Xi Jinping: China's Gorbachev?

Alphen, Netherlands. 15 November.  Watching Xi Jinping being anointed as General Secretary of the Chinese Communist Party I could not help but recall that old Confucian saying, “Choose a job you love and you will never have to work a day in your life”.  Xi is now head of the 82 million strong Party which will exert “popular sovereignty” over 1.34 billion people or twenty percent of the world’s population.  Xi is a ‘princeling’, the son of a revolutionary blue-blood who struggled successfully with Mao to overthrow Chiang Kai Shek and the nationalists back in 1949.  However, as ever all is not what it seems in China and as pressure grows within China for more pluralism the very anointing (rather than election) of Xi suggests that just over one hundred years since the 1911 abolition of the Chinese empire the Party may be retreating into old imperial habits – red imperial habits.   
 

On the face of it Xi is set fair. China already has the world’s second largest economy worth $11.4 trillion which many believe will eclipse the US $15.3 trillion economy by the end of Xi’s term in 2022.  Unlike his successor Hu Jintao Xi has moved quickly to consolidate power by taking over the leadership of the military as well as the Party.  He has also successfully slimmed down the Politburo’s Standing Committee from nine to seven and in March 2013 he will be elected President of the People’s Republic of China at the annual People’s Party Congress thus aligning his control of the Party with that of the Government.  
 

However, each of the ‘princelings’ on the Standing Committee represent over one hundred million people and Xi is by no means dominant.  This will tend to emphasise three trends within the leadership: a determinedly narrow focus on domestic issues; much expenditure of Xi’s own political capital to enforce Party discipline; and a tendency towards consolidation and conservatism.  And yet such conservatism is unlikely to satisfy a society facing deep inner frictions and fissures and which is changing at a pace unheard of in Chinese history.  Indeed, some senior Party members quasi-openly question whether the Party will survive to its centennial in 1921.
 

China is thus a Chinese recipe for instability and whilst China’s influence in the world will undoubtedly grow during Xi’s tenure, the Party’s influence could well diminish and undermine the stability that Chinese leaders obsess over.  For example, there are over two-hundred and fifty thousand micro-bloggers in China and the state media is fast losing the monopoly over information.  The metaphor for change in the Party stratosphere is an end to the endemic corruption in both the Party and the Government which has done so much to detach both from the Chinese people.  Hu Jintao made particular reference to this in his outgoing speech, even though he did little to combat it in his ten years in power and Xi himself referred to the need to combat “corruption and bribe-taking” in this morning’s speech.  Xi is also known to be considering the introduction of limited pluralism in Chinese civil society by encouraging institutions with little or no government patronage.  To that end, Singapore is being touted as a possible model.  The island-state’s one party rulers permit heavily prescribed opposition parties.  However, scaling the Singapore model up from a population of several millions to one of 1.34 billion underlines the challenges Xi faces and the dangers any reform poses for the Party.
 

The clamour for pluralism did not end with the massacre of the Tiananmen protesters back in 1989. Rather, it was either oppressed or bought off.  The opening of the Chinese economy in the immediate wake of the protests stimulated year-on-year double digit growth in the Chinese economy which laid the foundation for the post 1989 ‘popular sovereignty’ which the Party leadership has skilfully exploited ever since.  The deal was simple; the Party would stay in power so long as living standards rose.  However, the world economy is shaky to say the least and there are no guarantees that China’s export-led growth will continue, unless that is domestic consumption is stimulated. That in turn will lead to an expanding middle class which will also pose dangers for a closed leadership.  It is a leadership that has already been tarnished by the Bo Xilai scandal which went to the very top of the Party.

In his speech this morning Xi spoke of “the great renewal”.  It is renewal that will almost certainly take place on his watch.  If it fails, as well it could, Chinese nationalism lurks in the shadows.  Xi faces a difficult choice; do nothing and be swept aside by change or offer limited political reforms in an attempt to preserve the authority of the Party and like Russia's Gorbachev risk destroying it.

