Critics of the flawed euro project have been vindicated but gloating is premature. They need to set out their own vision
Europe, home to some of the worst and most unworkable big ideas down the ages, has done it again. The continent may have spawned the Roman Empire, the Renaissance and the Enlightenment. It may have given humanity Michelangelo and Mozart, Bach and Balzac, Canaletto and claret. But the European legacy also includes the Spanish Inquisition, Communism, Fascism and Nazism. To this formidable list of fanaticism and failure must surely now be added the euro — a lunatic project to impose the political integration of modern Europe through the creation of a single currency.
It is not yet fashionable to see the euro and the European project of which it is the vehicle in quite such dramatic terms. The leaders and spokesmen for the various institutions trying to “save the euro” usually make bloodless statements against a bland bureaucratic backdrop. The effect is designed to be soothing and to distract us from the wickedness and irresponsibility of what is being done.
The headline record unemployment figure of 11.2 per cent in the 17 eurozone countries, though even worse than Britain’s 8.1 per cent, masks the true extent of human misery involved. In the prosperous North unemployment is low, but in the South it is at dangerous levels as businesses fearful of the future lay off workers and stall on hiring. Austrian unemployment stands at just 4.5 per cent, German at 6.8 per cent but in France and Italy it is over 10 per cent, while in Spain and Greece the figures are 24.8 per cent and 22.5 per cent respectively. Youth unemployment in the Mediterranean countries is even higher. In Spain, among those aged 16 to 24, an incredible 53.3 per cent are now out of work.
The euro is doing this. Countries which should have their own currencies, and be able to devalue in order to begin the process of recovery, are straitjacketed by a one-size fits all policy.
If the euro was misconceived from the start, its design and execution were criminally negligent — as some economists, especially in Britain, warned at the time. (Notable among them were the economic advisers to Margaret Thatcher and Tony Blair respectively, Sir Alan Walters and the late Derek Scott, both derided and ignored by Europhile panjandrums.)
For a while these design flaws didn’t seem to matter, as the Mediterranean states surfed a tide of cheap money that flowed from being able to borrow at interest rates which were low thanks to the highly successful Germans. The poor economies would, by some process akin to alchemy, supposedly become richer. Greece would become Germany. But this was madness, for which millions are now paying with their jobs.
There was an alternative, sensible path open to European leaders. Rather than creating a bureaucratic superstructure to bully and undermine the nation state, Europe could have remained a continent of independent nations with their own currencies, trading and co-operating to mutual benefit. But that would have been incompatible with the mania gripping those pursuing the vision of the founding fathers of the European project after the Second World War.
In his excellent little book, A Doomed Marriage: Britain and Europe (Notting Hill Editions, £12), Daniel Hannan — the best-known Conservative MEP and a leading Eurosceptic voice — observes that the original architects of integration tended to come from the Carolingian heartland. They believed that a return to Charlemagne’s Holy Roman Empire, which covered much of Western Europe, was the only way to prevent more conflict between nation states such as France and Germany. Charles de Gaulle, France’s wartime hero and postwar president, later described the process of European integration as “a revival of the whole concept of Charlemagne”.
As Hannan shows, the euro was always primarily a political rather than an economic enterprise, designed to fulfill the original aims of the neo-Carolingian grand project. Whether through convergence or crisis the existence of the single currency would, after a suitable interlude, force its members to accept one finance ministry and, in time, one government.
Even now, after all that has happened since the start of the euro-crisis, the federalists are more wedded than ever to their bad idea: that it is Europe’s destiny to become one political entity which supersedes the nation state, whether or not it causes distress in the shape of Depression-era mass unemployment.
For British policymakers this creates what should be seen as a moment of genuine crisis, though this has been obscured by attention being focused, quite understandably, on the UK’s struggling economy. The global downturn will end, at some point, and there will be growth again in Britain, even if the coalition government has not thus far proved itself particularly adept at creating the conditions in which recovery will happen.
The European crisis, on the other hand, has the potential to be a much more significant moment of truth than one more turn of the business cycle. To save the euro, some of its members are frantically setting about completing the work started by the original builders of the European project. It is unclear whether they will succeed or fail. German domestic imperatives may yet assert themselves, fuelled by a Teutonic disinclination to subsidise the southern Europeans on a permanent basis. This month, the German constitutional court is due to rule on this latest attempt to bend the strict guidelines of the German Basic Law. It has the power to halt fiscal union.
What is clear is that it is now impossible to pretend that the EU is anything other than an attempt to create a country called Europe. Apart from elements of its business and foreign policy establishment and in an unrepresentative slice of bien pensant opinion, the UK has zero interest in being part of such an enterprise.
