Parallel Universe; Pin the Tail on the Scapegoat; Losing by Winning

A curious thing happened in the complete collapse of the EU budget negotiations. Actually several curious things happened.

1. UK Prime minister David Cameron was not the scapegoat.
2. Supposedly multi-national bickering was a good thing (when heading into the summit it wasn't)
3. German Chancellor Angela Merkel offered ridiculous platitudes as to what the breakdown means

Pin the Tail on the Scapegoat

Please consider Blame flies over budget ‘bazaar’.

It took Europe’s leaders two days to discover they could not agree on a €1tn budget but less than half an hour before the blame game started over who was responsible for the latest grinding episode of euro-stasis.

David Cameron accused José Manuel Barroso, European Commission president, for “insulting the European taxpayer” by failing to offer a single euro of cuts to the proposed €63bn budget for running the EU bureaucracy.

Some diplomats blamed Angela Merkel, German chancellor, and François Hollande, French president, for failing to patch up their strained relations to provide a lead in seeking a solution. Others said Herman Van Rompuy, the EU president and chief negotiator, showed a lack of urgency and imagination in the way he conducted the talks.

But perhaps the most surprising element in the post-mortem was how little blame was attached to David Cameron, Britain’s prime minister, whose promise to defend his country’s rebate and call for steep cuts had caused alarm in Brussels.

Europe’s leaders seemed determined to present Mr Cameron as a constructive partner in the negotiations – rather than the isolated, veto-wielding eurosceptic portrayed by many European newspapers this week.

After his isolation at a summit in Brussels last year over a new fiscal pact, Mr Cameron wants to get back into the fold as he tries to win friends for future fights on issues such as a proposed banking union and a possible renegotiation of Britain’s EU relationship. But his decision to hold out for a better budget deal will be welcomed by Tory MPs at Westminster, as will his hard-hitting attack on Mr Barroso, whom he accused of living in “a parallel universe” in refusing to countenance cuts to the EU civil service.

Merkel's Platitudes

The Financial Times discusses Merkel the Conciliator.

Ms Merkel came to the summit in Brussels insisting that it would not be “the end of the world” if there were no agreement. She left on the same note, perfectly relaxed, insisting that everyone had made substantial progress. They had got a good basis for a final agreement early next year, and no one had been isolated, she said.

There was a sense of palpable relief in the German delegation that David Cameron, UK prime minister, had not been tempted to wield his veto.

“It is not a question of a single country,” she said after the meeting was halted. “We agreed that only if we decide unanimously can we agree on a reliable financial basis.”

The worst possible outcome, she declared, would have been to struggle to reach a deal on the seven-year financial framework, and to fail.

The alternative – of running the EU on annual budgets based on the existing allocation of spending – “would very much weaken the growth prospects in Europe”. It would particularly hurt the prospects of the new member states in central and eastern Europe, who under the seven-year plan will get a greater share of spending.

What a Crock

Merkel is allegedly breathing a sigh of relief because more than one country objected to Barroso's budget?

Supposedly we are to believe that 24 agreements out of 28 possible is better than 27 agreements out of 28. Please be serious.

I am also laughing at Merkel's platitudes "The worst possible outcome, she declared, would have been to struggle to reach a deal on the seven-year financial framework, and to fail."

Apparently it is better to throw in the towel and quit rather than try, because that is exactly what she said.

Losing by Winning

Cameron raised the EU's bluff and Merkel promptly folded.

The problem is the UK would be far better off by having a straight up or down vote on the EU by British citizens (which I am sure would be rejected), and sadly that outcome was avoided.

Instead, Cameron has decided to wimp along instead of doing what needs to be done: having a national referendum on UK membership in the EU.

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