Stresses in the EU

In his Telegraph blog Bruno Waterfield reports on a press conference given by Hans-Gert Pöttering, President of the European Parliament.

Asked why the Parliament did not clean up its act, the institution’s President claimed that in the EU one man’s expense scam could be another man’s legitimate claim on allowances. It’s a cultural thing, don't you know?

Mr Pöttering explained that MEPs come from various cultures.

“If I was to employ someone from my own family, and this person was one of my sons and he got money from me. I could say goodbye to politics. I would lose my job. Obviously it is different in the UK. This is a crude example of how different our cultures are.”

But, says Waterfield, he didn't explain why the rules that have been agreed, "notwithstanding the EU’s 27 different cultures", are not properly applied. Stern claims that between 2004 and 2005 receipts for expenditure on MEP allowances worth over £58 million are missing.

He also failed to properly tell us why the Parliament has refused, despite rulings from its own Ombudsman, to give details of allowance payments.

Mr Pöttering’s own evasiveness and secrecy is indeed the product of a unique culture: the euro-culture of “not in front of the children” that tends to universally prevail in the EU institutions.

Stricter rules generally apply in the north of the EU than in the south. If MEPs' expenses were set out in detail, northern voters might start asking why they should tolerate the lax standards of the southern members. That would never do.

Out in the currency markets, some money is moving from the US dollar into the euro as a safer haven. This is naturally leading economists to point out that the euro is not risk free. They particularly highlight the growing gulf between the economic performance of the northern and southern eurozone countries.

Publication of southern MEPs' expenses might add a little political strain to the growing economic strains. That would never do either.

P.S. Open Europe relays a Finnish daily Vasabladet report that Finns are becoming increasingly sceptical about their country's EU membership. "A new poll shows that 35% are against membership altogether - the highest figure ever - versus 36% in favour. 66% think the membership costs too much and 79% that the EU imposes too many rules on Finland".

Euro worsens Spanish economy's problems

The Telegraph reports what it calls "the first high-profile victim of the credit crunch in Spain".

Strikingly, the Governor of the Bank of Spain, no less, is reported saying that euro membership is the root of the trouble, causing the economy to overheat badly and pushing house prices 35% above their sustainable value.

Interest rates halved almost overnight when Spain joined the euro. Almost 800,000 homes were built in Spain last year, leaving a glut of 300,000 properties in the market. The Governor says -

The single monetary policy has meant that excessively loose conditions for our economy have been almost continuous. A less relaxed tone would have been better for our needs.

These are huge numbers, and numbers which the Spanish government is powerless to influence. All the government can do is to watch the slow motion crash caused by interest rates being too low over a period. It's not even clear that they will be able to do much about picking up the pieces.

Recent comment suggested a possible split in the eurozone between the "Latin" and "German" blocs - that is south v. north. France and Italy, for instance, want to devalue the euro against the US dollar - so they want the ECB to cut interest rates.

In the short term lower interest rates would mitigate Spain's immediate problems - but the ultimate crunch might then be worse.

This is not the stuff of flashy daily headlines - indeed, the Telegraph's coverage is on an inside page of their Business section. After all, it involves numbers, and economic numbers at that.

But look behind the politics to the eurozone's economies. Underneath, the tectonic plates are starting to move.

Best get the constitution in place before the economic earthquake causes popular discontent with the euro - and by extension the EU in general.