EU the Toothless Tiger, Totally Dysfunctional Until it Disintegrates Into Oblivion

MishTalk

The EU is splintering right before the EU nannycrat’s eyes, but they don’t see it.

by Mish

Instead they scream “more Europe”.

Here are two more cases in point, both from today.

The EU is already extremely upset with Ireland’s corporate tax rate, and seeks a uniform EU-wide rate.

Viktor Orban, Hungary’s prime minister, says to to hell with that: Hungary to Offer EU’s Lowest Corporate Tax rate.

Hungary’s government is to cut its corporate tax rate to the lowest level in the EU in a sign of increasingly competitive tax practices among countries seeking to lure foreign direct investment.

Prime Minister Viktor Orban said a new 9 per cent corporate tax rate would be introduced in 2017, significantly lower than Ireland’s 12.5 per cent.

Mr Orban has signalled a desire to reduce taxes since Hungary emerged from EU budgetary discipline measures in 2013. Hungary raised some taxes in 2010 to avoid an international bailout.

Public debt has fallen below 75 per cent of gross domestic product and the country’s economy is forecast to expand by 2.1 per cent in 2016 and 2.6 per cent in 2017, above the EU average.

Mihaly Varga, economy minister, said government reserves up to Ft200bn ($688m) would cover the costs of the measures next year. An official said they hoped the impact on the budget would eventually be neutralised by increased investment.

Hungary’s parliament has already approved the 2017 budget and it is unclear when a vote on the measures will take place.

Poland Smells Victory Over EU Nannycrats

Emboldened by votes for Brexit and Donald Trump, the rightwing nationalist administration in Poland believes it is close to outmanoeuvring the European Commission in a bellwether case that exposes the weaknesses of the EU’s oversight of democratic standards.

The ruling Law and Justice party, led by Jaroslaw Kaczynski, has for a year ignored the commission’s increasingly threatening demands to roll back reforms that in effect neuter the country’s constitutional tribunal, a court designed to check parliamentary power.

The defiant stance has come despite the commission’s threats of sanctions and its unprecedented decision to accuse Warsaw of endangering democracy, which some EU officials fear will be found to be toothless.

“As far as we are concerned, there is no procedure,” said a senior Polish diplomat in reference to the “rule of law” measures brought against the country. “We want to fix this problem by ourselves. There is almost no one in Warsaw who will listen to what the commission wants to say.

“We should not be triumphalist … but I do not expect any developments,” he added, echoing comments by other senior officials.

The EU has faced a dilemma over how to respond to Poland. The commission relies on member state support for its warnings to carry weight.

Yet Poland’s ally Hungary will block any action, and Germany and other big countries are unwilling to intervene for fear it would achieve nothing but sour relations with Warsaw. Jean-Claude Juncker, the commission president, has hinted that proposing sanctions would be pointless “because some member states are already saying they will refuse to invoke it”.

“We should not be triumphalist … but I do not expect any developments,” he added, echoing comments by other senior officials.

The EU has faced a dilemma over how to respond to Poland. The commission relies on member state support for its warnings to carry weight.

Yet Poland’s ally Hungary will block any action, and Germany and other big countries are unwilling to intervene for fear it would achieve nothing but sour relations with Warsaw. Jean-Claude Juncker, the commission president, has hinted that proposing sanctions would be pointless “because some member states are already saying they will refuse to invoke it”.

I don’t think there’s anything we can do,” said a senior EU diplomat involved in the issue.

Polish politicians have taken courage from Britain’s vote to leave the EU, calculating that other member states do not want to risk alienating another country. They also view Mr Trump’s election as the final nail in the coffin for an international effort to force them into compromise.

Toothless Tigers

In the utterly foolish way the EU is setup, it takes a unanimous vote to do nearly anything.

Trade deals take forever and reforms are non-existent. France will never give up its agricultural tariffs and the EU sits and watches.

There is nothing the EU can do about France, about Poland, about Hungary.

In fact, there is nothing the EU can do about anything except for authority already granted by the treaty. All the EU can do is piss and moan and issue threats, until there is a unanimous opinion.

There are some treaty provisions for all-against-one. But in this case, Poland and Hungary scratch each other’s back.

EU Totally Dysfunctional

The nannycrat non-solution is “more Europe” and more power to Brussels.

Try selling that to Poland, Hungary, or Italy. Heck, try selling that idea to Germany or France.

Germany fears a transfer union, and France fears revocation of agricultural policy.

Mike “Mish” Shedlock

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