Charlemagne's notebook

A FOOTNOTE to my column this week on the EU budget. The European commissioners’ weekend reading is the draft of a long-awaited budget review setting out future spending priorities, reforms to rationalise a horribly complex system of levies and rebates, as well as ideas about how to raise new “own funds” for the EU. The latter would be called anything but a “European tax”. In the words of Alain Lamassoure, the French head of the European Parliament’s budget committee: “Once you mix the words 'Europe' and 'tax' in the same sentence it becomes explosive.”

These matters are so sensitive that the commission has gone to unusual lengths to prevent leaks, after last year’s early draft was exposed (PDF) and shot down. The review has been drafted by a small inner core of commissioners. Only a limited run of numbered copies of their latest draft has been printed. Each commissioner has had to sign for his or her copy. And as an added deterrent to leaks, each is written with slightly different phrases and spelling mistakes to help identify the culprit should the contents appear in Monday’s papers.

The commission will try to sell any request for “own resources” as a kindly attempt to relieve some of the financial pressure from the European taxpayer: instead of seeking more funds from national exchequers (and so from the taxpayer) the Eurocrats will consider raising money from bankers (a financial transaction tax) or polluters (airline tickets or credits for greenhouse-gas emissions). These are more palatable targets than the citizen’s pay-packet. Nobody should be fooled. Any new revenues ultimately come from the taxpayer, given that the EU does not independently generate its own wealth.  Many will argue that any new funds might as well go to state coffers to help pay off national debt, thereby reducing the pain of spending cuts or other tax rises.

If the EU really wants to be kind to the taxpayer it might do better to find ways of spending less money. One need not be a veteran of the EU bubble to spot some obvious savings: end the expensive practices of moving the ministerial caravans from Brussels to Luxembourg for three months a year, and of splitting the meetings of the European Parliament between Brussels and Strasbourg.

COUNTER-TERRORISM, like defence, is one of the last redoubts of national sovereignty in Europe. But now that jihad has gone global, the response to it must, by necessity, extend beyond national frontiers.

In recent days there has been renewed nervousness about terrorist attacks, actual or suspected, in Denmark and the Netherlands. In France, Bernard Squarcini, the head of France’s domestic intelligence, has given warning that “all the flashing lights are red”, echoing the phrase used by George Tenet (“the system was blinking red “) to describe the atmosphere at the CIA in the days leading up to the September 11th attacks nine years ago. Yet in all this, the European Union struggles to find a role for itself.
In America, the response to the 9/11 attacks was to try to make intelligence agencies unlearn the lifetime habits of releasing information only on the basis of “need to know”, and adopt insted the doctrine of “need to share”. On the other side of the Atlantic, though, the idea of pooling intelligence Europe-wide never got very far.

One reason is that those who don’t have much good intelligence have little to pool; and those  who do have valuable information guard it jealously to protect methods, sources and perhaps mystique. Intelligence does get shared. But it flows through narrow straws, not into a general pool; it is passed on to specific people for a specific purpose, usually fellow spooks who can be trusted to keep secrets.

Continue reading "Making life harder for the bomb-makers" >>

“FRANCE is a large country. It is sovereign… France is not before a tribunal.” So declared Pierre Lellouche, the French minister for European afffairs, as he tried to fend off on September 13th the growing questions about his country’s eviction of Roma (gypsy) migrants. A day later comes the news that France may indeed be placed before the judges.

For weeks, the European Commission has shied away from declaring France’s actions illegal, although it has strongly hinted at its disapproval, asking for further information and issuing coded warnings.

Today Viviane Reding (pictured), the commissioner responsible for justice, fundamental rights and citizenship, unexpectedly turned up the regular noon briefing and dropped the euphemisms. “I personally have been appalled by a situation which gave the impression that people are being removed from a member-state of the European Union just because they belong to a certain ethnic minority. This is a situation I had thought Europe would not have to witness again after the second world war.” The commission, she predicted, would have no choice but to begin formal “infringement proceedings”, a process that could end with France being taken before the European Court of Justice, based in Ms Reding’s native Luxembourg.

The rumble of journalists heading out of the door to file the news is testament to the remarkable turn of events. The commission is typically accused of being timid, particularly when it comes to taking on big member-states like France. Infringements of EU regulations is one thing; a head-on confrontation over the internal politics of a founding member of the EU is quite another.

Why the change of tone, particularly given the commission’s caution when Roma were being evicted from Italy last year?

First, events have spurred the commission into action. The French government had argued that the evictions were simply a matter of public order, and of preventing illegal migration; there was no question, Paris said, of targeting a particular ethnic group. The assurance was repeated at a meeting in Brussels on August 31^st between French ministers, including Mr Lellouche, and European commissioners.

But on September 9^th a French website, “Le Canard Social”, published leaked instructions from the French interior ministry telling prefects to evacuate 300 illegal camps within three months, with the Roma camps as “a priority”. This was, said commission officials, the “smoking gun” that the French government had been less than candid.

Ms Reding plainly took umbrage at Mr Lellouche’s haughty dismissal of the commission’s long-established role as the guardian of European treaties. “The commission can say what it wants,” he had insisted. States that had adopted the treaties were equally their guardians. “There is no divine right from whatever god who says how things should be done.” Ms Reding retorted that the commission’s role as guardian was the foundation of the European Union, “which is held together not by force, but by respect of the rule of law agreed upon by all member-states, including France.”

