More news from up north

I don't mean Yorkshire. I leave that county to the Boss. Further north, where the Vikings dwell to this day.

It seems that the Icelanders are determined to prove their political masters wrong. For some reason they seem very reluctant to accept their destiny in the European Union. Could it be because they can see what happens to those who have accepted it? Surely not.

EU News from Iceland tells us that opinion about EU membership is becoming more and more negative. A new poll was produced by Capacent Gallup for the Federation of Icelandic Industries, whose leadership, naturally enough, favours membership. What is it with leaderships of trade organizations? OK, maybe I do know the answer.

However, the results are not such as to gladden the heart of the average industrial leader.

According to the poll 43.2 percent of Icelanders are unhappy with the EU application the Icelandic government delivered in July after it was being accepted narrowly by the Althing, the Icelandic parliament. 39.6 percent are happy with the application.

More than half of Icelanders, or 50.2 percent, are opposed to joining the EU while 32.7 percent favour the step. In another poll by Capacent Gallup published in August where the same question was asked 48.5 percent were against EU membership and 34.7 percent were in favour.

Finally 61.5 percent said they would vote against EU membership if a referendum was held now, 38.5 percent said they would vote in favour. Of those 38.6 percent said they would definitely vote against but only 16.1% said they would definitely vote in favour.

It looks a little as if we shall not have the Icelanders joining us in our insane attempt to destroy all the fish in the Atlantic.

Meanwhile, on the other side of the political spectrum and a little closer to home, geographically speaking, the Swedish Secretary of State for European Affairs, Maria Asenius, told EurActiv something many of us have known all along: the Lisbon Treaty is important but not that important to the EU. (Here is the link but for some reason the article appeared only on the German version of EurActiv.)

It is, however, easy enough to work out what she is saying: the EU can function quite well without that treaty (there seems to be some worry about it being ratified in the few countries left and that does not include Britain) and can, should it wish to do so, continue with its amoeba-like endless enlargement.

Open Europe's blog has a little more on the subject. One wonders how they can square these blatant pronouncements with their own notion that all will be well if the EU simply followed their ideas on reform.

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More news from Scandinavia

Not Iceland this time but Norway, which is showing no signs of wanting to apply to the EU but where an election is due in September.

The Economist makes a valiant attempt at sorting out the voting system and predicting what might or might not be the outcome. Naturally enough, the Economist is hoping that the present left-wing coalition will retain power and is clearly rooting for that to happen.

The general election in September looks to be heading for a close finish between the governing centre-left parties and the centre-right opposition. The Labour Party and the populist Progress Party are expected to dominate the final stages of the election campaign, but it is the showing by the smaller parties that is likely to determine which coalitions are possible in the new parliament.

With the election on September 14th just over one month away, the result looks like being extremely close. Recent opinion polls suggest that the ruling left-centre coalition, comprised of the Labour Party, the Socialist Left Party (SV) and the Centre Party, could remain in power, but with only a one- or two-seat majority. If it fails to win an overall majority, there are considerable uncertainties over which combination of parties could succeed in forming a new government. The rise of the populist Progress Party (which was evident even before the last election in September 2005) suggests that some voters see a clear right-wing alternative to the dominant Labour Party, but Progress could still find it difficult to find partners to form a government.

"Populist", in the pages of a "respectable" media outlet is a very bad thing, indeed, but it seems that:

Among the opposition parties, Progress has so far run the most successful campaign, benefiting from media attention on issues such as immigration and crime. Even the more serious "broadsheet" newspapers, such as Aftenposten, have had extensive coverage of East European criminal gangs operating in Norway. This has allowed the Progress Party to attack Labour for being soft on crime and the governing parties of the present and past administrations (in effect all the other parties) for allowing Norway to have such permeable borders. Support for Progress is more than double that of the Conservatives, meaning that Progress would dominate any right-of-centre government.

As a matter of fact even this Wiki entry on the Progress Party shows it to be no different from other political parties in leaders' behaviour and having reasonably sensible ideas that are popular with the people but not with the largely left-wing, tranzi-supporting political establishment of the country. No wonder they are being shunned by other politicians though not by the electorate.

What is actually wrong with this:

The policy of the party is to favour immigrants who quickly learn Norwegian and get jobs, while expelling the criminal foreigners. Generally the party want a stricter immigration policy, so that only people who are in real need for protection according to the UN Refugee Convention is to be allowed to stay in Norway. In a speech during opening of the election campaign for the 2007 election, the party chairman Siv Jensen claimed that the present immigration policy is a failure because it lets criminals stay in Norway, while throwing out people who work hard and follow the law.

This reminds me of a meeting in May hosted by the indefatigable Henry Jackson Society at which the impossibly glamorous Siv Jensen, Chairman of the Progress Party spoke. (I really, really hate those glamorous European women politicians, particularly if they happen to be on side. Our female politicians I can cope with. What's to hate?)

Ms Jensen talked of her admiration for Margaret Thatcher and the economic policies that encouraged global trade, which, in turn lifted 100s of millions of people out of poverty. Her party, she emphasised, believe in individual liberty and as little interference from the state as possible. Individual liberty, she said, is fundamental for human happiness and economic prosperity.

This sort of thinking is about as far away from fascism as possible but in the topsy-turvy world of modern political discourse those who believe in freedom are called fascists.

She then turned to the main issue on which her party is deemed to be untouchable by all but the electorate: immigration, culture and multi-culturism. She said very firmly that she supports multi-ethnic societies but not multi-cultural ones. (I appreciate that the distinction is often lost on both sides when this debate is conducted in this and many other countries but it is a very important one and it was good to hear Ms Jensen outline it so forcefully.)

The Progress Party, she said is against discrimination on all the usual grounds but does not believe in cultural relativism or the all-embracing welfare state. In other words, those who come in and assimilate, work hard and bring up their families must be helped and encuraged but Norway must not be seen as a safe haven for criminals who are not accepted in other European countries; nor can there be any question of Sharia law being introduced for anyone in the country.