Julian Lindley-French

Britain and France in Flanders Fields

Alphen, Netherlands.  The eleventh hour of the eleventh day of the eleventh month.  As I write this I have just listened to the Last Post and observed two minutes of sombre silence to mark Britain’s war dead.  This year Remembrance Day was particularly poignant as on Friday I attended an excellent conference on the future of European defence in the heart of Vauban’s superb seventeenth century fortress, the Citadelle at Lille.  Europe in many ways started here.  To the immediate north and east of Lille are great battlegrounds of two world wars over which I drove in my two hour, three country freedom journey on a tarmac carpet across a quagmire of sacrifice from my home on the Dutch-Belgian border.

 

Now, I am a self-confessed Francophile who respects both France and its people. For all the British talk of“punching above our weight” it is in fact the French who repeatedly turn a difficult strategic position into effective influence at a reasonable price. And, one should be in no doubt that I believe the Franco-British strategic relationship is critical, not just for Europe but the wider world. The problem is that when the French elite talk (particularly the Left) about Britain they are not only wrong but so often determinedly wrong.  It was the same on Friday.  The specific (and implied) grouse was why can Britain not see that it has no alternative but to sooner or later accept the French view of Europe and the world?  That was not the only loaded question.  So, here is the response that my weapon of mass confusion (my Yorkshire French) failed to convey:

 

1.   How could Britain leave the EU and survive? Britain (GDP $2.3 trillion/€1.81 trillion, population 63.5 million, 2012 defence budget €57.9bn/$73.6bn) will become like Switzerland (GDP $600bn/€472bn, population 6.6 million, 2012 defence budget $4.9bn/€3.8bn).  No disrespect intended to the Swiss, but the facts speak for themselves.   

2.   Why does Poland offer more troops to EU missions than Britain?  It is because Britain is fighting real not paper wars. 

3.   Does Britain not realise France and Germany will replace Britain in EU defence with Poland (GDP €911bn/$1.16 trillion, population 38.4 million/ 2012 defence budget $8.79bn/€6.92bn)?  Again, no disrespect to the Poles but who are they kidding? 

4.   Why do you British keep mentioning the number of soldiers killed in Afghanistan as it suggests a lack of respect for the French fallen?  The French armed forces are impressive and critical partners of the British armed forces, as Libya ably demonstrated.  Moreover, I honour French fallen as much as I honour British.  However, sensitivity on this issue reflects an unwillingness to face an inconvenient truth; no union or alliance can survive the imbalance of risk and sacrifice evident in an Afghanistan that has critically polluted Britain’s trust in its European ‘allies’. 

5.   When the Americans pivot to Asia-Pacific you British will be forced to accept strategic modesty?  Well, no.  Given the stated British ambition to rebuild its armed forces around a maritime strategy the British will become more not less important to an America which will care much more for capable partners than incapable allies.

Sadly, this kind of nonsense is also beloved of the “Little Britain” mafia in London who preach that one of the world’s most potent political and military powers could not survive outside an EU moving in a direction that Britain neither wants nor can be part of.  And here is the irony; after almost a century since the struggles that made my journey possible the issue is still Germany and its power.  Indeed, for all the financial travails one hundred years on ‘Europe’ is still a metaphor for how to accommodate Germany; friend Germany, ally German, partner Germany, but nevertheless powerful Germany.  Thankfully, the most poignant moment this weekend was to witness the British and German ambassadors to Belgium laying wreaths together at Ypres's famous Menin Gate.  

Lille’s Citadelle was built at a time when Louis XIV was at the height of his powers.  However, it reflected the essentially defensive nature of French thinking during yet another war with Britain.  The British of course chose not to attack Louis’s strongest point, but rather his weakest.  In 1704 Marlborough defeated Louis at the Battle of Blenheim in Austria thus guaranteeing the very victory the Citadelle was built to prevent.

The question that no-one at the meeting dare pose was this; can Britain and France have a future strategic relationship above and beyond the EU?  Given the real world (as opposed to the Euro-world) Britain and France must.  However, for that to happen the French élite must abandon its comforting prejudice about l'albion perfide.  Indeed, even if Britain in time leaves an EU that has effectively left Britain, the British will never leave Europe.  Much of my drive was across our fallen in Flanders Fields. 

