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How Her Majesty ('s Treasury) is draining Europe's super rich

Florian Chevoppe — Wed, 02 May 2012 10:31:17 +0000

A "fair measure". This is the argument brought up by the French Socialist party whose candidate Francois Hollande has recently proposed to set up a new 75% income tax for incomes above 1 million euros (£834,000). This new proposal, by a man almost sure to stand at the second turn of the presidential election has probably upset a few - if not a lot - of people. Indeed, according to a recent study by Credit Suisse published in October 2011, France is the country with the highest number of millionaires in Europe : 2.6 million. But is there really a general trend of raising taxes for the most fortunates across Europe ?

An isolated French initiative ?

If France comes first according to this study, in the UK and Germany millionaires are actually richer. Fortunes worth more than $100 million are "more frequent" there. And in the UK, Francois Hollande's proposals were almost universally rejected. During his meeting with Labour Party leader Ed Miliband, it was clearly rejected. And David Cameron's coalition government is currently on diametrically opposed trend.

The "50p tax", which introduced by Labour Chancellor Alastair Darling in 2009 and brought HM Treasury more than £5.5bn was scaled down to 45p by the coalition government. About this, British journalist John Lanchester wrote "the only countries that have anything even vaguely resembling the British policy towards the super-rich are places that are openly accepted as tax havens, such as Monaco and Switzerland." No need to say more.

But the idea seems to have been heard in those countries which border France. With a deficit higher than a 100% of the GDP, Elio Di Rupo's socialist government wants to put in place a "temporary crisis contribution on important property holdings, that is to say those valued at more than €1.25 million". Temporary indeed. In Germany too, last summer, a group of 50 of the richest Germans joined the "tax me harder" group, which called on the government to raise taxes on high incomes.

Similar initiatives to the Socialist proposal have been implemented, or reimplemented around the Hexagone. In Spain, after having abrogated it in 2008, a tax was re-introduced by Socialist Prime minister Jose Louis Zapatero in 2011. In one of his first austerity budgets, Mario Monti also put in place measures affected those with annual incomes towering above €300,000. Finally, Switzerland also started a parliamentary procedure to set up similar taxes for annual incomes higher than €360,000. Luxembourg, Monaco and Andorra have however not changed their fiscal policies.

One can see that there are two very different Europes, and three trends. First, there is a eurozone Europe, whithin which there is absolutely no convergence of fiscal policies. In this Europe, there are those who are raising their tax rates on high incomes, more or less because their are obliged to (Greece, Ireland) or because they have to deal with threatening debts like France. Still in this single currency Europe, free riders such as Luxembourg remain, bordering major economies like Germany. Finally, there is an anti-single currency Europe which could be compared to "war profiteers", enjoying those tax spikes, and will readily welcome those fleeing fortunes.

Professional British profiteering

This is what the United Kingdom is doing at the moment, but it is not the only example. Countries bordering major economies such as Canada have taken similar measures and became tax heavens. But the exodus has already begun : in 2011, according to real estate agency Knight Frank, 10% of buying transactions in London, the largest city in Western Europe, were made by Italiens and Greeks. According to this agency, the number one reason of all these arrivals in the city is "the placement of money outside of the eurozone", and ever-higher taxes.

This is one of the main failures of the EU's economic integration in the last 20 years : having set up a common monetary policy without any fiscal and economic convergence. The ease with which transactions and capital movements can be made, densification of high-speed transports and litteraly no obstacle to moving from a country to an other makes capitals flight a children's game. The revocation of the Edict of Nantes led more than 200,000 to flee the Kingdom of France, and crippled its financial and industrial capacities. Will this happen too in the Kingdom of € ?

What is sure is that it is particularly hard to implement such measures when one's own country shares borders with a semi-dozen tax heavens, and an undersea channel with another one. To be convincing, such policies can not be implemented at the national level, or even at that of the eurozone. As far as fiscal convergence is concerned, there can be no free rider of weak link in the European Union. As long as one of the 27 states that there are now will maintain a policy of fiscal dumping, the stability of others will be endangered. But does it mean fiscal dumping should become the norm ? States would then get in a race to the lowest tax rate.