So we can see why the party is gaining in popularity and why the rest of the political and media world, including our own Economist, watches its progress grimly. Now that I think of it, I wonder why Ms Jensen was allowed into the country. Why did our delighful Home Secretary, whoever it was at the time, not stop her on the grounds that her pronouncements are dangerous? Hmm, asleep at the wheel again.

There were several other points of interest in her talk, all to do with foreign affairs. Ms Jensen and her party dislike the notion of Norway being a special friend of terrorist organizations like Hamas and she ever becomes Prime Minister (not such an unlikely event, as it happens) that will change.

She considers the question of EU membership to be dead. There have been two decisive referendums and nobody is going to try for a third one. She herself, interestingly enough, was vaguely for membership, thus proving that the issue cuts across parties. Then she went to Brussels and realized that all the criticisms she had aimed at the Norwegian government could be doubled, tripled, quadrupled when it came to the EU. So she decided that as far as Norway becoming a member of this pernicious organization it was thanks but no thanks.

She also supports NATO though thinks there should be an open debate about its future role and thinks the West should get tougher with Russia, especially on the question of energy supplies, something Norway is particularly interested in.

Interestingly, her party is not particularly fond of the UN though she assumes that there is some way of reforming it and "restoring" it to some rose-coloured original quality. The trouble is, she explained, when a number of us argued with this notion, even criticizing the UN is a political hot potato in Norway. Nobody does it and one must move very cautiously.

Fair enough, I suppose. If the Progress Party establishes the notion that no sacred cow is sacred, not even the tranzis, that will be a big step forward.

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Keeping up with the Icelanders

EU News from Iceland tells us that the number of Icelanders who oppose EU membership is growing steadily. The government or, at least, that part of it that is in favour of that membership is not happy.

The author, Hjörtur J. Guðmundsson, has told me that there has been a certain scarcity of poll results about opinion on EU membership through the spring and summer despite the plethora of events. You may think all sorts of things but I couldn't possibly comment.

Oh yes, before I forget: the boss is not happy with me because I do not link often enough to Your Freedom and Ours, which I ought to be doing through that twitter thingie at the top. I hate twitter thingies, I am afraid. The only time I saw any use to them was in Iran where demonstrators and other oppositionists could send information out fast and without any hassle. The Shepherds Bush insurrection is gathering momentum.

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More news from Iceland

At first I imagined that I was treading in the footsteps of William Morris who had written about Iceland; then I checked my facts (always a useful thing to do) and found that though Morris had visited Iceland at least twice and translated several of the sagas he had not written any books that could be called news from Iceland. He did write a poem about the country and published his travel journals, though. That's just as well because I am not exactly a follower of William Morris: a great deal to be said for his designs but his literary output is heavy going and his political ideas are mushy to put it mildly.

W. H. Auden, on the other hand, is a man I admire greatly; just in time I recalled that he and Louis MacNeice (less admired but good nevertheless) wrote a book together, called Letters from Iceland. That's all right, then. I do not mind treading in their footsteps though it is unlikely that I shall ever produce poetry one tenth as good as Auden's.

Right, on with the motley. (Hey, you have to keep up on this blog.) The government of Iceland has, as we know, applied for EU membership, which was not the cause of unalloyed joy either in that country or in the existing Member States.

Now we have a couple of updates on the situation from Hjörtur J. Guðmundsson of the excellent EU News from Iceland. This posting analyzes poll results about EU membership in Iceland.

Polls asking if people wanted to start membership talks (aðildarviðræður) with the EU have almost always resulted in a majority in favour.

Polls asking if people wanted to apply for membership (umsókn um aðild) of the EU have almost always resulted in a majority against.

Polls asking if people wanted to join the EU have usually resulted in a 50/50 situation.The first two examples obviously contradict each other. But this has an explanation. For years people in favour of EU membership have claimed it was possible to enter some kind of a non-obligational "scouting talks" with the EU just to find out what kind of a deal Iceland would be able to get.

Of course, as the talks progress the Icelanders will realize that those non-obligational, exploratory talks are more mythological than the Viking heroes of old. And as Mr Guðmundsson points out, there will have to be a referendum before Iceland actually joins. Not to mention the possibility of the government falling.

In another article on EU Observer Mr Guðmundsson deals with that familiar canard that countries in the EEA might as well join the EU because they have to adopt most of the legislation, anyway, while having no hand in shaping it. Anyone would think that Britain a fully paid up member of the European Union had any say in that legislation but let that pass.

In any case, Mr Guðmundsson says, this is not true.

In the spring of 2005 research carried out by the EFTA [European Free Trade Association] secretariat in Brussels at the request of the Icelandic foreign ministry, however, revealed that only 6.5 percent of all EU legislation was subjected to the EEA agreement between 1994 (when it came into force) and 2004.

In March 2007 a report published by a special committee on Europe commissioned by the Icelandic prime minister, showed that some 2,500 pieces of EU legislation had been adopted in Iceland during the first decade of the EEA agreement. The study also found that about 22 percent of Icelandic laws passed by the parliament originated from the EU during the same period of time.

The totality of EU legislation is according to various sources around 25,000 to 30,000 legal acts. Total Icelandic laws and regulations, however, are around 5,000. Of those there are less than 1,000 laws, the rest is regulations. Even if the entire legislation of Iceland came from the EU it would only be around 20 percent of the total acquis communautaire.

Clearly Iceland does not adopt two thirds of all the legislation of the EU; neither is it true, to turn the numbers round, that two thirds of Icelandic legislation comes from the EU.

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Not so fast

The news that Iceland's government has decided to apply for EU membership for the country has not been greeted with unalloyed joy and I am not talking just about the people of Iceland. The Commission, naturally enough, has welcomed the application. As far as they are concerned, any application, no matter who submits it and with what popular support or lack of it, is proof positive that the EU is a success.

However, there is trouble in Germany, as EUObserver reports.

Centre-right politicians from Germany's Christian Social Union (CSU) have spoken out against Iceland's bid to join the European Union.

"The EU cannot play saviour to Iceland's economic crisis," Markus Ferber, head of the CSU's members of the European parliament, told Suedduetsche newspaper [Süddeutsche Zeitung] over the weekend.

