Cameron speech – going down like cold moussaka
President Barosso has just told the UN in New York: “I bring you a message of confidence.” Well that’s all ok then.
Talking to various sources here and on the continent you get a powerful sense of Greece on the precipice. If there’s a bank run in Greece it may not reach the second election. One source said “the next week is very dangerous.” You could have a state of emergency called, elections suspended and another caretaker, technocratic government formed to serve until who knows when.
European sources might, as with the replacement of George Papandreou by a technocratic government at the end of last year, try to lend a hand to government formation. Who knows how that would end? One phenomenon that alarms Brussels is that liquidity the ECB has been passing on to keep Greek banks going seems to be held up by negotiations between the Greek government and their banks.
EU future hangs in the balance
If Greece gets to the elections, there are various possibilities. If Greece backs parties that are against the terms of the EU’s second programme of austerity, it’s not clear how much time there would be before the process of ejection from the eurozone came into effect.
Some see it being a hasty and very rocky exit. Others think it could be more protracted, managed and not chaotic. But you could get a coalition formed after the election which wants to stay in the Euro but wants to negotiate the terms. That could split the EU with France, Spain, perhaps Italy, supporting a relaxation of the fiscal straight-jacket for all; Germany, the Netherlands and allies saying no.
An informal gathering of EU leaders over dinner in Brussels next week was originally dreamt up as a “getting to know you, Francois” session for all the EU leaders who’d refused to meet Francois Hollande when he was running against Nicolas Sarkozy. Then it became thought of as a Spain crisis meeting.
Now people think they might just be in the middle of a Greek crisis as well as pondering a Spanish one. One thing we can be pretty clear on. David Cameron will not be thanked for his interventions yesterday (in the Commons) and today (in a speech in Manchester).
UK seen as ‘wishing eurozone ill’
The PM’s “make up or break up” lecture to his EU partners appears to have gone down like a bucket of cold moussaka. Some across the channel see it as combative, patronising and arrogant. No 10 aides talk of it being a rational intervention in the debate – if EU leaders like Chancellor Merkel have lifted their own omerta on talking about a possible Greek exit why shouldn’t David Cameron join in?
One Brussels watcher says David Cameron can’t refuse to join in bail out efforts (non-Euro members Poland and Sweden do) and then screech from the sidelines. One German source said the UK is sometimes seen as “wishing the eurozone ill” and speeches like today’s add to that impression.
Another veteran European Union watcher said the Cameron speech showed a complete ignorance of how you build up “soft power” – “this is not how you build up alliances and get favours … I wonder if anyone in the foreign office is speaking up or whether he’s just not listening.”
A government source says all this tetchy over-sensitivity from the continent is, well, just that. No 10 believes that they do have a voice which can be heard in Europe – particularly if it is combined with the US and other voices. The timing of David Cameron’s appeal, they say, just ahead of the G8 gathering in Camp David, is no accident. He wants to recreate the pressure that the UK, the US together with China and others brought to bear on the Eurozone countries ahead of the Cannes G20 summit last autumn.