Triumph of One and the Price of Arrogance; Merkozy Treaty to Fail on Legal Grounds; UK Should Thank Sarkozy

By: Mike Shedlock | Sat, Jan 28, 2012
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The arrogance of French president (soon to be ex-president) Nicolas Sarkozy is about to bite the Eurocrat nanny-zone officials big time.

In December, Sarkozy insisted on a financial transaction tax and other concessions that the UK alone would not sign. In what was billed as a triumph of 26 of 27 is soon going to be viewed as a triumph of one over 26.

The Merkozy treaty that 26 nations signed can never legally fly.


Triumph of One

Der Spiegel reports Critics Question Merkel's Fiscal Pact Proposal

The final decision is planned for the next European Union summit on Monday. There leaders from 26 of the 27 member states plan to finalize the new fiscal pact, the agreement pushed hard by Chancellor Angela Merkel requiring signatories to adhere to strict fiscal policy guidelines.

But the high expectations awakened by Merkel are unlikely to be fulfilled. Several elements in the agreement are of questionable legality. It can't be written as an EU treaty because Great Britain won't sign it, which means it will only be an "inter-governmental agreement" between the 17 euro-zone countries and a handful of other countries participating voluntarily.

It's turning out to be a big handicap. On the one hand, the European Commission's hands are tied, because it can only act on behalf of all 27 EU members. Despite Merkel's wish, the Commission cannot legally take those that violate budgetary rules to the European Court of Justice. According to the fiscal pact proposal, national governments can only do this among themselves. But no country has ever taken legal action against another in EU history. Such a case would be seen as a gross violation of diplomatic etiquette.

Court Authority in Question

Even if it comes to that, the authority of the European Court of Justice's (ECJ) remains in question. The treaty proposal states that the Luxembourg judges can impose fines of up to 0.1 percent of a country's GDP if they don't properly anchor the debt brake in their national law.

But these sanctions aren't actually provided for by EU law. In fact, they deviate from Article 126 of the Lisbon Treaty. And, according to Matthias Ruffert, a European law expert at the University of Jena, it is likely that all 27 EU members will have to ratify the fiscal pact for any ECJ sanctions to be binding.

Other lawyers argue that the sanctions would not be as binding as other ECJ verdicts. Because the fiscal pact terms involve only an intergovernmental agreement, they aren't EU law, which means they don't automatically come before national law, says European law expert Ronan McCrea, from University College London. Thus, in the case of an emergency, it would be easier for a national government to disregard such a verdict.

Another issue that EU leaders must resolve on Monday is who will be allowed to attend future EU summits. The fiscal pact proposal states that the President of the European Parliament can be invited. But this doesn't go far enough for representatives of the people, who think he or she should be automatically present, in addition to presidents of the European Commission, the European Council and the European Central Bank.

For most observers of the EU summit, the fiscal pact is only interesting as a side issue. In fact, many see it as nothing more than one of Merkel's pet ideas, and Luxembourg Prime Minister Jean Asselborn even went so far as to tell SPIEGEL ONLINE in a recent interview that it was a "waste of time and energy."


UK Should Thank Sarkozy

British Prime Minister David Cameron would actually have signed that fool treaty has it not been for the crap Sarkozy tried to force down Cameron's throat. It would have been a big mistake.

Thus, British citizens should thank Sarkozy, because it was Sarkozy's arrogance that doomed the treaty. A humorous irony is that six days ago Sarkozy Dumps Financial Transaction Tax After Pressure From Banks.


Kiss Sarkozy Goodbye

Because of numerous gaffs, Sarkozy will not be reelected. Indeed, he may not even survive the first round of voting. On January 19, I reported Le Pen Inches Closer to Bumping Off Sarkozy in First Round of French Elections; Interesting Crossover Vote Opportunity for Hollande Supporters to Dump Sarkozy.

On January 21, The Guardian reported Marine Le Pen and France's Front National sense their time has come

The conjunction of the eurozone crisis, the loss of France's triple-A credit rating, and rampant unemployment, currently at a 12-year high, has given unexpected credibility to Le Pen's anti-Europe, anti-immigration stance. The economic storm has created what political pundits and pollsters believe may be a now-or-never moment for the Front National after 40 years spent largely in the political backwaters.

Poll after poll places Le Pen third with 21.5%, hovering just behind Sarkozy at 23.5%, and with the Socialist party's François Hollande well in the lead for the first round of the presidential vote in April. If the opinion polls are accurate, it is perfectly feasible, allowing for the accepted margin of error, for Le Pen to reach the second-round run-off a fortnight later. Some surveys show support for the FN candidate to be considerably higher, topping 30%.

The days when the FN, then run by Le Pen's father, Jean-Marie, now 83, could be dismissed as the loony fringe of French politics have long gone. Some of its policies have been anxiously emulated by Sarkozy's government as it shifts to the right, giving them a mainstream respectability.


UK Wins Regardless

The UK wins if Le Pen wins because if she wins the Eurozone breaks up. That would be a good thing in my opinion. However, Le Pen is not going to win.

Hard-line socialist François Hollande is going to win regardless of who the final two candidates are in the election. Sarkozy has made too many mistakes and the socialists will never vote for Le Pen.

Socialist Hollande is likey worse than centrist Sarkozy. The saving grace however, is Hollande has promised to rework the Merkozy treaty which would doom the whole thing, signed by 26 or not.

Thus, the whole mess will soon come flying apart unless Cameron snatches defeat from the jaws of a "Triumph of One" victory by signing a revised treaty before the French presidential elections.

In the meantime. expect more Bickering Over Who's at the "Three-Speed" European Table.

 


 

Mike Shedlock

Author: Mike Shedlock

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Mike Shedlock

Michael "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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