"We should discuss the structure of the EU before we discuss expanding it," said Alexander Dobrindt, General Secretary of the CSU, which is the smaller sister party to German chancellor Angela Merkel's Christian Democratic Union.

The newspaper reports that the manifesto for both parties for the 27 September general election will indirectly oppose further EU enlargement, with the exception of Croatia

Why any German politician should ignore the fact that Croatia will have to be subsidized quite heavily is something of a mystery but, presumably, the country they really do not want in the EU is Turkey.

The story is, naturally enough, reported in Iceland and in Ireland. Jamie Smyth writes in his European Diary in the Irish Times that there is a general disaffection with the whole idea of further enlargement. Given that, as some of us predicted about ten years or more ago, eastward enlargement has not been an unqualified success for anybody, this attitude is not surprising.

The old chestnut of the absolute necessity of sorting out whichever treaty is being held up for the sake of enlargement or, rather, these days, before we can speak of further enlargement comes up with the assumption, natural enough for Mr Smyth that the only thing that matters is the second Irish referendum. What of the German Constitutional Court's decision? In the long term that is likely to be much more dangerous for le grand projet than the referendum.

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Iceland will be applying for EU membership

EU News from Iceland reports that the government narrowly carried the vote to apply for EU membership, losing in the process some of its own voters and even one of the Ministers (the Ag and Fish one, naturally enough).

The plan is to complete negotiations by 2012 when there will be a referendum on membership and, if it goes the "right" way becoming members by January 1, 2013. There is many a slip, of course. It would appear that even the politicians are split on the proposal and the populace is split about 50:50. Clearly the brief panic after the financial crash that manifested itself in a desire to seek refuge in the EU has already abated and there are several years to go before the people are asked to approve, assuming the negotiations go well.

Hjörtur J. Guðmundsson gives all the details. From my private discussion with him I know that he thinks there is everything to fight for and the government is very anxious.

The Baroness Kinnock in place

There she was, our Glenys, in her place as Minister for Europe, answering or, rather avoiding, questions about the second Irish referendum as to the manner born. Apart from being economical with the truth about the Irish government not being bullied or pressurized into that second referendum, she gave no explanation at all as to why it is needed. After all, the people of Ireland have spoken.

Another point she omitted to explain, despite being asked by the Lord Pearson of Rannoch is what happens if there is no Accession Treaty either with Croatia or Iceland, the latter country not having applied for membership yet. Or if there is a treaty in the near future, how near is it and what happens to those "legal guarantees" in the meantime?

No doubt, the Baroness Kinnock (any sign of Master Kinnock following mummy and daddy into the House of Lords?) intends to go on as she has started.

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Getting interesting

The Irish referendum drama took another lurch towards a conclusion today, with the European Council agreeing to offer to the Irish government "legal guarantees on national sovereignty" as an incentive which they hope will attract a "yes" vote in October when a re-run is planned.

That much is according to Reuters which refers to the guarantees being given the status of a treaty "protocol". This, as opposed to the declarations which were originally proposed, give them legal status, but this also means that they must be ratified unanimously by all 27 member states.

The Irish Times, unsurprisingly, has following the drama, earlier reporting that the deal followed an early morning meeting between Irish prime minister Brian Cowen (pictured) and Gordon Brown - the latter having blocked the idea of a protocol. It is understood that, as the meeting, Brown withdrew his objections.

Protocols do not actually change the constitutional Lisbon treaty. They are described as providing a "common interpretation" of it. Specifically, they pledge that nothing in the treaty will affect Ireland's constitutional provisions on abortion and the family, its right to determine its own tax regime, or force the state to sign up to European defence co-operation.

Bruno Waterfield suggests that this move could see a future Conservative government plunged into fraught negotiations over the EU's powers. The process could require the opening of full-blown treaty negotiations next year, possibly allowing a new Conservative government to renegotiate the power balance between Britain and Brussels.

To support this we get an unnamed official cited, saying that, "Some people see this as a Pandora's box," adding: "It could be used by Conservatives to reopen the question of EU powers over [Britain's] social affairs." Bruno adds that a fresh debate in the Commons soon after returning to power could open up old wounds in a party historically split between europhiles and euro-sceptics.

This is amplified by the BBC's Mark Mardell, who remarks that there could be a campaign in Britain for a referendum on the protocols. Either that or someone will pop up and ask for their own reassurances, or the Czech or Polish president will find a new reason for not signing off Lisbon, or there'll be some other democratic diversions.

However, Mardell also notes that the protocols could simply be tagged onto the next accession treaty – perhaps either Croatia or Iceland – which was always an option. That would require no further discussions at EU level, unless of course a new Cameron administration made it an issue.

Here, Dave could make agreement conditional on the EU agreeing to new British opt-outs or, writes Mardell, "even a new relationship with the EU," then leading to a British protocol being attached to the accession treaty, on the back of a UK referendum.

Back in Ireland though, there is a mixed reaction to the deal. Newly-elected Socialist MEP for Dublin, Joe Higgins, is insisting that the protocols are an "elaborate charade" meant to distract attention away from the key issues.

"The debate on the Lisbon Treaty has yet to be held because we've been dealing with side issues," he says. "The fundamentals have still to be debated." Higgins thus maintains that the protocols (which will not be in force by October) will not mean that the treaty will be ratified.

This "take" on the treaty is, of course, spot on – the protocols do deal with side-issues, leaving the substance of the treaty unchallenged. But that aside, one wonders whether the Irish will even accept the assurances so far given, bearing in mind that any member state could refuse to ratify them after the next referendum, thus negating the whole deal after it is too late to block the treaty.

What would be interesting, therefore, is whether the Irish would be prepared to refuse to agree to Lisbon until after the protocols have been ratified – which could be some years hence. That would certainly put Cameron in the frame as his new administration would have no excuse whatsoever for refusing a UK referendum.

All of a sudden, EU politics are getting interesting again.