One can then see that the French proposal is a highly dividing one, but whichever policy is followed by our leaders it must be at the community level. The time of competition between states within the EU has passed. In order to succeed, there can only be two methods : either states decide to relegate a part of their sovereignty and competencies to a caring, watchdog "mother Europe" or governments set up radical and unanimous convergence plans. These two hypothesis are credible, but as of today, the Fiscal Compact signed on March 2nd abides to neither of them : London and Prague remain non-signatories.

All equal… but some more than the others: The case of homosexual marriage

Annamária Tóth — Sun, 08 Apr 2012 09:34:55 +0000

The European Union is founded on some fundamental values, amongst which we find the prohibition of discrimination based on sexual orientation and the freedom to move and reside freely within the Union. However, when we look at homosexual couples, whose status is defined by the member states, these fundamental rights are often far from being respected…

On 1 April 2001, two lesbian brides and six gay grooms were the first homosexuals of the world to say “I do” officially at the Amsterdam city hall. Two years later, Marion Huibrechts and Christel Verswyvelen were next in Belgium, followed by around 2500 couples in the next twenty-four months. In 2005, Spain was the first country to introduce a form of homosexual marriage that was completely equal to its heterosexual counterpart: indeed, in this country, where the Catholic Church and conservative parties have long opposed gay marriage, a very simple step was taken: it was only considered necessary to specify that the term 'marriage' applies equally to two persons of the same and of the opposite sex. Sweden, a country that legalised homosexual marriage in 2009, is the only country where the Lutheran Church has the obligation to accept marriage between homosexuals. Finally, the Portuguese Parliament voted in favour of homosexual marriage in 2010.

“Sexual apartheid”

While these five European countries accord equal rights and obligations to homosexuals as far as marriage is concerned, they are the exception. Even in countries with a so-called registered partnership (or civil partnership in the United Kingdom), inequalities persist. For example, Austria introduced such a partnership in 2010. Even though it allows same-sex couples to declare their union officially and gives them the right to several rights and social benefits, the Rechtskomitee Lambda (RKL), an Austrian organisation for the rights of LGBT people, still finds 59 differences to heterosexual marriage. Moreover, registered partnership remains, as in other countries such as Germany, Hungary, or the UK, limited to homosexual couples. This is why the Austrian Constitutional Court refused the application of a heterosexual couple, Helga Ratzenböck and Martin Seydl, to be registered as partners. The couple then decided to go to the European Court of Human Rights (ECHR) with the support of the RKL. In this case, the RKL talks about “sexual segregation into a homosexual ghetto (registered partnership) on the one hand and a heterosexual ghetto (civil marriage) on the other”. The British “Equal Love" campaign also supports four homosexual couples wanting to get married and two heterosexual couples wishing to be registered in a civil partnership. They applied to the ECHR on 2 February 2011.

EU law: prohibition of discrimination based on sexual orientation

Ever since the introduction of the Lisbon Treaty and the entry into force of the Charter of Fundamental Rights, the prohibition of discrimination based on sexual orientation has taken legal effect as a fundamental principle of EU law. Indeed, as the European Commission on Sexual Orientation Law (ECSOL) explains, Article 2 of the Treaty on European Union and Article 21 of the Charter are at the heart of this principle. The ECSOL adds that the EU now has a “pro-active approach” as far as the fight against discrimination based on sexual orientation is concerned.

For instance, in the judgement Römer v Freie und Hansestadt Hamburg, the European Court of Justice (ECJ) deals with the question of the inequality between (heterosexual) marriage and (homosexual) civil union in Germany. The Court rules that homosexual couples “must have access to all the employment benefits for married couples”. If a member state (as for instance Germany, Austria, or the UK), allows for a form of registered partnership equal to civil marriage, the exclusion of partners from social benefits constitutes direct discrimination. For the lawyer Helmut Graupner, President of the RKL and Mr. Römer's legal representative, this judgement is a “groundbreaking case for the whole of Europe”: “Even if a [member state] prefers segregation, excludes same-sex couples from marriage and refers them to a separate marriage-like institution, it nevertheless has to grant same-sex couples access to all the employment benefits married couples enjoy; if the law separates it at least has to grant the same rights and obligations.”