The crisis thus forces Britain to choose. Not wanting to be included in the inner core, Britain must decide what its relationship with the evolving entity will be. Should we stay in the EU and wait for a chance to try and renegotiate a deal which repatriates powers? Or should we leave and choose as our model Norway, which accepts EU regulation in return for access to markets? Perhaps we would be better off pursing the route taken by Switzerland, which would mean being outside the European Economic Area but then negotiating free trade agreements with the EU. Couldn’t a country of Britain’s size with an economy more than double the size by GDP of the Swiss and Norwegian economies combined, which is a net contributor to the EU and is huge export market for companies in the EU, actually negotiate a rather good deal? Of course we could — and this is the nub of Dan Hannan’s argument in A Doomed Marriage.
But answering these questions involves confronting reality, which is usually an awkward moment for a political elite. Especially as since the 1970s much of the British approach has been based on avoiding the truth about the European project. True, there were a relatively small number of genuine British federalists who drove forward their cause, including Edward Heath, Michael Heseltine, Tony Blair and the British Foreign Office — a band of brothers memorably described in Hugo Young’s This Blessed Plot. Those officials, hailed as heroes by Young, saw Britain’s destiny as being to join in fully and end centuries of post-Reformation English, and then British, distinctiveness. The voters, they knew, would not approve, so the goal would have to be approached by stealth. Brilliantly, if wrong-headedly, they directed policy so that Britain would be taken as deeply as possible into Europe and its institutions.
Beyond that highly motivated group, the wider British establishment view was that it was best not to cause a fuss by being overly obstructive or confrontational. Yes, the original integrationists had some wild ideas about abolishing the nation state; but this was mainly flowery European rhetoric, wasn’t it? Surely the real purpose of Europe was trade and, of course, making it easier to go on holiday in Tuscany or Provence. By a process of diplomacy, which rests on compromise, excessive awkwardness could be avoided and difficulties smoothed over. Many times a British public that had always been sceptical of “Brussels” was assured by the Foreign Office and its allies in the media that “we” (i.e. they) were “winning the argument in Europe”, which was meant to suggest that other countries were coming round to our point of view on particular negotiating points. This was delusional. We weren’t winning the big argument on Europe; usually we were avoiding it.
In this way, the official response to the European problem, ever since Harold Macmillan first applied for EEC membership in 1961, has been very British. David Cameron, a pragmatist who simply wanted his party to stop arguing about Europe for long enough to get him into Downing Street, is squarely in this tradition.
Having got into power, thanks to a coalition with the federalist Liberal Democrats, Cameron was confronted with the Eurocrisis. The Prime Minister would really rather not be dealing with this. He has an increasingly agitated group of backbenchers — including many of his party’s brightest young talents — agitating either for a renegotiation or for a referendum on withdrawal. And it is his historical misfortune to have Nick Clegg as a deputy, a Lib Dem who is a former Brussels bureaucrat and such a Eurofanatic that he makes Tony Blair look like Daniel Hannan.
So far Cameron has shown little inclination to lead. There was his (strictly limited) use of the veto before Christmas, which briefly cheered Eurosceptics. Since then he has affirmed that he wants to stay in the EU, but he has not yet explained how powers or competences he claims he wants back might be repatriated. The Tory leadership hints periodically that it may promise a referendum, as does Labour’s Ed Miliband, who hopes to revive Tory divisions.
A referendum is coming, probably just the other side of the next general election, but there is as yet no way of knowing what the question will be. It might be a straight in or out proposition, in which case David Cameron and a good many other senior Tories would conceivably campaign to stay in. Equally, with very little preparation done inside or outside government on what a renegotiated settlement might look like, it is difficult to see such talks producing an outcome satisfactory enough to result in a decisive alternative question. The situation is messy.
This makes it extremely difficult for Eurosceptics with a range of views to get themselves organised into a coherent campaign. Some efforts are now being made behind the scenes, with major Tory donors getting ready to fund the beginnings of a cross-party effort. The Conservative Party in the country is shrinking at such a rapid pace that an alternative organisation with hundreds of thousands of volunteers prepared to canvas and assist in a referendum is envisaged. Work on recruiting will start online soon.
Frankly, the biggest risk is Eurosceptic over-confidence. If it comes to a straightforward in/out referendum the forces defending the status quo will be formidable. British big business, the Labour establishment, some of the most recognisable Tory big beasts, the Lib Dems and parts of the BBC will present withdrawal as dangerous isolationism favoured by wild-eyed madmen.