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Another country to watch

Iceland goes to the polls tomorrow and, according to this Reuters piece, the caretaker government is likely to be brought back. It is made up of the Social Democrats and the Left-Green Movement.

It so happens that we do have some information about the situation in Iceland beyond what appears in the British media. According to our informant EU membership, discussed in the first few days after the financial collapse, is now a dead duck. After the collapse polls showed anything up to 2/3 in favour of the country joining the EU. Now the majority is against and the new (or old but now elected rather than caretaker) government will not be under any pressure to apply.

It seems that there was a proposal to change the Icelandic constitution in order to make it easier for the country to apply for EU membership. This has been defeated by the opposition Independence Party. The Left-Green Movement is against EU membership but supported the constitution change, arguing that it would be more democratic. Well, they always argue that without bothering to provide a definition.

The saga (pun intended) of Iceland and the EU is carefully monitored by Hjörtur J. Guðmundsson on his blog, EU News from Iceland. Worth watching. We shall be reporting.

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Lessons to learn

One of the most deadly phrases we hear in modern administration is the mantra "lessons that must be learned".

This we are hearing yet again, this time in respect of the failed Icelandic banks. It turns out that seven English local authorities breached official guidance and their own treasury management protocols in continuing to invest in Iceland after the banks' credit ratings had been downgraded below acceptable levels.

One authority failed to open an email warning of the ratings change, another was using out of date information, while a third exceeded its own limit for deposits in a single bank. Another authority, Havering, invested £2m in an Icelandic bank on 1 October - only 20 minutes before it was told the bank's credit-rating had been downgraded.

In all, according to the BBC, a total of £32.8 million was deposited between the downgrading of the banks' rating to "adequate" on September 30 last year and the collapse of the Glitnir and Landsbanki banks on October 7.

All this information comes from the Audit Commission which says that the Icelandic banking collapse had exposed the "variable" standards of treasury management in local authorities. Treasury managers could and should have been aware that there were risks associated with making investments and that, in particular, there were risks associated with investing in some institutions.

This is the same Commission, incidentally, that invested £10 million in Iceland. As you can imagine, it is insisting that this did not compromise its ability to analyse what went wrong. "We found that most local authorities heeded the warning signs about Icelandic banks," says chief executive Steve Bundred. "But some did not, and a number were negligent. Our report shows that there are lessons that must be learned by everyone."

There is a very simple point to make here. Could we please have public authorities learn their lessons, before disaster strikes, rather than afterwards? Or is that too much to ask?

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All because the EU wants to be loved

There are some people, no doubt, who are looking enviously at Hungary, where its highly unpopular prime minister has resigned. He follows in the wake of the Lithuanian government, which was voted out last autumn, and Latvia's, which fell last month.

Iceland also has a new prime minister and it looks as if the Czech Republic could also be in trouble – to say nothing Greece, where the government is hanging on by its fingertips.

Given such a clear example, many would wish that Gordon Brown would follow suit and fall on his sword, unlikely though that is. He looks certain to hang on until the election next year.

Before that, of course, we have the euro elections in June, which is getting the EU parliament – if no one else – excited. It has just appointed the Berlin-based ad agency Lutz Meyer to manage a €28m advertising account in an attempt to convince people to vote. The EU parliament is worried that in the last euros, in 2004, the turnout was 48 percent, 18 percentage points lower than in the first parliamentary elections in 1979.

It really is rather ironic that we should have a German ad agency spending our money in an attempt to get us to vote for an EU construct that more than 50 percent of the nation does not want – and which attracts widespread hostility.

The bigger irony is the report of a private Labour poll, aired by the News of the World and picked up by Open Europe, which suggests that the BNP could win seven seats this June. That rather explains why Labour politicians were panicking about the BNP last month.

The party that should be panicking, however, is UKIP. The likelihood is that it will suffer most, but there is no room for complacency in the Tories, as they too could find themselves losing votes. But the EU has something to worry about as well. If its ad campaign is successful, one possibility is that the BNP vote could increase.

With Brown then hanging on for another year, this gives the BNP a firm base to build a general election campaign. It is not likely to pick up a Westminster seat, but a firm vote could damage Tory chances. Those with longer memories will recall the "UKIP effect" in the 2005 election, where the combination of UKIP, Veritas and BNP cost the Tories upwards of 30 seats.

It is not totally beyond the realms of possibility, therefore, that the EU could be spending its money in a way that eventually deprives the Tories of office and enables Brown to buck the trend. If European governments keep falling, his could end up the only one to remain in office past 2010. And all because the EU wants to be loved.

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Reality is a nasty place

Simon Heffer offers a laborious analysis today, which amounts to a prediction that the euro might not survive the recession. Or is it wishful thinking?

In a way, the euro is like the bumble bee – in theory neither can fly but they do. The euro should have nose-dived many times, but it has led a charmed life and continues on, despite the gathering clouds of the economic storm.

The point that Heffer makes, though, is two-edged. Invoking Milton Friedman, he asserts that "there has never been a monetary union, putting out a fiat currency, composed of independent states. There have been unions based on gold or silver, but not on fiat money – money tempted to inflate – put out by politically independent entities."

What perhaps he misses is the qualifier "politically independent entities", in which context there is an alternative that he does not fully explore … that the "entities" cease to be independent.

The essence of the European "project" is that there has emerged a European political class, where the ruling élites have more in common with each other than the people they govern. We have also seen of late more than a little nervousness amongst those élites about the prospect of civil unrest, and not a few of them must have looked anxiously at Iceland and then Latvia, where the governments have been deposed.

The idea of "independence", therefore, is strictly one for the proles. This is not something that will at all bother the élites – their concern is survival and their own protection. And, having conspired against their own peoples for so long, the driving force amongst them will likely be, "hang together or hang separately".

For all their comedic elements, we see in the statements of Joaquin Almunia and others of the "colleagues" a determination to stretch the rules to breaking point and beyond. When it comes to the Treaty provisions and what is legal and what is not, we are well beyond the stage of keeping within the treaty boundaries. The "colleagues" will do whatever it takes to survive.

