John Bruton

Opinions & Ideas

Month: June 2012

POLITICAL UNION IN EUROPE—-is it the binding cement that is needed, if countries are to be willing to take responsibility for other countries’ debts?

The big enemy of economic growth is uncertainty.  Particularly uncertainty about the value of money.
If people do not feel the value of their money is safe, they will not invest, and they will not put their savings to work in a form that will create jobs.

Securing the euro is about securing the value of people’s savings, so that they will be willing to invest them productively. That means assuring them that there is a solid and workable political structure standing behind their money.
Now that the financial crisis has spread to Spain and Italy, the problem has become too big for the step by step approach to EU reform, that has been followed since 2008. Now we need an integrated package where the short term elements are linked to credible long term commitments. That is what will be considered at the EU Summit at the end of this month. Failure to come up with a credible package could set off a downward spiral, like the one that followed the Lehman collapse, from which  everyone would lose.

An article in “Der Spiegel” has recently given details of the radical shakeup in the way the European Union works, that is now in prospect, as part of a permanent to sustaining the value of the euro, and solving  the sovereign and banking debt crises.
A key goal is to make the currency union believably “irreversible”.

As long as markets think there is a possibility that a country can leave, or be forced out of the euro, there will be a reluctance to lend to the Government, or banks, of that country. As it stands, it is legally impossible under EU Treaties for a country to leave the euro. But, somehow, markets have ceased to believe that, in extremis, that law could, or would, be upheld.

 This disbelief  is at the core of the entire problem, and it has been aggravated by two factors
 1)    commentary in the English language press,, on both sides of the Atlantic,  which  was always disinclined to believe the euro was permanent, and

2)   the inaction of some euro area Governments, who allowed their relative wage and price competitiveness to deteriorate, as if the option, of curing that loss by a quick devaluation still existed, even though they knew it did not.

The Der Spiegel article suggests that the four EU Presidents, Van Rompuy, Barroso, Juncker and Draghi are preparing proposals for the EU Summit at the end of the month which would include

1)    a fiscal union under which Member states would  cease to be able to borrow, without permission of a fulltime EU Finance Minister, who would  chair a group of national Finance Ministers. This constraint would apply to all states, including Germany. There are suggestions that this rule might only apply if a country was proposing to borrow more, in any one year, than 3% of it GDP for that year.

2)    All members to be liable for new debts undertaken by member Governments under this scheme, but old pre existing debts would remain the responsibility of member states themselves. This particular formula would be difficult for Ireland, a quarter of whose Government debts derive from bank recapitalisation, some of which benefitted non Irish bondholders ,who had  unwisely lent to Irish banks during the bubble. On the other hand, it would also be very difficult for Germany, which would have to pay a much higher interest rate on its government bonds than it pays at the moment, while it enjoys a sort of “safe haven for money” status within the euro zone. This additional charge for Germany will arise in the case of all the various proposals including  those for euro bonds, blue bonds, red bonds, or  a redemption fund.

3)    An EU wide deposit guarantee, and bank resolution, regime. This would mean a pooling of the deposit guarantees of all existing states, but would also require some form of tax base as a back stop. This would reassure savers that their money was safe.  It would also require that there be a single rule book for banks, and the supervision of bank behaviour by a European authority. I hope this would also help in dealing with the “too big to fail” problem, and make it easier for bank customers to shop around for the best banking service anywhere in the EU.

4)   This centralisation of power would have to be accompanied by greater democracy. To achieve greater EU wide democracy, Der Spiegel says the four Presidents are contemplating proposing the direct election, by the people of the EU, of either the President of the Commission, or of a new President, who would preside over both the Commission and the European Council. This is a proposal I have long advocated myself, including when I was Taoiseach. I believe European currency will not be fully viable until European voters think, and vote, as Europeans as well as, as citizens of their own states.

While individual parts of this package could be brought into force without Treaty change, it is hard to see the whole package being adopted on that basis. There is also the possibility that Germany itself might have to amend its own constitution to accommodate some of the changes.

