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Anatole Kaletsky: The Times,
July 1, 1999
Welcome aboard, Tony. It is both a pleasure and an honour to report that the most successful British politician of the 20th century has decided to climb onto the bandwagon which started rolling quietly several years ago on the pages of The Times. The Prime Minister's decision to "back Europe, not the euro", revealed by Downing Street on Monday, has long been the obvious solution to the great political dilemma of the decade. Britain can - and should - contribute enthusiastically to the improvement and enlargement of the European Union, while staying outside the single-currency project, at least for the foreseeable future. As noted on Monday by New Europe, the pro-European but EMU-sceptical lobbying group set up by Lord Owen earlier this year: "If the Prime Minister has now decided to kick the issue of UK membership of the euro into touch and concentrate on much more important and pressing business within the European Union, New Europe offers its congratulations." I wholeheartedly agree. Before moving on to some of these important and pressing issues, let me deal with a question begged by the paragraph above. Has Mr Blair really changed his attitude to EMU? In his heart of hearts, he probably still hopes to dragoon Britain into the single currency after crushing the Tories in a general election in 2001. His head, however, is now clearly riven by doubts. Even if he wins overwhelmingly in the general election he now knows that many of Labour's supporters are likely to abandon him in a referendum on EMU. He also knows, from the experience of numerous hapless continental leaders, that losing a referendum on this issue would effectively end his political career, however big his majority in Parliament. And even a narrow victory might prove politically disastrous, since any subsequent economic setbacks or financial crises would be blamed on his decision to push the country into EMU against so many people's better judgment. Furthermore, a tiny majority comparable to President Mitterrand's "petit oui" in 1992 might not be sufficient to settle the issue. Part of the reason for having a referendum on EMU is to take membership, if it is ever undertaken, out of normal party politics. But a tiny majority in favour, achieved on a small turnout, would be unlikely to achieve that result. It is worth recalling that the 1975 referendum, which really did settle the EU issue, produced a majority of two to one in favour on a turnout of 65 per cent. Yet if Mr Blair defers a decision on EMU until the mid-term of the next Parliament the risks of a referendum would become even greater. By then, the economic and political cycles will probably have turned and the Government will probably be suffering from mid-term political blues and an economic slowdown. Thus, the middle of the next Parliament seems far less plausible than 2001-2002 as a "window of opportunity" to press-gang a reluctant nation into EMU. In effect, a decision not to hold a referendum shortly after the next election will almost certainly mean shelving the EMU issue until the next Parliament - 2006 or beyond. Willy-nilly, therefore, Mr Blair may well be on the point of adopting an EMU policy that is indistinguishable in practice from William Hague's. But does this mean that he must give up his hopes of leading Britain toward a more constructive and creative relationship with Europe? The answer is emphatically "no". The people who maintain that Britain can do nothing in Europe unless it joins the single currency are victims of the naive Marxist fallacy of "economism". Exactly the same fallacy was propounded before the 1997 general election by many of the same pundits, who insisted that Labour would be indistinguishable from the Tories because Gordon Brown had promised to stick to Kenneth Clarke's tax and expenditure plans. If Mr Blair were really serious about becoming a European leader and about bringing Britain closer to Europe, he could find a long list of important political, diplomatic, economic and social issues, in the EU apparatus and in British domestic politics. This is something that Mr Hague, to his credit, has begun to understand. His negotiation to secure a looser alliance of right-of-centre parties in the European Parliament could promise to give the Tories an influential voice in Strasbourg. It could go a long way to rebut Mr Blair's absurd and cheap accusation that, through their opposition to the euro, the Tories are a pariah or a laughing stock. Mr Hague is eager to play a constructive part in trying to accelerate EU enlargement into Eastern Europe and in promoting the labour market and regulatory reforms desperately needed by the EU economy. But where Mr Hague falls short is in lacking a vision of the way that British domestic politics should relate to Europe. In today's Tory vision, Europe is seen primarily as a threat. This is in sharp contrast to the way Europe was seen in the first half of the Thatcher period, when the single-market programme was presented (probably rightly) as one of the greatest economic opportunities of the century. Mr Blair could not possibly recreate the enthusiasm for Europe that produced the Single European Act. But if he were prepared to shelve the single-currency project he would allay much of the popular paranoia about all things European. He could then launch a series of popular domestic initiatives that would have much more effect than the single currency in bringing the British people tangibly closer to Europe. Consider just one practical example suggested by recent events. The present fuss about passports could present Mr Blair with a perfect opportunity to announce a decision to join the Schengen agreement, combined with a voluntary scheme to accept the new-style photo driving licences as identity cards. Britain's persistent refusal to open its borders is a far more powerful psychological symbol of isolation from Europe than the arcane monetary politics which obsess the so-called pro-Europeans. Refusing to join the Schengen agreement entails major economic costs, for example the advance check-in requirements which undermine the commercial viability of the Eurostar rail service. This, in turn relates to one of London's most serious handicaps as a financial centre for the whole of Europe. London lacks frequent transport links with Paris, Frankfurt and Brussels comparable to the half-hourly shuttles between New York and Boston and Washington. A second great handicap is the one-hour time difference which, because of the timing of the European and British lunch-hour, makes telephone communication with European executives extremely difficult for most of the day. If Mr Blair were serious about reinforcing London's position as the financial centre of Europe, he would not be campaigning for the euro. Instead, he would be taking steps to eliminate the border delays, the transport problems and the time difference that seriously impede business links with Europe. But what has all this to do with the single currency? At present, abolishing border controls or adopting Central European Time might be politically risky in Britain because it could be attacked as "another sell-out to Europe". But if Mr Blair made clear that he was shelving the EMU project, at least for the next five years, the dynamics of European politics in Britain would completely change. By abandoning the euro project, Mr Blair would have demonstrated that he values Britain's independence. At a stroke, the paranoia about all things European would disappear. Sensible practical policies to bring Britain closer to Europe would no longer be denounced as sellouts. Inevitable compromises that have to be negotiated in Brussels would no longer be derided as capitulations. Instead, the Government's policies to bring Britain closer to Europe would be judged on their merits and many would undoubtedly win popular support. Isn't that exactly what the Prime Minister should want if he is genuinely pro-European? |