Eurosceptics should not presume this charge can just be swept aside. There was a taste of what is to come in a recent BBC Radio 4 debate, hosted by Evan Davis. Four Eurosceptics were up against Sir Stephen Wall, the former mandarin and arch-integrationist. The programme encapsulated the sceptic problem. The four sceptics each sat on a different part of the spectrum advocating renegotiation, compromise or immediate withdrawal. Sir Stephen was smooth, urbane, the Foreign Office incarnate. He even managed to sound as though he kept a straight face when suggesting that the UK may yet join the euro.
In contrast, Roger Helmer MEP — formerly Tory, now UKIP — was saloon-bar Euroscepticism personified. It sounded as though it had been a while since Helmer last spoke to an audience of waverers and actually tried to win people over. Indeed, at one point he seemed astonished when he didn’t bring down the house with a thundering tribute to Margaret Thatcher and Ronald Reagan for liberating Eastern Europe. Sir Stephen interjected politely to say, quite correctly, that the peoples of Eastern Europe surely also deserved some of the credit for overthrowing Communism.
Many members of the audience sounded as though they took exception to Helmer’s presumptuous tone. Tone matters. If the eventual Eurosceptic campaign is defined by strident, hectoring voices rehashing old certainties and accusing all those who disagree with them of treason, then many voters will turn away.
A referendum will not be won easily. Forget what the polls say now. Many voters may say they dislike the EU, as they tend to distrust institutions run by politicians and bureaucrats. That does not mean they can be counted automatically in the “Out” column, especially once the Europhile media, led by the BBC, starts pumping out over-cooked propaganda about the risk to trade, jobs and much else besides. In a referendum campaign there will be millions of undecided Britons who will need careful persuading that an act which sounds risky and transgressive — leaving the EU and negotiating a trading relationship with our neighbours — is safe even to consider.
Clearly Britain’s future lies in reconnecting with the burgeoning markets beyond Europe: in Asia, Africa, North and South America and especially the Commonwealth, which, as Hannan shows, now has a larger GDP and is growing much faster than the eurozone. Meanwhile we must maintain good relations, economic and political, with those who will always be our continental neighbours. The UK can leave the EU, but it cannot leave the neighbourhood. Nor do we wish to pull up the drawbridge to keep Europeans out. Instead, as David Cameron told French refugees from President Hollande’s penal tax regime, we prefer to roll out the red carpet.
Here Eurosceptics must have answers to other questions ready. It is surely not enough to say that our return to being a wholly sovereign nation state will somehow rebalance Europe and induce harmony. An important component of any campaign will be explaining how there will still be co-operation after Europe is redesigned and states such as Britain (others may want to follow in time) enjoy a different set-up. However disliked the EU may be in Britain, peace and fraternity in Europe are certainly not.
By attempting the abolition of the nation state, the EU’s founders chose the wrong response to war and tyranny, but that does not mean that the problem the Continent was confronted with after 1945 was somehow imaginary. The arguments between nation states, over boundaries, imperial ambitions and ideology were real. They led to two world wars which resulted in the deaths of some 50 million Europeans, not to mention the break-up of Yugoslavia less than 20 years ago which cost the lives of hundreds of thousands in the Balkans.
Reviewing Hannan’s book, Charles Moore wrote: “Those of us who believe that the EU is misconceived at root must recognise that, without the EU, Europe will need some new international (not supranational) institutions to order its affairs and defend the weak.”
There is a paradox. This should be a golden age in which to be a Eurosceptic, with events in the eurozone substantiating the sceptical case. But having waited so long for the moment of righteous vindication, the danger is that Eurosceptics are putting too little thought into what comes next. The assumption of the ultras — that getting a referendum, then relying on the “good sense of the British people” while preparing to revel in the return of sovereignty, as the Elgar soundtrack swells in the background, will be enough — seems dangerously naive.
To win, the Eurosceptics must produce instead a positive vision of the alternative to the status quo, offering inspiration and reassurance in equal measure. They will need, as American campaigners put it, to “own the future”.
More immediately, this autumn the various party conferences will most likely take place against a backdrop of the next stage of the single currency’s meltdown. Yet the current Tory leadership seems completely incapable of seeing this moment as a great historical opportunity that is plainly there to be seized. This means that it is going to fall to others — to grassroots campaigners, sceptical Tory MPs, Labour’s Eurosceptics and wealthy donors — to band together. Urgently, they have to begin constructing a referendum campaign coherent enough to win a battle which promises to be tougher than it looks.