Britain would face some difficult choices. If the package includes some form of Eurobond, these would tend to be issued, and traded, from a financial centre in the euro zone itself (eg Frankfurt, Paris or even Dublin) rather than London.
If Britain opted out of the EU bank guarantee schemes, and opted to have different banking rules, it might have difficulties in playing a full part in the EU financial market. This could hit employment in London. Banks headquartered outside the euro zone, but with big operations in the zone, could be a special difficulty, particularly if they were so large, that they posed a potential  systemic risk to the euro zone banking system as a whole.

The package involves a series of interlocking pieces.  Each country will want other countries to make the first concession. Germany will want to hold back on any commitment on debt mutualisation until it is satisfied that the countries that would benefit from debt mutualisation are fully tied in to controls that will ensure debt repayment. But other countries will not want to give up powers until they  are sure they are getting significant security in return.
These ideas will lead to intense debate in Ireland, where there will be a tension between a  desire for financial security on the one hand, and for  fiscal sovereignty on the other.

There also are problems of timing. Markets do not always have the patience that would necessary to accommodate a multidimensional diplomatic negotiation between 27 countries, each with differing interests, electoral cycles, and constitutional obligations. 
Leaders will have to give their word, and keep it, if we are to get through this difficult time. Trust and trustworthiness will be vital.

Leaders will also have to prepare their electorates to think on a European scale, and , just as we had to do in Ireland  during the peace process , begin to see things, as the people on the other side of the negotiating table do . 
The challenge is political, even more than it is financial. 

WE NEED THE HELP OF OTHERS

I was asked to speak at the Eucharistic Congress last week in Dublin. This was a rare honour.
The Congress was last held in Dublin in 1932.  It is a gathering of Catholics from all over the world. Apart from the religious ceremonies, the Congress consisted of a series of workshops, at one of which I spoke.  Here is what I said.
According to the Holy Father, anyone who
“ in search of truth, trusts only his individual actions, and does not recognise the help of others, is deceiving himself”
 In this light, I would like to look at what the Eucharist means in the modern world, what it might tell us about how we should live our lives, in families, in local communities, and about how we should engage in politics.
 Secondly, I will argue that believing Christians have both a right, and an obligation, to bring their faith to bear in their engagement in politics and
Thirdly, I will ask what believing Christians can bring to politics that will serve the interests of everybody, believers and non believers alike.
IT ALL STARTS WITH THE EUCHARIST
For us, as Catholics, it all starts with the Eucharist that is the source of our belief and should be the motive for our engagement with others.
Catholic Christianity is Eucharistic Christianity. For the Catholic in the street, so to speak, it all starts with the Eucharist. That is the source of our belief, and should be the motivator of our engagement with others. The Second Vatican Council put it this way
“the Eucharist is the  SOURCE and SUMMIT of Christian  life. ……it casts light on how we are to live”
The very word “Communion” means a coming together of people.
The words said at the consecration in the Mass, “This is  my  body”, “This is my blood”,  and the invitation  to take and eat, to receive Christ into ourselves,  are found in St Paul’s First letter to the Corinthians in 1/ Chapter12.  That is where we might go to understand the meaning of Communion.
These words, used in the consecration every day, are immediately preceded,   in the letter of St Paul, by a reproof to the Corinthians about the way they had started to celebrate the Lord’s Supper in Corinth.
 The Lords Supper, in Corinth as elsewhere, was as a common meal, to be eaten together by all the faithful. But divisions had grown up among the Christians of Corinth.  Because of these divisions, some better off members of the community did not want to share their food with others. St Paul had learned that they went ahead and ate, without waiting  for all-especially for  the less well off- to arrive and take part.
St. Paul had no time for that.
Referring to the evidence of class distinctions among the faithful in Corinth in the way they celebrated the Lord’s Supper, St Paul said
“Or have you no respect for the church of God, and would you humiliate 
those who have nothing?…
Shall I commend you?  In this matter I do not commend you”
St Paul thus reproved the faithful of Corinth for this lack of community and mutual respect, their lack of communion, in the way they celebrated the Eucharist.
 Later in his letter to the Corinthians , just a paragraph or two after the words of the consecration, with which all Catholics-and all Eucharistic Christians- are so familiar,   St Paul called on the Corinthians to examine their consciences  .
He said
“But let a person look carefully at himself and in that spirit eat the bread and drink the cup”
 and later on he adds
 “If, however, we scrutinize ourselves, we should not be judged”.           
THE SECOND VATICAN COUNCIL
For Paul, the celebration of the Eucharist is a social act, not just an act of individualistic piety.  It is also an occasion for putting things right in the way we live our own lives, and the way we treat others. This thought has been developed by modern theologians.
 Monika Hellwig, a Professor of Theology in the Jesuit University at Georgetown  in Washington DC  has described the Eucharist as
  