Britain and France together, forever, in Flanders Fields. 

Julian Lindley-French

Obama's Lessons for Europe

Alphen, Netherlands. 7 November.  James Freeman Clarke once said, “A politician thinks of the next election; a statesman of the next generation”.  President Obama has just been re-elected by the next generation.  Now is his chance to be the statesman he needs to become.  If 2008 was an economic-storm election to lose 2012 could be (could be) the election to win with a US economy predicted to grow at 3% next year with three million jobs being created over the next four years.  What is truly remarkable is that the president held together a coalition of young white suburbanites, women and urban minorities to get re-elected in what is still an instinctively centre-right country.  Certainly, this US election has profound lessons not just for Republicans and conservatives but also for Europeans. 

 

The first lesson for Europeans concerns the growing political gap in western societies between old and young, men and women, whites and minorities.  Women, who make up 54% of the US electorate, voted 55% for Obama.  Albeit a chronic generalisation the message from American women seems to be that at a time of economic crisis they want more government not less.  They also reject the machismo pain is gain logic of fiscal discipline and austerity which may make financial and economic sense over the longer-term, but causes suffering in the short-term.  Those preaching fiscal common sense clearly failed to resonate with many in an America facing a fifteen trillion dollar deficit and soon to peer over the edge of a fiscal cliff which come 1 January, 2013 could cut 4.7 percentage points off the US economy, and see taxes soar and public services savagely cut. 

The second lesson concerns the impact of changing demographics on the vote in all western societies.  In the US the white vote is now down to 72%.  In most European countries it is between 80-85% but given immigration it is heading in a similar direction.  For conservatives it means they can no longer hold onto their 1950s view of society and for all the frictions and failings of fifty years of the liberal experiment it has created a society that whilst fairer is grossly uncompetitive.  As globalisation bites that decadent reality will become ever more apparent.  For progressives immigration might work in the short-term because it shifts the ‘class’ vote in their favour but at the cost of social cohesion that is now a distant memory.  It also reinforces a culture of dependency on government which is economically unsustainable. 

 

There is another third and potentially more dangerous lesson. If (as now seems possible at midnight Washington time) Obama wins the presidency but Romney wins the popular vote what legitimacy the president?  At electoral day’s end the candidate who wins the most votes should be the one who is elected.  There are several countries on both sides of the Atlantic where too often a leader is elected on a minority vote, not least my own country Britain.  Semantic and sophisticated arguments can be made to justify this but over time all that happens is the growing alienation of a large minority who believe the systems works against them.  Alienation is a real threat to European democracy already under threat from centralising EU technocrats and Euro-federalists. 

There are also aspects of this vote that are peculiarly American.  No US president has ever been elected with unemployment over 7% as it is today.  Obama won as much on charisma as policy, which was very hard to discern on either side.  His charisma and celebrity made contact with the lives of millions of ordinary Americans in a way that a billionaire white, wooden opponent too close to irresponsible, greed-stricken extremist capitalism simply did and could not.  Democrats should and will rejoice but they should also remember that Obama is a one-off political phenomenon.  Four years hence it will be back to Washington business as normal…almost.  

Sadly, it is the precisely the mix of extreme capitalism and the politics of entitlement implicit in this election that has led Europe to the edge of the abyss.  America (like Europe) is today a society unable to face the hyper-competitive facts of globalised economic life and one in which capitalism red in tooth and claw is championed.  How and if that contradiction is resolved will define Americans (and Europeans) in the coming age.  There can and must be no return to some form of sweat shop economy but nor can Americans or Europeans defy economic gravity.  Rather, the political class left and right must seek a new balance between competitiveness and compassion, between government and civil society, between liberty, responsibility and entitlement to sustainably pay for the values that Americans and Europeans share and which not only define who we are but what we stand for together in the world.

