to force through most of the proposed changes, including Commission surveillance of national budgets, while it is likely that the EU will in December also have to announce a new mini-treaty for bigger measures like the Financial Transactions Tax.

Heads of government, including David Cameron, hope that by bringing about the forthcoming transfer of powers this way, calls for an EU referendum will be neutralised. The argument will be that the treaty is too insubstantial to amount to a constitutional change.

Of course, Sarkozy and his fellow anti-democratic elitists have form in this area, having himself back in 2005 ignored the overwhelming French rejection of the EU Constitution in a referendum and then used his majority in the French assembly to steamroller through the tactically renamed Lisbon treaty.

The exact same thing happened in Holland following a vote of 62% against transferring new powers to the EU and, on two separate occasions within the past ten years, the Irish people have voted against new EU treaties only to be told that they must vote again.

Yet with its new policy of regime change, the EU's anti-democratic inclinations are now being taken to new, extreme heights. So when the European Movement next go on about their beloved institution's great commitment to democracy, just laugh out very loud, please.

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written by Marc Glendening

Dazzling numbers obscure real eurozone deal

Another day, another eurozone rescue.

We have, of course, been here before. Today's deal is similarly long on rhetoric and short on detail, but that won't prevent the markets bouncing and the media once again reporting that the crisis is solved.

Yet, in a few weeks time, they will again all realise that the latest 'solution' is far from that at all.

Just as happened back in July, many crucial details of the deal are yet to emerge and have the capacity to cause a rapid unravelling.

How exactly the European Financial Stability Facility will be leveraged from its remaining €250 billion to an extraordinary €1 trillion (£880bn) - whether by the provision of risk insurance or a special purpose investment fund into which countries like China and the Gulf states will be asked to contribute - will not be revealed until the end of next month.

Similarly, will banks be able to find the required extra €106bn in capital? And whether private investors will actually swap their Greek bonds for those with a 50% repayment reduction also remains to be seen.

According to the BBC's Robert Peston, the agreement of the banks "in principle" to slashing what Greece owes them by half came at the last minute. But yesterday's Irish Times highlights unsurprising scepticism that what is being asked of them with respect to Greece represents "an exceptional and unique solution" and does not set a precedent for what may happen should the difficulties in other countries worsen.

Investors could yet decide that the warm words of EU politicians and appointees about Greece being a special case are too wafer thin relative to the economic forces that could yet come to bear on the far bigger economies of Spain or Italy.

Even if the banks go through with the deal, many observers doubt that the resulting reduction of Greece's debt to 120% of GDP by 2020 (ie. the same as Italy's) is in any case going to lighten the country's burden sufficiently to enable a rebalancing of its economy.

Economic union

A bigger problem in how today's deal is being reported is how the media are once again too hypnotised by the glittering numbers to look at the small print.

What many are missing this time are the details under the summit conclusion headings (pdf) 'Economic and fiscal co-ordination and surveillance', 'Governance structure of the euro area' and 'Further integration' which cover the EU's growing power-grab over taxation and how euro members run their economies.

Back in July, commentators made the same mistake. A far greater focus was applied to the new repayment terms for Greece and the possibility of increased funds for the European Financial Stability Facility (EFSF) than on the real gem of the package for EU leaders.

Namely, the granting of permission for EFSF money, guaranteed by eurozone members, to be used to recapitalise the worst-afflicted banks in particular countries - a responsibility that would normally have to be fulfilled by national treasuries.

Obscured integration

Again today, dazzled by completely unqualified numbers, the media are overlooking the far more significant passages of the latest deal that relate to deepening economic union, greater EU powers to interfere in the budgets of member countries and the introduction of EU taxes.

See Paragraph 27a, which says that "for euro Member States in excessive deficit procedure, the Commission and the Council will be enabled to examine national draft budgets and adopt an opinion on them before their adoption by relevant national parliaments".

Far from applying to one or two financially irresponsible cases, 13 of the 17 euro member countries are currently in the EU's excessive deficit procedure. So this represents a substantial extension of the influence of the unelected EU Commission over national parliaments with respect to the politically highly sensitive tax and spend policies of euro member countries.

Paragraph 29 goes on to discuss the "Pragmatic co-ordination of tax policies in the euro area" as a "necessary element of stronger economic policy co-ordination" and confirms that "Legislative work on the Commission proposals for a Common Consolidated Corporate Tax Base and for a Financial Transaction Tax is ongoing."

And Paragraph 35 instructs the European Council to bring forward an "interim report" in December 2011 on "strengthening economic convergence within the euro area, improving financial discipline and deepening economic union" with a report on how to implement agreed measures including "the possibility of limited Treaty changes" due by March 2012.

