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Britain
Euro or no, we will never be ’at the heart of Europe’
2003-06-15
Nigel Lawson, former UK Chancellor of the Exchequer, on why Britain should avoid the euro.
The most significant part of Gordon Brown's long-awaited statement on the UK and the euro last week was the section that had unaccountably gone missing. When he originally set out the official position some six years ago he emphasised that the Government would need to be sure that the as-yet-unborn European monetary union was "successful" before it would recommend UK entry. With the monetary union now some four and a half years old it was surely reasonable to suppose that a key part of last week's statement by the Chancellor would be an assessment of how successful it had so far proved to be. Yet his lengthy statement contained not a single sentence assessing the success of the project to date. One can only surmise that the assessment was left out because, in the purely economic terms which the Government claims should be decisive, success has been conspicuous by its absence. As Prof Wilhelm Nolling, the distinguished former Bundesbank director, pointed out in this newspaper last week, for Germany in particular — the euro-zone's largest economy — the strait-jacket of a one-size-fits-all monetary policy has been unequivocally harmful.
"One size fits all" is usually harmful and often painful. Just ask anybody wearing hand-me-down shoes...
Mr Brown did, however, offer a clue about what is fundamentally wrong with the European monetary union when he quite rightly stated that "it is important to learn the lessons not just from the experience of the euro area but also from how the states and regions adjust successfully in the United States monetary union". And so far as the United States is concerned the lessons are clear. Three absolutely crucial conditions are satisfied. First, there is a very high degree of labour mobility: Americans are prepared to move long distances, within the union, to find work. Second, there is a high degree of labour market flexibility, allowing wages to move down as well as up. And third, as a result of a genuinely federal system of taxation and public expenditure, substantial sums of money are automatically transferred from the more prosperous to the less prosperous parts of the union. Not only does the European monetary union satisfy none of these conditions, but the first could fully be achieved only if the union were bound together by a common language, the second is a feature of the "brutal" Anglo-Saxon economic model which the "civilised" European social model explicitly rejects, while the third is the characteristic of a single federal state.
Which is what they're going for...
It is not, of course, remotely surprising that the European monetary union as we know it is fundamentally flawed since, as is openly avowed by its continental promoters, its raison d'etre is not economic but political. There is nothing remotely disreputable about this: what is disreputable is to deny it. For many in Europe that motivation is the eventual creation of a federal United States of Europe, an ideal sought for its own sake, and towards which the monetary union is seen as an essential stepping-stone. Indeed, outside the United Kingdom, it is France alone that presents a major obstacle to this process. But it is important to understand precisely what the French objective is. As the Iraq imbroglio underlined, it is to construct a Europe sufficiently united to create an effective challenge to what it sees (and fears) as the political, economic, and indeed cultural hegemony of the United States.
Of which, I suspect, the last is the one that counts with the Frenchies. If we smoked Gaulloises, drank Bourdeaux instead of Coke, and — what joy! — spoke French or at least crowded out Anglo-Saxon rooted words with French-rooted words, the first two would be side issues. When all you've got left is your culture, and your culture's in danger of being unceremoniously supplanted by that of hairy-knuckled (occasionally remote) offspring of Perfidious Albion™, leavened by imports from most everyone else in the world who doesn't smoke Gaulloises, what else can you do?
This, it firmly believes, can best and most safely be achieved by a Europe under French leadership.
Look at how successful Louis XIV was. And that Bonaparte guy. Both Bonapartes, in fact. And it was France that was the genesis of the Holy Roman Empire...
And that, in effect, is what we have known up to now. It has been made possible because European history over the past hundred years has made the idea of a German-led Europe unacceptable. Hence the settled view of the German political classes that they can best exert influence not as Germans, but as Europeans in a Europe led by a Franco-German axis. And hence, too, the settled French policy of seeking to create a European Germany in a French Europe.
In an American world...
Mr Blair's seldom-articulated reason for so obsessively wishing to see the UK sign up to the euro is also political rather than economic. He appears to believe that, once inside EMU, we could exert a decisive influence over Europe's role in world affairs that would be unattainable outside it. It is, however, a motivation that is implausible to the point of incoherence. In the first place, just as we have always been anxious to exclude France and Germany - particularly France - from the intimacy of the Anglo-American special relationship, so they have no wish to see Britain complicate the Franco-German special relationship by turning it into an uneasy menage a trois.
"That's French! Oh, Tish!"
Indeed, in French eyes there is a compelling reason not to do so. As, once again, Iraq showed, Britain is (in de Gaulle's words) America's Trojan horse in Europe. Unless Britain were to sign up to the French agenda, to allow the United Kingdom a leadership role of any kind would be to threaten what, as France sees it, Europe is all about. The problem for France is that, as time passes, German guilt, on which France relies to ensure its paramount political role in the Franco-German special relationship, and thus the de facto leadership of Europe, is a wasting asset. When, one day, the day the German economy recovers, Germany will understandably wish to assert itself politically. But it is a delusion to suppose that, if and when that happens, Britain will be the gainer. For if and when France can no longer exert its present leadership of Europe, it will flip from being the only effective obstacle to a United States of Europe to being its foremost and most eloquent advocate, leaving the UK once again out in the cold, but in a more fundamental way than ever.
I'm not sure that last statement holds water. Nope. It's leaking like a colander. Germans who had any connection with the Reich are dying off — probably most of what's left were Hitlerjugend, and they're moving rapidly into pension territory. It's the post-war babies who're in power now, and they weren't around, so we're reduced to beating them up over what Mom and Dad did in their youth, and as a result they've assiduously avoided the sins of the fathers. Twenty years from now, we'll be beating them up over what Grandmaw and Grampy did, which begins to approach the silly. I think that's a pretty logical cut-off — when was the last time anybody beat up the Fritzies over Kaiser Bill? By that logic, and we could be beating up the Frenchies over the atrocities Napoleon was responsible for and tracing down bloodlines to make sure people in power had nothing to do with that regime of a couple hundred years ago. So the Germans, with a clean, or impending clean, record assume their rightful place in the center of Europe, now reunified, with the East mostly digested. So I see an impending Franco-German rivalry to go with the traditional Anglo-French rivalry. France, remember, wasn't a member of the Holy Roman Empire, even though it started with them.
Contrary to the Government's latest propaganda line, there is nothing "anti-European" about not wishing to see sterling replaced by the euro. Is Denmark, whose people voted decisively not to join the monetary union, anti-European? The plain fact is that to pay an economic price, which may be small, but could also in some circumstances be large, to secure a theoretical objective that is in fact unattainable and a practical consequence that we do not desire, cannot make sense. It is a Rubicon which it would be the utmost folly to cross. If Mr Brown is really as prudent as he claims to be, he will not dream of allowing Mr Blair to do so.
Posted by:Bulldog

