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Generational Dynamics Web Log for 30-Nov-05
Press reports say that Tony Blair ready to cave on EU budget

Web Log - November, 2005

Press reports say that Tony Blair ready to cave on EU budget

Under intense pressure from the European Union and other member states, the UK Telegraph is reporting that British Prime Minister Tony Blair is "ready to surrender EU rebate with no payback."

The rebate is related the EU's Common Agricultural Policy (CAP or PAC), which provides agricultural subsidies to member states. The CAP was actually set up in the 1980s, when "iron lady" Margaret Thatcher was British Prime Minister, and she negotiated a "rebate" for the UK, since the UK didn't have enough agriculture to justify much of a subsidy.

Furious EU President, Luxembourg Prime Minister Jean-Claude Juncker <font size=-2>(Source: BBC)</font>

Furious EU President, Luxembourg Prime Minister Jean-Claude Juncker (Source: BBC)

The issue came to a head in at an EU summit in Brussels in June, in which Blair and French President Jacques Chirac disputed the terms of the EU budget for 2007-2013. Blair offered to agree to end the EU rebate, currently about $3.5 billion per year, provided that France agreed to reduce the CAP subsidies, currently about $10 billion. Chirac demanded that Blair give up the rebate with nothing in return. The dispute between the two men turned into an extremely vitriolic confrontation. The furious EU President Jean-Claude Juncker sided with Chirac and condemned Blair and the UK, saying he felt ashamed that "certain people did not have the will to reach agreement when some poorer other countries were willing to do so."

From the point of view of Generational Dynamics, this is the kind of result one would expect. Ten years ago, when the EU was in a "generational unraveling" period, a compromise would have been expected, and indeed similar disagreements always did end in compromise.

But today, 60 years after the end of World War II, Europe is in a "generational crisis" period, a time when leaders increasingly seek confrontation and retribution rather than compromise and containment of problems.

Thus, a compromise on the EU budget seemed unlikely.

On the French side, there was never any doubt that Chirac would never back down, and if there WERE any doubt, the doubt would have been eliminated by the the Paris riots from early November. These riots revealed that France was much deeper financial trouble than even the 12% unemployment rate would indicate.

On the UK side, there seemed to be an equally steely determination not to back down, and as late as last week, Gordon Brown, Britain's chancellor of the exchequer, made it clear that the rebate would be retained unless France yielded on the agricultural subsidies.

So it comes as quite a shock that if press reports are true then Blair is about to cave completely.

The pressure on Blair and UK has been enormous.

On Tuesday, Poland's president sharply criticized Blair, assigning him the sole blame for deepening the crisis in the EU.

Hungary's Prime Minister told Hungarian television that "What ... Blair is now proposing is unacceptable ... It is so far from Hungary's interests that let's put it simply: no."

And an open letter by the prime ministers of Poland, Hungary, the Czech Republic and Slovakia pressed Blair for a compromise, saying that "for us the stakes are high."

And the executive European Commission warned the failure to agree on the budget would plunge the EU deeper into crisis.

This is a very interesting situation, and it will be fascinating to see how it's going to play out.

From the point of view of Generational Dynamics, the EU is going in any direction besides compromise. When the French voters rejected the proposed EU constitution in a referendum, my analysis of the exit polls showed that the split was generational: Older voters born before the end of World War II favored adopting the Constitution, while those born after the war favored a rejection. Since the first group of voters is constantly getting smaller while the latter group is constantly getting larger, it's pretty clear that the EU Constitution will never be adopted for the foreseeable future.

This indicates that the "European Union project" is, for all practical purposes, dead. The budget impasse seemed to confirm that.

Conflict risk level for next 6-12 months as of: 30-May-2005

W. Europe 1 Arab Israeli 2

Russia Caucasus 2 Kashmir 1

China 2 North Korea 3

Financial 3 Bird flu 3

Key: 1=green 1=Low risk 2=yellow 2=Med 3=red 3=High 4=black 4=Active

Thus, a budget compromise would be quite a surprise, given the European trend, and it would have harsh repercussions for Blair in Britain.

It would be a surprise for a different reason. As we discussed earlier this week in the article on Ariel Sharon's political "earthquake" in Israel, the countries that fought in WW II are all on a kind of "cruise control," led by people born after WW II with no skills to actually DO anything except express outrage when something goes wrong. Thus, if the EU actually manages to get a budget agreement for 2007, it would be quite an achievement.

However if, surprisingly, Blair caves and the EU reaches a budget compromise, then it does not change the eventual trend, just as a heat wave in November doesn't mean that winter isn't coming to New York City.

Generational Dynamics predicts that there'll be a new west European war, just as there have been west European wars at regular intervals for a millennium or more. Generational Dynamics doesn't predict who the belligerents will be, but trends for the last few years indicate that England and France will, once again, be at war. I see no reason at this time to make any changes to that prediction. (30-Nov-05) Permanent Link
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Generational Dynamics Web Log for 30-Nov-05 Press reports say that Tony Blair ready to cave on EU budget

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Generational Dynamics Web Log for 30-Nov-05
Press reports say that Tony Blair ready to cave on EU budget