“a celebration of divine hospitality in the  world”. 
 She saw the second Vatican Council as a turning point in the church’s understanding of the Eucharist. There was a shift from a pre Vatican II emphasis on what she described as
 “the cult of an unquestioned mystery, reinforced by the use of a sacred language ( namely Latin)”
 before a passive congregation,  to an additional emphasis on  a vigorous quest for deeper understanding, through the  active involvement of the congregation that we  take for granted at Mass today.
There is an echo here of what Pope Benedict has written about  evangelization , when he said that evangelization is not simply to preach a doctrine, but to proclaim it in ones words and actions.
 The Holy Father added that we must come together with others for this, and that   
 “spiritual individualism isolates the person”
Returning to the celebration of the Eucharist, the emphasis is, of course, centrally on the presence of Christ in the celebration, on the transubstantiation of the bread and wine on the altar into the body and blood of Christ, a belief that is central to our faith, and indeed  a conviction that is so radical, that, if we truly accept it, it MUST change our lives.

COMMUNION WITH OTHER PEOPLE…..AN APPROACH TO POLITICS
But, in addition to that, there is now Professor Hellwig says, a new emphasis on
“the outward looking  expectation  and explanation of our worship, and the  effect it is   supposed to have on our lives and actions”.
With the Second Vatican Council, there is a formalisation of something Christians had known from the beginning, but of which they had lost sight. The Eucharist, and Christianity,is all about the quality of our relationship with each other. Is it a relationship of trust and respect, or is it something else?
The absence of trust and respect in the relationship between Christian nations was forcibly  rediscovered in the horrible first half of the  twentieth century.  
To formulate this in terms of the Eucharistic Congress-Eucharist is Communion with Christ AND with one another,
As we can see from reading the  full text of his letter to the Corinthians, this emphasis  on the impact that participation in the Eucharist has, on the way we come together with other people,  was in forefront  the mind of St Paul when he reminded  the Corinthians of the words Jesus had used at the Last Supper, which are  repeated every day at the consecration of the Mass.
That is where the link can be made between the Eucharist and politics and political institutions.
Politics is one of the ways by which Catholics, Christians and people of faith generally, come together with other people.
Is the  relationship we forge with one another and with other people, through politics, one of justice and respect, or does it fall into some of the errors of disputatiousness and class division ,that St Paul found  among the  faithful living in the city of Corinth?
Likewise, do we feel free to bring some of the sense of justice and mutual respect,that we derive from sharing the Eucharist together, to bear in politics for the benefit of the wider community? 
These are some of the questions I will talk about in this address.
SHOULD POLITICS AND FAITH BE KEPT SEPARATE?
 First of all, it might be wise to address a word to those  who argue that  Christian  belief should be kept out of politics, that politics should operate in  a separate sphere from religious belief, which  should  neither  influence, nor be influenced by , political institutions
The European Convention on Human Rights, guarantees to every European the right, in its words, to
 “manifest his religion, with others in public or private , in teaching, practice , worship, and observance”.
 The Convention does not confine religion to the private sphere. It confers a right to practise religion, but also a right to manifest religious belief in public.
A ban on Christian religious processions in public places, like the ban that applied in Germany under Bismarck would be illegal under the Convention. 
I believe a “separationist “ view of keeping religion in the private sphere, and out of politics,  is artificial.  It misunderstands human nature. It also refuses to accept religious faith for what it is, something that informs every aspect of ones life.
First, Voters do not divide their minds up into compartments, one  marked “religious”,  another  marked “political,” another  ”personal, and  yet another marked” family” and so forth. Faith is not just one compartment of life.
What goes on in one part of their mind influences what goes on in the other.
Second, everyone agrees that ethical beliefs can, and should, influence the actions of political institutions.   But, for many people it is impossible for them  to separate their  ethical beliefs from the religious source from which they spring. 
Chief Rabbi Jonathan Sachs said that, in modern society, we need to be bilingual, we need to be able to speak the language of faith in our religious community, and the language of the common good in the wider world. And learning another language usually enriches our use of the one we already speak!
Third, Humans are social beings. They do not live atomised lives. They live in overlapping communities of families, of neighbourhoods, of workplaces, political parties, nations, sports clubs, and for many….in the community of a church.
All of these communities, including churches, help form a society’s ethos. Religious education has shaped the ethos of Irish society in so many positive ways. Ones heritage of religious belief shapes ones ethos, even in ways one does not acknowledge.  A shared ethos is part of the social capital of any state.
SHARED ETHOS…A BASIS FOR TRUST IN SOCIETY
Without a shared ethos, it is difficult for a society to function, or to be governed.
Common sense tells us that laws are obeyed not only out of fear of  retribution, but also out of respect for the shared  ethos, the   ethos  that forms a basis  for trust in society , and which  makes   government, governance, and states possible.
A shared ethos is also important to the working of the economy
As the Pope puts it in the Encyclical, Caritas in Veritate
“Without internal forms of solidarity and mutual trust, the market cannot completely fulfil its proper economic function. And today it is this trust that has ceased to exist, and the loss of trust is a great loss”
This is a very important insight. All markets depend on trust. Without trust, we would find ourselves spending so much on lawyers to check one another out, that trading with one another would become incredibly expensive.
But where does trust come from?
It comes from a shared ethos or belief system in a society, on the basis of which one can anticipate how people one has never met will behave. And where, for many people, does that shared ethos come from?