#14  Some shit never decomposes.
Posted by: Shipman   2004-06-14 10:00:59 AM  

#13  When will Haiti join NAFTA?
Posted by: True German Ally   2003-06-15 20:59:10  

#12  I don't think anyone is more happy about Poland joining the EU than the Germans. As for Turkey, just as I thought, they will always have that carrot in front of their nose but will never be able to reach it.
Posted by: RW   2003-06-15 20:56:47  

#11  ..genuinely federal system of taxation and federal government..."

It's of course something the UK would be fighting against with teeth and claws. So it boils down to this: We won't join the Euro until the conditions are right. But we'll do anything to prevent that these conditions may be realized. The cat bites its tail rather happily.
I think Europe should tell the UK. Come when you are ready, we'll get along until then. But you know what Mr Gorbachev said about being late in history.

Let's review the statements:

"but the first could fully be achieved only if the union were bound together by a common language"

Not really. Switzerland has four and lives rather happily with that. Although most Europeans are fluent in at least one foreign language, and most of the time it actually is English. In the East German may be a bit more common.

"the second is a feature of the "brutal" Anglo-Saxon economic model which the "civilised" European social model explicitly rejects"

in its "brutal form" yes but most European countries are on the way to reforms in that respect although they want to reform social security, not kill it.

while the third is the characteristic of a single federal state.

Which the UK will never accept, of course. But once the smaller countries (especially the new ones) realize that the won't be swept under the table of a Federal Europe things may change. When they do the UK will have to make some hard decisions.

Let's face it: Europe can survive without the UK. The UK can probably survive outside the EU. Question is whether the UK will want to.

As for Turkey I think Aris has answered it all. Europe can't expand forever (some Rantburgers already want Israel in it, a true Trojan horse indeed, and looking at the map I don't see Israel being part of Europe). Europe will enter a long phase of consolidation. Turkey is basically an Asian country and will have to live with close association for the next decade. How Turkey will look like in 2013 we'll see then. Turkey actually blew a big chance with Cyprus to be considered earlier.
Posted by: True German Ally   2003-06-15 15:41:09  

#10  i for one will take a brutal system where i myself makes it or breaks it! i do not want to pay for someone who does not want to work hard! in the end it makes a stronger person and nation..
Posted by: Dan   2003-06-15 15:21:33  

#9  That's quite okay. I rarely waste time discussing most opinions expressed here either. Who would have the time? Some things interest me enough to respond, other don't. And that's the way it should be.