Effectively, in so baldly stating that, "It's not clever to tell you in public…" what they intend to do, Almunia is admitting that they have torn up the rule book and are flying by the seat of their pants.

Thus, we would like to think – as indeed does Heffer assert – that national interest will prevail, and in so doing bring down the euro and thence the whole edifice of the EU. But there is a greater, stronger interest at play – the interest of our ruling élites as a collective.

As long as they feel safer together, and can look to each other for mutual support, national interest will take second place. In there lies reality, where the rulers are responsible to their peoples and accountable for their actions.

That, for the "colleagues" is a nasty place to be and they do not want to go there. They will do everything in their power to prevent it happening.

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Bring out your unrest

Much to everyone's surprise, including the organisers, 120,000 people or so marched through Dublin yesterday in an "emotional and angry national demonstration over the Irish Government's handling of the economic crisis."

According to one report, the sheer size of the turnout meant it had to set off earlier than was planned, with the parade stretching the entire length of its mile route at one stage.

Hundreds more lined the streets of the city centre, many clapping and cheering, as both public and private sector workers came together under the banners of several trade unions for one the largest demonstrations ever seen in the capital.

The demonstrators marched past the Dail (Irish Parliament) for a rally at Merrion Square, where the Irish Congress of Trade Unions (Ictu) general secretary David Begg accused a wealthy elite of "economic treason" by destroying the country's international reputation. "There is fear about how to keep body and soul together," he then told the crowd.

This is by no means the full extent of the fallout from the economic crisis. After Iceland, yet another government has bitten the dust, with the Latvian prime minister having resigned amid public unrest over his handling of the recession.

This, we are told, throws the Baltic state into political turmoil less than two months after his unpopular government launched an International Monetary Fund-approved austerity programme to avert a balance of payments crisis. An IMF mission is in the capital to review the programme's progress, and its findings may not be happy news for the young lady of Riga.

And, although there has been nothing in the headlines recently about Greece, the unrest there has not gone away. It seems to be entering a new dimension with the emergence of a "guerrilla group" called Rebels Sect.

It has been taking pot-shots at a local TV station, its second attack in less than a month. The group says that is had specifically targeted journalists because they represented a corrupt establishment and warned them that worse attacks would follow. "By attacking the channel, we are sending an ultimatum to all journalists," it says.

That is certainly and interesting development and points – perhaps – to a wider lack of appreciation of the fourth estate. No longer detached observers, they are seen as players – and as bad as the rest of them.

This and unrest in the French territory of Guadeloupe, where there have been violent demonstrations over low wages and living conditions, with at least one civilian killed, has had a senior aide to Sarkozy warning that many other countries risk seeing explosions of popular anger,

This is Henri Guaino, one of Sarkozy's inner circle of advisers. He has been telling Le Monde that without some commonly agreed rules on reasonable levels of protection and government intervention "more uncontrolled outbreaks of populism and xenophobia were likely".

"This crisis is already going through all the chapters of an economics textbook," he says. "We should be careful that it doesn't also go through a history textbook as well."

The UK, which has already seen unrest over the "British jobs for British workers" issue, may well be set to enter that textbook. Anarchists and anti-globalisation activists are plotting a mass demonstration against bankers in the heart of the City, for 1 April - the day world leaders arrive in London for the G20 summit. They are dubbing the event "Financial Fools Day" and are looking to cause mass disruption by blocking traffic and buildings.

Protesters hope to mobilise "anti fat-cat" sentiment among students and workers affected by the credit crunch as they demonstrate against the financial system, and are inviting activists to "set up camp" in London's financial centre.

If the Irish experience is anything to go by, they may well get larger crowds than they expect, especially as one anarchist blogger is claiming "inspiration" from Greece. With the G20 summit in London, this, he says, "gives us the opportunity to mobilise far larger than usual numbers on to the streets."

I suppose if they follow that inspiration to the logical conclusion, and they start taking pot-shots at journos, we could be in for some interesting times.

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So, is the eurozone a safety zone?

Opinion on the other side of the Pond seems to differ. The Wall Street Journal appears to think that it is, indeed, just that and it will not be long before what they call Reykjavik on the Thames (that would be London, one of the largest financial centres in the world until the EU's financial directives and the determined vandalism of this government destroy it) will see the usefulness of being inside that big tent.

The article disposes of the argument that the present financial crisis and the various governments' twisting and turning may lead to various members of the euro dropping out of the club or, according to some, freeing themselves from a straitjacket.

The thinking of those who believe Greece or Italy may drop the euro goes something like this: Freed of the shackles of a one-size-fits-all monetary policy and back in charge of their own currencies, these countries could devalue themselves out of the crisis, giving their industry a competitive advantage.

But this makes little economic sense. Any benefit from a devalued currency would be short-lived; it would surely lead to wage inflation, thereby neutralizing the advantage for exporters. The pitfalls of leaving the euro, though, would be enormous.

Through various tortuous arguments the article proves to its own satisfaction that countries are safer and more secure inside the eurozone. Not only would they be foolish to abandon it but those outside should really start thinking of joining it as soon as possible. Of course, that argument should apply to countries outside Europe as well. If the eurozone is such a good idea, why don't they all join it?

The euro is an anchor of stability, particularly for small members that otherwise would be much more exposed. Denmark may hold a referendum on joining the euro next year and in Iceland, which hitherto has declined to join even the European Union, a clear majority now favors adopting the single currency.

Perhaps the euro skeptics in the other Reykjavik, the one on the Thames, may soon rethink their position as well.

The trouble with all those majorities that they often disappear when the referendum actually comes round and people are faced with the reality of joining the EU (in Iceland's case and fish is not mentioned in the article at all) or the euro in Denmark's case.

I suspect this may be another effort by Alistair Macdonald, the egregious UK politics, economics and European financial regulation correspondent.

Landon Thomas in the New York Times and the International Herald Tribune thinks otherwise.

In Europe, after a brief lull, the financial crisis is back with a vengeance. Germany, France and the Scandinavian countries, though stronger, if also ailing, are mounting stimulus programs and building fences around their banks. The peripheral European economies are being left to twist in the market winds.