From diverging definitions of partnerships…

All in all, then, national legal situations differ in significant ways. Looking at the different provisions on the forms of unions allows to shed light on this situation. There are three kinds of partnerships between two persons: marriage, registered (or civil) partnership (which allows for an official declaration of the union without actual marriage) and de facto unions (the fact of “liv[ing] together or prov[ing] in some other way that you are in a long-term relationship”). In all cases, the definition of these concepts can vary from country to country as far as the rights and obligations of the persons and even the conditions for entering such a union are concerned. As already mentioned, five Member States of the EU authorise homosexual marriage but some countries give a substitute to marriage that is equal or almost equal in the form of registered partnership. However, the registered partnership of other countries, such as that of France, Ireland, or the Czech Republic, guarantees but an inferior substitute. Finally, there are countries without any legal provision recognising same-sex unions, such as Italy, Poland, or Slovakia. Bulgaria, Romania and Estonia even refuse to recognise any form of same-sex partnership established abroad. In other words, marriage is the exception rather than the rule…

… to the difficult recognition of the liberty to move freely

This diverse situation gets even more complicated when it comes to recognising unions of one Member State to the next as citizens are exercising their right to free movement, one of fundamental freedoms of the EU and thus another principle protected by EU law. One of the main documents ensuring this liberty is Directive 38/2004 on the right of citizens of the Union and their family members to move and reside freely within the territory of the member states. Every citizen has the right to move and reside freely in any member state of the EU, even if this liberty is subject to some limitations. They have the right to be accompanied by their family members, an element which can pose problems to same-sex couples.

This is why the Intergroup on LGBT Rights of the European Parliament defines the free movement for LGBT persons as one of its priorities: with the implementation of the Stockholm Programme, “a roadmap for European Union (EU) work in the area of justice, freedom and security for the period 2010-14”, protecting this fundamental right has gained particular importance. However, as MEP Adina-Ioana Vălean explains about her report on the “EU Citizenship Report 2010: Dismantling the obstacles to EU citizens’ rights”: “My report makes clear what Parliament has known for over four years now: same-sex couples face serious obstacles to their free movement, which is a pillar of the European Union. If we are serious about the European project, the Commission needs to address this situation, as well as other obstacles faced by the citizens when exercising their rights, such as the portability of social benefits, recognition of diplomas and inheritance tax.”

It is up to the Member States to decide

In other words, there is a theoretical obligation to respect the principle of equal treatment, while the recognition of (same-sex) unions remains in the remit of the member states in practice. This means that certain same-sex couples cannot exercise their freedom to move, as their unions are not recognised in the same way in all member states. Some countries consider registered partnership as equal to marriage, which means that the citizens have the same rights in the field of immigration: the registered partner can accompany their spouses when they move to the member state in question.

By contrast, countries which do not recognise any form of same-sex unions will most often recognise the marriage concluded in one of the five Member States as de facto unions. The marriage thus becomes void as it is the law of the Member State of destination that applies. Despite the obligation to facilitate the entry and residence of same-sex couples, the spouse can lose their right to follow their partner because the union is not recognised. The report “Homophobia and Discrimination on Grounds of Sexual Orientation in the EU Member States: Part I - Legal Analysis” of the Fundamental Rights Agency (FRA) argues that the host member state should not be able to re-evaluate the validity of a union established in the member state of origin in order for fundamental rights such as the freedom of movement to be respected.

Conclusion

To come back to MEP Adina-Ioana Vălean's report: if the Union takes the protection of fundamental rights such as equal treatment and the freedom to move seriously, it has to reinforce its action in these fields, which it has already done repeatedly, as in the “Proposal for a Council Directive on implementing the principle of equal treatment between persons irrespective of religion or belief, disability, age or sexual orientation” or Anti-discrimination directive (COM (2008) 426 final), which has been blocked in the Council without being examined formally since 2008. This is exactly the important point: without the willingness of the member states to change, for example, the system of recognition of partnerships, the protection of these fundamental rights will not advance.