Flaws not fixed

Ultimately, even if today's uncertainties pan out as the EU desires, the reality is that this latest deal will still not be enough to cement the euro's cracks.

The reason is simple. There is no solution to the eurozone's problems other than for the most indebted countries to break the fixed exchange rate system and leave the euro, to restore competitiveness and growth to their economies. But of course, EU politicians and especially its employees refuse to let go of their flawed single currency project.

While the markets are bringing some realities to bear, the question is for how much longer can Europe's political elite get away with putting off the inevitable crunch, in the process worsening the mess they have created and now flushing almost incomprehensible sums of public money to protect the failing euro?

A Tobin tax will benefit the EU nomenklatura, not the peoples of Europe

by Marc Glendening

At the Sarkozy-Merkel mini-summit on
16 August, held to enable the French and German leaders to discuss the future of the eurozone, one of the concrete proposals that emerged was the idea of a Tobin, or ‘Robin Hood’, tax.

Sniffing a financial opportunity, Jose Manuel Barroso was on 29 September quick to reiterate the Commission’s desire to see such a tax introduced.

There is clearly a growing momentum among the EU elite to impose levies on financial transactions, a portion of which will be diverted to EU coffers. But beyond the debate concerning the efficacy or otherwise of this proposed measure, there are two other questions that need to be addressed.

First, should a Tobin tax be applied to the non-Eurozone member countries - Britain, Denmark and Sweden - as Brussels is demanding, even if the elected representatives of these countries do not want it?

And second, does it necessarily follow, should it be introduced, that a proportion of the money raised be handed over to the coffers of the European Commission, rather than for it all to go to hard-pressed national treasuries at a time of public sector cuts and tax hikes?

EU waste

Those, like the Robin Hood Tax campaign, who support this proposal in the abstract should think twice about the Sarkozy-Merkel proposal in particular. Do they really want more cash to be directed towards an organisation notorious for fraud and waste, excessively high wages and whose budget has not been cleared by the Court of Auditors for the past 16 years?

Is it right, for example, that Peter Mandelson is still drawing 50% of his annual Commission salary of £180,000 three years after leaving office in Brussels? Lord Mandelson is taxed at the EU ‘community rate’ of 26% on his earnings - why doesn’t he pay the full rate of either UK or, alternatively, Belgian taxation?

Or do the peoples of Europe really believe it is appropriate that money raised in their countries should be used to heavily subsidise the privileged, private education of the offspring of the Brussels Nomenklatura in their special European Schools?

EU fundraising

The French and German leaders in making their Tobin tax demand were in fact adding their weighty support to a proposal the Commission has long been making.

Brussels desperately wants to find new ways to raise an increasing proportion of its ever-expanding budget through taxes levied against the individual citizens of the member countries. In this way the EU elite will be able to replace national contributions with so-called ‘own resources’.

Once enough streams of direct taxation are in place, Brussels could by-pass all the tedious arm-twisting of the member state governments it currently has to undertake and just keep ramping up the levies European citizens individually have to pay.

The Commission estimates that it could raise between 31 and 50 billion euros every year on the basis of just a 0.1% tax on stocks, bonds and derivatives.

Merkel and Sarkozy are also concerned about how on earth the EU is going to be able to prevent the Eurozone from collapsing, especially since the German government is adamant that the idea of Eurobonds - whereby northern Europe would become responsible for the debts run up Greece, Ireland, Portugal, Spain, Italy and others - is a complete non-starter.

Understandably, Angela Merkel does not want to stand for re-election in 2013 on a policy of having incorporated the German people into a permanent European debt union.

The idea of a Tobin tax, together with other ideas floated by the Commission - such as taxes on air travel, emissions-trading and the sending of emails - is much more attractive to the German chancellor because these would also be directed at citizens from Britain and the other non-Eurozone countries, as well as those from the states inside the single currency.

These new planned euro taxes are therefore a way of making three important net donor countries responsible for the cost of helping to maintain the dysfunctional euro system they have opted to stay outside of.

Cameron's challenge

David Cameron will no doubt claim that the Tobin tax and other measures cannot be applied to the UK as we will have a veto over the next tranche of powers Brussels is seeking to gain.

In the near future, the EU will attempt to re-define Article 136 of the treaty in order to help it establish ‘central economic governance’. On top of this, there might even be a new treaty.

However, it must not be forgotten that our government thought it was exempt from having to contribute to the Eurozone bail-outs and was forced under Article 122 of the Lisbon treaty to hand over £12.5 billion towards helping Ireland and Portugal. We are tied into doing this for another two years.

John Major also believed he had negotiated certain opt-outs concerning the Maestricht treaty only to discover that they were worthless once the EU had got Britain to ratify the document.

