Britain and Germany change attitude towards the European Union

European Council in Brussels. From left to right: Herman Van Rompuy, President of the European Council welcomes rather typically David Cameron, UK Prime Minister and Nicos Anastasiades, President of Cyprus looks on. (Council of the European Union photographic library, 24/10/2013).

Two different developments, completely unrelated with each other, at least in the first reading, took place yesterday and may shape the future of the European Union in the near future. In the first instance the British Prime Minister, David Cameron, on official visit to China, had a quite unpleasant morning yesterday being badly molested by the country’s government controlled Press. One of the majour Chinese commentators even wrote that, “The UK is highly replaceable” in China’s strategy towards the European Union and concluded that “the UK is no longer a big country”.

In the other semantic incident the two bigger German political parties, Angela Merkel’s CDU and the socialists’ SPD, yesterday also said they will govern together having as their guide the 185 page document entitled “Shaping Germany’s future”. This is the detailed agreement the two parties recently concluded. It is expected to become the grand coalition government’s programme, when the new administration will be asking for the Bundestag’s vote of confidence. Let’s start now from the far away Beijing.

Chinese Press against Cameron

Cameron is on a three-day state visit to China. He is leading large government and business missions. What he had to offer to the new rulers of Beijing was mainly a ‘free trade zone’ on EU soil that is on UK’s territory and the Britain’s support for a conclusion of an EU-China free trade agreement that Beijing eagerly wants. On top of that, some weeks ago the British government opened the doors of London City so as one or two majour Chinese banks can trade yuan values there. With all those British ‘gifts’ to China, London attracted the wroth of Brussels, because Cameron is actually ‘selling’ things his country doesn’t own.

Understandably a free trade area or agreement between the EU and China are majour European issues and Cameron cannot go around the world selling them, as if they belonged to his country. The Treaty of Lisbon has transferred the EU’s entire foreign trade policy package to the European Commission. For one thing a Chinese free trade area on European Union soil or a free trade agreement will change everything in the economic relations between the two countries. After such deals become final, Europe will not be able to control in any way the flow of Chinese goods into its markets. And all that for the sake of Britain?

In short Cameron is ‘selling’ majour EU economic assets which don’t belong to his country but to the 28 countries as a club. On top of that the British PM when offering something which is not his, he will ask for something in return from the Chinese. Of course this ‘in return’ will be given to Britain alone. It could be something like for example a large Chinese investment in the multibillion super-fast train line Britain is planning, to connect London with the north of England.

What London offers to Beijing

It’s quite amazing how the British government could think of a trade like that. In reality London is ‘selling’ stolen assets, a ‘free trade zone or agreement’, and demands something in return that is not to be shared by the other co-owners of this asset. Seemingly that’s why the prestigious Chinese newspaper wrote that “Britain is not any-more what is called ‘big country’… it is an old European country good for travel and study abroad, with a few good football teams.”

Undoubtedly the Chinese are not only wise people but have a great sense of humour. Of course they also understand that one cannot sell something one doesn’t own. This is true, at least when it comes to entire countries.

As for the opening of UK’s financial market to trading and clearing yuan values, this will solidify the London Citi’s reputation as the best and largest money laundering machine of the world. However the close interconnection of the London financial market with mainland European markets will expose the entire Eurozone to Chinese indirect and direct investments, which are not always welcomed. In every respect all those Cameron’s gifts meant to lure the Chinese, have infuriated all the mainland EU countries.

As it seems now, even the Chinese have not expressed any positive estimate about the whole affair. Cameron was told to his face by the Chinese journalists, authentically expressing their government, that Beijing doesn’t need the British ‘goodies’. No doubt Cameron is being mocked in Beijing.

Berlin closer to Brussels

Let’s now turn to the other major development which took place yesterday. In Berlin the two German parties which are to form the next grand coalition government, confirmed that their joint programme will be followed to the letter. In many respects this 185 page document sets completely different policy line principles within Germany and in relation to the EU. This is understandable because the socialists are a completely different government partner for Merkel than the liberals of FDP. The disappearance of this last party from the Bundestag, must have weighted in shaping the new European policies of Germany.

According to the terms of the CDU-SPD government agreement, as it is worded in “Shaping Germany’s future”, Berlin will be much more pro-Europe than during the previous administration. A lot of new measures and policies agreed by the two parties are to be implemented in direct cooperation with the EU institutions. A good example is the training programme for the young.

On top of that the participation of the socialists in the new German government will increase the country’s internal growth spending by at least €120 billion. This is something the Eurozone crisis countries in the south have been asking from Germany for a long time. Expectantly this new government spending will indirectly support also the main trade partners of Germany in the euro area. In total Berlin, under the new government is expected to change its image of austerity lover.

Now if one puts the two developments together, that is what happened in Beijing and Berlin yesterday, one can conclude that Britain is all the time distancing itself from mainland Europe while Germany will try to increase its role there by coming closer to the EU institutions. Neither development is for the good of the smaller European countries.