A third factor is the vociferous protest from the European Parliament. On September 9^th it passed a strongly worded resolution denouncing discrimination against the Roma, and singled out the commission for its “late and limited response”.

The row thus brings out the contradictions of European democracy: an elected national government finds that its resort to populism is confronted by the European Commission, an appointed body, and by the European Parliament, a distant chamber elected by a minority of voters.

One senior commission source puts it like this: “The commission can be free of populism. It does not have to think about opinion polls… Democracy is not just elections but the rule of law. Courts are not elected, but they are absolutely legitimate.”

POOR José Manuel Barroso. For the past nine months the president of the European Commission has lived in the shadow of that other European leader, Herman van Rompuy, president of the European Council. During the economic crisis Mr Barroso has been accused by the European parliament of being “absent”, and big member states seemed happy to keep it that way. It was Mr Van Rompuy who was given the job of leading a task force to draw up proposals on the future governance of the euro zone.

Today Mr Barroso finally had a chance to shine: the European Parliament asked him to deliver the first of what will be an annual “state of the union” address. Except that the parliament’s excess of zeal did much to deflate the big occasion. It had threatened penalties against MEPs who did not attend the session, but its leaders hastily retreated in the face of mockery and outrage.

The other inconvenience for Mr Barroso is that he was scheduled to speak in Strasbourg on the same day that European finance ministers were meeting in Brussels to discuss regulation of the finance industry and new rules to govern the euro zone. It made Mr Barroso seem even more detached from the action.

The Commission President  might still have redeemed the situation with some inspiring rhetoric (let’s face it, it’s pretty hard to make bank levies and budgeting semesters sound interesting). But weeks of work on the text failed to inject any real passion or direction. Mr Barroso gave a shopping list of familiar things he saw as necessary, but may be powerless to achieve: economic governance, promoting growth, building “an area of freedom, justice and security”, launching negotiations on a new budget and “pulling our weight on the global stage”.

His barbs were sufficiently well-concealed that they could safely be ignored. “Racism and xenophobia have no place in Europe….I make a strong appeal not to re-awaken the ghosts of Europe’s past.” This, one is told, was a reference to Nicolas Sarkozy’s gleeful deportation of Roma to Romania and Bulgaria.

He said he would prepare proposals “without taboo” for the next round of negotiations on the EU budget. But he mentioned the British rebate only obliquely as part of “a byzantine set of corrections” and did not dare speak of reforming the Common Agricultural Policy. Taboos remain in place.

The reaction from MEPs was, for the most part, criticism of Mr Barroso’s failure to push for the response that most of them, from left to right, instinctively saw as the solution to Europe's problems: “more Europe”.

Martin Schulz, the leader of the socialists and democrats, said Mr Barroso had delivered a “liberal-socialist-green” speech, and he was right. There was a little bit for everybody, including some red meat for those who think Greece’s debt crisis was due entirely to “speculators” rather than to its own mismanagement and statistical lying. “Abusive” naked short-selling  would be stopped, and credit default swaps would be banned or restricted. “The days of betting on someone else’s house burning down are over,” said Mr Barroso.

It is a pity, because Mr Barroso is by all accounts a sensible president of the European Commission, committed to free markets. Indeed, he said it was time to “exit” the era of fiscal stimulus, called for structural reforms and promised plans to dismantle the umpteen barriers that still exist within the single market. His own supporters scratch their heads at his inability to push such views more effectively, even now that he has been re-selected for a second term. The Commission has the bureaucratic firepower and expertise within the EU system, yet it is weak.

One of Mr Barroso’s problems is that he is only one of four European “presidents”: apart from Mr Van Rompuy, there is the president of the European Parliament, Jerzy Buzek, and the rotating president of the council of ministers, currently held by Belgium, even though it once again has no proper government of its own (it has had a caretaker government since June, when Flemish separatists made big electoral gains).

It was Nigel Farage, leader of the eurosceptic UK Independence Party, who had the best line of the day. He told Mr Barroso the state-of-the-union speech “doesn’t quite put you on a par with President Obama, because there is one fundamental difference: he, of course, is elected, and you are not. Forty-eight million people watched his address, and here in the European Parliament we even have to beg to get the MEPs to turn up to listen to you.” Ouch.

* The passage about Martin Shulz should read: "and he was right" , not "and "he has right" . The typo has been corrected. Entschuldigung.

IT has been 17 years since I first set foot in Brussels, arriving for a half-year internship at the European Commission. Back then, there was a faintly provisional feel to the European project. The European Parliament had rather few powers and worked out of a borrowed building in Strasbourg normally used by the Council of Europe. The Berlaymont building, headquarters of the European Commission, was an asbestos-ridden ghost, closed off and hidden within a shroud of plastic sheeting and scaffolding. The single currency was still years away. There was a theoretical European Currency Unit (a basket of real currencies) and it seemed like a quaint joke that bar prices at the Nouvelle Rotonde, a commission coffee shop, were listed in ECUs as well as Belgian francs. If memory serves me, the only thing that cost exactly one ECU was a draft Belgian beer. Brussels itself was shabby, grey and somehow provincial and exotic all at the same time. From its clanking yellow trams to its ramshackle clubs and semi-legal bars, I liked it very much.