For many years, countries like Greece, Spain and Italy took advantage of the easy money that came their way. Trade deficits remained wide and governments borrowed up to their treaty-set limits - sometimes beyond.

Now, with the need for stimulus to deal with the severe downturn, these countries find themselves caught in an awful policy bind: credit is available, but only at punitive short-term rates; and further borrowing not only breaks with European Commission dictates but raises broader questions of solvency.

The situation is not exactly rosy in Britain with another bank bail-out, which, presumably, though Mr Thomas does not put it quite so bluntly, will be as efficacious as the last one.

For Mr Thomas the weakest of all links is Greece, something that will not surprise any of our readers as that country managed to scrape into the euro only by a great deal of fudging. There is the additional problem, not mentioned by Mr Thomas: most of those weaker, peripheral countries have had a great deal of money transferred into their economies from the other, somewhat stronger ones. That, too, may come to an end now.

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Are they getting worried?

Strictly speaking, civil disorder in member states is none of the business of our supreme government in Brussels. Maintaining law and order on the streets is a matter for provincial governments.

However, the ever-watchful Bruno Waterfield tells us that the euroweenies have called for "emergency talks" to discuss the groundswell of social unrest and violent street protests that have spread across Europe.

So far, Bulgaria, Latvia, Lithuania, Hungary, Greece and Iceland (is that Europe?) have all faced social unrest and rioting as unemployment soars and – so Bruno says - as many European countries have been forced to impose severe cuts to government spending. Thus, the March European Council is to examine the increasing unrest, regarding it as one of the "major challenges" for the Spring Council.

Sarkozy has already raised the spectre of "May 1968" protests spreading across Europe, although it is hard to take that seriously. There is nothing like the undercurrent of "revolution" that prevailed then. There is no ideology that is driving the crowds. They are just pissed off with their rulers. Which gives the demonstrations a nihilistic tinge.

Anyhow, what the euroweenies are considering is "intensive sharing of information", which include "regular updates" on the situation in various European countries. What they can get from that, which cannot be got from open source, is hard to imagine. Usually, in these sorts of situations, the official channels are the last to know what is happening.

However, there is some sense in what one EU official is saying. "People," he observes. "obviously are seeing what is happening in other countries in the rest of Europe, such as Greece, and they thought 'Why are we so calm?'" They are particularly worried about developments in Bulgaria where hundreds of Bulgarian protesters have clashed with police, smashed windows and damaged cars in Sofia when a rally against corruption and the economic crisis turned into a riot last week.

There is a point there. Considering how badly our rulers have managed our national affairs – here not least – we should all be out in the streets ripping throats out and racing tumbrels to the nearest public guillotine.

Perhaps it is too early yet, as most people – especially the bloated public sector – are not really hurting yet. It needs more time. Possibly, that is what is really worrying the euroweenies. They suspect its coming, but they can't work out when.

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We are supposed to take this seriously?

Next year in the UK is set to be one of the top-five warmest on record, according to the Met Office.

The average global temperature for 2009 is expected to be more than 0.4 degrees celsius above the long-term average, making it the warmest year since 2005. The Met Office also says there is a growing probability of record temperatures after next year.

The record year was 1998, says the Met Office, and this one, we are led to believe, will not be far behind, even if it will not beat the hottest year. Thus, says Professor Phil Jones, director of the climate research unit at the University of East Anglia, "global warming had not gone away despite the fact that 2009, like the year just gone, would not break records."

Taking a quick reality break, courtesy of Steven Goddard over at Watts up with that?, we are reminded that the Met Office in April last year predicted that the 2008 summer would be "warmer than average" with "rainfall near or above average."

That was immediately picked up by The Observer which happily reported: "Britain set to enjoy another sizzling summer after new evidence from the Met Office suggested above average temperatures for the season."

As the country basked in warm spring sunshine over the Easter weekend, the paper went on, "the new research suggests that it could be time to say goodbye to defining features of British life, like rainy picnics and cloudy sunbathing."

By 29 August, however, someone had obviously been looking out of the window, allowing the Met Office unashamedly to report that the summer of 2008 had been: "one of the wettest on record across the UK." And here they go again, "predicting" that 2009 will give us another warmer than average summer.

Meanwhile, as we shiver in the unaccustomed cold, The Daily Telegraph is telling us: "New Year's Eve set to be colder than in Iceland." Even then, the memory-free journos - Duncan Gardham and Jon Swaine – have imbibed the fantasia and are solemnly repeating the Met Office mantra.

Funny enough, all Met Office forecasts carry a health warning. We are told that, "Our long-range forecasts are proving useful to a range of people, such as emergency planners and the water industry, in order to help them plan ahead."

They are not, we are cautioned, "forecasts which can be used to plan a summer holiday or inform an outdoor event." But, it seems, they are good enough to predict global warming well into the next Century.

And we are supposed to take this seriously?

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There's no business like snow business

Published by Canada.com is a jolly little tale about how the EU has taken it upon itself to declare the Arctic region part of Europe's "immediate vicinity" and thus invite itself as a party to talks over the future of polar exploitation.

Even though the commission concedes that the European Union has "no direct coastline on the Arctic Ocean", having decided on this fabled, "immediate vicinity" status, it is thus proposing that all nations which do actually have direct coastlines should conform with "binding international standards" to govern offshore oil extraction. And, of course, the EU should have a hand in framing those "standards".

This move, says Canada.com (rather appropriately under the circumstances) is likely to prompt "a cold stare" from Canada and some other polar nations. But, undeterred, the Commission has still gone ahead an issued a report asserting its growing interest in the natural resources and environmental health of "the rapidly melting Arctic Ocean".

This, the commission proudly declares, its "first step towards and EU Arctic Policy", which it believes is "an important contribution to implementing the Integrated Maritime Policy for the EU."

To that effect, it has identified three main "policy objectives", which are: protecting and preserving the Arctic in unison with its population (presumably the polar bears); promoting sustainable use of resources; and contributing to "enhanced Arctic multilateral governance".