31 May 2012, the day all eyes will be on Ireland (again)

Florian Chevoppe — Mon, 02 Apr 2012 11:21:32 +0000

31 May 2012. This is the date Taoiseach Enda Kenny, head of Fine Gael currently senior partner in a center-left and center-right coalition with the Irish Labour Party since 9 March 2011, has chosen to hold the referendum validating the ratification of the EU's Fiscal Compact signed on 2 March 2012 by the Oireachtas - the country's parliament. This referendum is a major stake for this once prosperous nation, which has suffered from the economic crisis. For the first time, this insular 4.5 million inhabitants republic, which has a habit of rejecting treaties at first (like Lisbon or Nice), could this time find itself completely isolated should the "no" win.

Once a stronghold of growth, now a drifting islet

Since 2008, Ireland has been lying in the eye of the financial cyclone. The first European state to have entered recession, Ireland has seen its unemployement reach historical levels : 326,000 people, the highest number since 1967. This crisis has created major disruptions in its economy : the Irish banking system, the Irish stock exchange (having lost more than 8,000 points) and the Fianna Fail, having governed the country for more than 60 years, have all collapsed.

The first solution to this crisis was a major intervention from the European Union and the International Monetary Fund with a €85bn bailout, litteraly saving the Irish state from bankrupcy. On the longer term, it is the European Fiscal Compact, signed on 2 March 2012 which ought to lead the eurozone, and Europe in general, out of the crisis.

As imposed by the constitution of this country (by a decision of its Supreme Court in 1987), ratification of this treaty must be subject to a popular referendum. Whether or not one approves or disapproves of this method of direct democracy, there remains a risk that the country will reject it. Although a recent poll by the Sunday Independent showed that 36% of the Irish people would vote for and 26% against, 15% remained undecided. These 15% have to power to shift the balance in favour of the "no". In 2008, 5 months before the Lisbon vote, there was also a majority in favour.

One remembers how fierce the media campaign against Lisbon was, and it was lead by -among others- Declan Ganley and his political party Libertas, which eventually delayed its coming into effect by more than six months. But this time a provision is included in the treaty so that should it be ratified by at least 12 states, it would immediatly come into effect. Lisbon would come into effect on the first day of the first month following the last ratification of the treaty. But in 2012, with financial decisions often taking place before those of our politicians, this method has become obsolete.

However, can we really think that this treaty would be practical should only 12 states ratify it ? What would happen if Greece, Italy and Portugal did ratify it but the Netherlands, Finland and Germany did not ? What about if Ireland, Grece and Cyprus rejected it : would we not christening a ship with a gigantic hole in its hull ?

Lessons learned from the past ?

How can we successfully lead a campaign in Ireland so that the treaty be accepted by the population ? Unlike European elections, a pan-European campaign is highly inadvisable. First, because it could cause a massive uproar in states which are only going through parliamentary ratification, with people demanding "fairer" and "more democratic" referenda. Then, because recent interventions of foreign leaders and dignitaries have had some rather dire side effects.

It happened in France, during the current presidential campaigen, when some thought Merkel's backing of Nicolas Sarkozy was highly inappriopriate. All the more, the German Chancellor had already be at the center of a controversy for having appeared during the Lisbon campaign in Dublin and calling on the Irish to vote in favour of it. Now that the Emerald Isle has had to allow the IMF and the EU to intervene in its economy, and impose painful reforms on it, it is probably not the right time for EU leaders to visit Dublin.

So will the text be adopted by the Irish ? For now, major political forces and most mainstream media seem to back the "yes" campaign, but it is not sure whether public opinion will follow. One can remember that in 2008 the main argument against Lisbon was a major loss of sovereignty of Ireland to Brussels. The Fiscal Compact is precisely doing the same, however not in political but in economic domains. And as the Irish Independent recently put it, "outside surveuillance is a loss of sovereignty - but largely of the sovereign right to be irresponsible."