At the end of the day, it will be the Eurozone majority within the EU, backed up by the European Court of Justice, that will have the final say in interpreting what our legal obligations and exemptions are, and are not, under an elastic EU treaty open to an infinite range of interpretations.

It should be for the elected and accountable national parliaments throughout Europe to decide if they do, or do not, want a Tobin tax following rigorous debate about the pros and cons of this policy.

If it is introduced, the amount raised by hitting the bankers in this way should go exclusively to, and be spent by, those who are democratically accountable. Not remote EU figures who cannot be removed from office by the voters of the member countries.

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written by Marc Glendening

Cameron to support creation of Euro-State without democratic consent

by Marc Glendening

The British government in March gained the initial approval of Parliament to give the EU at a later date new powers over economic decision-making, through a redefining of Article 136 of the Lisbon treaty.

As was confirmed yesterday (August 16) at the Sarkozy-Merkel mini summit, Brussels intends establishing central economic governance under the leadership of the EU president Herman van Rompuy. Ostensibly, this will only apply to the Eurozone countries.

As People’s Pledge advisory council member Douglas Carswell MP, among others, has warned, giving the green light for the creation of such a powerful centralised authority carries huge risks for Britain, together with other non-euro countries Denmark and Sweden.

A unified Eurozone voting bloc will be able to force through whatever measures it wants to, aided by the European Court of Justice which has the final say in any dispute regarding interpretations of the treaty.

Remember, back in May 2010 it was decided by the eurozone majority that Britain and the other non-euro countries must contribute to the bailouts under Article 122 of the treaty. Our government believed, in its naivety, that this article was only about helping countries that were experiencing ‘natural disasters’.

Whatever opt-outs David Cameron believes he has secured will ultimately mean nothing so long as the EU enjoys legal supremacy over us. Once he has given his consent to a new Article 136, the gates of the eurozone Gothic castle will clamp shut for all EU member states.

No consent

There is also a moral dilemma relating to this issue, but not one that concerns the current UK government, sadly: Should Britain really be enabling the EU to further extend its undemocratic control over the lives of German, Greek, Irish, French, Italian and other eurozone peoples when they will have no chance to give or withhold their democratic consent to what is being planned for them?

Remember, not one European electorate voted explicitly for the single currency project in a referendum. Opinion polls showed at the time the euro came into existence that a clear majority of the German people wanted to keep their national currency.

The legal instrument through which the new powers will be transferred from the member countries to the EU is Article 136 of the Lisbon treaty. When the time comes, the political heads of all the member countries, including David Cameron, will vote to change the wording of this article.

Blank cheque

As opponents of Lisbon have always warned, the treaty contains within it the means for the political elite to add new policy making controls to the EU portfolio without having to go through the lengthy and often politically messy process of ratifying new treaties through national parliaments or, heaven forbid, referendums.

This they are now in the process of doing. The Irish government is particularly keen to restrict the right of its voters to have a say. This will no doubt be tested in the courts by citizens demanding a referendum on what will clearly be an issue of constitutional significance.

It may still be that some of the measures the French and German governments want to force through will also require a new short treaty. For example, Angela Merkel has the problem to contend with of legal challenges before the German supreme court that claim that the bail-outs of Greece, Portugal and Ireland are unconstitutional as they violate Article 125 of the treaty which forbids paying off the debts of other eurozone countries.

While nothing has been decided yet, it might be that in order to overcome the objections of many German citizens, together with some politicians, Merkel will require an explicit re-writing of the treaty.

Miliband's opportunity

Even if this proves to be the case, our government has stated it will do whatever is required to facilitate a politically unified eurozone. Cameron will attempt to whip through Parliament, enthusiastically supported by the Lib Dems, naturally, any new treaty in addition to the beefed up Article 136.

It will be interesting to see how Ed Miliband plays all this. If he’s smart, Labour will oppose this Cameroonian chicanery and make common cause with the numerous Tory MPs who can be expected to defy their leadership on this. If this were to happen, it is not inconceivable that the government could be defeated and the Labour leader would be able to position himself as a champion of the rights of the British and other European peoples against the furtive, secretive political class.

If he doesn’t, he will confirm that he is just another dreary and untrustworthy political insider.

The good thing about all of this is that at least the fog is now clearing from the battlefield and a growing number of people appreciate what is at stake and that the stark reality is that Britain now needs to decide whether it is governed principally from Brussels or by those who are accountable to us through the ballot box, as in Switzerland and Norway.

It’s that simple. And this is where the People’s Pledge referendum campaign comes in.

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written by Marc Glendening

EU re-negotiation is not an option

by Marc Glendening

Regimes and politicians periodically feel the need to reiterate arguments and claims that they know to be untrue, we the recipients of their propaganda know to be untrue and they know that we know are untrue.

Yet, they feel strangely compelled to continue repeating their claims or impossibilist demands anyway.

