Ursula von der Leyen has invoked the nuclear option of the Lisbon Treaty. By threatening to activate emergency powers under Article 122 she has told the world that Europe is no longer a safe place for private capital or inward investment.
The clause allows Brussels to seize factories, take direct control over the production process and redirect vaccine flows. It enables war-time occupation of companies.
A regime that behaves like this is liable to impose capital controls without compunction, or block energy flows through the interconnectors, as has been threatened three times already (I keep count). And as we have seen, anything can be politicised, even random stochastic blood clots. Will global pharma ever build a plant again on EU territory after this episode?
“We want to see reciprocity and proportionality in exports,” said Mrs Von der Leyen. Delicious. The EU is currently refusing to reciprocate temporary UK waivers to smooth post-Brexit trade flows or to reciprocate on bare-bond equivalence in financial services.
If these daily antics from Brussels and Berlin continue, the eye-wateringly large capital outflows from the eurozone that have already been occurring may accelerate into something closer to outright capital flight.
HSBC says outflows reached half a trillion euros in the fourth quarter, an annualised pace of 20pc of GDP. It quickened to €250bn (£214bn) in the single month of December. The scale is breathtaking. It happened before the vaccine debacle condemned Europe to an extra quarter of economic recession and social despair.
“Relative to GDP, these outflows were the largest we have seen going back 20 years,” said Paul Mackel, HSBC's currency chief. Hedging contracts have prevented this setting off a disorderly slide in the euro but that does not change the fundamental picture.
You can interpret these outflows in many ways but one thing they are not is a vote of confidence in eurozone growth and recovery, or indeed the political management of the EU. The exodus is likely to gather pace this quarter as American reflation and the vast funding needs of the Biden treasury suck capital out of the global system.
But the accelerant is what the German vice-chancellor calls the vaccine “sh-- show”, made more destructive by the failure of every major EU state to heed the lesson from Britain and to let the B117 variant run rampant. The waning epidemic from the old variant and the rising epidemic from the new variant created an illusory stability in case numbers. Epidemiologists issued warnings. Politicians again refused to listen.
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