Julian Lindley-French

Angela and David: Time for an Amicable Divorce

Alphen, Netherlands. 5 November.  Tonight is Guy Fawkes or bonfire night when the good people of England commemorate the burning at the stake of the leader of a 1605 Catholic plot to burn down Parliament, which to many Britons seems merely an idea that was ahead of its time.  This week Chancellor Angela Merkel is due to visit London as part of a German charm offensive to persuade PR-Meister Cameron to support an increase in the EU budget - if there are three things that have brought the EU low it is British ‘vision’, French ‘pragmatism’and German ‘charm’.  What Cameron should be telling Merkel is that Britain will leave the EU unless Germany ends its drive towards further political union.

   

Cameron of course will not do that.  Rather, surrounded by his group-think, europhile officials (one must be europhile to get promoted in London) he will meekly apologise to Merkel for last week’s outbreak of parliamentary democracy and MP’s demand for a real cut in the EU budget. He will instead agree with the German Chancellor to delay any decision on the budget so long as he can keep the deal from the British people...and hope. 

That will be difficult because Britain’s departure from the EU is now nigh on inevitable, not least because the EU seems determined to accelerate Britain’s departure.  Last night it became clear that the EU’s European Investment Bank has loaned the Ford Motor Company some €100bn (some of it British money) to establish a factory in Turkey, a non-EU member, so that Ford can close a factory in Britain, an EU member.  Ford clearly sees no real problem with basing production outside the EU to sell into it.  Indeed, any attempt to impose trade sanctions on a departing Britain would be illegal under World Trade Organisation rules, which is precisely why Ford can use British money via the European Investment Bank to shift production from Southamption to Turkey. 

Germany is the prime architect of Britain’s pending departure from the EU because Berlin is intent on changing the rules of the EU game in its favour.  It is a crisis-driven power game the full extent of which will only become apparent after the September 2013 German federal elections when a newly re-elected Merkel will then and only then the German people the enormous political and financial cost of the Eurozone crisis. 

At that point today’s phoney war will end and Europe will come to dominate British politics in the run-up to the 2015 British general election.  Indeed, battle-lines are already being drawn with Deputy Prime Minister Nick Clegg and his “Little Britain” followers (which by the way includes much of the Labour Party and some in the Conservative Party) who believe one of the world’s leading economic and military powers could not survive outside the EU and the massive bulk of the British people who now believe Britain can and should go.

The facts speak for themselves.  Today the Centre for Economic and Business Reform said Britain will enjoy the strongest growth of any major European economy over the next two years.  The percentage of British trade going to the EU is dropping fast from near fifty percent to around forty percent with the rest of the EU selling some €55bn more of goods and services to Britain than Britain sells to the EU, which suggests the EU needs Britain far more than Britain needs the EU.  Indeed, the huge transfers of British taxpayers’ money the EU demands is little more than a tax on the British people for no demonstrable benefit and even less influence because the link between such transfers and boosting the single market has now been broken.  Instead the cost of regulation that Brussels imposes on Britain has become one of the main breaks on economic recovery.

The irony is that tensions between a globalising Britain and the Eurosphere would have been rising even in the absence of the crisis.  Britain's future will depend far more on growing world economies than a doomed-to-be sclerotic Eurozone. British trade with the emerging markets is growing year-on-year in double-digit figures. It is perhaps no coincidence that Cameron is today visiting the booming Gulf States which suggests the PR-Meister may have an alternative strategy up his sleeve (do not hold your breath).  There are some surprising boom areas in the British economy such as the establishment of English law as the legal framework for global contract law. 

Therefore, if Cameron has any political sense he will politely tell Chancellor Merkel the truth at this week’s meeting; there is no place for Britain in her vision for Europe and no amount of ‘charm’ can change that.  She is a sensible woman and will of course understand the implications and she will also see benefits from an amicable divorce that would separate Britain’s political destiny from resolution of the Eurozone crisis.  If not David Cameron might soon find that he too joins Guy Fawkes atop a political bonfire of his own making.

