Barbarians Not at the Gates?

by Andrew Stuttaford

At this point “pro-Europeans” have to stop talking rubbish and start on realpolitik. Alaric is not at the gates of Rome. Washington has not crossed the Delaware. Napoleon has not returned from Elba. All that may happen is that Europe’s democracies, disregarded, distorted and corrupted for a quarter century by the oligarchs of Brussels, will crawl out from the shadow of the very Acropolis where democracy was born. For all sceptics of grand federations, gilded alliances, and upmarket mafias hatched down the ages in Europe’s cloud-capped spas, this could be an exhilarating moment.

There is nothing wrong in a currency zone of compatible political entities. There is a dollar union between the American states, and there have been attempts at using currencies to cohere earlier empires, with crowns, roubles and pounds sterling. But a union must reflect an underlying economic reality, with political institutions that can relate voting to taxing and spending, and borrowing to repaying.

Where, as in Europe, this has become far from the case, the disciplines of a complex modern economy become unenforcible. Those in charge merely demand “ever closer union”, which means ever more power over subordinate democracy.

Indeed, indeed

But this is, perhaps, the most important paragraph:

The euro rescue packages now being mooted are eerily reminiscent of the reparations imposed so disastrously on Germany after the first world war. It may all be “just”, but the forced impoverishment of Greeks, Portuguese and Italians to honour the paper value of German and French debts must be as close to revolutionary incitement as modern policy can get. Does nobody in Brussels read history?

The last question is interesting, and I can never make up my mind as to what the right answer may be. Some in Brussels appear to have read too little history, others, in some ways, too much. What is clear, however, is that none of them appear to understand it.

The reference to the reparations of 1919 goes too far (a better analogy might be found in the Argentina of the early 2000s) the words ”revolutionary incitement” less so. We have heard the dire warrnings, up to and including war, if the eurozone breaks up, and it cannot be denied that any such a process (or, better, a divorce into ’northern’ and ‘southern’ euros) would be anything other than painful, highly risky and potentially catastrophic. Nevertheless, it is worth pondering the possibly even more malign consequences of keeping the euro together in its current form, a decision that could run the risk of dooming a large swath of the zone’s periphery to a long period of stagnation, or worse than stagnation, while condemning the more productive nations of europe to pay for it for a generation or more. Maybe that’s too pessimistic, but it does not sound like a recipe for social peace to me. In any event, the risk/reward calcualation is far more complicated than Brussels would like everyone to believe.

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