One Tory equivalent of ‘widget production is running at record levels in the Upper Urals’, or ‘violent crime is at its lowest point in the UK for 50 years’, is the periodic re-articulation of the pretence that the EU treaty can, and should, be re-negotiated.

A number of Conservative EU-sceptics, including John Redwood, have recently tried to revive the line, in the wake of the Eurozone crisis, that the opportunity now exists for David Cameron to play real hardball with Brussels. Unless the EU returns powers over aspects of social policy and other matters, the UK should not sign any new treaty enabling the creation of ‘economic governance’ in the Eurozone, they urge.

That nice Dr Cameron, however, can be confidently expected to respond to this proposal by applying his trusty political sedative, based on a carefully crafted cocktail of pretending to take this demand seriously, combined with the making of vaguely sympathetic, soothing noises.

A sense of calm will return to the Tory ‘patient’. And nothing will then happen, except, of course, that the current government will agree to a greater EU centralisation of power, claiming that none of this will apply to non-Eurozone countries.

Reality check

My suspicion is that 90% of the Tory re-negotiatists know that the choice now confronting us is, in reality, whether to continue accepting whatever comes down the tube from Brussels or to quit membership.

They must appreciate that forcing a repatriation of powers is an impossibility since the Lib Dems will simply not permit it, as Nick Clegg has recently confirmed, plus any attempt at re-negotiation would take months - possibly years - of complex arm-twisting and coalition-building in Brussels.

It also seems unlikely that the EU will risk presenting a new treaty any time soon. A lot of the economic governance agenda will be forced through using a revamped Article 136 of the post-Lisbon EU treaty, so avoiding any risk of a referendum in Ireland or anywhere else.

Back in March, our government won the backing of Parliament to agree to the EU beefing up Article 136 with absolutely no strings attached. Brussels is now using the Lisbon treaty changes to give itself new powers not spelt out in the original text of the treaty.

Strategic mistake

Accepting the stark reality before us, however, is not something at this stage, for politically understandable reasons, most Tory (as well as Labour) EU-sceptical MPs and wannabee politicians want to acknowledge.

Putting forward the case for a theoretical re-negotiation is therefore a much more attractive option: it enables politically ambitious EU-sceptics to sound simultaneously radical without instantly placing them outside the mainstream (instant death in today’s conformist, cautious and superficial political culture).

Inevitably, the central demand the Tory boys and girls make in this context is the repatriation of employment and other aspects of social policy. But this is a strategic disaster from an anti-EU perspective, because the Social Chapter has obviously been popular amongst those on the left.

Targeting this area can only undermine the struggle to build a mass, democratic popular front across the political spectrum for a referendum on EU membership - the only way now to change our relationship with the EU. Clearly, the centre-right on its own does not have the strength to deliver this objective.

It is as unwise for EU-sceptical conservatives to whine on about the Social Chapter as it would be for pro-EU Tories to, say, crow about Brussels imposing public sector cuts on the Eurozone and centrally demanding the liberalisation of a range of services.

To do so is to potentially drive a wedge in the coalition of forces that is in the process of being created around the referendum demand.

Broad alliance

The building of this cross-party alliance on Europe is a delicate business that requires the different component parts to apply a self-denying ordinance. It means emphasising the issues and demands that unite rather divide left, right and centre.

To employ a New Labour-ism, the EU-sceptical ‘narrative’ needs to make it clear to the British people that, so long as Brussels remains legally supreme over the member states, it doesn’t matter whether the electorate want public ownership to be re-established over the railways or postal services, or instead want greater economic deregulation of employment policy and other areas.

These and other key decisions will not be made by law-makers accountable to the electorate. Proper democratic political conflict between left and right will only resume once we are free of EU control.

Presuming it is accepted that we all acknowledge that there is no real prospect of re-negotiation, Tory EU-sceptics should either 'out' themselves as now being overtly anti-EU or, if they cannot bring themselves to do this, they should refrain from reiterating European policy demands that the left do not share.

Such demands inhibit the work of those waging the battle for independence through the building of a pro-referendum alliance.

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written by Marc Glendening
This article was published yesterday on ConservativeHome

Peter Hain was right! EU moves to full fiscal union

by Marc Glendening

Respect where it is due. Peter Hain, when he was still a principled politician of the Labour left, predicted in his prescient book Ayes to the Left that the European single currency would lead inexorably to full fiscal union and this was one of the reasons he believed we should stay away from this elitist project.

"A European Bank independent of democratic control and dedicated to almost exclusively to price stability must be reversed. It is economically disastrous and politically dangerous", he asserted correctly.

A short while later, Tony Blair offered him the job of being Europe minister and, low and behold, Mr Hain had discovered the joys of New Labour and membership of the single currency.

