Are we neglecting our soft power assets?

Has Will Hutton gone mad?

Over the weekend, Will Hutton offered a ‘modest proposal’ so bizarre that it must have left his colleagues at the Observer fearing for his sanity.

David Cameron, he suggested, should…

… travel to Germany and make a speech in German – however embarrassing – spelling out the choices. If Germany is unprepared to accept them, he should argue that the least bad option is not for Greece to leave the euro – but for Germany, whose economy is strong enough to take the shock, to do so.

He should say that while it was right for Britain not to join the single currency as it was previously constructed, if Germany were to act responsibly, Britain would peg sterling to a reformed euro and in the long run even consider joining the regime. Moreover, Britain would do this either way, he could argue – eventually joining a single currency in which Germany accepted its responsibilities or a single currency without Germany.

Now the idea that Cameron should offer to swap places with Angela Merkel at the heart of the Euro meltdown is, without doubt, genius. The Germans, I am told, feel cursed to stagger on endlessly chained to the corpses of weaker European nations. So… why not help out? Strap them to the UK instead!

But it’s Hutton’s tactics I worry about. Year after year, with consummate skill, he’s been inching [sorry, centimetring] Britain towards Euro membership.

Who can forget his moving plea from ’99 that the UK adopt the single currency because “we read the same bible, drink the same wine, haunt the same discos, play in the same Champions League” as our European neighbours?

Or his reassurances from 2002 that fears the Euro could crack were ‘scaremongering’ and ‘wishful thinking’? Or his masterful solution for the problem of one-size-fits-all interest rates (in a crisis, European countries survive by running up bigger deficits!)?

Or from November 2008, his Cassandra-like insight that only through immediate Euro entry – now, this minute – could the UK avoid ‘national bankruptcy’ and the ‘clutches of the IMF’?

Or perhaps most prophetic of all, his essay from just a fortnight ago, hailing European leaders for taking an ‘inspiring leap’ towards financial stability, by creating “a self-help club” in which every European country could be both strong and free?

But it’s the language thing that makes me fear Hutton is losing his marbles. Our PM may not be able to speak a word of yer’actual German, but he can do a hilarious German accent (this is taught to all boys as part of the British national curriculum). He even whipped it out on the campaign trail:

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What’s more, he’s almost certain to push things too far by borrowing a costume from Prince Harry to make his big day in Berlin memorable for all concerned. The likelihood of embarrassment is overwhelming! He’s sure to come across more John Cleese than JFK.

No – what Cameron should do, obviously, is resign forthwith and allow Nick Clegg a fluent German speaker to take over. Clegg could then appoint a government of technocrats to prep the UK for Euro membership. I nominate one Hutton, W as our next Finanzminister….

Kosovo re-assessed?

I’ve written on the BBC Editors site about whether the Kosovo intervention is being reassessed in the light of allegations against Prime Minister Thaci

Kosovo has been back on the front pages in recent weeks with lurid allegations against its Prime Minister and dominant politician, Hashim Thaci, accusing him of involvement in organised crime and even harvesting human organs for sale for profit.  Mr Thaci has denied the allegations. 

Mr Thaci has also been in the news as his party was accused of vote rigging in last month’s parliamentary elections which were the first organised by the Kosovo government. This week, the vote had to be rerun in some of Mr Thaci’s strongholds and a new government should be formed in the next few weeks. 

Why is this interesting to people who don’t follow affairs in south east Europe closely? Read More

Germany to Europe – do as we say and do

Listen to Germany

A few weeks ago, I questioned German wage restraint, pointing out that other Eurozone countries would prefer Germany to allow salaries to rise, thus stimulating domestic demand, and helping address Europe’s economic imbalances.

French finance minister, Christian Lagarde recently made the same point:

Clearly Germany has done an awfully good job in the last 10 years or so, improving competitiveness, putting very high pressure on its labour costs. When you look at unit labour costs to Germany, they have done a tremendous job in that respect.

[But] I’m not sure it is a sustainable model for the long term and for the whole of the group. Clearly we need better convergence.