To a significant degree, it comes from their shared religious beliefs, from their religious heritage, from their religious education.
It is simple. Markets need ethics, and, for many people, ethics derive from religious belief.
There are, of course, clear distinctions of function between the roles the state performs, and the role churches perform. These must be respected even though the boundaries will shift slightly from time to time .
A SENSE OF PROPORTION IN POLITICS
That said, what is the “added value”, to use a piece of business jargon, that  Christian believers can bring to politics.
Here is how the participation of people of faith can enhance the quality of political discourse
Faith in eternal life, helps one to be humble in all things, including in ones contribution to politics, to accept that we do not know it all.
Because our faith tells us that there is a God, and are not alone in the universe, we should not be arrogant.  Just as our religious life should be a ceaseless search to come closer to a truth we will never fully know, so should our political life be.
We should not act as if this generation, with all its technologies, has all the answers. Faith  tells us that, no matter how hard we try,  we are not going to create a heaven on earth, and that totalitarian or materialist philosophies that pretend to do so, are just plain wrong.
But Faith also tells us that there is such a thing as fundamental truth, for which we must seek,  by the use of our reason, informed by the teachings of Jesus Christ passed  down to us through our  church.
 Christianity does not offer a specific political programme.
“My Kingdom is not of this world” Christ said.
FUNDAMENTAL TRUTHS,  AND FUNDAMENTAL RIGHTS
 But if we believe there are certain fundamental truths, then, in approaching political questions, we cannot claim that what is right or wrong, what is true or untrue, is to be determined solely by  the political consensus in a society at a particular time.
Opinion polls are not the determinant of truth, nor, for that matter, is the “latest scientific research”. Opinion polls are just opinion polls, and research is essentially what it says it is, research.
Both can and will be superseded by other polls and other research. Meanwhile fundamental truths remain true.
Truth and right are not contingent. Majorities can be wrong, and often are.
As the then Cardinal Ratzinger put it in   a chapter of his collected writings  entitled “The Problem of the  Threats to Human Life”
“In a world in which moral convictions lack a common reference to the truth, such convictions have the value of mere opinion”
In that, Christianity is in agreement with the approach of framers of the Universal Declaration of Human rights, who also held that there were certain fundamentals, that were antecedent to the opinion of the majority at any given time.
These fundamentals are formulated as enduring human rights.
CONSCIENCE
In approaching political questions, a Christian must be influenced by his or her conscience, as St Paul recommended we should be when participating in the Eucharist.
Our reason is a gift from God, and we must use it to examine our own lives, our faith and our failings, to examine our conscience, to use a very old fashioned phrase
Maybe a more frequent, formal, public, and private, examination of conscience by individuals and organisations would reduce the need for so many regulations and regulators.
As St Paul said to the Corinthians “if we scrutinize ourselves, we should not be judged”. I have, in some of the work I have been doing in business, come across some excellent work on how best to promote ethical behaviour in large business organisations. In a real sense, it is it is a systematic application of what St Paul recommended so long ago.
Our faith, and our conscience, also tells us we should respect God’s creation. We should leave the earth in a better condition than we found it.  That should influence our politics .
Our faith tells us that God created each one of us as individuals, that we are not mere accidents of genetics, and that He cares for each of us, as individuals. Our life comes from Him, and it is not ours to manipulate, or to take away. That is not a belief we can simply leave aside when approaching politics. Just as basic human rights are not contingent on the vagaries of opinion, nor are questions about the value of a human life.
EVERY PERSON COUNTS
I think the whole concept of Human Rights really has a Christian root.  Every person counts. If one believes God created each one of us as individuals, that makes it easy to understand  why  we should  respecting the human rights of all other people, who , as  Christians, we believe were also individually created by God.  That is why every person counts.
A belief that we are each a creation of God  for  makes it  reasonable  to respect the  right to Life from conception to natural death,  and, equally importantly, to  help  eliminate easily curable diseases, like malaria, that cause  children to die prematurely.   Just because a human being has not yet been born, or lives out of our sight on another continent, does not mean that they have no call on us to vindicate their human rights. It is not a question of taking a moralistic position,  but rather a question of what we do, and how we live our lives
Our faith tells us that there a life after our death, we do not simply pass away into nothingness. We have to give an account of ourselves.
Pope Benedict said “Deeds without knowledge are blind, and knowledge without love is sterile”.
Science, and material progress, are only means to an end, no more. They are not why we are here on earth.
The GDP does not measure the success of a society.
