Update: The EU (improbably) as … Dirty Harry. Click through to the wonderful link.

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If I were a diplomat from Mars reporting back to HQ on the wheeler-dealings of the pitiful earthlings in this part of the planet, I’d be starting to suggest that the days of the UK’s full membership of the EU are numbered.

Not so much because the UK masses reject the EU (although plenty are very unhappy with it). But because the EU is now mutating fast into something the UK masses (myself included) will not accept.

See this elegant analysis by the BBC’s Paul Mason of the implications of the vast Eurozone New Deal whose sheer size has impressed the markets (for now) – emphasis in the original:

The fact that this is called a "special purpose vehicle" – a term we all remember from Enron, Lehman and the London Tube PPP – gives the game away. Like all SPVs it is designed to make unclear who ultimately shoulders the risk. Since "Europe" does not have any money itself, the implication is that Germany, France and Italy now stand behind the rest of Europe. But the implication will be hidden behind bilateral deals, clauses etc.

Why it is radical becomes clear if you compare it to the Bank of England’s move to print £200bn. That £200bn shows up on the "balance sheet" of the Bank, not the British government. But the Bank of England is ultimately an arm of the British state – whatever its formal constitution says. Ditto the US Federal Reserve. However, the ECB is a central bank without a state to underpin it…

The move to printing money is a signal that the EU has to create something more like a state to back the ECB.

Not only is the EU now committed to much stronger fiscal – i.e. tax and spending – oversight. It is now implicitly committed to becoming an economic super-state…

But because every step of the EU project has been taken by elites, with the populations left to work out what was happening months and years later, we can now trace very accurately where the risk has been transferred to. It has been transferred to politics: will the people of Europe accept the consolidation of the eurozone, with the loss of economic sovereignty that represents?

In short, in a matter of two years, we have transferred risk from the banking system to the state finances to the streets. And the risk is only partly dissipated by this transfer…

Was not this the point made by Warren Buffett about all those ever-more clever financial tricks to carve up and sell on dodgy sub-prime US mortgages – don’t touch them, as you can’t say where the risk is?

If the risk is now ‘on the streets’, as we can see from those latest German elections the German streets are unhappy with being compelled to take on this burden with no clarity about what it all means. Nor are the Greek streets too impressed either.

Paul also has this remarkable paragraph:

We are only beginning to get our heads around the detail of this deal but its geo-strategic and moral implications are clear. Big states have bailed out little states and will demand reforms that change the lifestyle of people in these states forever. Northern Europe has effectively seized control of southern Europe. The eurozone is on a path to becoming a supra-national state-like entity.

In which case, as the Euro-cocktail party starts to get tense it is time for the UK to start to sidle politely towards the door and make our excuses to leave?

Because if there is one thing that is not doable, it is that northern Europe will get southern Europe to ‘change its lifestyle’.

Look at the stunning effort made by the international community in Bosnia, where for years we in effect ran the place. No impact whatsoever on their ‘lifestyle’.

This is because what changes a ‘lifestyle’ is not ‘demands’ from outside. Such demands if anything reinforce a lifestyle, as people close ranks against bossy or intrusive foreigners (see Bosnia).

No. The only thing which makes a real difference are people taking decisions for themselves, then accepting the consequences and learning from them – adjusting or not as they deem sensible.

Which leaves eg Poland as a country on track to join the Eurozone in a very difficult decision.

To stay substantively independent? Or to merge with Greater Germany – on Greater Germany’s terms? Watch Eurosceptic Jaroslaw Kaczynski’s ratings rise in the coming Presidential race.

Our UK position is different. We are not in the Greater Germany Eurozone, and have no plans to join it. But, if that is where hard EU decision-making increasingly will have to be made to keep the whole structure wobbling on, won’t its decisions tend to impact negatively on the non-Eurozone EU members?

Maybe we need – and are going to get whether we like it or not – two or even three separate smaller European Unions. 

One for those states which want to be part of Greater Germany.

One for those states which prefer a much looser, more relaxed association.

And one for all those Balkan states which find all this too complicated and difficult, and just want to snooze in the sun…

Update: Maybe it’s not Greater Germany but Greater France, given the way the Germans folded in the key negotiations to keep the Euro attached to reality?