So what was it, exactly, Mr Hain, that suddenly attracted you to the European views of the then all powerful leader of your party?

Euro prediction

In his book, written in 1995, Peter Hain went on to claim that the Brussels budget would have to be increased “three to four times” in order that a system of fiscal transfers could be established so that huge sums of money could be injected into those economies within the Eurozone that were struggling with the interest and exchange rates determined by the European Central Bank.

Last week's second Greek bail-out of €109 billion (£96 billion) and the outlining of the future direction the EU in relation to economic policy, including the expansion of the powers of its bail-out fund, confirm the Hain thesis.

A jubilant Nicolas Sarkozy claimed the crisis summit in Brussels represented "a historic moment" and promised that "by the end of the summer, Angela Merkel and I will be making joint proposals on economic government in the eurozone. Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government… There is no European Monetary Fund yet, but nearly”.

Whether German, French, Dutch, Finnish, Swedish, Danish and other taxpayers from EU member countries feel quite as ecstatic at the prospect of having to stump up billions of extra euros to help keep afloat the single currency project is another matter and a factor few in the media have focused much thought on.

EU taxes

While the whole EU project has been designed to prevent ordinary citizens from being able to hold the Pan-European political class to account on key issues (hence the elite’s fear of referenda), it is probable that many of them will use their votes increasingly in national elections to express their displeasure.

British taxpayers will be further dragged into this crisis in the short-term if Portugal and Ireland require new bail-outs before 2013. We are obligated under Article 122 of the Lisbon treaty to do this, just as we were first time round with these two countries. This is in addition to the amounts we have put in through the IMF, including of course to Greece.

In the longer-term, the EU plans to introduce a range of new Brussels-set taxes that will be levied against all individuals from the member states. This is the only way Brussels will be able to build a treasury on the scale Peter Hain so accurately predicted fifteen years ago.

Sudden impact

When he was Europe minister in 2002, Peter Hain evoked Clint Eastwood in the cult classic movie Dirty Harry with the words 'Make my day' in challenging EU-sceptics to have the courage to debate him about the single currency.

Sadly, unlike Harry taking on a rabid gun-toting psychopath on the streets of San Francisco, Mr Hain turned out to be all mouth and no trousers.

Despite the Democracy Movement offering to stage a public debate between the then minister and pro-pound Labour National Executive Committee member Mark Seddon (now director of the People’s Pledge), Peter Hain failed to take up the challenge he had rhetorically set.

Instead, he embarked on a national speaking tour in support of the euro that was much more in keeping with the New Labour ethos of the times: no opposing speeches were allowed!

Perhaps he was worried that Mark Seddon would have used against him the compelling arguments he had himself expressed in Ayes to the Left.

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written by Marc Glendening

Euro in meltdown: Let's break free sooner rather than later

by Marc Glendening

The new Democracy Movement campaign, Out of the EU and into the World, gives 5 positive reasons why we need to free ourselves from the Little Europeanist vision that has so dominated the thinking of the political class for the past 50 years or so.

There is a huge opportunity now for those of us who have a more modern, international future for our country. A growing number of people are open to the idea Britain should liberate itself from centralised EU control.

The current crisis in the eurozone is completely undermining the once commonly held belief that a politically united Europe is 'inevitable'. The task we now face is to make the British people aware that unless our country leaves the EU we risk being sucked into the ideologically fanatical attempt to prop up the single currency. This will have terrible repercussions for ourselves, as well as the peoples of the other member states.

UK taxpayers have already been forced under Article 122 of the Lisbon treaty (a measure supposedly concerned with showing solidarity to countries experiencing 'natural disasters') to risk £12.5 billion as part of the bail-outs for Greece, Ireland and Portugal, even though we, together with Denmark and Sweden, have chosen to stay outside the euro.

ECB exposed

According to Brussels, we are obligated until 2013 to continue handing over money to sustain the euro, in addition to our £17.5bn annual budget contribution. With many German and Finnish voters defying their EU-obsessed rulers on this issue, the Brussels based elite will probably attempt to make us stump up even more cash to finance further bailouts. Greece is in need of a second massive injection following the initial £110 billion it received last year.

In recent days, German officials have been reiterating to their British counterparts in the EU that we will be obliged under the terms of Article 122 to contribute more cash to the next Greek bailout. The Guardian (June 17) claims that Britain will have to find a further €15 billion should the second intervention reach €100 billion.

According to a recent Open Europe study (pdf), the European Central Bank is currently exposed to the tune of a staggering €444 billion worth of debt having provided cheap credit - in violation of the EU's own stated treaty obligations - to struggling banks and Eurozone governments. The ECB is holding €190 billion worth of Greek debt alone.

