Jason OMahony - Irish political blogger, Irish politics, EU politics
 

Is it time to break up the Euro?

Posted by Jason O on Oct 20, 2016 in European Union, The Times Ireland Edition |

The Times ScreenshotPreviously published in The Times Ireland Edition.

On my desk, as I’m writing this column, is a small EU flag on a stand. It’s typical of the overpriced tat on sale on and around the tourist devouring gravitational black hole that is the Grand Place in Brussels. No self-respecting EU official would waste their money on rubbish like this. And yet I spent mine, and it sits on my desk, meaning something to me, a symbol of an almost lifetime of belief in not just European integration but an actual United States of Europe. It’s that belief which is what makes this particular column so hard to write.

Last week there was a debate about the European Commission insisting that the Irish government had no choice as to whether to levy a water charge or not. That it was EU law, that our derogation was over, that was that. Now, as it happens, I believe in water charges. Clean, safe water is a precious commodity that costs money to deliver to our homes, and should be treated as such, and that means putting a value on it. People respect something far more when they have to pay for it.

But a question niggled in the back of my mind. Why is it Brussels’ concern whether we charge for water or not? We signed up for the water framework directive, but the bigger question is why does our system of water supply funding matter to Brussels at all?

Defenders of the directive will say, quite fairly, that if you sign up to something you should carry it out. They also raise the question of why we sign up to some of this stuff in the first place. These decisions are not forced on us by Brussels but by our own national ministers agreeing, and our national parliament not holding them to account before they do so, as say, the Danish parliament does. Indeed, Danish ministers often have to brief their parliament before they go to Brussels, and receive instructions.

It also raises the question, which seems to be regarded as heresy in Brussels, as to whether a member state can change its mind about a directive or regulation and go back to the council and say “you know what, this isn’t working. Let’s get rid of it.”

But the water directive is indicative of something much bigger, and much more troubling. The truth is, we now have a situation where Brussels has direct involvement in the finances of the member states, actually telling us what we can and can’t do with our own money.

Now let me be clear, less some eurosceptic reads this as a Damascene conversion to euroscepticism: I get why we do it. We do it because the euro, our common currency, can only work if its participant nations operate on the basis of sound finances. But that’s the problem: in order for that to happen, we have to go the full federal route, with an economic policy decided in Brussels. The problem is that there is no support for that in Europe, and so we end up, pardon the awful pun, stuck in the middle with EU.

I believe in the euro. I don’t buy the argument that the euro caused our property bubble. The fact that we complain now about the Central Bank restricting lending shows that we had the power to restrict the availability of cheap money during the Tiger years but chose not to use it.

I support a common currency because it makes a political union wealthier. Is there anyone who thinks the US would be the world’s preeminent power if it had 50 competing currencies?

But our problem is that we’re not willing to go the full route, to a central economic policy and a central treasury with Eurobonds. Without it, the euro becomes a convenient demon, for UKIP or AfD in Germany or the Five Star Movement in Italy to easily blame for problems and even failures of national policy. In short, it becomes a weapon to use against the EU itself.

The euro has made countries share power with each other, making German prosperity reliant on Greek finances, but has not given anyone enough power to actually complete the job. If a federal government in Brussels actually collected Greek taxes, and returned a block grant to the Greek government, we’d all probably be better off, including the Greeks. But that’s not on the table, and trying to put it, or something like it, on the table will almost certainly break up the EU.

The euro is becoming a scapegoat for nationalist populists to blame, either directly, as in Italy, or indirectly, as in Ireland with our fiscal treaty obligations to balance our books.

I voted for both the Maastricht criteria and the Fiscal Treaty because I wanted to restrict the ability of Irish politicians to recklessly abuse the national finances. But instead we have created an unforeseen consequence, where rather than forcing national politicians to be honest about tax and spending, we have given them a faceless stooge to blame.

Should we break up the euro? The consequences of such an act, and the devaluation wars it would set off, are horrific to contemplate. So I honestly say I don’t know.

But I’ll tell you one thing: if the belief that it is some unaccountable thing in Brussels which is making you pay for water or queue for hours in A&E is permitted to grow, it will eventually destroy not just the euro but the European Union itself.

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