The pursuit of knowledge is an expression of the creative gift God has given each one of us.  But it is not an end in itself. We are not on earth, simply that we may know more. That is why it is right that scientific experimentation be limited by ethical considerations.
ANSWERS TO THE MOST DIFFICULT QUESTIONS
Our faith helps us answer the really difficult questions, questions which, if left unanswered can, when we face some unexpected setback in our lives,  lead to depression, nihilism  and sometimes, as I say,  even  to despair.  
Faith answers questions like
“Why are we here? 
“What is the meaning of my life?”
Inability to answer those questions, leaves people with a great emptiness at the heart of their lives.
An ability among citizens to satisfactorily answer such profound questions of existence for themselves has a social value, even in purely secular terms,  if  it helps people  to cope with crises in their lives.
CATHOLICISM AND NATIONALISM
Our faith, as Catholics, helps us in our relations with people of other nations.
The very word “Catholic” reminds us that our obligations are universal, to all humanity, not just to our own family or our own nation. That is what the word means. In literal terms, it is hard to reconcile Catholicism and Nationalism. They are opposites.
Pope Pius the eleventh reminded the world in 1922, even patriotism, must be “kept within the laws of Christ”. 
And the laws of Christ forbid murder and theft, even when committed for supposedly patriotic motives.
FORGIVENESS
We must never think we know it all. Our faith also tells us that God sent His only Son to live, and die, on earth, so that our sins would be forgiven, and that we might live.
Our faith tells us that we should follow the example of Christ, and forgive others who have wronged us. Forgiveness is not something that comes naturally. In fact it almost goes against nature. But we do it, because we believe that Christ died, so that we in our turn may be forgiven, and because He told us to forgive. 
We must deplore the sin, but we should not shun the sinner.
Vengeance does not cure the injury to victims. Sometimes it makes it worse. 
Retribution is not Christ’s way.  No, that hard and unnatural thing, forgiveness, is Christ’s way.
It would help Modern Ireland, with its record prison population, and it’s culture in relentless search for someone  to blame , it would help it a great deal, if it could  remind itself, of  the true meaning of Christ’s life, and  of the  meaning of His death, namely
forgiveness,  
letting go,    
and rising again.
Penalties are necessary to ensure that laws are respected, and may involve terms of imprisonment, but these penalties should be calculated by reference to the need for deterrence and restitution, not as a form vengeance or catharsis for victims.
And once a penalty is paid, offenders should be forgiven. 
I will back up this point by quoting from a recent article by Michael Gerson in the Washington Post on the  death of former Watergate convict, Chuck Colson, who went on, after imprisonment for the obstruction of justice,  to devote his life  to Christianity and to the improvement of prison  conditions
“Prison often figures large in conversion stories. Pride is the enemy of grace, and prison the enemy of pride. “How else but through a broken heart may Lord Christ enter in?” wrote Oscar Wilde after leaving Reading gaol.
It is the central paradox of Christianity that fulfilment starts in emptiness, that streams emerge in the desert, that freedom can be found in a prison cell”
Gerson concluded
GLOBALISATION AND INEQUALITY
These are some of the insights that Christianity can bring to political life.
Christian belief is, I contend, as important to the living of a good life now, in the twenty first century in Ireland, as it ever were at any time in our country’s long history.
It is also important to understanding how best to live in a globalised world.
In his Encyclical  “Caritas in Veritate”,  speaking of the world economy, His Holiness said
“The principal new feature has been the explosion of worldwide interdependence, commonly known as globalisation”
He went on to say that, without the guidance of charity in truth, globalisation could cause unprecedented damage and cause new divisions in the human  family. He is right.
Thanks in part to globalisation, modern western society is afflicted by growing inequality in incomes, reversing a period of relative equalisation following the  Second World War.
 Money and talent can now move freely than ever before across frontiers, and this reduces the possibility of individual states using progressive taxation to mitigate inequalities of income between people.  
Remuneration policies within companies are also driven by the fear that “talent” will be stolen by competitors. This can lead to big differences between what people at the top of a company can earn, and what is earned by others, who are less well known and less likely to be  headhunted by competitors.
To change this, will require a change in the ethic by which capitalism operates.
That is something than can be influenced for good by religiously inspired ethical principles, whether these principles are applied in Government, in company boardrooms, or among the investment community, or by individuals in their daily lives, as shoppers, voters, or as contributors to public debate.
No, Christians, and Catholics in particular, should not be afraid to bring their beliefs into the public square.
TRUST AND RESPECT
Drawing on their faith, they can help society to work out, and maintain, a strong ethos of mutual trust and respect,
trust and respect within religious communities,
between religious communities,
between people of faith and non believers,
trust and respect in business and economic relations, and
trust and respect  between nations.
That is what we have to offer the twenty first century, and we should not be behind the door in putting it forward, with pride.