To bolster its claims to being a party to this "enhanced Arctic multilateral governance", it has opened a "thematic website", which proudly offers an "action plan" for the "EU and the Arctic region".

There, it tells us that the EU is inextricably linked to the Arctic Region (hereafter referred to as the Arctic) by a unique combination of history, geography, economy and scientific achievements. Three member states - Denmark (Greenland), Finland and Sweden - have territories in the Arctic. Two other Arctic states - Iceland and Norway - are members of the European Economic Area. Furthermore, Canada, Russia and the United States are strategic partners of the EU.

The problem for the ever-ambitious EU is that Finland and Sweden, as well as the EU-associated "economic partner" Iceland do not have Arctic Ocean coastlines. Those three nations were not invited to attend a Greenland summit in May that resulted in the five-nation Ilulissat Declaration - an explicit rejection of any new multilateral frameworks for governing future economic activity in the Arctic.

While noting that Canada and the four other signatories to the Ilulissat Declaration have committed to the "orderly settlement of any overlapping claims" in the Arctic, the commission's report pointedly states that "since then, several of them have announced steps extending or affirming their national jurisdiction and strengthening their Arctic presence."

This, of course, simply will not do for the commission. National jurisdiction, as we all know, is an anathema to the EU, not least because, "Climate change might bring increased productivity in some fish stocks and changes in spatial distributions of others."

Even worse, "New areas may become attractive for fishing with increased access due to reduced sea ice coverage. For some of the Arctic high seas waters there is not yet an international conservation and management regime in place." This, the commission says, with more than a hint of desperation, "might lead to unregulated fisheries." You can sense rather than see the stress on the word "unregulated", the ultimate of all horrors.

One is almost tempted to snigger quietly at the back of the room at the chutzpah of these people, except they are serious. They will keep plugging away in the hope that they wear down the other players and eventually get their way.

However, since much of the new EU policy is predicated on the premise that there is that "rapidly melting Arctic Ocean", perhaps someone might do them a favour and take the commission for a trip into the ice fields and show them what we can all see from the satellite pics – that the Arctic Ocean ain't melting.

Whoever does this kind deed, though, would do us all an even greater favour by leaving them all there.

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Another day, another admission

Typically, the journos miss the point, although this article is by Richard Spencer - a China hack, not a financial specialist.

However, because Howard Davies, former head of the Financial Services Authority, is speaking in Peking – no doubt after flying out first class and being put up in a five star hotel – his views are reported by Spencer, who focuses on Davies's comments about Iceland.

This is fair enough – Spencer is a half-way decent journalist – but embedded in his story are some much more tastier fish. For instance, Davies opines that, "Financial regulation is too heavily dominated by Europe and America," in what is described as "a sweeping attack on the failure of economic control systems to heed warnings about impending crisis."

Thus, we are told, Davies "contradicted the notion that the breakdown in financial markets had come as a surprise." He says "economists and others had been drawing attention to the imbalances in the world economy for years," but "regulators and politicians were too slow to react, and when they did, failed to co-ordinate their positions despite the globalised economy."

Well, knock me down with a feather. All these high-priced "suits" lapping up the cream in their gilded offices did know after all? When economic illiterates like us were picking it up in 2004 and 2005 - and we’re a political blog, I suppose we can be thankful for small mercies that they were aware that something was going down. But, it seems, when it happened, they were "too slow to react". Can't have everything, I suppose.

Even at a relatively late state though, we imagine, intervention could have taken the edge off the crisis, especially as those world-class financial experts were writing of the situation:

All of this invokes vague presentiments of gloom and there are plenty of bears ready to sustain fears that we are on the brink of economic meltdown. Small wonder we are agape as Gordon Brown continues to parade his "economic competence". We seem to living on "funny money" and no one seems to want to take responsibility.

Waaaaaaaaahhhhhhhh …

That was us, the economic illiterates, writing in January of this year under the heading, "funny money". And the "suits" didn't notice something then, and think about taking action?

But never mind, Howard Davies, one of the "suits-in-chief" is now on the case. From his gilded palace in Peking, he loftily tells us that the European Central Bank brought the extent of the crisis to public attention in August last year, by pouring in liquidity into the system. But, he complains, "the first comprehensive international summit to address the crisis is not taking place until this November or December, 16 months later." So! They didn't think about taking action!

Unabashed, Davies moves on to give as an example of the problems in the regulatory sector the "reforms" to the Basel Committee on Banking Supervision guidelines. These, he says, took ten years to produce. If a bank decided to reform its rules on risk management but took ten years to do so "people would say you were mad", he admits. And what does that make the Basel Committee?

Then, of course, we get part of the explanation: "It was telling that of 13 nations represented on the committee, ten were from Europe," says Davies. And, surprise, surprise, "Even the European Union had been unable to act in concert when the crisis struck."

Is it just me, or do I sense that we have a gang of people here who are simply not up to the job, running regulatory systems designed for the Stone Age? Well, Mr Davies, God bless his silken socks and his $1000 suits, seems to agree. "We need to improve the legitimacy of bodies that set international standards," he says. "The ones we have reflect the world as it used to be not as it is."

And the word from Parliament about all this is?

Can we even begin to hazard a guess as to when our honourable and dligent MPs are going to notice that there has been a king-sized global regulatory cock-up, and make some intelligent comments about it?

"Hush yore mouf chile! Dey iz de man!" comes a voice from the darkness. "Yo mussn't sez zose fings!"

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Totally unaccountable

On March 24, 1989, the oil tanker Exxon Valdez, carrying more than 50 million gallons of North Slope crude oil, ran aground and ruptured in Alaska's Prince William Sound.

Approximately 11 million gallons of crude oil poured out of the ship in less than five hours. By August 1989, the oil had moved across nearly 10,000 square miles of water in the Sound and the Gulf of Alaska.

This was an ecological and financial disaster that cost the company $300 million in immediate compensation costs, and a $2 billion contribution to the clean-up, with a $2.5 billion law suit still pending.