There is every possibility now that the increasingly toxic ECB will itself go bust within the next two years. Who will ultimately have to pick up the bill should this happen? Ostensibly, the national central banks and taxpayers of those countries within the eurozone.

Given the huge likely cost of recapitalising the ECB it is far from certain that the European political elite will be able to deliver the sums required from within the Eurozone alone. Just as Brussels forced taxpayers from the non-euro countries to contribute to the bailouts that have already taken place through a highly perverse interpretation of Article 122, there is absolutely nothing to stop them trying to pull off the same trick again.

Rule of law abandoned

It is the European Commission (the guardian and enforcer of the treaty), together with the Eurozone voting majority in the Council of Ministers and the European Court of Justice, that can determine what exactly are our financial obligations to the EU in this context.

As we have already experienced with Article 122, there are a range of elastically-worded articles in the treaty that are open to any self-serving interpretation the key EU bodies wish to construct. The rule of law simply does not apply in Brussels in any meaningful sense. So long as we are EU members, these unaccountable EU institutions will continue to enjoy supreme legal authority over ourselves and the other peoples of Europe.

Brussels is currently putting together a new package of measures designed to extend the degree of control the EU elite has over its subordinate entities. "Governing these very vast and equally diverse economies with a single currency is more of a challenge in a union of sovereign states than in a political federation," Jean-Claude Trichet, the ECB govenor, commented in a recent speech. "That is the reason the European Central Bank is stressing tirelessly the necessity of strongly reinforcing the euro area economic governance."

'Economic governance'

One plan is for all governments to have to submit their annual budget proposals to the unelected European Commission for approval before they are shown and voted on by national parliaments. Brussels also wants to start taxing all EU citizens individually.

The EU elite appreciate that it is going to be very hard in future to persuade member governments to keep increasing their national annual contributions. Herman van Rompuy, Jose Manuel Barroso, Trichet and the others are commendably open about the need now to complement monetary union with fiscal union.

When opponents of the euro predicted this would eventually have to happen, they were derided by the likes of Ken Clarke and Chris Huhne as hysterical scaremongers.

The notion that Britain, Denmark and Sweden will be able to absent themselves from the forthcoming financial and political drives to save the euro from collapse is therefore naive in the extreme. The full insanity of having established a European single currency in the absence of an already existing unified, Pan-European people prepared to support it with their taxes is now self-evident.

Jacques Delors and the other fanatical architects of the Eurozone believed that once they had set in stone the single currency everything else, by some functionalist magic, would fall into place. According to the EU-state-builders, the governments of the member states would then tamely accept the logic of the situation and agree to hand over ever more political powers concerning economic policy to Brussels, the business cycles of the diverse national economies would miraculously converge and the different European peoples would organically merge into one collective consciousness, complete with new sense of political identity and loyalty.

Germans would then not mind, so the theory went, being taxed to help out other parts of the Eurozone, any more than they currently object to having their contributions redistributed to other parts of the Federal Republic.

Silver lining

This scenario, of course, was a total and utter fantasy in the minds of some members of the political elite and, like the other authoritarian, grandiose political fantasies from the European past, has extremely dangerous implications for the ordinary citizens of our continent; the people who really have to live with the consequences.

The inevitable eventual collapse of the Eurozone will have unpleasant consequences for all European economies and beyond. However, the silver lining is that the EU in its current undemocratic form cannot survive. The problem though is that its collapse, or transformation into a much more diluted form, could be drawn out over a number of years.

As we are seeing, the EU political class will do everything possible in the short to medium-term to resist the inevitable and will throw huge sums of public money at a problem that is beyond their power to solve.

The imperative for the British people must now be that we minimise for ourselves the damaging implications of this disintegration and get the hell out, quick.

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written by Marc Glendening

Denis MacShane's low tactics on an EU referendum

by Marc Glendening

Despite having been reported to the police by Parliamentary authorities over allegations that he has abused his expenses, Denis MacShane MP is not keeping a low profile politically.

Those of us who have observed, and been subjected to, him over the years would expect nothing less. He is, in so many ways, a figure of great amusement yet the low political tactics he employs are worth becoming familiar with in order to better counter them.

He was in characteristic mud-slinging form on Radio 4's Start The Week on May 9th, when up against People's Pledge Advisory Council member Ruth Lea.

Ruth had introduced the People's Pledge and explained the case for an EU referendum to Andrew Marr. Not content with simply arguing against our right to be consulted on EU membership, Denis proceeded at every opportunity to refer to referendums as 'plebiscites'.

This was a classic MacShaneism; a crude attempt to smear any opposing EU-related view with the stench of fascism, the far-right, and, somewhat ironically perhaps in this context, political authoritarianism.