Julian Lindley-French

Cloud Cleggo Land

London, England. 2 November. As I write this I am sitting in the Senate Chamber of Church House at the Chief of the Royal Air Force’s air power conference organised by the Royal United Services Institute.  Church House is the Supreme Spiritual Headquarters of the Church of England and there can be no better place to discuss the future of the Royal Air Force than the seat of the Lord High Air Power Almighty in London.  The good news is that British Defence Minister Philip Hammond has just given the strongest hint yet at this conference that HMS Prince of Wales, one of two super aircraft-carriers the British are building will be commissioned into the Royal Navy towards the end of the decade.  Rule Britannia!

 

And then there is Europe.  The latest foment over the road in the House of Commons has been triggered by the ‘we don’t do political principle’ Labour opposition who joined with Tory rebels Wednesday to inflict a humiliating defeat on PR-Meister Cameron as he prepares to head off to not-negotiate the European Omission’s five year Multi-Annual Financial Framework or EU budget.  The sceptics want the PR-Meister to negotiate a real-time reduction in the Omission’s budget.  Fat chance!

Last night at Chatham House Lib-Dem leader and David Cameron’s Coalition partner-in-crime Nick Clegg said that there was not the slightest hope in hell (or is that Brussels) of Britain securing an aforesaid reduction not least because a strong majority of EU member-states now have access to British money with Labour having in effect negotiated away any say over the matter.   Rather Nick wants Britain to confront changes in the EU “head on”, which in Nick-speak means join the Euro. He is after all the Omission’s point-man in London.

 

Now, I like Nick Clegg.  He is a fellow Sheffielder and given that we are an endangered species we really should stick together.  And, technically he is right but that is not the point.  What Nick fails to point out is that the changes taking place in the EU will inevitably lead to the runtification of the European nation-state and thus represent a clear and present danger to the British state.  Do you really think Scotland would be considering independence if not for the political backdrop of the EU?

Rather, Nick’s false ‘reality check’ reflects the lack of any sensible debate in this town about what next in Europe.  The choice Nick offers is either complete political immersion in Project Europe or a form of political Dunkirk, a false choice wrapped in a European flag.  In fact what is needed is a sensible chat about Britain and a very changed Europe.  There are huge questions of political philosophy implicit in the changes taking place in the EU, particularly as it affects the relationship between the state and the individual.  It may well be that in time the UK leaves the EU, although we are not there yet.  Therefore, London desperately needs grown-up people to talk in a grown-up way about one of the most important choices Britain will soon have to make.

 

This RUSI conference could point the way forward.  What has struck me about the British defence leadership is that they are slowly muddling towards something like a real defence strategy, although given the lack money and personnel committed it still too often smacks of hollow strategy. That said the emphasis on strategic partnerships with allies and partners both within institutions such as the EU and NATO and beyond is to be welcomed.  Britain foresees a series of powerful partnerships with emerging states and traditional allies befitting the world’s 5^th or 6^th real economy and 3^rd or 4^th defence actor. 

Whatever happens to Britain’s EU membership it is vital that the strategic state-to-state relationship with France is preserved and new relationships built with Germany and Italy.  However, that will require Europe’s power states to look at their respective relationships with London in a new light.  Equally, Britain must be freed to exploit deeper its strategic relationship with the United States and others, just like Germany is doing with China in pursuit of the German interest.  These relationships will be built on traditional forms of statecraft for which and to which Britain’s powerful defence strategic brand will be critical.

 

This will be the decade of choices for Britain and Nick’s implicit status quo at any cost is not an option.  It is not those who question Britain’s continued EU membership who are in cloud cuckoo land, even if sometimes they sound like a stuck record.  

Rather it is you Nick who is stuck in cloud Cleggo land with your misplaced “resistance is futile” nonsense.  At the very least give the rest of us a vision of how Britain could in future stay in the EU and outside the Euro.  We have yet to hear it.