I arrived for a second time in January 2005, and was struck straight away by the self-confidence and solidity of the place. Brussels was a prosperous international city, more or less. The parliament had built itself not one but two Babylonian complexes of glass, steel and marble: one in Brussels, the other in Strasbourg. The Berlaymont gleamed and hummed. My wallet was full of euros. The banknotes looked like play money after years using dollars in Asia and America, but the currency was hailed all around as the EU's greatest achievement, fuelling growth across a booming continent.

The new EU constitution had just been approved, and was going to be a triumph, acclaimed by voters in referendums across the block. Books were being published with names like "Why Europe will run the 21st Century". It is hard to imagine such confidence now, in a Brussels that feels weary and wary about the future.

Today is my last day as Charlemagne, and almost my last day in Brussels. On Monday, I will swap pseudonyms, take the Eurostar to London and turn into Bagehot, writing a weekly column on British politics. I will miss this blog, and especially its readers. You are too shrewd a bunch for soft-soap and compliments, but your comments have transformed the blog, for the better. I read all of them, and do not consider an idea stress-tested until it has run the gauntlet of the comments section. Thank you for your courtesy and engagement with each others' ideas.

My final print column appears on Friday. Charlemagne's Notebook will take a pause for a few weeks, and will be back in trenchant form under my successor towards the end of the summer. I will be blogging on Bagehot's Notebook from Monday. See you there.

To end, some thoughts about how we got from the confidence and hubris of 2005 to the Euro-gloom of 2010. They were commissioned by E!Sharp, a Brussels policy magazine, for their issue out next week. Here is my piece for them:

BACK in February 2005, a few weeks after arriving as a journalist in Brussels, I wrote a newspaper piece about the striking mood of “seriousness and self-confidence” that hung about the EU capital.

The European Commission was to be heard, boldly making the case for large-scale immigration by economic migrants to offset the greying of Europe. The euro was hailed as a huge success, bringing many EU countries the lowest inflation and interest rates they could remember. Spain was gearing up to hold a referendum on the EU constitution: a document so inspiring and so significant that France, the Netherlands, Luxembourg, Ireland, Belgium, Portugal, Poland, Denmark, the Czech Republic and even grumpy Britain had all pledged popular votes on it.

In Barcelona, I watched Jacques Chirac tell a pro-constitution rally that the treaty would allow Europe “to take giant strides forwards in terms of defence”. This, beamed the then French president, offered a “very desirable balance” to the current system based on NATO. His host, José Luis Rodríguez Zapatero, focussed on Spain’s booming economy, and the billions in EU aid that made it possible. Now, said the Spanish prime minister, it was “time to say thank you”.

My timing was lucky. A few months later, and I would never have witnessed this high point of confidence. Arriving when I did, I experienced some of the most significant events in recent EU history, the long-term impacts of which have yet to be felt. Four are linked to the doomed constitution.

The first two were things that happened: the No votes in France and the Netherlands. They were different forms of rejection – one a reflection of French exceptionalism and the French public’s dislike of free market capitalism, the other more straightforwardly Eurosceptic. Both – looking back – were linked to globalisation, and a sense that ordinary French and Dutch voters no longer fully recognised themselves in the enlarged EU, or believed that they controlled it.

The third seismic event was something that did not happen: Britain cancelled plans for a referendum on the constitution. That would surely have been lost, prompting moves by an ad-hoc core of states to push ahead with deeper integration.

The fourth event also matters because it did not happen: namely, Irish voters did not reject the Lisbon Treaty a second time. The first Irish vote was a blow to Brussels, but not a catastrophe. In contrast, a second Irish No would have exposed the EU establishment at its ugliest, with calls for Ireland to be expelled from the Union, or at least bullied senseless. Shortly after the first Irish No in 2008, I found myself at a gala dinner in Brussels. Sitting on a gilt armchair in a panelled stateroom, I was told by the head of a Brussels think-tank that the Irish result proved the idiocy of putting EU treaties to the people. “Fucking voters,” he declared, languidly extending one arm so the hovering steward could refill his champagne glass. “I mean, fucking voters, what do they know?” I still wish I had walked out.

Inside the Brussels bubble, the constitution remains a success story. Conventional wisdom says nothing was lost by ratifying the constitution in disguised form through parliamentary votes, as the Lisbon Treaty. But Europe lost some of its innocence when it rammed the constitution through. Back in 2005, lots of leaders genuinely wanted to put the treaty to voters: they thought its grandeur would inspire popular approval. They are sadder and wiser now.

The treaty inspired my fifth seismic event: the June 2009 ruling by the German constitutional court in Karlsruhe that core areas of lawmaking had to remain under national control, because the EU enjoys only second-class democratic legitimacy. Germany’s partners are slowly waking up to how governments in Berlin feel bound by that ruling.

I was in time for two more events whose consequences have yet to play out. The Copenhagen climate summit in December 2009 woke the EU from its dreams of bestriding a multipolar 21st century as a normative superpower.

Finally, overwhelmingly, there is the financial and economic crisis. I am sadly sceptical that the EU will emerge unscathed. As I leave Brussels, I sense little of the self-confidence of 2005, nor the buzz of new ideas: only the same old ideas being dusted off, but this time in a Europe where democratic deficits are much harder to ignore than before.

But in truth, my scepticism is not really towards the EU, but towards Europe as a continent, which feels too old, tired and anxious to compete. I only hope I am wrong.