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Remarks by John Bruton, former Taoiseach (Prime Minister) of Ireland (1994/7) ,at 7pm on Thursday 14th June,  at a meeting in The Eucharistic Congress, held in the RDS Dublin.
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THE EURO CRISIS – WHERE WILL IT VISIT NEXT?

The bailout of Spain’s banks over the past weekend was necessary, but it may not be sufficient.
Spanish banks are carrying a lot of bad debt from the construction bubble there. The banks have not properly acknowledged this debt in their books, and this has sapped investor confidence in them.
House prices in Spain have not adjusted downwards as much as they have in Ireland, and Spanish competitiveness has not improved as much as Irelands’ has. Unit labour costs remain high, although Spanish exports have been fairly buoyant.
The new Spanish Government has introduced sweeping labour market reforms that will improve Spanish growth potential in the next few years, but that is not immediate enough to kick start the Spanish economy today. The true financial position of many Spanish regional governments is obscure, and that saps confidence too.
Greece, despite all the austerity, still has a big balance of payments deficit. In other words, Greeks are buying more abroad than they are selling there. Until that is tackled, nobody will want to lend to Greece. It seems Greek banks are using cheap ECB money to lend to some Greek consumers who are spending it abroad.
Meanwhile, other Greeks have experienced big wage cuts, but, because the distribution system in Greece is riddled with monopolies and restrictive practices, Greek prices have not come down along with wages. This is why many Greeks are angry.
It is not so much that Greece has had too much austerity, it is that it has had the austerity in the wrong places. So far, that problem has only been tackled on paper, because the Greek system of public administration is weak.
Portuguese banks have a big exposure to a possible Greek collapse. Total Portuguese exposure to Greek debt comes to 7% of Portuguese GDP, as against a comparable exposure of 5% for France, 4% for Germany, and 2% for Ireland.  Relative unit labour costs in Portugal have hardly come down at all since 2007, whereas they have come down substantially in Ireland and Greece. All this makes Portugal particularly vulnerable to a loss of confidence that might come, if Greece defaults again.
The recent decline in voter confidence in the government of Mario Monti  in Italy is also a big worry. His reform programme is only beginning to take effect, and the fear has to be of a return to populist politics, of a kind that would stop  long overdue action Monti is taking  to clear the arteries of the Italian economy, and lift its growth potential .
Two issues, growth potential and   political capacity to implement decisions, are at the centre of our present dilemma.
The OECD has done some calculations on the growth potential of various countries from 2016 to 2025, making assumptions based on growth or decline in the working age population and likely productivity growth. These estimates show huge differences between euro area countries. OECD thinks Ireland has a growth potential in that period of 2.7% per year, whereas Germany only has a  growth potential of  1.2%!  This is explained by the likely decline in Germany’s working age population.