Now, let us make a comparison. During the period of late September to mid-October 2008, the global banking system ran aground and ruptured in centres around the world, from New York to Iceland and London and beyond, spilling out trillions of dollars. World-wide, trillions of dollars of public money had to be spent to clean up the mess.

In the Exxon Valdex disaster, the events were raked over the coals, with innumerable inquiries, court hearings and the rest. The Captain, Joseph Jeffrey Hazelwood, was prosecuted, fined $50,000 and sentenced to 1,000 hours community service. Has never worked as a master since.

By contrast, in the Great 2008 Banking Disaster, the "tanker" has been hauled off the rocks, patched up and refilled with oil. The crew which drove the "ship" onto the rocks has been left in place and is now being allowed to have another go, with not so much as a slap on the wrist, much less an inquiry. Moreover, no one seems even to be calling for an inquiry.

If that parallel looks to be far-fetched, how else does one interpret Mervyn King's startling admission yesterday evening that, "Not since the beginning of the first world war has our banking system been so close to collapse."

Said our Mervyn, the events sparked by the collapse of US bank Lehman Brothers in September, culminating in the 37-billion-pound (64-billion-dollar, 47-billion-euro) banking bailout, were "extraordinary, almost unimaginable". Speaking to a meeting of business leaders in Leeds, he then went on to say that it was "difficult to exaggerate the severity and importance of those events".

Add to this, the comment of the editor of The Financial Times, Lionel Barber, which we recorded yesterday, when he talked of a "collective regulatory failure". His input is just one of many that speak to the same theme, a theme echoed by Professors Patrick Minford and Tim Congdon, which we picked up a week ago.

It is even one which has been acknowledged by the now embattled shadow chancellor who, at the end of last month complained that "Gordon Brown's regulatory mechanism has comprehensively failed". Discard the political rhetoric about Brown, and you have a "regulatory failure" in the frame.

Even David Cameron is singing the same tune, declaring that our "largest household debt of any major economy" was "not something we imported from America – it was down to bank lending and regulatory failure here at home".

Casting a wider net, a commentator in Australia is saying, "Government regulatory failure, not the greed of investors or speculators, is at the core of present financial problems." We even get the same refrain from Scotland with a commentator declaring, "Taxpayers' billions were being used to solve problems caused by banking avarice and regulatory failure."

To that list we can also add the multiple complaints yesterday in the US Congress about the "weaknesses in financial regulation" including, incidentally, a robust condemnation of the "mark to market" accounting system.

Finally, to cap it all, we have the chairman of Lloyds, Lord Levene, telling Jeff Randall that the regulators were to blame for crisis. He believed things had "fallen through the cracks", asking, "Did the regulators fully understand what they were looking at?" then adding, "Did things fall through the cracks... I think they have done."

Now go back to yesterday and Lord Turner's comments about the need to seek "fundamental improvements" to the Basel II framework for measuring capital.

Then pick up the comments from Mario Draghi, European Central Bank Governing Council member and Financial Stability Forum Chairman. He says "that even stronger revisions may be needed to the Basel II accord regarding the amount of capital needed to be set aside by banks."

Every which way you look at it, we have the equivalent of an Exxon Valdez of the financial regulatory system, with all roads leading to Basel. So why is it that no one in the UK seems to be calling for an inquiry?

The points we made two days ago are still valid, but the only development we have had so far is a call by Michael Howard for an inquiry into the reporting by the BBC's Robert Peston of the crisis. Greg Hands MP, though, wants a full-blown Serious Fraud Office investigation.

We have had Conservative Party Treasury spokesman Philip Hammond calling for a public inquiry, but only into the FSA's oversight of AIG Financial Products in Mayfair. But at least that is something. All we have had from the Liberal Democrats is a call from Chris Huhne for a "full investigation" into the George Osborne affair.

With that affair dominating the headlines - in what is possibly of some minor significance in the narrow domain of party politics, the bigger picture has been swamped.

From the perspective here, it seems the political establishment has lost the plot, retreating into a new infantilism while the important issues go unheeded. Perhaps though, this is just too big. At the top of the regulatory midden is that shadowy organisation, the Basel Committee on Banking Supervision, the apogee of the new system of world government.

But, if no one wants to take on this committee on, when even its own chairman admits to failures, then it would seem to confirm the very worst – that our new government is totally unaccountable. It is responsible to no one.

Rather than taking the responsibility of commanding a ship, clearly it is better to be an anonymous banker on an international committee making the rules if you mess up. That way, not a hair on your head is disturbed and you glide effortlessly on, safe in your anonymity as your monthly salary cheques continue to flow.

And there is not a single politician, journalist or commentator prepared to do a thing about it. Thus are we betrayed.

COMMENT THREAD

"Practically irrelevant"

We learn from the BBC that the finance ministers of the EU member states have agreed to raise the minimum level of compensation under the deposit guarantee scheme from €20,000 where it stands at the moment to €50,000.

That brought a comment from Robert Peston, the BBC's destroyer of banks and one-man rumour mill, that it was "practically irrelevant". He didn't mean it in a broader sense, but he is effectively describing the whole EU institution. Events have moved on so quickly that the EU is left floundering in their wake – as we see from the Icelandic situation where, as we have heard, thousands of British customers have had their online accounts frozen.

Actually, the BBC is being premature. The finmins haven't "decided" anything. The EU compensation scheme is set out in our old friend Directive 97/9/EC which means that all they can do is ask the EU commission to amend it.

No doubt the commission will oblige but, as a single market measure, it is co-decision, so the EU parliament must approve any changes, as indeed must the Council. How long that will take is anyone's guess. Perhaps even they can take short-cuts, as rules do tend to be flying out of the window these days.

You can get a sense of the disarray in the Council from what is described on the website as a briefing document issued by the Council presidency. If nothing else, it is a masterpiece of concision. You have to open up the document (it is only one page) to see the joke.

The picture shows Ms Christine Lagarde, French Minister for economic affairs, industry and employment – and also president of the finance minister's council. You can see that there is a fair amount of press interest but, apart from providing photo-opportunities, have the ministers anything else to offer?

Other posts on the financial crisis here.

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