Who's Nigella? Pretty girl, but I haven't heard about her.
Posted by: Aris Katsaris   2003-06-15 12:56:40  

#8  Indeed, Parabellum. I didn't realise we exported so much Nigella nowadays.

Aris, you'll forgive me if I don't waste time discussing your opinions.
Posted by: Bulldog   2003-06-15 12:21:52  

#7  Yes, I've failed to notice the important difference of genuine federal redistribution of wealth vs. the non-genuinely federal redistribution of wealth.

Agree with everything else? Hardly. I just chose to dispute a factual piece of information rather than waste time discussing the guy's opinions.
Posted by: Aris Katsaris   2003-06-15 12:02:34  

#6  They left off some important info.

"Lord Lawson was the Chancellor of the Exchequer from 1983 to 1989 and is Nigella's father."
Posted by: Parabellum   2003-06-15 11:54:32  

#5  You're ignoring the clause: "...genuinely federal system of taxation and federal government...", Aris. Thankfully the EU hasn't yet had the chance to impose direct taxes on nation states' citizens to appropriate capital to be redistributed away from the prosperity-generators. Of course the EU's into wealth distribution, but it's carried out under the guise of CAP etc., and the funds are obtained from member states' EU subscriptions. But your knee-jerk reaction is to assume you know the basics of EU finance better than a man who controlled Britain's economy for seven years. I would have expected no less.

But I'm glad you seem to agree with everything else. Must make a change for you to ingest something other than al Grauniad make-believe when it comes to news from the UK, Aris.
Posted by: Bulldog   2003-06-15 11:18:25  

#4  "And third, as a result of a genuinely federal system of taxation and public expenditure, substantial sums of money are automatically transferred from the more prosperous to the less prosperous parts of the union. Not only does the European monetary union satisfy none of these conditions,"

Excuse me? Where has the Telegraph been all these years not to know that substantial aid is given to the less prosperous parts of the Union?
Posted by: Aris Katsaris   2003-06-15 10:38:33  

#3  "As a parting shot, I would ask TGA and Aris to give us an estimate on when Turkey will be invited to join. TGA? Aris?"

First of all countries aren't "invited" to join, they apply to join and certain applications are accepted. You may think it a nitpick perhaps, but it's a crucial one, I think.

Secondly, for new countries to join the Union you need a unanimous agreement from the countries already in it. As long as Turkey occupies half of Cyprus, neither the Republic of Cyprus nor Greece will accept Turkey's application.

Thirdly, it has been agreed that Turkey needs to first satisfy the "Copenhagen criteria", about democratization and human rights.

Fourth, the Treaties specify what will happen as long as we have up to 27 members (that's the 15 current ones + the ten to join up next year + Romania and Bulgaria). I'm sure there's gonna be some sort of renegotiation before we accept countries beyond the "27" limit -- such renegotiation will not only influence Turkey but also countries that are likely to enter the EU before her, such as Croatia, or even (if all goes well) Serbia & Montenegro.

So to sum it up.. Estimation? If Cyprus is reunified, and new negotiations aren't sabotaged by youknowwho, 2012-2015 seems a likely goal for Turkey to strive towards.

Hmm... But are countries prone to be victims of Islamic terrorism (such as UK) likely to accept the idea of 70 million or so Muslims allowed to freely roam through its borders? ( This is of course a question to set you up! ;P )
Posted by: Aris Katsaris   2003-06-15 10:30:01  

#2  An excellent, if blunt, analysis of American economic advantages over Europe. Yes, the American economic system is somewhat brutal, but if France's system is the alternative, then we'll pass, thank you very much.
Posted by: Ptah   2003-06-15 10:02:29  

#1  My home being in Canada, I'm actually resigned to this whole debate now; I could care less what happens in Poland or the rest of Europe. Best of luck to them. I just hope the UK does not get suckered into anything.
As a parting shot, I would ask TGA and Aris to give us an estimate on when Turkey will be invited to join. TGA? Aris? (This is of course a question to set you up)
Posted by: RW   2003-06-15 08:13:04  

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