HERE is another despatch from the parallel universe called: Brussels off the record. I have spent the last few days talking to some of this town's big cheeses about European economic government (or governance): the new wheeze that we are endlessly told will save the euro. The Brussels consensus is that future crises in the euro must, absolutely must, be avoided with the help of new systems to oversee national budgets, and tough new sanctions for countries whose borrowing and spending looks unsustainable.

As always with a Brussels consensus, the grip of these arguments on public debate is total. The only discussion out there turns on exactly what sort of sanctions should be slapped on countries that misbehave. Some talk of fining countries by withholding EU funds. Others talk of suspending the voting rights of miscreants at EU meetings. Some think both might be a fine idea. But sanctions are apparently the way forwards.

Being a literal-minded sort, one of the questions I have been putting to all my interviewees this week is the following. Why should anyone believe such sanctions would ever be applied to a big country like Germany or France?

I have to tell you that, in several off the record conversations, the answer I have received is this: of course sanctions would never be applied to Germany or France. It is absolute nonsense to imagine they would ever be hit with a voting ban, let alone fines. Some top folk think only small countries could be hit with sanctions. Others think even that is madness, suggesting that EU-imposed punishment would be the best way of fuelling populism and even extremism in all manner of countries.

I confess this tallies with my own hunch. I can assure you I have been talking to a range of people from across the machine. And I can report they do not put their faith in this talk of sanctions. Some, to be fair, think that all is not lost because market discipline and peer pressure could still do a lot of good to improve public finances across the block. But sanctions? Nope.

Alas, Brussels off the record is likely to remain a parallel universe. With EU leaders under such pressure to show they have a cunning plan to save the euro, I fully expect the debate about sanctions to remain the consensus in Brussels for months to come.

SINCE the start of the euro crisis, one of the challenges for a Brussels-based reporter is that very big things may be afoot, but nothing much is happening. Or rather, it is dramatic that the politics of this crisis have been deadlocked since February, more or less, when EU leaders first agreed that they would not let Greece go belly up then realised they disagreed about everything else. But from moment to moment, it has been a replay of Groundhog Day (the film, rather than the hokey folk festival).

One of the hardest things to report is all the calls for economic governance or an economic government. I have been writing since February that different countries mean different things by these words. To simplify, the Germans want the harmonisation of budget discipline, thrift and competitiveness. The French want economic governance to mean the harmonisation of taxes and labour laws across the eurozone, dirigisme and lots of redistribution: whether by fiscal transfers or cheaper borrowing via common European bonds (ie, allowing everyone to borrow Germany's credit rating).

Those positions have not budged greatly since then. And when I sit down and ask people what they really mean by economic governance, they struggle to offer any detail. So Jean-Claude Trichet, the head of the European Central Bank, has done us all a great service by setting out his vision of what economic governance might mean, in some detail.

Mr Trichet was before the European Parliament's monetary and economic affairs committee today, and was quizzed about a paper the ECB has just published (Hat tip the FT), calling for a "quantum leap" in co-ordination. The paper called for finance ministers of the eurozone to become guardians of each others' fiscal sustainability; the creation of an independent fiscal agency, based at the European Commission, to monitor each member country's fiscal positions; "quasi-automatic" sanctions for those who break the rules, to include fines, suspension of voting rights and intrusive inspections by EU officials; and the conversion of the temporary, three-year €440 billion euro area defence mechanism into a permanent crisis management institution.

According to a parliamentary press release, a Luxembourg MEP asked Mr Trichet: "Is fiscal federalism and economic governance the same thing?" Mr Trichet, says the parliamentary note, "replied that what was pragmatically possible now was to argue for the equivalent of fiscal federalism based on much stronger surveillance of budgetary and competitiveness policies since a truly federal system would require a treaty change."

So what does this all mean? How far down the road to political union are we going? Not having a crystal ball, I have decided my hunch should lie within two bookends, if you like. On one extreme, I need to be careful not to dismiss out of hand the idea that we are on the brink of a great leap forwards to deeper European union. As a French colleague was forcefully reminding me the other day, Anglo-Saxon observers have a long record of being wrong about the euro, doubting it would ever be created and then underestimating at each stage the political will among founder members to make it work. There is something to this, so that gives me one bookend, labelled "suspension of disbelief".

Then, at the other extreme, comes my hunch that my French friend should not overestimate the political willingness in places like France to accept the sort of deep fiscal union of which he dreams. My bookend here involves imagining France a few months before a presidential election, and some new EU fiscal agency telling the incumbent president he is not allowed to spend public money to end massive street protests. Try as I might, I cannot imagine a French politician of any stripe feeling bound to curb public spending when their survival is at stake, just because of some EU rule or some deficit cap written into French law. At its simplest, French politicians simply do not believe that rules and things written down can ever trump politics.

I once heard a senior figure recall visits to the French national assembly to discuss the single currency, then in its infancy. Would you like European economic governance, he would ask deputies. "YEEES", they would roar. Ah, so would you like Brussels to have the right to tell France how much to spend or borrow? "NOOOOO", they roared.

I have no idea what will happen next. But I bet the answer lies somewhere between my twin bookends of open-mindedness and deep scepticism.

IT IS buried in article 14 of an uninspiring set of summit conclusions, but the 27 leaders of the European Union took a useful and important decision today, namely to publish the results of stress tests on Europe’s 25 largest banks.