Smear tactics

The word plebicite is now exclusively associated with the ways in which Napoleon, Mussolini and Hitler attempted to give their totalitarian regimes and projects the veneer of legitimacy by holding rigged tests of public opinion. Plebiscites were no more democratic than 'elections' in one party states or Zimbabwe and Iran.

In invoking this highly-charged historical concept MacShane was doing what he does best; playing the person, not the ball. It was the classic Blairite tactic of trying to distract those listening from the actual content of your opponent's arguments and associate them instead with deeply unattractive and sinister imagery.

In this way, MacShane was also engaging in the post-modernist tactic of deconstruction; taking a fundamental truth and deliberately subverting it. He wanted to turn the tables on Ruth Lea by substituting in the listener's mind her argument for greater democracy with the insinuation that those who advocate an EU referendum are really advancing an anti-democratic position.

Low grade

At the Fabian Society conference on Europe earlier this year when an opposing speaker made an entirely factual and non-jingoistic reference to Britain's traditionally liberal system of law, MacShane interupted his remarks by boisterously and grotesquely breaking into a loud rendition of Land of Hope and Glory, complete with exaggerated conducting gestures.

He assumed, being in playground bully mode, that the audience, who were largely with him on the EU issue, would burst into hysterical laughter and join in the mockery of the other speaker. Instead, he was greeted by an embarrassed and richly deserved silence.

He is a past master of this sort of disingenuous, but dangerous nonsense. For years he has accused EU-critics of being 'xenophobes', 'little Englanders' and of the 'far-right'. When he has been challenged to name names - to have the courage to apply these cowardly labels to the likes of Tony Benn, Bob Crowe, Kate Hoey, John Cryer, Kelvin Hopkins, Gisela Stuart and the legion of other left EU-sceptics - he fails to do so and hides away.

Again, tres post-modern and Third Way to simply refuse to acknowledge and confront inconvenient contradictions head on; to put up or shut up.

Real debate

There are honourable believers in the goal of a politically united Europe. People such as Mark Littlewood, John Stevens, Dr Stephen Haseler and Richard Laming. They start from first principles and try to convince others on the basis of intellectual content.

Dirty Den, however, prefers instead to go down a road similar to that travelled in the 1950s by the communist-baiting and smearing notorious Senator McCarthy in relation to anybody who was on the centre-left. For MacShane, substitute 'reds under the bed' with 'xenophobes in the closet' or wherever he thinks EU-critics reside.

Denis, when will you have the courage to debate the EU and to take on the idea of an EU referendum without recourse to evoking the memory of fascism?

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written by Marc Glendening

DM backs new People's Pledge campaign for an EU referendum

by Marc Glendening

You may have read over the past week about an exciting new initiative to force a referendum on Britain's membership of the EU - called the
People's Pledge.

We've received many enquiries about it in recent days, so I'm pleased to report that the Democracy Movement is enthusiastically backing this new campaign.

Launched last week in the futuristic setting of the Altitude 360 venue on the 29th floor of Millbank Tower, Westminster, the People's Pledge is a potent new all-party campaign to secure a referendum on whether we wish to be ruled by those we elect to Westminster - or by the unaccountable institutions of the European Union.

Broad support

The campaign has assembled an impressive spectrum of supporters include John Cryer MP (Labour), Zac Goldsmith MP (Conservative), Jenny Jones AM (London Assembly Member, Green party), Marta Andreasen MEP (UKIP & former EU chief accountant), among many others.

It's chaired by businessman John Mills (Chairman, JML Group) and the director is Mark Seddon, ex editor of Tribune magazine and former member of the Labour National Executive Committee.

The prominent economist Ruth Lea is also a supporter, as are writers Fay Weldon CBE, Virginia Ironside and John King.

The campaign has the support not only of those who are opposed to, or sceptical about, the EU. It's also backed by those who are committed to Britain's continued EU membership - such as Keith Vaz, the former Europe minister and John Stevens, the former Conservative MEP - but who nevertheless acknowledge that the people should decide.

Unique pressure

But it's the campaign's strategy that really sets it apart from all previous referendum efforts and gives it a great chance of success.

The People's Pledge asks voters to pledge that they will only vote for a candidate at the next general election who promises to support a referendum on Britain's membership of the EU and to vote for it in the House of Commons.

Numbers of people signing the Pledge in each constituency will be displayed on the campaign's website alongside the MP's majority. This unique feature of the campaign will pile the pressure on MPs and their rival candidates, by enabling them to see exactly the strength of feeling in their area for the right to have a say on the EU - and how many votes they stand to gain, or lose, as a result of their stance on the issue.

The campaign's sophisticated website will also record and display each MP's voting record on all EU-related issues, available for any voter to look up using only their postcode, and will finally enable voters to hold their MP to account for their actions on the EU.