Political turmoil in Greece

Claudia Louati — Thu, 22 Mar 2012 23:00:00 +0000

On February 13th, a few hours after the adoption by the Greek Parliament of an austerity programme strongly supported by the EU and the IMF, the government’s spokesman Pantelis Kapsis announced that Greek legislative elections would take place in April 2012. While the current coalition government struggles to implement the economic reforms demanded by Greece’s eurozonee partners, the political climate in the country appears extremely tense.

Political turmoil

Greece’s constitution was adopted in 1975 and established a parliamentary republic. 300 Members of Parliament (MPs) are elected every four years, under a proportional representation voting. The last elections took place in 2009 and coincided with the beginning of the Greek crisis. Socialist Prime Minister George Papandreou announced right after his election the abysmal deficit left by previous governments, an announcement which produced immediate effects on the markets and forced Greece to ask its partners for help a few months later.

A first reshuffling of the governmental team took place in June 2011, soon followed by a political crisis over the European bailout in November 2011. At the time, Prime Minister George Papandreou proposed a referendum to ratify the agreement struck with difficulty by the European countries a few days earlier, who had accepted to write off 50% of Greece’s debt in exchange for further austerity measures to restore financial stability. This move by the Prime Minister was presented as a way to restore democratic accountability, as the government’s harsh reforms were being extremely badly perceived by the population. It was however seen by the opposition as an attempt by Mr Papandreou to remain in power, expecting the Greek people to approve the referendum despite their dislike for the Prime Minister.A failure would have infuriated European leaders and may have led Greece to leave the eurozone. Hostility to the referendum was expressed even within the Socialist Party and support to the government dramatically eroded.

Although Mr Papandreou won a vote of confidence by a very narrow margin on 4th November and finally dropped the idea of a referendum, he decided to step down. Talks between the two main parties, PASOK and New Democracy, led to the establishment of a coalition government, a solution that both parties had long resisted but which appeared as the only way to implement the reforms Greece’s partners were pushing for. After long and difficult negotiations between the main parties, the Socialist Lucas Papademos was appointed Prime Minister and formed a government composed of members of PASOK, New Democracy and the extreme-right (the Laos Party). The latter however left the government on 10th February 2012 as a protest against the last loan deal agreed upon by eurozone leaders, seen as an unbearable burden for the Greek people.

The democratic problem

The coalition government was only supposed to be an interim government, established to carry out reforms and pave the way for the next elections. Its lack of democratic legitimacy was pointed out by many politicians in Greece, such as the head of the left-wing Syriza group Alexis Tsipras who affirmed that "the new government and the new prime minister are being called to impose a political policy that does not have democratic legitimisation". He added that Mr Papademos "is someone who has not been elected or judged by the Greek people".

In fact, this question is directly linked to the current debate on the lack of participation of the Greek people in the economic decisions that are being made and that harshly affect them. The troika composed of the International Monetary Fund, the European Commission and the European Central Bank is often described as a despotic entity that imposes cruel austerity measures on Greece without leaving any room for manoeuvre to the Greek government. Nigel Farage, known for his extremist positions and provocative harangues at the European Parliament once declared that “there is a troika running Greece, not a democracy”.

Is there however an alternative to the submission of governments to the will of the international organizations that lend them money? At the international level, any country benefiting from IMF loans is under close scrutiny from the organization and agrees to implement the measures that are needed to restore financial stability. Its democratic legitimacy is however not higher than that of the European Commission. In a world where countries’ interest rates and economic stability are determined by financial markets, even democratically elected governments have little room for manoeuvre to implement their economic policies.

In that sense, there is little chance that elections would actually give Greek people the power to choose their fate and their government’s path of action.Greece’s partners will insist on additionnal reforms if the country is to remain in the eurozone. European leaders actually required all major political parties to commit to upholding the new bailout agreement struck in February regardless of the results of the next elections. Elections will thus not necessarily bring the Greek people back in the equation.