For all their populist attacks on “immorality” of financial markets and vows to rein in “casino capitalism”, their sensible decision—taken at a one day meeting in Brussels—was prompted by market pressure. In short, for all their faults, markets have once again provided the only reliable source of discipline and rigour in this whole euro crisis.

It was the same in February, when EU leaders gathered in Brussels to wag their fingers and vow to stand by countries in the eurozone, in a bid to halt market attacks on Greece. However, their refusal to spell out what they meant meant that within days markets had called their bluff. Four summits later, the EU agreed a €750 billion eurozone defence mechanism. Markets can and do get things wrong, and rush about in herds. But no other force has been able to make EU politicians sit down and agree what they need to do to save the single currency.

The idea of making public these tests—that measure the ability of banks to survive various horrid economic scenarios—came from Spain. Spanish banking regulators and government officials have been pushing for publishing stress test data for some days, arguing that international markets were taking too gloomy a view of Spanish banks, and that a dose of transparency would act as a positive, calming surprise.

The Germans were more reticent, with the boss of Deutsche Bank, Josef Ackermann, saying last week that he supported publication of stress tests in principle, but that going public would be “very, very dangerous” if mechanisms to support European banks were not in place beforehand. Unsurprisingly, Germany’s public sector banking association, is still opposed: it represents the regionally-owned Landesbanken where many of Germany’s scariest financial skeletons lurk.

The Spanish forced the pace, however. Officials here in Brussels say that only two Spanish banking groups, Santander and BBVA, are big enough to make the 25 covered by the summit conclusions.

But the governor of the Bank of Spain, Miguel Ángel Fernández Ordóñez, a man of good sense who has been at the forefront of pushing for structural reforms (making him few friends in the Spanish government), announced yesterday that stress tests would be published covering all Spanish banks. That includes tests on the troublesome cajas—credit co-operatives that are often controlled by powerful local politicians and which have been resisting pressure from Madrid to merge and restructure. The tests will cover: “not only for what would currently seem to be the most reasonable scenarios, but also for complex growth scenarios in the near future”, he said. If by the end of June, any institutions are still resisting restructuring and recapitalisation by the FROB (Fund for the Orderly Restructuring of the Banking Sector), then the central bank “will act”, said Mr Fernandez Ordóñez. That is no idle threat: the FROB mechanism allows the central bank to take over recalcitrant banks, as happened with the church-run CajaSur the other day.

With luck, markets will reward Spain for this transparency. The prospect that openness will help Spain get ahead of the markets has certainly had a good effect on the Spanish prime minister, José Luis Rodríguez Zapatero. He began this crisis by hinting that the dark forces of an Anglo-Saxon conspiracy were picking on Spain to destroy the euro.

Tonight in Brussels, Mr Zapatero was still grumbling about unfounded rumours (and frankly, he has a point), but also arguing: "There is nothing better than transparency to demonstrate solvency.”

The European Commission president, José Manuel Barroso, jumped on the chance offered by the new mood of openness to push for a proper cleaning out of the horrors that still lurk in corners of EU banks.  “This should reassure investors by either lifting unfounded suspicion or by dealing with the remaining problems that may exist,” he said.

You will never persuade most European politicians to admit it, but they are finally doing the right thing, and it is down to those hated market forces.

"BELGIUM: historic victory for the Flemish independence movement" said a front page in the French press this morning. "Flemish separatist party wins in Belgian election", said an Anglo-Saxon broadsheet. Neither headline was completely unfair: the New Flemish Alliance (N-VA) of Bart De Wever does believe that Belgium's "natural evolution" is to split into two separate halves, and the party won a stunning victory yesterday, rocketing from fringe party status (five seats in the lower house of parliament in the last elections) to 27 seats this time, making it the largest party in Belgium.

Yet those headlines were arguably a bit too hasty, and at the same time not dramatic enough. Mr De Wever, a burly, clever populist, was far too canny to use the word "separatist" at this election, instead repeatedly saying that he was not proposing a revolution or the end of the kingdom of the Belgians. What he proposes is a confederation, a rare constitutional creation consisting of two separate sovereign states that would agree to pool certain aspects of their sovereignty and share things like foreign policy or defence, under an umbrella that will be called "Belgium". One of those states would be Wallonia, in the French-speaking south of the country, and one would be his homeland of Flanders, in the Dutch-speaking north.

True, he has made no secret of his belief that this is only a step to full Flemish independence, but his genius was to position himself as the most radical of the mainstream leaders, pushing the status quo as far as it can possibly go without triggering an existential crisis. He dangled before Flemish voters the idea that, armed with a thumping mandate from them, he would have the power to demand a constitutional structure that finally reflected the Flemish view of reality: that Belgium is made up of two societies, in which a thrifty, centre-right, Dutch-speaking north should no longer have to subsidise a poorer, welfare addicted French-speaking, socialist south.

But he spared them the frightening prospect of an immediate, catastrophic end to Belgium, with all the attendant problems of sacking the king, dividing up the public debt, working out what to do with the military and what have you. (In fact, showing that—very naughtily—he does not read this blog, Mr De Wever continued peddling the old line that Europe would save Belgium, suggesting that ever deeper European union would allow Belgium simply to "evaporate" as a state).

