Monday, 16 July 2018

On the Curia, the EUocracy and Ireland

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In what has been seen as remarkable speed, the Conclave has elected a new Pope, the Italo-Argentinian Jesuit Cardinal Bergolio who has become Pope Francis I. On the same day, the European Parliament rejected the budget cuts put forward and agreed by the EU leaders last month. What can one learn from the other?

Anthony Peters, SwissInvest Strategist

The Pope is a Jesuit, a member of the Society of Jesus, founded in 1534 by St.Ignatius of Loyola as an act of faith and as an element in the counter-reformation. The church was ridden with corruption and nepotism and Martin Luther’s act of defiance of nailing his 95 Theses to the doors of the Castle Church in Wittenberg in 1517 had launched the Reformation.

Luther’s Reformation movement – closely followed by those of Zwingli and Calvin – broke with orthodoxy and swept through the church like a dose of salts. St.Ignatius (not a saint but a retired soldier at this point in time) along with five others, including the later St.Francis Xavier, acted to reform from the inside, to reject the trappings of wealth and position, vowing poverty, chastity, and later obedience, including a special vow of obedience to the Pope. The brotherhood of Jesuits has been, over the centuries, one of the main and most controversial strike forces of the Roman church and is hence widely misunderstood. How does one trust someone who voluntarily asks for less and not more and who gives before he takes?

In this vein, the election of the religiously orthodox Pope Francis is being hailed as a setback for reformists but a huge step forward in clearing out the corruption and infighting which grips the Vatican. In politics, this would be defined as a return to core values. I may not be a Catholic but I once enjoyed the pleasure of having had a Jesuit school teacher and, 50 years on, I still regard him as one of the finest I had the pleasure of being taught by. He even succeeded in introducing me to the basics of Latin which have stuck with me and that is no mean achievement.

All roads lead to Brussels

Alas, swing the camera north towards Brussels and one might be forgiven for perceiving a similar problem of corruption – moral that is, not necessarily financial – and nepotism, of rampant self-interest and a steadfast refusal to accept that significant reforms to the incumbent system will be needed, going forward. The similarities between the Curia of the Vatican and the EUocracy of Brussels are astonishing in terms of overarching power without proper accountability.

So, while telegrams (in truth e-cards) will be fluttering into Rome from far and wide congratulating Cardinal Bergolio on his elevation to the supreme leadership of the Catholic church and excitement abounds about how this modest and ascetic man will “clean up”, movements to do the same in Brussels are being rejected. “How dare you think of stopping our very own gravy train!”

European leaders will be assembling in Brussels again and talk is of loosening the “shackles” being “imposed by Germany”. In the words of the Beeb this morning, they are looking to “kick-start the economy”. They’ve been kicking the economy for five years now and to precious little starting effect.

There is no denying that savings are being implemented and that the unbridled spending of the last decade is off the menu now but it seems like trying to keep a child under control next to the pick-and-mix stand in the cinema foyer. One minute of looking in the wrong direction and they’ll be in there again, feet first. The leaders of the sovereign governments which fund the EU have told the European Parliament how much they can afford and the pompous Euro MPs declare that that will not do and that it isn’t enough.

Perhaps we should think of appointing Pope Francis (apparently named after Francis of Assisi but my thinking veers more towards Francis-Xavier, co-founder of the Jesuits) to lead a cleaning up of the EUocracy too. What colour the smoke of burning egos?

Irish ayes

Meanwhile, Ireland did not get away, as expected, €3bn 10yrs at 4.25%. Instead, it sold €5bn at 4.15% for which it should be congratulated and which more or less takes care of its funding needs through 2013. That means that this country which needed bailing out and which, in reality, is still sitting on unfathomable debt is now not only trading substantially tighter than both Italy and Spain but that the levels have also been tested and verified by the market.

The Irish experience proves again that default occurs when lenders stop lending and that, so long as the credit tap remains open, not too much can go wrong. Whether 4.15% is correctly reflective of the risk might be debatable but confidence abounds that the Emerald Isle is through the worst. The same cannot be said for all countries. Ireland took the bitter pill by the spoon-load and is reaping the benefits. I’m not entirely sure that it should be calmly accepted as a pars pro toto but, for the moment, it should be left to bask in its own glory. It has worked hard enough for the pleasure. 

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