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Why trouble in Europe bodes ill for world markets

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Travelling around Europe makes one fully appreciate the European Union project. The four freedoms allow access through borders across the continent for goods, services, money and people. You can use your smartphone everywhere for no extra charge, consumer rights are uniform, and it is a blessing to spend one set of banknotes in most countries.

These laudable aims have been brought into reality by the EU, but dangers lurk. The federalists who run the European Commission on a day-to-day basis demand that one size should fit all. However, the individual countries sometimes require different sizes in varying areas of policy. The democratic Council of Ministers spends much of its time fighting domestic political battles at a continental level, so the commission can easily outmanoeuvre them.

I recall talking to a former Andorran finance minister about negotiating with the EU over the Financial Action Task Force’s rules on money laundering. The Europeans put him in a room and said, “Just make this easy for all of us; stay here until you sign our document.” It was less of a negotiation and more of a command from an appointed functionary to an elected representative.

The tactics were the same in 2015 when Yanis Varoufakis, the then Greek finance minister, was negotiating Greek debt solutions with the EU (see his book........

© South China Morning Post