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UK Prime Minister David Cameron has promised to hold a referendum on the UK's membership of the EU should the Tories win an overall majority at the next election due in May.  Never mind that his pledge was mainly to fend off the challenge of UKIP, and that he hopes to have negotiations with the EU in the meantime which might address some of the criticisms many Britons have of the EU. Opinion polls in the UK have been sharply divided on Brexit (with a trend favouring remaining in more recent polls), and any renegotiation of the UK's terms of membership is likely to influence the outcome of the vote.

The fact is however - whether Murdock media inspired or not - that many Britons lack a sense of fellow feeling with their compatriots in EU. They view their security as being guaranteed in large part by the USA and look to the EU as little more than a free trade area with a lot of unwanted immigration and meddling bureaucrats which need to be cut down as much as possible. There appears to be a disconnect between the business elite - generally very much in favour of British membership - and the working and lower middle classes who are much more concerned with the impact of immigration on their job prospects and the social and cultural life of the UK - an impact they blame on the EU, even though net immigration very much predates membership of the EU.

The irony is that there are now more than a million Britons living in France and Spain whose residency status and health care could be severely impacted by Brexit. But many of these don't have a vote, or won't go to the trouble of voting. Some indeed, would vote for UKIP in any case.  The little Englander mentality runs deep even in some of those who have made their homes elsewhere.  Basically many in the UK want the benefits of being part of a large market without bearing any of the costs of social solidarity which the EU ideal mandates.

It is doubtful whether the implications for expatriates or neighbouring states like Ireland will have a huge bearing on any UK referendum debate. The implications for N. Ireland could be very serious indeed.  So much so that the Irish Department of the Taoiseach(Prime Minister) is setting up a specialist unit to consider and prepare for such a development - having stayed studiously neutral and silenton the Scottish independence debate. Follow me below the fold for an initial assessment of what the implications for N. Ireland and Ireland might be.

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I once wrote a diary on the The negotiation Process and even considered making it the topic of a putative Phd. research proposal before deciding that the gulf between academia and practice was too large to bridge: there simply wasn't any good academic literature on the negotiating process that I could find, and no one could be found with the interest and expertise to supervise such a research topic. I raise the topic here because I am fascinated by the negotiating style adopted by Yanis Varoufakis and am still wondering whether he will ultimately be found to have been an effective negotiator on behalf of Greece.

Yanis Varoufakis interview: `Anything's better than austerity'

When asked whether Greece could have achieved more had it adopted a more conciliatory approach at the euro group, as his counterpartMichael Noonan and other Irish Ministers have suggested, Varoufakis delivers an emphatic "absolutely not".

While he declined to respond directly to Noonan's recent comments likening him to a rock star and to academic economists and experts that were very good in theory but not good in practice, he said Greece's previous experience in Brussels meant a robust approach to negotiations was essential.

"My predecessors in this job went along with the eurogroup's policies to the full. They bent over backwards to accommodate the memorandum and the policies of internal devaluation and fiscal consolidation, and the so-called reforms that were imposed on Greece."

And he points to where that has landed Greece. "It has been a complete and utter catastrophe. There's humanitarian crisis is on the boil because they were so `good in practice', this is quoting Michael Noonan. And I hope that I'm not so good in practice."

Regarding Noonan's other criticism that he was too theoretical, the Greek minister says he understands that "my colleagues in the eurogroup were disconcerted that one of their members insisted on talking macroeconomics".

"One of the great ironies of the eurogroup is that there is no macroeconomic discussion. It's all rules-based, as if the rules are God-given and as if the rules can go against the rules of macroeconomics.

"I insisted on talking macroeconomics."

But Varoufakis said he welcomed Noonan's comments, made at a conference in London on Wednesday, that he agreed in principle with the idea of swapping Greece's official debt for growth-linked bonds.

"Michael Noonan is quite right. We need to restructure Greek debt. My proposal for GDP-linked bonds has one purpose: to increase the amount of money we give back to your partners by encouraging them to allow us to grow."

