Monday, 25 July 2011

Peter Hain was right! EU moves to full fiscal union

by Marc Glendening

Respect where it is due. Peter Hain, when he was still a principled politician of the Labour left, predicted in his prescient book Ayes to the Left that the European single currency would lead inexorably to full fiscal union and this was one of the reasons he believed we should stay away from this elitist project.

"A European Bank independent of democratic control and dedicated to almost exclusively to price stability must be reversed. It is economically disastrous and politically dangerous", he asserted correctly.

A short while later, Tony Blair offered him the job of being Europe minister and, low and behold, Mr Hain had discovered the joys of New Labour and membership of the single currency.

So what was it, exactly, Mr Hain, that suddenly attracted you to the European views of the then all powerful leader of your party?

Euro prediction

In his book, written in 1995, Peter Hain went on to claim that the Brussels budget would have to be increased “three to four times” in order that a system of fiscal transfers could be established so that huge sums of money could be injected into those economies within the Eurozone that were struggling with the interest and exchange rates determined by the European Central Bank.

Last week's second Greek bail-out of €109 billion (£96 billion) and the outlining of the future direction the EU in relation to economic policy, including the expansion of the powers of its bail-out fund, confirm the Hain thesis.

A jubilant Nicolas Sarkozy claimed the crisis summit in Brussels represented "a historic moment" and promised that "by the end of the summer, Angela Merkel and I will be making joint proposals on economic government in the eurozone. Our ambition is to seize the Greek crisis to make a quantum leap in eurozone government… There is no European Monetary Fund yet, but nearly”.

Whether German, French, Dutch, Finnish, Swedish, Danish and other taxpayers from EU member countries feel quite as ecstatic at the prospect of having to stump up billions of extra euros to help keep afloat the single currency project is another matter and a factor few in the media have focused much thought on.

EU taxes

While the whole EU project has been designed to prevent ordinary citizens from being able to hold the Pan-European political class to account on key issues (hence the elite’s fear of referenda), it is probable that many of them will use their votes increasingly in national elections to express their displeasure.

British taxpayers will be further dragged into this crisis in the short-term if Portugal and Ireland require new bail-outs before 2013. We are obligated under Article 122 of the Lisbon treaty to do this, just as we were first time round with these two countries. This is in addition to the amounts we have put in through the IMF, including of course to Greece.

In the longer-term, the EU plans to introduce a range of new Brussels-set taxes that will be levied against all individuals from the member states. This is the only way Brussels will be able to build a treasury on the scale Peter Hain so accurately predicted fifteen years ago.

Sudden impact

When he was Europe minister in 2002, Peter Hain evoked Clint Eastwood in the cult classic movie Dirty Harry with the words 'Make my day' in challenging EU-sceptics to have the courage to debate him about the single currency.

Sadly, unlike Harry taking on a rabid gun-toting psychopath on the streets of San Francisco, Mr Hain turned out to be all mouth and no trousers.

Despite the Democracy Movement offering to stage a public debate between the then minister and pro-pound Labour National Executive Committee member Mark Seddon (now director of the People’s Pledge), Peter Hain failed to take up the challenge he had rhetorically set.

Instead, he embarked on a national speaking tour in support of the euro that was much more in keeping with the New Labour ethos of the times: no opposing speeches were allowed!

Perhaps he was worried that Mark Seddon would have used against him the compelling arguments he had himself expressed in Ayes to the Left.

written by Marc Glendening

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