 

Julian Lindley-French

2014: NATO Year Zero

Bologna, Italy. 29 October.  I love Italy.  As I write this I am gazing down from on high over-looking the Po Valley that separates Bologna from Milan re-thinking NATO.  That in any case was the title of the conference I have just attended (high level of course); Dynamic Change: Re-thinking NATO.  Still, as I wrapped up the conference in my now accustomed role as a strategic hooligan it struck me that if NATO’s members could just summon up even a modicum of strategic honesty NATO has an opportunity to remodel itself that it has never had before nor will likely ever have again.  Indeed, 2014 when NATO leaves Afghanistan (and it will), will be as close to a defence planning Year Zero as it is possible to get.  

The problem is that NATO members today range from the “I’m small get me out of here” type of country through the “I used to be important and I ought to be listened to” country up to (of course) the one “my way or the highway” country.  Apart from the latter they all suffer from a crippling disease called strategic pretence with “national strategies” for NOT doing things, also called “dynamic” and which talk about “change” a lot.  The result is NATO’s Defence Planning Process by which NATO’s Europeans – the pygmy powers - pretend to the “my way or the highway” country that they are fully committed to what the latter calls “transformation” and the "my way or the highway" country pretends to believe them.   

Naturally, the “my way or the highway” country has a 'plan' (they have a lot of those).  In the plan the pygmy powers and their bonzai militaries will join together to render unto someonw they call Uncle Same a NATO Europe cast in his image, albeit a midget version.  This may or may not include the Canadians as no-one can decipher anything Ottawa ever says these days as it is so politically-correct.  Does anyone speak Canadian around here?  Now, another reason the “my way or the highway” country pretends to believe the pygmies is because their defence-industrial “champions”, otherwise known as gangsters, have erected a big neon sign over Europe that flashes “suckers”.  

Today NATO Defence Planning is one of the greatest works of European fiction since Dante’s Inferno: the Four Choices before the Apocalypse.  Indeed, if the European Onion can be awarded the Nobel Prize for Not Yet Being in Pieces then surely NATO Defence Planning should be up for the Nobel Prize for Literature.

To finesse this lack of mutual comprehension away NATO talks a lot about “language”.  Indeed, anyone who has worked for NATO knows the importance of “language” which in human-speak means the use of long words in by and large indecipherable documents to present full-scale and rapid decline as efficiency and effectiveness.

The thing is that the pygmies, even the smaller pygmies, are slowly waking up to life beyond December 2014.  It is going to be a big, bad and for the first time in four hundred years not waking up every morning being impressed by Europeans world (I exaggerate that bit for effect).  In such a world defence transformation will really matter and in defence planning terms 2014 is yesterday.  Unfortunately, the gap between what Europeans need to do to defend their vital interests and what they can do is now so wide that only a true work of grand fiction can mask it.  Most small bands of bedraggled European brothers (and sisters) that these days pass for armies could now fit inside an old London double decker bus, if we could afford it that is. Strategic logic would suggest much deeper military synergy for some even defence integration.  The problem is the lack of trust after eleven years of Afghanistan.

 

For those reasons all the future planning I have seen is old wine in new bottles.  It is of course sprinkled with the current buzzwords of military-speak and much emphasis is now being placed on two blokes in the Special Forces who apparently in future will be able to achieve the same as an entire army today.  In the real world Europe’s pygmy governments are broke, want to cut armed forces further and have no intention of doing very much for their defence.  Their respective navies, air forces and armies are also far more interested in fighting each other than defending me, which in military-speak is called – jointness.

My own “I used to be important but ought to be listened to” country is a case in point.  Soon to become two “I’m small get me out of here” countries, and having spent the last eleven years fighting wars with “please after you” allies, it too has decided to become a “please, after you” ally as it seems a lot more effective to get others to fight your wars for you than do it yourself.  It is a sad delusion not least because the “my way or the highway” country will soon conclude NATO no way. 

Carpe diem as they say in these here parts (or at least used to).  NATO is not a Terry Pratchett novel and we Europeans do not live in a Disc-World atop a giant turtle - it just seems like that.

