Richard North, 29/08/2012  

Draghi 923-yut.jpg

In exploring today's statement in Die Zeit, we must remind ourselves that Mario Draghi is a member of the quartet of EU presidents charged with formulating a new EU treaty. And, according to Manfred Neumann, "He thinks only politically … He is always there when in Brussels rescue plans are being discussed, making suggestions and influencing proceedings".

Further, the ECB, of which Draghi is president, is an EU institution required under Article 13 of the consolidated treaty (p. 23) "… to promote its (the Union's) values, advance its objectives, serve its interests, those of its citizens and those of the Member States, and ensure the consistency, effectiveness and continuity of its policies and actions".

For Draghi then to assert, as he does in his statement, that: "The ECB is not a political institution. But it is committed to its responsibilities as an institution of the European Union", is not quite to capture the essence of the bank's role, or that of its president.

When he goes on to claim that the bank "will remain independent" and that "it will always act within the limits of its mandate", we can recognise a consummate practitioner in the arts of mendacity.

What is really interesting though is why Draghi feels impelled to utter such obvious lies. Does he believe them himself? And does he think we will believe them? If not, what does he think will be our response?

Another point of interest is the disparity in the perception of the piece as between ourselves and others. In common with other commentators , for instance, Reuters focuses on Draghi's argument that the ECB must employ "exceptional measures" at times to fulfil its mandate.

In our view, the key part of the piece comes earlier, when he notes that solutions to the euro crisis are deemed unsatisfactory because they offer binary choices: "either we must go back to the past, or we must move to a United States of Europe".

Draghi's response to this is that, "to have a stable euro we do not need to choose between extremes". Agreeing that we cannot go back to the status quo ante, he then sets out a series of adjustments to the architecture of the single currency which fall way short of a new, overarching EU treaty.

What this does is catapult Draghi into direct conflict not just with the Bundesbank but with Angela Merkel herself. It is she who occupies one of the "extremes", calling for precisely the United States of Europe that Draghi dismisses as unnecessary, something she has been consistent in favouring.

Then of historical interest is the admission that, even though sharing a currency would imply a high degree of joint decision-making, needing "strong common democratic underpinnings", a "deliberate choice was made in the 1990s not to give the euro such features". Thus, we get an acknowledgement that the euro was born to fail.

But this is not entirely unrelated to Merkel's call for political union. She is of the view that fiscal and political union are insperable, a nostrum that is shared by Jörg Asmussen, Germany's representative of the ECB board – where no further integration can be secured without the "democratic legitimacy" of a treaty completing the political union of eurozone members.

This, then, is the singular, most important point to emerge from Draghi. There is a major fault line between him and the most powerful of the member states – Germany. And if Draghi, as a member of the quartet, represents the view of the EU commission (and van Rompuy), we are in for some interesting times.


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