Eurocrash: it was political – and they knew it

18/05/2012

You would not even have begun to get a hint of the "bombshell" that was hidden in the Robert Peston's "Great Euro Crash" last night. Certainly in his puff for the programme yesterday, there was nothing given away.

Unsurprisingly, I lost patience with the programme as it was broadcast live last night, and stopped watching. But this morning I returned to it, picking up the narrative just short of 18 minutes, where Peston is saying that it needed "a great shock" to make the countries of Europe abandon their national currencies.

That shock, Peston says, was the bringing down of the Berlin Wall in 1989 and the reunification of Germany. This meant a more powerful Germany, from which point, the transcript reads as follows (17:50 minutes), with Peston doing the intro (pictured above):

When it became clear that the momentum towards German reunification was unstoppable, the French President, François Mitterand, needed a way of constraining German power.

David Marsh "author": Mitterand knew that the Germans were going to unify. He knew that there wasn't anything that was going to stop the Germans from unifying. The deal that was done was that the Germans, once unified, would then do everything they could to embark towards a single currency.

Robert Peston: For the French, monetary union was as much about politics, about the balance of power within Europe as about economics. The idea was to strengthen the institutions of the European Union, relative to member countries so that the growing power of Germany could be held in check.

The train towards monetary union was rolling. Europe's leaders assembled in a small town Dutch town to agree a treaty which would shape and shake the continent. And the point about monetary union is that it was about much more than money.

Lord Lamont: I was Britain's negotiator at Maastricht for the opt-out for the euro and I remember the very first time I met Pierre Bérégovoy, the French finance minister who was later the prime minister of France. And I remember the shock I felt when he said to me, "My children will live in a politically united Europe. And I think that is a great thing".

And what I saw very clearly was the force of the political will to create a monetary union and a political union.

Élisabeth Guigou: Mitterand believed it was the first step towards political union. It was both the key to economic union as well as the first step towards political union.

Robert Peston: Monetary union was a political project in economic clothing. At its heart was a terrible contradiction. It was designed by Mitterand and Köhl to speed up the creation of a European federation, a super-state. But pushing for monetary union before the political union was in place carried enormous risks.

Lord Lawson: You cannot have a monetary union that works without a fiscal union. You cannot have a fiscal union without in effect a single finance minister, which means you have to have a full political union. You can only have a full political union if the people are prepared to go along with it. And the people quite clearly are not.

David Marsh: It was an impossible dream that you could build a single European currency without a single European state. Everybody knew that it was a risk. Everybody knew that you were putting the cart before the horse.

Lord Lawson: It was arrogant because they thought that that way they could over-ride the democratic veto. And it was irresponsible because they didn't say, well this is a high risk project, and I think that was a gamble, if you like, that should never have been taken.

The interesting thing about all this is the "innocence" of Norman Lamont. In the Peston film he tells us that he was Britain's negotiator at Maastricht for the opt-out for the euro. That was in December 1991, but Lamont uses that as his baseline, telling us that he remembers the very first time he met Pierre Bérégovoy, the French finance minister.

Then, Lamont tells us that he remembers the shock he felt when Bérégovoy had said to him, "My children will live in a politically united Europe. And I think that is a great thing". What he saw very clearly then "was the force of the political will to create a monetary union and a political union".

The inference is that he discovered this in 1991, but that first meeting, of course, must have been much earlier. Lamont was thus aware of the agenda long before he went to Maastricht.

In fact, we get evidence of this on Thursday 6 December 1990, when Lamont was questioned in the House of Commons by Tony Favell, John Major's former PPS. Referring to Bérégovoy, Favell asked Lamont whether he was aware that the finance minister had, the previous day, said that "the move towards economic and monetary union can be achieved only by the simultaneous erection of an economic Government".

Lamont then replies: "We have always feared that an imposed single currency and an early imposition of monetary union must lead to a degree of political integration for which I do not believe the people on the continent of Europe are ready".

What really makes this so powerful is that we see Lamont in action three years later, eighteen months after the Maastricht summit, on 20 May 1993. Then, in a debate in the Commons, he asserts that that joining the single currency has its "risks":

… one of which is that we may become locked into a single European monetary policy that is wholly inappropriate to our economy. If that happened, we would be on a slippery slope, because pressures would grow for huge transfers of resources across the Community, and there would be calls for even closer political union.

In view of what Lamont now admits to Peston, these responses were lacking in candour. His 1990 warning of a "degree of political integration" does not even begin to capture the significance of what he had already learned. Then, three years later, simply to allude to highly conditional events, following which, "there would be calls for even closer political union" with the adoption of the single currency, does not get close.

If Lamont knew then, as he is now freely admitting, that the single currency was the precursor of political integration, that its very purpose was to pave the way for a "United States of Europe", and that was the plan all along, he should have said so - loudly, and clearly. But he did not.

Ironically, in a debate on 16 Feb 2012 in the House of Lords, in which the now ennobled Lamont took part, we have Patience Wheatcroft, former editor of the Sunday Telegraph and now the Baroness Wheatcroft, telling us that:

The fact is that the EU is not a political union and nor is the eurozone. That a single currency would falter if it were not accompanied by political and fiscal union was always likely, if not inevitable.

That much is true. That much has always been true. But only now do we get the likes of Peston saying so. Even then he cannot bring himself to emphasise the fact that it was known all along, and that his employer, the BBC, was therefore very much in favour of political union.