hms iron duke

hms iron duke

Monday, 20 June 2011

The European Onion and the End of the Euro-Republic?

Rome, 21 June, 2011. Sallust wrote, “Only a few prefer liberty – the majority seek nothing more than fair masters”. What does the Euro crisis say about the state of Europe and the European Onion?

I am back in Rome – the Eternal City, writing your blog from a perch on the Aventine Hill. Rome and the Tiber flow a hundred metres or so below down the Clivo di San Rocco. One of ancient Rome’s seven hills the Aventine is traditionally the place where the masses would protest against the patricians. The Aventine faces the Palatine, the palace of the caesars, which not without reason dominates the Forum and the Senate.

In the second century BC Sulla brought his Army to the Aventine breaking a golden rule established at the birth of the Republic, that no Roman army could enter Rome. Having crossed the Rubicon Caesar did just that a generation later. Caesar pretended to be upholding the honour and virtues of the Roman Republic even as he smashed it. Ancient Rome was much like modern Europe, an instable balance of power between oligarchs, patricians and people. Caesar succeeded not simply because of the Army but because political leaders and the Roman people chose to believe he was the protector of Rome at a time of crisis. European history since has been full of such deceipts. Is it happening again?

The late nightness of this week’s Luxembourg Compromise where Euro-zone political leaders struggled and failed to deal with the second Greek debt crisis seems all too representative of the mixture of incompetence, self-deception and sleight of hand that has characterized the descent. Leaders are for the moment resisting the temptation to pour more money into the black hole that is Greece, but in the many calls for European Onion ‘solidarity’ the ground is being laid for another costly and pointless bail out. It is the economic equivalent of re-arranging deckchairs on the Titanic.

Indeed, until the Greeks face up to the sheer scale of their national financial disaster they will either keep coming back to their northern European partners, demanding ever more money, or be condemned to live in perpetual austerity…and maybe the rest of us with them. This latest Greek tragedy could well become Europe’s tragedy.

So, Europe, like its Roman forebears, is sleep-walking into disaster. Sooner or later European governments will be asked to place their trust in a new Dictator (in Roman times a dictator was a leader given absolute power for temporary periods of crisis) charged with ensuring that the financial and fiscal rules upon which the Euro should be established are observed. The threat to European democracy could become pressing as the already dangerous democratic deficit is cast in Roman concrete.

The parallels with ancient Rome are striking. As the distance between the elected and the electees has grown a new European patrician class has emerged, an uber-elite, much of it in Brussels. I have too often seen myself the extent to which whilst comfortable talking to each other, Europe’s oligarchs and patricians talk eternally about the people, only so long as they have little to do with them. This is the true mark of the patrician class.

Given the state of the Euro there are indeed few options; a new financial Dictator could be appointed, Greece could be cut free, Eurozone members could move towards fiscal convergence…or the Euro could fail. What I suspect will happen, given the nature of the Onion, is that a mix of all the above will be sought. Something certainly has to give. The middle ground that Eurozone leaders, rather like the Aventine, is small and getting ever smaller.  Inaction is perpetuating the length and the depth of the contagion beginning to run across Europe like one of those ancient plagues that from time to time ravaged even the most civilised.

Those of us who hold much of our savings in Euros could wake up one morning faced with a fait accompli – the Euro collapsed, a new Euro-lite being hurriedly and disastrously re-established around what is in effect a new German Bundesmark, with the value of savings slashed, whilst much of southern Europe lies in financial ruin. In that event the Onion will be sliced, diced and fried.

What is needed is a Plan B! Prepare the ground now for a soft currency landing and put in place a properly constituted body of national politicians to oversee the process.

Brussels is indeed fiddling whilst Europe burns? Where are the new Ciceros and Catos when you need them?

Europeans, wake up!

Julian Lindley-French

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