Ambrose Evans-Pritchard — Kremlin hard-liner: Russians would 'rather starve' than surrender Putin to Western aggressors

Strong words.

The Telegraph
Kremlin hard-liner: Russians would 'rather starve' than surrender Putin to Western aggressors
Ambrose Evans-Pritchard, in Davos

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The decision amounts to an act of political defiance by a majority bloc in the Governing Council - unmistakably a debtors' cartel of Latin states and like-minded states - and therefore opens an entirely new chapter of the EMU story. 

This Latin revolt is to violate the sacred contract of EMU: that Germany gave up the D-Mark and bequeathed the Bundesbank's legacy to the ECB on the one condition that Germany would never be out-voted on monetary issues of critical importance. 

Nor is the irritation confined to Germany. The Tweede Kamer of the Dutch parliament was up in arms today, the scene of fulminating protests from across the party spectrum. "Dutch taxpayers should not be made liable for the debts of the Italian state," said the liberal VVD party.…

Yet this is a thin shield. Prior rulings of the court have made it clear that scale matters. The bigger it is, the more clearly it leaks into fiscal policy and violates the budgetary prerogatives of the German parliament. This is a sensitive matter. The court has ruled that no supranational body may usurp the budgetary powers of the Bundestag, for to do so would be to rip the heart out of Germany's post-War democracy. This legal battle will drag on. 

Let me be clear: I have argued for at least three years that the Latin bloc should seize control of the ECB's machinery and call the German bluff, and this is exactly what has just happened. 

They have perfect right to do so. The ECB's policy has been far too tight even for Euroland as a whole. For them it has been disastrous. The slide towards deflation - and contracting nominal GDP - has caused their debt trajectories to spiral upwards even faster. 

Yet nobody should have any illusions about the implications of such defiance. What is at stake is German political consent for the euro project. 

With the crisis is the EZ, the dispute between the UK and the rest of the EU about open borders, and the civil war in Ukraine along with sanctions on Russia, Europe is in the worst state its been since the lead up to WWI and WWII. Fractious.