Interestingly, Spain has a growth potential of 2.3%, whereas Greece and the Netherlands are deemed to have a potential of just 1.4%, and Italy 1.5%, almost as low as Germany. These figures, if valid, may explain why Germany is emphasising productivity and is unwilling to underwrite the debts of other countries, unless and until it is first fully convinced that those countries will achieve or, better still, improve their growth potential.
These figures also imply that some of the countries receiving help today, might be  the ones having to help others in  15 years time! They should also be taken into account by  the outsiders who are offering so much  self interested free advice to Germany
The other part of the problem is capacity to make and implement decisions at EU level. A currency depends on confidence, and confidence comes from knowing that  quick action can be taken in a crisis.
Although the European Union has done a lot, in the past three years ,to remedy the original design flaws in the euro, it still has a very long way to go, and the markets may not wait another three years.
For example, a banking union in the euro zone would need strong capacity to close down banks in individual countries, to require agreed bail ins by bondholders, as well as the provision of funds to guarantee depositors. The difficulty is that the decision making system of the European Union is not designed to make, and implement, complex and controversial decisions like this, quickly.
The EU system is designed for deliberative and consensual legislation, not speedy crisis management.
To make decisions, the EU has to bring along countries that are in the euro, countries that are not yet in the euro, and also countries that never want to be in the euro at all but want to share in all the benefits of the single market.
If an unforeseen problem comes up, the EU has to amend its treaties, and that requires ratification in 27 countries (and a referendum in at least one of them!). 
The EU has to cope with a decision making process that emphasises the national, over the collective European, interest.
Not only is the Council of Ministers structured to favour the pursuit of national interest,  even the European Parliament still allocates its own big jobs on the basis of national quotas, something it would be quick to condemn if it happened anywhere else in Europe!
Increasingly, because no European leader, like the President of the Commission, has  a direct mandate from the  European people, the really important decisions are being made by the 27 heads of Government, who each  do have such democratic mandates in their own countries.
But each of these women and men are “part time Europeans”, so to speak. Their day job is running their own countries (and getting re elected if they can). They meet less frequently together than national cabinets do, and when they do meet, there are 27 of them in the room.  That makes it difficult to get into the depths of any question, or to look beyond the immediate problem.
I believe the crisis is of a seriousness that  it requires us to step outside the  conventional ways of thinking, and  tackle the economic and political problems of Europe together in one package. If necessary, leaders should continue meeting until they have worked out a global blueprint, covering the present banking crisis, the Greek issue, structural reforms to lift growth potential, and enhancing democratic decision implementation.  Sometimes, the more issues are in the mix, the easier it becomes to find balancing compromises.
We do not have much time, and we need to remember that we could lose, in five months, something it took over 50 years to create.

