Wednesday, 7 May 2008

10 years of the euro

A couple of quotes by EU-state supporters appearing over on Mark Mardell's blog today deserve greater scrutiny.

Marking '10 years of the euro' (the fixing of exchange rates, rather than introduction of notes and coins), the BBC's Europe editor has written a well-balanced piece about the EU's currency - looking at plans for its future and asking whether we would have been better off joining.

Mardell first highlights apparent EU concerns that the currency isn't 'punching its weight' on the world stage, confirming that the Commission still harbours ambitions to remove eurozone member countries from being represented in international financial bodies - and to replace them with one EU representative.

An un-named Commission official is quoted as saying "At the moment we take up too many seats, too much space."

Leaving aside the idea that a lack of space, or seats, in perhaps the offices of the IMF or OECD is apparently a sufficient justification to deprive elected governments of an important international voice, what's more interesting from a British point of view are the implications of this Commission attitude in another EU policy area.

Namely, the 'common foreign policy', arising from the re-named EU Constitution.

Will the Commission be pushing for the removal of "too many seats" in international fora under this banner too, and what does that mean for Britain's seat at the UN?

UN seat under threat?

During negotiations on the Lisbon Treaty last year, the government strongly denied that Britain's UN seat would ever be under threat as a result of the treaty.

But it was subsequently revealed - in a standard EU 'step-by-step' move - that the EU could in fact take the seat for Britain and other EU member countries if representing a 'common position'.

This strategy was then confirmed by Lord Malloch-Brown - now a foreign office minister - who revealed to diplomats that the EU's advancement into international institutions in the place of its member countries would "go in stages".

"We are going to see a growing spread of it institution by institution," he said.

As ever with the EU, its tricky to see who exactly would be in charge of such a 'common foreign policy' decision to merge national seats into one EU seat in international fora, and whether we truly have a secure veto.

One thing we do know is it's doubtful that any of the MPs who gleefully voted to approve the EU Constitution without supporting the referendum they promised at the last election could tell us with any certainty.

John Monks: euro zealot

The second interesting quote in Mardell's piece comes from John Monks - head of the European Trade Union Confederation.

Obviously still clinging to his long-held fanaticism to get Britain into the euro, exercised very vocally when he was head of Britain's TUC, Monks tries to claim that the idea of our being better off in the euro has been "masked ... by the British economy doing well."

At least he admits we're "doing well", contrary to all the scare-mongering he used to indulge in about the consequences of keeping the pound. He's obviously conveniently forgotten about all that. But any chance of final recognition that we're doing well because we kept the pound, Mr Monks?

He then goes on to claim that the euro has "probably" prevented devaluations of the "franc and the lira and some other currencies".

While it's true that euro membership makes devaluations by individual countries absolutely impossible - given their currencies no longer exist to devalue - whether as a result of the credit crunch there would have been any without the euro's existence is highly debatable.

What the euro is not likely to do, however, is solve any underlying economic problems that in the past have made devaluation the least worst option for governments.

Economic pressure that could in the past have been resolved by an exchange rate adjustment would, under the euro, very likely just burst out in another possibly far more harmful aspect of the economy.

Pro-pound campaigners proved right

What's certain, though, is that those of us who campaigned for Britain to keep the pound have had our arguments completely vindicated.

Britain remains the top destination in Europe for inward investment, we avoided euro price rises, unemployment is at record lows and we've clearly been far better off setting our own interest rates for national needs.

All the euro-zealot scaremongering has proved groundless - a lesson, surely, in how seriously to take their statements on other EU issues.

Today, we're far more likely to see one or more eurozone countries no longer able to stand the strain of the euro strait-jacket and quit, than Britain decide to join.

The biggest threat the euro presents today to those inside it is that, in locking both exchange rates and interest rates, it can only create an economic pressure cooker.

And the bad news for the EU is ... the temperature's going up!

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