Merkel and Cameron Deadlocked Over EU Budget; Common Agricultural Idiocy

Merkel and Cameron Deadlocked

British Prime Minister David Cameron is locked in a battle with German chancellor Angela Merkel over whether to increase the size of the EU budget.

Cameron is the only holdout (yet he deserves no credit for his position). Rather, the British Parliament Voted to Reject EU Budget, Cornering Cameron. Otherwise he was prepared to have the EU budget go up at the rate of inflation.

The 17 net recipient nations are all in favor of more money of course. And as I have pointed out numerous times, Merkel would sell her soul to keep the EU intact.

Bear in mind, the EU budget could be and should be cut at least 50% (assuming there should be an EU budget at all which is certainly debatable).

Common Agricultural Idiocy

Nearly half the EU budget is crop subsidies, price support mechanism, and guaranteed minimum prices on agricultural good. The aim of the Common Agricultural Policy (CAP) is to provide farmers with a reasonable standard of living, consumers with quality food at fair prices and to preserve rural heritage.

CAP is idiocy. Farmers deserve no more taxpayer subsidies than bricklayers or computer programmers. Simply put, everyone deserves the exact same fair shake regardless of what they do. The way to accomplish that is not give any select groups subsidies.

Wimpiest of Wimps

Cameron is the wimpiest political leader in the G7. He refuses to hold a referendum on whether the UK should stay in the EU when the majority of UK citizens would leave, and a majority of his own party are begging for a referendum.

Showdown Time

Now it's showdown time as Merkel warns Britain against European Union exit.

Germany's Angela Merkel on Wednesday warned Britain not to turn its back on Europe and urged its Prime Minister David Cameron to work with her to avoid deadlock at European Union budget talks later this month.

 The leaders met in London to try to iron out differences over the EU's €1 trillion (£800.5bn) budget that threaten to block a deal and fuel fears that London is drifting away from the 27-nation union.

Describing plans to increase the EU budget as "ludicrous", Cameron has threatened to veto any deal he thinks is not in Britain's interests and will push for a real-terms freeze.

However, German officials are exasperated by what they see as London's slide towards Europe's margins, a feeling reinforced last week after the British parliament voted to call for a real-terms cut in the EU's budget.

Before meeting Cameron, the German Chancellor told the European Parliament she could not imagine a Europe without Britain, the world's sixth largest economy, which relies on the EU for half its trade.

Cameron was humiliated by last week's defeat in parliament and opponents say he has lost control of Conservative Party anti-Europeans, a group that helped topple former leaders and that wants a referendum on Britain's EU membership.

Debate over a referendum on Britain reworking its EU role or even leaving has climbed the agenda. A YouGov survey in October found 49pc of those polled wanted to leave the EU, against 28pc who wanted to stay in it.

Talking tough on Europe can play well with "eurosceptic" British voters and Conservative politicians, but Cameron risks angering EU neighbours and his pro-European coalition partners, the Lib Dems.

Cameron's threat to block a deal could delay a funding increase for the poorest east European member states and isolate Britain from disgruntled EU nations. He has already angered some by talking of using closer eurozone integration as a chance to repatriate some powers from Brussels.

In the past, many of Cameron's threats have been hollow. This one likely is genuine, but only because British parliament forced his hand.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com