In the south, as polls predicted, voters played into Mr De Wever's hands. They turned massively towards the Parti Socialiste (PS) of Elio Di Rupo, a bow-tie wearing dinosaur who wants to impose price controls on 200 staples like bread and milk, and who asserts that public spending, not capitalism, is what creates jobs. Mr Di Rupo is also the man who once argued that sky-high unemployment in Wallonia is not such a serious problem as all that, because once you add up childhood, old age, weekends and sleeping, work only accounts for 20% of the life of someone who reaches 80.

Does this mean that Flemish voters have converted en masse to separatism and the N-VA’s faintly menacing form of flag-waving, hymn-bellowing nationalism? Have southerners converted en masse to bone-in-the-nose socialism? Does Mr De Wever believe that the EU is about to become a federal superstate, allowing him to preside over the gentle dissolution of Belgium? No.

So what is going on? The country’s voters have realised that the status quo is broken: it took 282 days to form a permanent coalition government after the last elections, and even after that there seemed to be prime ministerial resignations and political crises every other month. Voters knew a big power struggle was due and so they elected the toughest-looking champions they knew, to defend their interests.

I suspect many of the Flemish voted for Bart De Wever while slightly holding their noses, trying to focus on his slick media image and wise-cracking manner, and to forget about his old friendships and associations with figures from the nationalist hard-right. I suspect many Walloons voted for Mr Di Rupo trying to forget that his party has run the south of the country as a dysfunctional one party state, truffled with constant mini-scandals of nepotism, fraud and public waste.

It is a bit like a company facing a really brutal labour dispute. That is the moment the board appoints a nasty thug as CEO, and the workers elect a militant headbanger as their union representative. In happier times, such extreme representatives might not be necessary. But these are not happy times.

As for Mr De Wever and his talk of Europe saving the day for Belgium, I think he knows as well as I do that Europe is not heading towards a federal superstate. But by having little European flags handed out at N-VA party rallies, and appearing in front of a blue backdrop with gold stars on it at his victory announcement, he was borrowing the EU’s multilateral aura to soften his hardline nationalist reputation. In crude terms, he was using the EU flag to signal: “I am not a fascist”.

Since Sunday’s election both Mr De Wever and Mr Di Rupo have been at pains to proffer olive branches to each other, with the N-VA pointing out that they did not win a majority of the vote in Flanders let alone Belgium, so they know they will not achieve everything in their manifesto.

Mr Di Rupo, meanwhile, said French-speakers had to hear a clear signal from the elections, that a large part of the Flemish public want big changes to the legal structures of Belgium.

There are all manner of hints flying that Mr De Wever might be happy to see Mr Di Rupo become prime minister, in deference to his status as head of the largest political “family” in the new parliament (once you add the 13 seats of the Flemish socialists to the PS’s 26).

So why do I think the headlines this morning are not dramatic enough? For one thing, the two men are defending such radically different political visions. For another, I would not put it past Mr De Wever to be counting on a Prime Minister Di Rupo to make the case for Flemish independence for him.

But something else has struck me in the last week, since I published first a piece in De Morgen and then a column in The Economist on the future of Belgium. In the past, writing about Belgium has always triggered a torrent of emails and readers’ comments saying I was exaggerating. Several times, articles prompted invitations to appear on Belgian television and radio debates. During such debates, the pattern was always the same: politicians would scold me for failing to understand, as a mere foreigner, that this latest political crisis was not as bad as all that, and would end with a good old Belgian compromise.

This time, after writing that Belgium appeared to be dying as a country, there has been lots of feedback, but it has been different. I have had emails and telephone calls from Belgian journalists and editors, and comments and messages from readers as far away as Conakry.

I have been criticised by Flemish readers for being sentimental about the end of Belgium. I have been attacked by French-speaking readers for failing to understand the strength of their case and the injustice of the Flemish case. Some messages were even supportive. For the first time, nobody has told me I am exaggerating.

LIFE IS a bit complicated at times. I am in Stockholm tonight for meetings about EU-China policy, while at the same time thinking about the Belgian elections coming up on June 13th, and what they say about the wider European Union. The print column this week will look at some lessons that the EU might need to draw from the surge in support for Flemish separatists at this latest election. In the meantime, I have explored some of these same themes from a narrowly Belgo-Belge standpoint, in a guest piece for the Flemish newspaper De Morgen. Here is the English-language text of my piece for De Morgen. Treat it, if you will, as a first take on the theme of Belgian separatism and democratic deficits:

