Dan O’Brien, in last Friday’s Irish Times here, finishes his piece with an interesting possible glimpse of the future: “The choice facing Europe…would be to allow the euro (and the European banking system) to collapse or to take a large leap towards further political integration in the form of fiscal union. Europe may well find itself in 2011 having to choose between a meltdown of apocalyptic proportions and taking a very large step towards European statehood. It is unthinkable that the former would be permitted, so the chances of the latter are not inconsiderable. Euro federalists may have their hearts’ desire in 2011, but hardly in circumstances for which they would have wished.”
As someone whose heart leaps at such a proposition, and respects Dan’s analysis, I have to say that I’m sceptical. A fiscal union needs the consent of a lot of people, especially the German people, and the question has to be how you give them that reassurance that they are not taking possession of a fire-saled continent whilst convincing the rest of the Eurozone to give the Germans the power to feel secure? It’s a mammouth task. Yet, as Dan points out, the alternative, the very money in our hands ceasing to work, as it were, is a nightmarish possibility.
I can’t speak for other countries, but would the Irish vote Yes to creating a form of SuperEcoFin in a referendum? There will be some who will immediately advocate that Ireland attempt to blackmail the rest of the Eurozone in return for an restructuring of the IMF deal, but given that the collapse of the euro will be the outcome of a No vote, I have a suspicion that such a rich pot would be too rich for most Irish gamblers, and that they would vote for fiscal union. Ironically, you could have the surreal situation where the possibility of Ireland leaping from a burning Eurozone into Sterling could transform overnight Sinn Fein into a European federalist party, especially if Tory MPs start suggesting that Ireland in Sterling could print its own “Oirish” version of the pound as Northern Irish and Scottish banks do already.
But what is also interesting is that Britain, outside the Eurozone, will nevertheless probably have to give consent to the changes sought to the treaty, provided Britian is exempt. Even the most thickheaded of eurosceptics will surely not want to see the euro collapse in disarray for fear of the effect on Britain. But it then leaves them in a curious position, where Britain, after hundreds of years of a policy of preventing a dominant power emerging on the continent, will awaken to find a European state with a population of 330 million people sandwiching the UK into the North Sea. Ooops!