Poll

Varoufakis will ultimate prove to have been a very successful negotiator for Greece

84%55 votes
15%10 votes

| 65 votes | Vote | Results

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Cross-posted from the European Tribune
With the Syriza movement led by Alexis Tsipras likely to win next weeks elections in Greece, the possibility of Greece being expelled from the Eurozone, at German insistence, raises its head. We must be clear that Greece does not stand alone in this conflict, and that the German dominated ECB also has some culpability in the continuing crisis.  Unfortunately Ireland's national leaders have shown no interest in supporting Greece or any other Eurozone state in this crisis - preferring to gloat in Ireland's own relative success in exiting the bail-out and fearful of rocking the boat at the ECB.  

This cozy "national" consensus needs to be challenged. I have sent the following letter to the editors of Irish national newspapers:

Unlike the US Federal Reserve, the European Central Bank has one, and only one self imposed target by which it's performance can be judged: to keep inflation at or just below 2%.  It has failed miserably to achieve that target, with the result that those people and nations with large debts have seen their real debt burden increase.  

This suits net creditor nations like Germany, but is a disaster for almost everyone else, with deflation likely to lead to increased real indebtedness, recession and perhaps even depression in the rest of the Eurozone.

Lest anyone think this is an accident of history, it is an outcome advocated by some German economists and by many of the German dominated staff in the Frankfurt based ECB itself.  Essentially it is a case of the Eurozone being run by Germans in Germany's interest.

And yet no one calls for the resignation of the ECB Board for failing to achieve its one self-declared target, never mind achieving a broader set of economic targets including employment levels like the US Fed.  Our leaders seem to be afraid to criticize the ECB in case it might once again threaten to pull the plug on our banking system.

The ECB is the most undemocratic institution in the EU, with Ireland never even having sought representation at Executive Board level.  It is time that must change, and it is time our political leaders had the courage to hold our banking masters to account.  

The Eurozone must be run in the interests of all Eurozone members, and failing that we must consider acting in our own national interest and leave the Eurozone in concert with other Eurozone members whose economic needs are being ignored.

In further news, the ECB has refused to cooperate with the Irish Parliamentary inquiry into the Irish Banking Bail-out Fiasco which looks like costing Irish taxpayers something north of €40 Billion even if the Bank of Ireland and Allied Irish Bank end up refunding the taxpayer in full - claiming it is accountable only to the European Parliament. When was the last time the European Parliament ever exercised effective supervision over the ECB? Perhaps it is time for all of us to start lobbying our European Parliamentarians...

NB: European Inflation is currently running at - 0.2%

Discuss

Having written a piece on American ExceptionalismI thought it might be appropriate to turn my attention to the EU, and to try to define what makes it a unique constellation of notionally independent states today. There are many misconceptions about what the EU is and is not, so perhaps some clarification from a citizen of a relatively enthusiastic member state (Ireland) may be helpful in understanding the phenomenon.

The first thing to be said about the EU is that it is in a state of continuous evolution, and with different member states pushing that process along at somewhat different speeds and in sometimes quite different directions. That it hasn't all fallen apart (yet) may be regarded as quite an achievement in itself, especially given the the European propensity for fractious nationalism leading to regional and world wars.

But what, positively does the EU stand for?

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Ireland has been producing some fairly decent economic statistics for a couple of years now - despite the general stagnation in the Eurozoneand the continuing "consolidation" of the public finances as the Troika imposed austerity plan seeks to reduce the current budget deficit to below 3% by next year. But the latest figures showing 9% GNP growth and 7.7% GDP growth in the last 12 months take the breath away, and even if they prove to be something of an anomaly, would seem to indicate that the Irish economy has reached take-off velocity despite the heavy gravitational pull of public sector spending cuts, a 125%  debt to GDP ratio, and stagnant external markets.

About 5% of Irish GNP and GNP can be attributed to the tax avoidance strategies of (mainly US) corporates basing themselves in Ireland for tax purposes, whilst in reality, the vast bulk of their activities take place elsewhere. The marked divergence between GNP and GDP growth above can also be attributed in large part to the so called "Patent Cliff" which has resulted in a large fall in the value of pharmaceutical exports as blockbuster drugs like Lipator and Viagra come off-patent.

Ireland is the fifth biggest exporter of drugs in the world, and Irish chemical and pharmaceutical exports surged by more than a quarter in the five years to 2011 when they peaked at €56bn, a figure equivalent to almost a third of gross domestic product.  But the employment content of those exports is relatively small, and what is clear from these recent figures is that there is a much more broadly based recoverytaking place in the Irish economy which is now even making up for the fall in drug export revenues.