The current political climate

There is no general consensus between and within political parties on the timing and the organization of legislative elections. In the Prime Minister’s party PASOK, certain ministers (such as the education minister Diamantopoulou) have publicly proclaimed that elections should not take place before next year, while others have vehemently advocated for them to be organized as soon as possible. Not surprisingly, PASOK is currently polling extremely badly - with some polls even bringing its figures to below 10%, as it is blamed for the country’s current situation. Mr Papandreou is currently the party leader but is soon to be replaced in an intra-party ballot, most probably by the current finance minister Venizelos.

The other big party, New democracy, is expected to be the winning party in the next elections, but the likeliness of it gaining an absolute majority is very slim. The party was, until at least 2010, blamed for all past mistakes which led to the country's application for a bail-out. Over the past two years, the party’s current leader, Mr Samaras, has voted against all bail-out related legislation up until the last package, taking a firm anti-memorandum stance. While this systematic opposition may have earned him some sympathy from certain parts of the electorate, he is now suffering in the polls from having given his consent to the last package and the austerity measures that accompany it. He tried to justify such a spectacular move by the risk of bankruptcy faced by Greece, but this unexpected turnaround has not gone unnoticed by the party's electoral base. Almost 20 MPs left the party as a protest against the last economic agreement, and some are already thinking about forming new parties – such as the 'Independent Greeks' party led by Mr Kammenos which was created a few days ago.

Conclusion

Right now, no party enjoys a majority in the Parliament, which means that the current coalition government under Mr Papademos is completely dependent on the two main parties’ support. In these times of crisis, the political stability of the country appears to be extremely fragile. While elections will lead to the democratic replacement of the current coalition government, it can be feared however that the harsh electoral campaign and the likelihood that no clear winner stands out will trigger a difficult political crisis.

The author would like to thank Mr Vasileios Ntousas for his extremely useful comments and insights.

To read further

On Nouvelle Europe's website

Dossier March 2012 : 2012 : année électorale en Europe

On the internet

Comment la crise grecque est devenue celle de l'euro? Le Monde, updated on 1st November 2011
Greek leader's referendum bombshell, by Helena Smith, The Guardian, 1st November 2011
Greece on shaky ground as coalition party rejects troika loan deal, by Helena Smith, The Guardian, 10 February 2012

The EU in the Republican Electoral Debate

Thu, 22 Mar 2012 23:00:00 +0000

With the upcoming US presidential elections in November 2012, the race for the White House is in full gear as both Democratic and Republican Parties are currently holding primaries. The first Republican presidential debate was held on May 5th of last year, followed by more than 25 others. As with any election, it is as interesting to see what is being talked about, as it is to see what is left out. So, what are Republican candidates saying (or not) about Europe?

Barack Obama’s election in 2008 was greeted with popular enthusiasm in Europe and seen by European politicians , as an opportunity to improve the transatlantic ties that had suffered so much during the George W. Bush era. Obama, a declared multilateralist, seemed to be ideologically closer to European traditions of social democracy on issues such as healthcare reforms, tax reform or climate change.

The moment seemed ripe for renewed and improved transatlantic cooperation. However, the cancellation of Obama’s visit to the EU-US summit held in Madrid in May 2010, among others, marked yet another blow to transatlantic relations. Amongst the reasons put forward for this cancellation, Obama’s domestic woes certainly need to be taken into account. Against a backdrop of minimal state interventionism, Obama’s “social democratic” healthcare reforms, caused much debate and disarray in American political circles.

From Blatant Anti-European Rhetoric …

Obama has often been portrayed as being too European in his policies, even if such a depiction is misguided. Although most (Republican and Democratic) candidates scarcely mention foreign policy, let alone the EU, in electoral debates, this vision is often reiterated by Republican candidate Mitt Romney, as a critique of Obama’s presidential tenure. In his New Hampshire primary victory speech, Romney said the Obama administration was the “worst of what Europe has become”.

From this victory speech, it seems that Romney is running as much against Europe - or American perceptions of the Old Continent - as he is against Obama. Europe was depicted as socialistic and weak, and lacking inspiration when compared to the shining American model. President Obama, Romney stated, “takes his inspiration from the capitals of Europe; we look to the cities and towns across America for our inspiration.” Obama wants to “turn America into a European-style social welfare state. We want to ensure that we remain a free and prosperous land of opportunity.” In Iowa, Romney warned voters that Obama’s policies are making the US “more and more like Europe.”

