"It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy."
Jose Manuel Barroso, President of the European Commission
London, 29 September. The Euro-crunch is upon us and with it perhaps the most delicate and dangerous moment in the EU’s history. Indeed, the implications of what is about to happen are slowly only becoming apparent. One of the most profound of which could be the withdrawal of Britain from the European Union.
The Euro can only survive if the EU and the Euro become one and that by definition excludes Britain. It also means more integration and that in turn means more power transferred to unaccountable Brussels. Talking to a couple of very senior British politicians in London it is clear that Britain will never adopt the Euro whoever is in power. Nor will London accept the hidden integration necessary to solve the Euro-crisis and Britain’s consequent marginalisation. Least of all will the British pay the price for something of which Britain is not a part. The alternative is to simply accept leadership by a Germany that does not want it.
A couple of years ago I breakfasted in Washington with former German Foreign Minister Joschka Fischer. I made the point to him that the Union had reached the point where London could no longer pretend to the British people that the Union is merely a super-market. If the Union moved decisively towards political and economic union the British would be faced with the worst of all worlds – subject to the Brussels diktat without influence over it. Fischer’s response was blunt; if that is how the British think then very well go. That moment has now arrived. So long as the Euro was not the Union the pretence of a messy fiction could be maintained and Britain could remain within the EU even if it was not a Eurozone member. Not any more.
The implications of Britain’s departure would be profound to say the very least. Critically, the checks and balances on Germany’s power that Berlin is rightly conscious of would be profoundly weakened. Britain’s presence guarantees the essential balance of big state power at the heart of the Union. And, in spite of London’s current travails and its many idiocies Germans have long-understood the importance of Britain’s role, particularly now as Berlin emerges from history to become the undisputed master of Europe.
Is there an alternative to German leadership? Whilst a believer in the concept of a more united Europe of states I have been extremely critical of a system that under the guise of ‘integration’ has emphasised the power of bureaucracy at the expense of democratic legitimacy...and rightly so. Nothing in European history suggests that such an approach is politically sound. And yet, if the runes are to be read correctly – and one has to read runes on these occasions because of the obsessive culture of secrecy in Brussels which too often sees the European people as enemy – the bureaucracy is about to be given a whole raft of new powers to save the single currency.
The increased commitment to 'communitarianism' called for by Commission President Barroso, is one of those euphemisms beloved of the Euro-Aristocracy which runs the bureaucracy to place themselves ever closer to the very heart of European power for the sake of expediency. The really cheeky bit is that they also want the British to pay for much of it. The call for the Transaction or Tobin Tax on banking transactions to help pay for the European Financial Stability Facility would see the British contributing 80%. The rest? The Facility might need to be expanded to a staggering €2 trillion if the so-called 'Blockbuster Fund' is set up to cover all debt across southern Europe. Moerover, with the European Central Bank already swimming under a mountain of junk debt it is I the Dutch taxpayer who will have to guarantee what is in effect going to be a transfer to the south of what little wealth I have for many years to come.
Whatever choice is made it will not be by or for the British and thus the further marginalisation of Britain is inevitable. Nick Clegg, the Liberal Democratic Deputy Prime Minister, believes Britain has more influence by remaining within the EU. However, if the EU core are about to create a system from which Britain is excluded but for which it must pay then that is clearly no longer the case. In such circumstances EU membership would no longer make strategic sense for London. Quite the reverse in fact because a future Britain would be better placed to play its vital balancing role outside the Eurozone/EU political singularity.
Therefore, all concerned might need to pause for a moment and consider the consequences. Commission President Barroso has rightly said that this is the EU’s most dangerous moment. With its coming the EU could now well have embarked on the road to the final reckoning over Britain and its membership. If that is a conscious choice then so be it. However, if it is an unintended consequence then beware. For all concerned some thinking is needed now about how best for Britain to depart with least damage.
Some of you in Brussels will scoff. There will be those amongst you who believe that in time the British will be forced to join the Euro and accept more Brussels not less. That would be a mistake. The appalling mismanagement of this crisis has made that option simply impossible. That was the message of my political interlocutors in London - one Conservative, one Labour.
History also offers a salutary lesson to our European partners. Never under-estimate us!