In the FT, Otmar Issing – who did his best to ensure the European Central Bank was run on Bundesbank-approved lines – reacts to the suggestion with characteristic restraint and good humour:

This idea, presented as a panacea for Europe’s problems, is so economically erroneous and politically dangerous that it would hardly deserve being taken seriously – were it not for the risk that it might actually prevail…

At a time when the EU has launched a new initiative to make the continent’s economies more competitive, after the failure of the “Lisbon agenda”, an approach that deliberately tried to reduce the competitiveness of one of the most successful exporters in world markets would look like a bad joke.

I’ll take that as a ‘no’ then. Issing, who has been lobbying hard against a Greek bailout, reflects a worrying trend in German opinion. According to this line of thinking, other Eurozone countries should buckle down, cut wages and public spending, and do what their richer and more prudent masters in Berlin Brussels tell them to.

And if this medicine is too bitter, then they should bugger off, re-adopt the drachma, lire or peseta, and spend the next hundred years or so paying back the Euro-denominated debt they have incurred while in the single currency.

It’s a depressing vision. And, for Europe, it looks like it’s stagnation ahead.

On the web: London’s global financial standing, EU security and defence policy, China and the West…

– The FT has news that London’s position as the dominant global financial hub is slipping, with the UK capital now tied with New York for top spot in the latest rankings. Elsewhere Barry Eichengreen and Kevin H. O’Rourke examine the latest economic data comparing the present crisis with the Great Depression across a range of indicators (including global output, world trade, and equity markets). Robert Shiller, meanwhile, explains the difficulties of using past experience to predict the course of the current crisis.

European Geostrategy suggests that EU security and defence policy is like a jazz band and explains why a White Paper providing a “grand strategy” is needed. EUobserver, meanwhile, has news on the emerging shape of the European diplomatic service – its structure and staffing – as member states gear up to secure the important EEAS secretary general post.

– Elsewhere, Constanze Stelzenmüller takes an in-depth look at the travails of German security policy, offering insights into how it might evolve. Highlighting the lack of strategy, she argues that “fundamental decisions regarding German security policy have been repeatedly forced into the Procrustean bed of moral necessity, domestic imperatives, or the demands of external alliances.”

– Finally, over at openDemocracy, Andy Yee explores the “hedgehog’s dilemma” between China and the West, highlighting a gradual acceptance of different core values. TIME magazine, meanwhile, assesses the slow progress toward democracy in Hong Kong and the possible wider implications from Beijing’s perspective.

Foreign Office leads EU coup

It’s taken as a given here in the UK that Brits wield little influence in Europe. But apparently – not. According to the Guardian, an FCO-led coup is under way:

Germany is planning to stop what it sees as a British campaign to dominate European foreign policy-making under Lady Catherine Ashton, the Guardian can disclose.

Amid growing criticism across the EU of the performance of Baroness Ashton of Upholland, the EU’s new high representative for foreign and security policy, Berlin and Paris are alarmed at the prominence of British officials in the new EU diplomatic service being formed under Ashton.

A confidential German foreign ministry document analysing the creation of the EU’s new diplomatic service, seen by the Guardian, has concluded that Britain has grabbed an “excessive” and “over-proportionate” role…

The French contend that the inexperienced Ashton is being schooled in policy-making by the Foreign Office. Diplomats and officials in Brussels also see Britain’s hand in one of Ashton’s first appointments, made last week. She named Vygaudas Ušackas, a former Lithuanian foreign minister and ambassador in London, as the EU’s special envoy to Afghanistan. He was widely seen as the UK’s favoured contender after Britain withdrew its own candidate because it secured the post of Nato envoy in Kabul.

The Germans are also increasingly unhappy at what they see as the erosion of their influence and being cut out of decision-taking.

Pay restraint in Germany

According to the FT, the German government is proud that it is keeping pay down in both the public and private sectors, and hopes this will provide an example to less prudent Eurozone economies.

But surely Greece, Italy, Spain and Ireland (and the UK as well) would prefer Germany to push wages up – putting more money in the pockets of German consumers and helping reduce Europe’s trade balances?