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The USA has been the undisputed Global superpower since the collapse of the Soviet Union; dominating the world militarily, politically, economically and culturally. In recent times China has begun to make some inroads into that economic dominance, Russia has begun to become more assertive again, and Merkel has consolidated her position as undisputed leader of the Eurozone. But the most significant changes have possibly been within the USA itself.

First came 9/11 which punctured the sense of American invincibility: that the US could do what it liked abroad without it having much in the way of repercussions at home. In military terms the event wasn't all that significant: 3,000 deaths is all in a weeks work in some of the bloodier conflicts around the world.  But what was significant was the reaction: America went collectively mad.

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Scotland votes in an independence referendum on 18th. September.


Whilst the debate on independence is hotting up in Scotland, I have been surprised at the lack of discussion both here and in Ireland. Indeed Irish Government Ministers have been briefedto avoid commenting on the issue one way or the other. So far the major "external" interventions have been by the British Chancellor of the Exchequer, George Osborne, saying that an independent Scotland can't have the "British pound", and outgoing EC President Barosso saying that Scotland can't take continued EU membership for granted. Both have been seen as somewhat maladroit attempts to bully Scotland into remaining within the UK.

For those interested in following the debate in Scotland more closely, a good summary can be found here.  I am interested in discussing the issue primarily from an Irish perspective, but hope this diary will provoke a broader discussion here.

Poll

Scottish Independence

70%209 votes
21%63 votes
8%25 votes

| 297 votes | Vote | Results

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Mon Jul 21, 2014 at 11:15 AM PDT

Time for Europe to get real

by Frank Schnittger

298 mostly European civilians lost their lives when a civilian airliner was apparently shot down by a sophisticated homing missile available only to the most advanced armies in the world and fired from an area controlled by Ukrainian insurgents. Such weapons had allegedly been previously used to shoot down Ukrainian military aircraft. Whether it was operated by Ukrainian insurgents, Russian "advisers", or regular Russian troops, is almost immaterial: Putin and the Russian federation are almost certainly ultimately responsible. And yet European leaders do little but wring their hands and complain about the chaotic crash scene investigation and the recovery of bodies and personal effects.

No one expects European leaders to go to war with a nuclear power like Russia over such a provocation - but the repeated mincing of words by Obama and his Nato allies is nothing short of embarrassing. Well might Putin et al obfuscate until the outcry dies down.  But isn't it about time that the EU took some concerted action?  How about a strategic EU energy policy and plan to reduce all dependence on Russian gas within 10 years to zero by building a European supergrid powered from largely sustainable sources?

The problem with most forms of sustainable energy is that they require very large amounts of capital upfront, reasonable interest rates, and guaranteed feed in tariffs to be economically viable.  This is problematic at a time when many EU states - particularly those at the periphery are over-borrowed and under huge pressure to reduce Sovereign and private indebtedness. But how about making such capital available through the European Investment Bank for EU Commission approved projects?  

Irish and Scottish wind, wave and tidal turbines allied to eastern European and Mediterranean solar farms could make up a huge amount of the energy deficit created by a progressive reduction in Russian energy imports, whilst at the same time providing a much needed boost to investment and employment starved peripheral EU economies.  Would it be too much to ask the EU to be proactive and actually take the lead in such a continent wide project?  Would it be too much to ask for the EU to actually have a continent wide energy policy?

Discuss

Jean-Claude Juncker has now been formally elected at President of the European Commission by a 422 to 250 margin of victory in the European Parliament.  Most Prime Ministers in Europe can only dream of such a wide margin of victory.  That vote follows on from his 26 to 2 vote victory in the European Council (made up of national heads of government. And Yet Nigel Farage, leader of England's UKIP,can only rage at the undemocratic nature of his election.  

It is ironic that the most vehement objections to Juncker's election have come from the UK - a country which has a whole House of Parliament made up of unelected Lords and which has just nominated one of that number  - Lord Hill - to be Britain's next member of the Commission.  It seems democracy only becomes an issue when you don't get your own man appointed through some kind of back room deal. The UK's ignorance of and contempt for EU institutions has now come to bite it severely in the back-side.  