PADRAIG FAULKNER RIP

“I wish to pay tribute to the memory of Padraig Faulkner, who died last week.
We represented neighbouring counties, but different political parties, and we had many friends in common.
Padraig Faulkner always impressed me as a man of sincere principle.
As he describes well in his excellent autobiography, he came from a politically divided family, his mother being a republican, and his father being a constitutional nationalist.
I believe this made him especially attentive to points of view other than his own.
He was a progressive and tolerant Minister for Education, who understood the value of technology, and also that  of ethos and tradition.”

ROBERT PEEL……A POLITICIAN UNAFRAID TO CHANGE HIS MIND

He was elected to Parliament at the age of 21, for a constituency in which only 24 people had  a vote. The constituency was Cashel, in Co Tipperary, and the year was 1809.
He went on to become Prime Minister of the United Kingdom, to form the first professional police  force in the world to reintroduce income  tax at seven pence in the pound, and to split his own party and  end his own career by enacting a law to reduce the  duty on corn imports.
These are the highlights of the career of Sir Robert Peel, who is the subject of an excellent biography  by Douglas Hurd, which I enjoyed reading in the past month.
As a former Conservative politician himself, Douglas Hurd a natural sympathy with Peel. He also is able to draw apt comparisons of events in Peel’s career, with things that happen in modern politics.
Peel at first opposed Catholic Emancipation (which allowed Catholics to sit in the House of Commons), but eventually came around to supporting it.
He also at first opposed Parliamentary Reform. Reform was necessary because, when Peel first came into Parliament in 1809, big cities like Birmingham and Manchester had no MPs at all, while Old Sarum, a place with no electors, had an MP to represent it.
When he established the Metropolitan police, he decided that there would be no “officer corps”, with separate entry requirements, like there was, and is, in the army and the Navy.
In this respect, his decision endures to this day in both Ireland and Britain, where promotion to top ranks in the police is open to all entry level recruits, in ways that it is not in the military in either country.
The repeal of the Corn Laws in 1846 was the big event of Peel’s career. His party represented farming interests and most of his supporters wanted to keep a high duty on foreign corn so as to keep the price high for their own produce. Peel felt that this led to unacceptably high food prices in the towns, and in Ireland, where the potato blight was beginning to take its toll.
Peel could only get his bill to repeal the Corn Laws through Parliament with the help of Opposition MPs and the votes of a minority of his own party MPs.   The majority of his own party turned against him. While the Bill to repeal the protectionist Corn Laws was passed, its passage ended Robert Peel’s political career.
Douglas Hurd portrays Peel as an unemotional and aloof politician, who made his decisions on the basis of careful and open minded study of facts and figures, rather than on political instinct.
The author, Douglas Hurd was Secretary of State for Northern Ireland, Foreign Secretary, and Home Secretary. He contested his party’s leadership in 1990, but lost to John Major.  His parliamentary seat, Witney, is now represented by David Cameron.
His book on Robert Peel is published by Phoenix.

COPYRIGHT JOHN BRUTON & CONTENT