The EU is paying the price for its pursuit of 'integration' at any cost, says Christopher Booker.
Easily the most telling statement by any politician last week was that from an anguished Angela Merkel, in pronouncing that "the current crisis facing the euro is the biggest test Europe has faced for decades, even since the Treaty of Rome was signed in 1957". "If the euro fails," she went on, "Europe fails," warning that the consequences for the whole of Europe would be "incalculable".
We have still scarcely begun to wake up to the gravity of the crisis now upon us, not just for the eurozone but also for us here in Britain and for the entire global economy. The measures so far taken to prop up the collapsing euro, such as that famous "$1 trillion package", are no more than gestures.
Greece was just the antipasto: Italy, Spain, Portugal and others are now hanging over an abyss of debt which scarcely all the money in Europe could fill – created by countries living way beyond their means, thanks not least to the euro's low interest rates. The only possible consequence of
the collapse of one of the world's leading currencies, leaving Europe with no money to trade in, would be utter chaos.
What we are witnessing here is a judgment on the entire deceitful and self-deceiving way in which the "European project" has been assembled over the past 53 years. One of the most important things to understand about that project is that it has only ever had one real agenda. Everything it has done has been directed to one ultimate goal, full political and economic integration. The headline labels put on the various stages of that process may have changed over the years, such as building first a "common market", then a "single market", finally a "constitution". But by far the most important project of all was locking the member states into a single currency.
This was always above all a political not an economic project, to be driven through at any cost, which was why all those "Maastricht criteria" laid down to bring it about were repeatedly breached. But as expert voices were warning as long ago as the 1970s, when it was first put on the agenda, there was no way economic and monetary union could work unless it was run by a single all-powerful economic government, with the power to raise taxes.
As was advised by Sir Donald MacDougall's report to Brussels in 1978, it could only work if, following the US model, between 20 and 25 per cent of Europe's GDP was available to such a government, to enable a huge transfer of wealth from richer countries such as Germany to the poorer, more backward countries of southern Europe – and how ironically has that come about!
When the 10-year-long construction of the euro began in the 1990s, all these warnings were ignored. The cart was put before the horse. So fixated were the Eurocrats on the need to get their grand project in place that the "rules" were treated as mere window dressing. The member states were locked together willy-nilly in a one-size-fits-all system, with a single low interest rate, enabling countries such as Italy, Spain, Portugal and Greece to live on a seemingly limitless sea of borrowed money. And now, entirely predictably, judgment day has come.
If the euro does disintegrate, as
Mrs Merkel warns, the consequences would be incalculable. Replacing all the national currencies was a gargantuan task, by far the most ambitious ever attempted in the name of European integration, and there is no Plan B. Without a currency, trade would collapse – leaving Britain, dependent on Europe for 50 per cent of its trade, just as seriously affected as everyone else. A system failure on this scale would make the 1930s pale into insignficance.
Inevitably, cries went up last week for the EU to be transformed into a proper economic government with control over national budgets and
the power to raise taxes – exactly
what MacDougall and others were talking about in the 1970s. But it is
too late, and all that remains are desperate gestures.
As reported by the think tank Open Europe, Mrs Merkel was even calling last week for a "global" tax on financial transactions to raise 321 billion euros a year Europe-wide – 204 billion euros of which would come from Britain, still the world's leading financial centre, with 43 billion euros from Germany and just 17 billion euros from France.
As alarming as anything, with this tsunami roaring down on us, has been the sight of our new leaders preening themselves with their list of irrelevant little "coalition policies" and babyish boasts about the "greatest democratic shake-up since the 1832 Reform Act", as if none of this was happening. As one analyst put it: "They are like children let loose in the sweet shop, seemingly oblivious to the horrendous reality unfolding before us."
A well-known economist said wryly to me last week: "Bring back the days of Alistair Darling and Gordon Brown. At least they had some grasp of what is going on. This lot are just totally out of their depth."
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