BELGIUM, increasingly, feels like Europe’s orphan. For years, Belgians were told that their kingdom would be a model for the wider European Union. Federalist Belgium would be a template for a bold new future in which powers flowed down to the regions and up to a European superstate, leaving the nation a hollowed out shell.
It was no coincidence that this federalist vision was uniquely popular in Belgium: it was, after all, a future that would safely dissolve the troublesome kingdom into a United States of Europe in which Wallonia, Flanders would have their say, and Brussels could preen as the Washington DC of the old continent.
Unfortunately for Belgian federalists, Europe has gone another way. For all their faults, nation states have proved hard to kill off, and Europe is a more intergovernmental project now than at any time in a generation. As an outside observer, I have a hunch that Europe’s change of direction is underestimated as a driving force behind today’s tensions between Wallonia and Flanders.
Communitarian tensions have turned into a lethal distraction. In the most dangerous economic crisis in generations, Belgian politicians instead want to squabble over the relative merits of confederalism and enhanced federalism. Joelle Milquet talks of a corridor linking Brussels to Wallonia through the Foret de Soignes (presumably populated by French-speaking squirrels and deer). Annemie Turtelboom fusses about the language used on election convocations in Wezembeek-Oppem. Do these people know that Belgium has the eurozone’s third highest public debt level, after Greece and Italy? Do they care?
Perhaps it is not all their fault: Europe was supposed to spare the likes of Bart De Wever and Elio di Rupo the agony of campaigning against each other, yet here they all are, stuck with each other.
Watching this election, a still unhappier thought strikes me. Belgium has in one sense become a model for the European Union. Alas, a negative model.
Belgium is a living proof that the cultural gulf between north and south Europe makes it agonisingly hard to pull off a single economic and political union, with large-scale transfers of wealth from north to south. Yes, I know that every country is unique. I have read about “Sire, il n’y a pas de Belges”; about the“IJzertoren”; about Leopold III and the Royal Question; about Leuven in 1968.
But listen to N-VA’s most popular slogans in this campaign: the complaints about transfers of billions of euros or the accusation that Francophone authorities hardly bother to collect taxes. Listen to Flemish voters grumbling that their immaculate motorways are lined with radar traps, while Wallonia’s pot-holed autoroutes are camera-free. Listen to the angry demands for “solidarity” from Francophones.
These are the complaints of a north-south culture clash. They are another version of the tabloid headlines in the Bild Zeitung, asking why German taxpayers should pay for Greeks to retire at 55.
Francophone leaders do not help, too often teetering on the brink of caricature. Think of the endless “affaires” in Charleroi, or Wallonia’s Jurassic Park brand of socialism (the Parti Socialiste is currently calling for price controls on water, bread, milk and 200 other staples).
This election, in many ways, supports the old idea that Belgium stands athwart a cultural dividing line between Germanic and Latin Europe. And the bitterness of Belgium’s election has big and painful implications for a European Union that is struggling with north-south tensions of its own. In this crisis, Europe is divided between a Germanic block determined to save the euro with discipline and budget rigour, and a southern block that wants to save the single currency with cheaper borrowing through Eurobonds, political intervention and large scale fiscal transfers.
Yet if Belgium, a country with a single treasury, centralised taxes and a single social security system, is struggling to preserve its transfer union from voter resentment, what hope does Europe have?
Belgium’s democratic deficit surely plays a big part in this. The calls for federal voting constituencies are long overdue: though arguably they are too little, too late. At present, a northern voter keen on austerity can do nothing to keep Mr di Rupo from power. A southern voter devoted to Belgian solidarity cannot sanction Mr De Wever, or even vote tactically for his rivals.
This democratic deficit is reproduced at the European level, even more acutely. Euro-dreamers say a fiscal transfer union could be built on the legitimacy of the European Parliament. In the real world, few voters know or care who represents them in the EU’s bloodless, artificial parliament. Build too weighty a project on those democratic foundations, and the edifice will crumble to dust.
Will Belgium crumble? I hope not. Gloomy Belgians often say the Flemish and Walloons live wholly separate lives, from the news they consume to the celebrities they gossip about. With respect, I disagree.
My favourite book about Belgium, “De smaak van de Belgen”, by Eric Boschman and Nathalie Derny, asserts that north and south are bound together in shared memories of childhood Cecemel, melo-cakes or chicons au gratin. They are surely right.
Eat tomato and grey shrimps in the glazed terrace of a café in Ghent, De Haan or Dinant, while your children tuck into meatballs and tomato sauce and the rain lashes down outside: you can only be in Belgium.
It goes beyond food. Spend a weekend morning in a provinciedomein like Kessel-Lo or Huizingen, and observe the other families. There will be fathers drinking 11am Leffes (because beer is essentially a soft drink, as every Belgian knows), and mothers dunking speculoos biscuits in their Rombouts coffee. It will all feel rather old-fashioned. There will be grandparents guarding pushchairs and older siblings looking after toddlers. In the distance, there may be gangs of the world’s scruffiest scouts, their shambolic uniforms only identifiable by a flash of a knotted scarf, being led on a treasure hunt by gangling teenage leaders. Some will be speaking Dutch, others French: to me all look distinctively Belgian.
Plenty of countries partly define themselves by not being a neighbour (Canada is the non-America, for example). Belgium is uniquely not two neighbours: the French speaking place that is not France, the Dutch speaking place that is not the Netherlands. This is handled with a self-deprecating humour bordering on genius. My favourite song about Belgium is Dick Annegarn’s “Bruxelles”, in which the singer defines the city by considering the ways in which it is not Paris. Mr Annegarn, a Dutchman who sings in French, suggests it is a “cruel duel” to pit “neurotic Paris” against decadent, beer-soaked and frankly “moronic” Brussels. Nonetheless, he sings, he will return to Brussels, because France has left him a broken man. Mr Annegarn was duly made an honorary citizen of Brussels, for services to the worldwide image of the Belgian capital.
Is any of this enough to keep a country together? That is not a question a foreigner can answer.
This outsider can say that Belgium’s divided democratic system feels unsustainable. At each election parties in the south and north win office by making impossible promises to their own communities. Those promises turn to poison once the election is over, when coalitions must be formed.
Europe is not going to save Belgium’s national politicians from their squabbles. Without national democracy, a nation cannot survive long. Belgium has been my home twice, this latest time for nearly six years. Personally, I would be very sorry to see it go.