… to a General Lack of Interest …

Europe is set to become the cultural scapegoat of Romney’s 2012 presidential campaign. Other candidates however are not picking up the anti-European platform; in fact it is a general lack of interest in Europe that characterises the US electoral debate. During the Republican debate of 11 October 2011, which focused on the economy, there were barely a few words about one of the most important economic issues of the moment : the eurozone debt crisis and its potential effects on the US. Only one question was asked about the eurozone crisis and Romney stated that a financial meltdown is only “hypothetical” and as such it was not worth dwelling on.

Neither was the eurozone crisis widely discussed in the GOP debate of 12 November 2011, which focused on foreign affairs. While the candidates debated about Pakistan, Iran, China and Afghanistan, it was only the very last question which dealt with the eurozone crisis. While candidates may not be too fond of this topic, Romney and Paul did come out against a possible European bailout, even if a collapse of the eurozone would have significant repercussions on the global and American economy. The eurozone crisis seems indeed to be more important to the day-to-day life of the US than are the Russian elections or Chinese hegemony. But few candidates seem to remember that.

In fact, the EU and US economies are so intertwined that if Europe was to collapse, the US would be compromised as well. The EU is the US’ largest trading partner, with $240 billion worth of US goods exported to Europe every year (according to 2010 figures). The EU-US trade economy is the largest bilateral economic relationship in the world today; in terms of services, the EU is the US’ number one export market. Moreover, 70% of job created by foreign direct investment (FDI) in the US comes from the EU: be it the jobs in Wall Street, or for Volkswagen, which invested $1 billion to build a plant in Tennessee, or in the BMW factory in Spartanburg, S.C., with its 2010 investment of $750 million. To say or to suggest that the European economy has nothing to do with the US economy or its job growth is to forget the effects of globalisation.

… a Convenient Association.

American banks understand this, Wall Street certainly does too, as well as the Federal Reserve System. But for some reason, Romney prefers to use the eurozone crisis as a campaign platform to appeal to the xenophobic part of the electorate. Considering the general lack of interest in Europe by most candidates, the question is why is Romney running on this blatant and simplistic anti-European platform? Aside from appealing to a particular section of the electorate, associating Obama with Europe links the incumbent President with the current malaise in Europe, which only serves Romney in his race to presidency. It emphasises the stereotypical notion that Americans have about Europe, that they have no defence capabilities, are freeloaders and live on welfare benefits. At the Florida Primary, Romney said that Obama would “like to make us more like a European social welfare state. Europe is not working in Europe. The last thing we need is for America to become more like Europe.” Therefore not only is Romney emphasising the dysfunctional nature of European social democracies - thereby disavowing "socialism" - but he is also linking President Obama to these failures.

The EU in the Republican electoral debate is therefore characterised by two main trends: on the one hand there is a general lack of interest for European issues, and on the other hand, it is used by Romney as a platform from which to run against President Obama. Romney is not so much running against Europe unlike many of his speeches may suggest, but against an American vision of Europe that Obama, the anticipated nominee of the Democratic primaries, embodies. Opposing old, weak and inspiration-less socialist Europe to the “free and prosperous land of opportunity” - to the American dream - seems to be bearing its fruits however, as Romney is in the lead to win the Republican primaries.

To go further

On Nouvelle Europe's website

Dossier March 2012 : 2012 : année électorale

On the internet

Mitt Romney: 'European socialist policies not right for US', video made available by the Telegraph, 23 Sept. 2011
Mitt Romney blasts Obama and Europe in NH primary victory speech, Globalpost, 11 January 2012
Romney and his European straw dog, by Edward Goldberg, The Huffington Post, 1 December 2012
Romney runs against...Europe? by Andy Reinhardt, Bloomberg Businessweek, 12 January 2012

Original source of the photo: US and EU flags, Flickr