Why does Osborne want a United States of the Eurozone?
I can understand that a ”United States of the Eurozone” – Osborne’s phrase, even though he says that it does not have to be a “full-blown” political union – is one solution to the present crisis. It would be better for us than a disorderly break-up of the euro. But it is still far from the best outcome, which would be an orderly break-up and the restoration of floating exchange rates.
So why do Cameron and Osborne not say, “It is in our interest that the eurozone finds a way back to prosperity, but it is up to the eurozone members how they do that”? Why do they advocate, from outside, a non-optimal route to relative prosperity, namely the closer integration of the eurozone? They must know that this will (a) paper over the structural imbalances of the eurozone, postponing the day of reckoning, (b) suppress growth in the eurozone for the foreseeable future and (c) create a European core superstate on our doorstep.
Iain Martin seems similarly baffled in his Q and A in The Sunday Telegraph, although he tries to make sense of it. He points out that William Hague, the Foreign Secretary, must surely believe that the euro is doomed, yet takes the opposite position in public.
James Forsyth, always well informed about No 10’s thinking, reports in the Mail on Sunday that the Prime Minister feels vindicated by his standing aside from the fiscal compact in December and is disinclined to worry too much about Nick Clegg. Yet Cameron does not seem to intend to use this opportunity to lead on the question of Europe, with “senior figures” being just as obsessed by the idea of a referendum as the rest of them. Forsyth even says that these SFs (senior figures or, more accurately, stonking fruitcakes) believe that a promise of a referendum “would boost Cameron’s reputation for strong leadership”.
As I have repeatedly said, a referendum is a second-order question. First, you have to decide what is the right thing to do. I simply cannot believe that Cameron, Osborne and Hague sincerely think that trying to make the unworkable euro work is the right thing to do, which is no doubt why the Conservative Party, and the rest of us, find the referendum question so incomprehensible.
Update: My excellent colleague Mary Ann Sieghart in tomorrow’s Independent is better than me at explaining what Cameron is up to:
A break-up of the euro fits far better with Conservative views on national sovereignty and the undesirability of creating a United States of Europe. And – after the initial trauma – it would give the member states greater long-term economic and political stability. But the process of getting there would be nearly as painful for Britain as for the rest of the eurozone, which would make the 2015 election almost unwinnable.
No wonder the Prime Minister looks as if he is talking out of the side of his mouth when he urges the eurozone to integrate further. The idea couldn’t be more foreign to him. But he is terrified of a eurozone failure dragging Britain down with it. And he is equally unwilling to advocate break-up for fear of being blamed by the rest of the eurozone for precipitating it.
*This sentence, for example, is curious: “Despite our huge budget deficit and massive banking system, our economy is benefiting from safe-haven status.” Massive banking system?Tagged in: david cameron, euro, euroscepticism, eurozone, george osborne
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