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Every EU country bends the rules— Global

Preface

Every club needs rules and the European Union is no exception. It has quite a few, in fact.

Law

13 June 2012

Every club needs rules and the European Union is no exception. It has quite a few, in fact. Treaties that stretch well beyond the 1,000 page mark, each line detailing exactly what is allowed and what isn’t. Break those rules and, well, bad things happen.

The rules, those who run the EU hope, will keep a rather unruly bunch of 27 members in check. Some countries appear to bide by them more than others. The UK, despite its Eurosceptic tendencies, stuck to the letter of the law when its biggest carmaker, Rover, was on the brink of bankruptcy a decade ago, accepting that EU competition law made it illegal for a government to prop-up a private company. France, on the other hand, tends to take a more flexible attitude towards certain EU laws, particularly any connected to agriculture.

On the whole though, the rules are stuck to and there is a general acceptance that breaking them can lead to problems.

The issue facing Europe now is quite the reverse. The euro’s rules aren’t working. Sticking to them rigidly has only made things worse. Sticking to them until the bitter end could lead to catastrophe. To take one example, eurobonds may not get past the German constitutional court but if the alternative is economic disaster across the continent for a generation then perhaps it might be sensible to find a way that the German constitutional court can be persuaded to agree.

Persuading that unruly bunch of 27 – or 17 if we’re talking about the eurozone – to change those rules is not going to be easy. Baby steps have been taken, mostly under duress, but the dramatic changes that need to be made don’t appear to be any closer to happening. Victory for François Hollande in France and the defeat for all the parties which supported the terms of the bailout in Greece have concentrated minds but Angela Merkel does not appear to be the sort of leader willing to change direction.

One other thing. I said bad things happen for those who break the rules. That’s not actually entirely true. Two countries broke the fiscal rules fairly early on, by running up deficits higher than the allowed three per cent. Neither country was punished. The two countries were France and Germany.

Whoever the Greek finance minister is after this week’s elections may want to remind Angela Merkel next time they sit down for a chat.

Monocle 24

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