There’s been an enormous amount of ink used on the ‘veto’ that David Cameron used in Europe last week, with warnings of dire consequences if the UK doesn’t help to support the Euro.
Frankly, I don’t understand this as the Euro has been doomed since introduction in January 1999. In fact, the 10th anniversary of the release of Euro banknotes and coins on 1st January, 2002, would be a great time to announce its departure as a central currency.
“Heresy” I hear being loudly cried… But the facts are simple – for a central currency to work, it needs central control, and Europe doesn’t have this. Sure, it has a hideously expensive, large, bureaucratic parliament that shuffles (at even more expense, thanks to French Government insistence) between Brussels and Strasbourg every month, but all this body does as far as I can – apart from ensure regal lifestyles for its members at taxpayer expense – is create complication in everyone’s life, and silly rules that have clearly not been thought through. What the Eurozone doesn’t have is central fiscal control. A United States of Europe, if you like, where the member countries have the status that individual states have in the USA.
Of course, the reason for this is simple – no member country’s politicians want to be answerable to a (central) higher authority. You can see this in the choice of the European President – a nice enough chap, apparently, but basically invisible, and certainly no “leader of Europe.”
Unlike the USA, Europe is not united in a common history/language/culture. It’s a very diverse set of countries and should remain as such – celebrating the differences, rather than trying to blend them into a murky sameness. It could never support a central government, and shouldn’t.
What it SHOULD be is a free-trade zone, as originally envisaged. The Euro should be simply a currency that exists to facilitate this free trade – similar to the ECU of pre-1999, but actually existing as a currency. Legal tender in all EU countries, it would operate alongside those countries’ own currencies, with a rate of exchange that floats against each, allowing that country to determine its own fiscal policy (as they all do to a large extent anyway – which is what caused the mess) and have the relative value of its currency determined accordingly. Like trade, loans could be made or sought in Euros or a country’s own currency, depending on the will of both parties to the transaction.
The dissolution of the current Euro would be simple – start with each country having its currency at par with the Euro, and let them float from that point. Market forces would soon determine the real value of each currency.
As a considerable side benefit, this would also facilitate the dissolution of the European Parliament saving us all a great deal of money and aggravation.
There would be no need to try to prop up a fatally flawed system and countries could celebrate their individuality while sharing in what should arguably be the biggest and wealthiest free trade zone in the world. This would also mean an acceleration of growth at country level.
Given the Euro cannot survive unless all in the Eurozone abrogate power to the centre – which I can’t ever see happening – isn’t it best to ackowledge the role the Euro should play and move to individual currencies; the sooner the better?