Cameron's influence in the EU is now at an all time low and will not be helped by his replacement of William Hague  by the Eurosceptic Philip Hammond as Foreign Secretary in the current Government reshuffle which also sees a number of other prominant Eurosceptics promoted. When this is combined with the UK's likely loss of Baroness Ashton's (another ex-member of the House of Lords) post of High Representative of the Union for Foreign Affairs and Security Policy, it looks as if the stage is being set for an ever more distant relationship between the EU and UK.

Why anyone in the EU (apart from Ireland) should now be bothered about anything Cameron has to do or say is beyond me. Should Scotland vote for Independence another barrier to England getting it's own way and departing the EU will have been removed. Northern Ireland's constitutional status will again be destabilized, and who knows how that will play out - possibly for the better - but it could be a long and painful process. Cameron could yet be known as the Prime Minister who led England to the break-up of the UK. Certainly the EU will not be weakened by his antics.

Poll

Will the UK withdraw from the EU?

42%8 votes
57%11 votes

| 19 votes | Vote | Results

Discuss

So. Juncker was the duly elected Spitzenkandidat for the post of President of the European Commission for the EPP, the party which won the most seats in the European Parliament elections. He subsequently gained the support of 26 out of 28 Heads of Government and State on the European Council.  And yet British Tories rage at the undemocratic nature of his election. Apparently he is an old school European who doesn't represent the will of the people as reflected in the outcome of the elections.  

Except he does.  This is the first time that voters could directly influence the choice of European Commission President with their vote.  The fact that many voters knew little of the Spitzenkandidat system is neither here nor there. People vote for a party for a variety of reasons, and not always because they like the party leader. Most Prime Ministers are not directly elected by the whole electorate either. Junker has greater democratic legitimacy than any candidate Cameron or a group of cronies on the Council could have come up with, and it is telling that they couldn't even come up with an alternative candidate:  Martin Shultz, Spitzenkandidat for the Socialists & Democrats, the second largest grouping in the Parliament would have been even more unacceptable to them.

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Thu Jan 16, 2014 at 07:35 AM PST

Judging Gays

by Frank Schnittger

Why do religious gay bashers claim they are only preaching the Gospels when in fact they generally quote St. Paul rather than Jesus in support of their homophobia and misogyny?

McAleese and church stance on gays - Letters | The Irish Times - Thu, Jan 16, 2014

Sir, – Fr Patrick McCafferty (January 15th) states, “The church unequivocally proclaims the message of the Gospel ” and goes on to quote twice from Romans in support of his argument concerning homosexuality and church teaching. As he is no doubt aware, Romans is not, in fact, a gospel. Why is it that the opponents of gay rights generally quote St Paul rather than Jesus? Could it be because Jesus never actually condemned homosexuality, and indeed healed the centurion’s sick pais (male servant/lover)? – Yours, etc, FRANK SCHNITTGER

Former President Mary McAlease has stirred a bit of a hornets nest with her comments on the Catholic Church and homosexuality:

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Ajai Chopra (left) of the IMF and an unidentified colleague pass a beggar as they make their way to the Central Bank in Dublin in November 2010. Photograph: AP

It's easy to be Snarky about Ireland exiting the Troika Bail-out on the 15th. December, but it really is a big deal for the Austerity Hawks: It proves (to them) that they were right all along, and that austerity "works". Ireland is the shining poster child to be waved in front of Greece, Spain, Portugal and every other prodigal state should they waver from the approved path of austerity. Some in Ireland are attributing historic significance to the bail-out exit, whilst others see it as merely escaping the tyranny of the Troika for the tender mercies of the international sovereign debt markets.

But it also does no good to deny that a significant economic recovery is now underway in Ireland (from a very low base), so does this prove all the Keynesians wrong? I would argue that neither proposition is correct: Ireland has succeeded (insofar as it has) for neither the standard Austerity or Keynesian reasons and has done so due to factors that are mostly non-generalizable to other economies. To understand the Irish recovery, you have to understand an almost unique combination of factors that is making it possible.

Given that the scope and sustainability of Ireland's economy is still under debate, I will begin by offering some evidence for and against the recovery hypothesis and then suggest some reasons as to why it might be happening.

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