WRITING from Brussels, I will not presume to say I know what really happened aboard the Gaza flotilla. Writing about Brussels, there is a familiar case to be made that the EU looks pretty irrelevant in a Middle East crisis, for all its fancy new foreign policy ambitions (Tony Barber takes a well-earned swipe at the Union for the Mediterranean in his FT blog today). The 27 member countries took four hours to come up with a common position yesterday, thanks to the usual divisions between those like the Czechs who wanted to give Israel the benefit of the doubt or at least wait for more information to emerge, and those like the Swedes, the Spanish or the Belgians who publicly called Israel's naval intervention a disproportionate use of force.

Writing for a Brussels audience, though, another more immediate thought occurs to me. This is yet another piece of bad news for those (like this newspaper) who believe that the EU's ambition should be the admission of Turkey to the EU. True, the EU consensus is critical of Israel's actions. And so the EU consensus, logically, is not a million miles away from the angry reaction of the Turkish government to the killing of activists aboard the Gaza flotilla. But emotionally, as a gut instinct, I have a feeling that lots of Europeans woke this morning to pictures of Turkish demonstrators in the streets of Ankara and Istanbul, chanting "death to Israel" and "God is Great", and thought: whoa, that really does not look like a European country.

Now, I am sure there are any number of sophisticated counter-arguments, and I probably agree with many of them. For one thing, it is risky to judge a country from a demonstration involving a few thousand people. For another, as a diplomat put it to me today, the EU should probably be more upset by the recent Turkish-Brazilian diplomatic engagement with Iran on its nuclear programme, which achieved little beyond making it harder for the UN Security Council and international community to put pressure on Iran's repressive and aggressive government over its nuclear enrichment ambitions. Finally, as the same diplomat put it, the anger on the streets of Turkey is a sign that civilian democracy is taking root there: the old Kemalist military-dominated Turkey would never have tolerated such protests, let alone allowed Islamists to set sail for Gaza from a Turkish port.

Encouraging democracy was always a high-risk, high-reward strategy for EU friends of Turkey. Only democracy can get Turkey to the role that its Western friends dream of, as a dynamic and strategic bridge between Europe and the Muslim world. But democracy is also capable of taking Turkey to other destinations, too.

But at a simpler level, I set a lot of store by the cumulative impact of images and television footage on public opinion. I do not think that Europe has "lost Turkey", at least not yet. But I suspect that if we do lose Turkey one day, or rather if Turkey decides to head in a different direction, partly as a result of European rejection, this is what that process would look like. And that message will not have been lost on voters across the EU. These are gloomy times for those who want to see the EU enabling and strengthening reforms in Turkey.

TO MADRID, to talk to academics, politicians, officials and students about the new European austerity, and what this all means. The day was overshadowed by news from the Spanish parliament, where the government's emergency austerity plan passed by a single vote. The consequences of a no vote hardly bear thinking about. With world markets flirting with a return to panic, a failed austerity plan in Spain would have been explosive news. My hosts kindly explained the closeness of the vote (a Basque party with seven members of parliament decided to vote against the plan rather than abstaining), and the inter-connected nature of the world was laid bare once more.

It is not too much of a stretch, I think, to say that the eurozone came close to catastrophe today thanks to a Basque nationalist called Iñigo Urkullu. He can be seen here explaining that his party, PNV, would be voting no because the austerity plan did not take into account the special circumstances of the Basque country.

Just in case Mr Urkullu is not obscure enough, the Spanish papers are full of news of Cajasur, a miniscule savings and loan institution from the lovely southern city of Cordoba, which was taken over at the weekend by the Spanish central bank. The fall of Cajasur moved markets as far away as Asia, where the Nikkei index slumped in response to jitters about Europe and the solvency of the banking sector. It is true that Spanish cajas, as these institutions are known, are a problem that needs fixing. Cajas are typically controlled by local political interests, with management boards packed with place men, cronies and family members of small town party barons. Half-banks, half social agencies, they run things like schools, libraries and daycare centres as well as savings and loans institutions. The view among grown-ups in Madrid is that the central bank has taken far too long to knock heads together and force small cajas to merge or be sold.

But the story of Cajasur itself is more one of piffling local politics than macro-economics. It was closely linked to the church, and its final demise came after the priests who run the place refused a merger with another, larger local caja, Unicaja. Rival theories abound for their decision to refuse the merger. One says that the priests could not bear Unicaja as it is close to the local Socialist administration of Andalucia. Another says that the priests did not want the blame for job cuts that were to accompany the merger.

Cajasur amounted to 0.6% of the Spanish banking sector, shortly before it went phut. It employed three times as many people as cajas of similar size according to the Spanish press, and paid them well over the going rate (in a nice detail, El País relates how in the bank's glory days, staff were given fat bonuses to attend religious festivals such as the coronation of the Virgin of la Fuensanta). A series of ill-judged loans to property tycoons, and it was all over.

The idea that the world is inter-connected is hardly news. But it is getting harder to keep pace. One paper carried a nice picture of three Cajasur bosses in their clerical suits and dog collars. I gazed at them in puzzlement, trying hard not to think of Father Ted. They controlled an institution amounting to 0.6% of the Spanish banking sector, and they moved the Nikkei.