2014: NATO Year Zero

Julian Lindley-French

Merkel's Great Euro Deception

Bologna, Italy. 26 October.  “Oh what webs we weave when at first we seek to deceive”.  In the run-up to D-Day in 1944 the British ran a superb deception campaign called Operation Fortitude to fool the Germans as to the real location of the invasion.  It worked spectacularly.  Today, the Germans are being fooled again, this time by their own government.  The report by the so-called EU-European Central Bank-IMF Troika on Greek efforts to reduce €13.5bn of their budget deficit in return for more of my money and a two-year extension is pure theatre.  Berlin took the decision a long-time ago to give Greece the extra time and money.  Chancellor Merkel’s pretence to be awaiting the Troika report before making a decision was revealed by Athens this week to be what it is; political sleight of hand.  The reason is simple; Chancellor Merkel wants to mask the truth about the real cost of saving the euro until after the September 2013 German federal elections. 

It was Luxembourg Prime Minister Jean-Claude Juncker who famously remarked, “We know how to solve the crisis.  We just do not know how to get re-elected afterwards”.  It was a point this week reinforced by German Finance Minister Wolfgang Schauble who contradicted French President Hollande’s outbreak of insane optimism by saying that Europe is only “in the eye of the storm”.  

The figures are simply staggering and Schauble is of course correct. Hence the need to hide the hard truth from the German, Dutch (i.e. me) and other northern, western European taxpayers who are going to have to foot the bill with broken hopes, dreams and bank balances.  Even the most optimistic assessments suggest a Grexit (a Greek exit from the euro) would cost at least €320bn.  And that does not take into account the secret EU (my) money being poured into banks across the Balkans which to all intents and purposes are insolvent.  If the euro then began to progressively fail German banks alone would need at least €500bn to remain solvent or 20% of Germany’s gross domestic product.  Even modest move towards a banking union and limited debt mutualisation would cost between €300bn and €400bn of which the German taxpayer would be liable for at least 30%. Moreover, mutualising debt would increase German interest costs by at least €15bn per year whilst cash transfers to poorer EU economies to bring their deficit-busting revenues up to that of mid-ranking EU member-states would cost the German taxpayer at least €250bn per year.

The consequences of Chancellor Merkel’s perennial kicking of the now famous can down the seemingly interminable road are dangerous in the extreme.  At some point I will run out of money and the ECB’s printing presses will run out of ink and then the markets will take savage revenge.  Moreover, Chancellor Merkel may no longer be able to control this farce.  At the next EU summit Britain, the Netherlands and Sweden will veto the European Commission’s future budget.  This will mean that much of the regional aid and many of the infrastructure projects undertaken in recent years in central, eastern and southern Europe with the promise that my money will be used to pay for them will effectively default.

Such a default will plunge Europe into another political crisis and bring into sharp relief the sheer incompetence of EU leaders in failing to deal with a crisis that they themselves have turned into a pending disaster.  Chancellor Merkel has much of the responsibility for this dereliction of duty to the European citizen for whilst she has talked Europe, she has meant Germany and only short-term Germany.  As a consequence of this prevarication the fundamental issue; growth-killing structural deficits that plague most EU member-states has not even begun to be addressed.  Indeed, her entire strategy of hoping sufficient growth will turn up to make the problem go away is doomed by her very inaction which increases the cost to her own taxpayer with each passing day.

Furthermore, whilst no-one can doubt her commitment to this most political of projects (and therein lies the problem) her prevarication and short-termism now makes it ever more likely the real crisis when it comes will either destroy the euro or force a democracy-busting, Franco-German axis crippling British-exiting leap to some form of weak political union wanted only by the self-interested Euro-fanatics in Brussels DC.  That crisis will now come in the first quarter of 2014 and it will hit hardest in places like Italy from where I write you this missive.

To paraphrase Geoffrey Chaucer the truth will out – eventually.  As President Hollande said last week Chancellor Merkel has her own deadline.  Let us all hope it is not so late that the can has grown so big that not only can she no longer kick it – but it kicks back with a vengeance.  Chancellor Merkel must come clean with the German people now.

Julian Lindley-French