Local campaigns

From now until the next general election, through both national and local activities particularly in the marginal seats, supporters of the People's Pledge will be challenging MPs and their rival prospective candidates to declare their support for a referendum.

This campaign therefore presents a new and innovative way to harness and focus 'People Power' towards bringing about change in Britain's relationship with the EU. It's about pressuring the political elite into giving us what they have long denied us; a say on the future of our political system.

With the passing of the EU Constitution/Lisbon treaty, and with a new forthcoming EU treaty designed to establish what Angela Merkel calls 'European economic governance', it is now clear that we as a people have to make a choice: Are we to be governed centrally from Brussels in a growing range of key policy areas or, instead, do we wish an alternative democratic future for our country?

Sign the People's Pledge

We're urging all our supporters to sign the People's Pledge and to encourage as many others as they know to do so as well.

While the People's Pledge will make the case for people to be consulted about the EU's powers, it will not take sides on whether Britain should be 'in' or 'out'. That's why, while working closely with the People's Pledge to secure a referendum, the Democracy Movement and other EU-critical groups will also continue independently to make the case for Britain to forge a new, genuinely co-operative relationship with our European neighbours that, unlike the EU, respects democracy.

When the People's Pledge is successful in securing that referendum, we who want change must ensure we are in a position to WIN it!

So look out for more information here soon about how the DM will be taking forward the case for a referendum by supporting the People's Pledge - and promoting a new vision for Britain outside and beyond the confines of EU membership.

People's Pledge campaign for an EU referendum

The Daily Mail today gives major coverage to the looming launch of a new organisation called the People's Pledge.

Under the headline, Give us a vote on our future in Europe, the Mail reports that this new cross-party campaign aims to "pile pressure on party leaders and MPs to support a poll that would settle the divisive question of EU membership once and for all."

An online version of the article can be seen on the Daily Mail website here.

The People's Pledge is a unique and potent new initiative, which the DM is very pleased to be supporting. More information about the campaign will follow in the next few days.

Britain still vulnerable to euro crisis

by Marc Glendening

British taxpayers risk losing £8 billion if, as many are now predicting, Greece defaults on the EU/IMF loan in which we were forced to participate back in May last year.

Britain has being sucked into the current crisis affecting the eurozone under Article 122 of the Lisbon treaty, which was passed without the democratic consent of the electorate despite a referendum being promised by all political parties.

This article allows the EU Council of Ministers, by qualified majority vote, to provide collective assistance to a member state hit by "natural disasters or exceptional occurrences beyond its control...".

However, through a highly elastic and convenient interpretation by the EU elite, the clause is now being used to force countries outside the single currency to bail out those countries that have run into financial trouble.

It is effectively being used by the EU to help itself to billions of pounds of taxpayers' money - even from those countries who have chosen to remain outside the euro - to prop up their fundamentally flawed single currency project.

"Regrettable" billions

Back in November, the House of Lords Treasury spokesman Lord Sassoon described the way Article 122 had been twisted by the EU as "regrettable".

With £8bn on the line, this must surely be a strong contender for the title of understatement of the year!

In reply to a question from Lord Pearson on 22 November, Sassoon said: "It is clearly regrettable that articles of the European Union treaty, such as Article 122, which should have been used for such things as natural disasters, has been enabled to be used for a mechanism in which the UK was committed to be a contributor by the previous Government."

With Portugal, Belgium, Spain and possibly Italy still facing major economic problems, and many now seeing eventual debt default by Greece and Ireland as inevitable, British taxpayers are facing huge potential liabilities.

Government weakness

In a belated bid to shut the stable door and end Britain's financial vulnerability to the euro's flaws, David Cameron in December sought a "political commitment" from EU leaders that Article 122 would no longer be mis-used in this way.

However, the best he could achieve was an exemption for Britain once the new European Stability Mechanism is created via a treaty change - in 2013. Yet there may be plenty of bailouts between now and then!

Should both Portugal and, more seriously, Spain need financial assistance, it is estimated that Britain's liability under Article 122 will be £16 billion and David Cameron has effectively confirmed that his government is completely powerless to limit this.

Criticising his party leader's actions, Douglas Carswell, the Conservative MP for Clacton, said: "This latest failure shows the futility of the government's position. Unless it is willing to challenge the premise of EU membership and the terms on which we signed up, it can never get its way," he said. "The government is utterly impotent."

Referendum needed

The British people never consented to join the euro and yet we find ourselves having to risk billions of pounds to help sustain that dysfunctional system.

This is why we must have a referendum to decide whether or not we want to be bound by Article 122 and all the other provisions of the Lisbon treaty.

The only referendum that makes any sense now is one on whether we want to accept full EU political union or a new relationship based on trade and voluntary ad-hoc co-operation.

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written by Marc Glendening