EU Referendum


Eurocrash: the new global power


21/05/2012



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The reason I bought The Sunday Times yesterday was to get a look at a much-touted article about the Great Historian Niall Ferguson, an interview with whom graced the front page of the review section and more besides.

One has to be a little careful taking the headlines at face value, but before even reading the piece I was prepared to disagree with his thesis, based as it was on the lurid header which had Merkel dressed up like a character from Wagner's Ring cycle. Ferguson, we were told, asserted that the currency will survive and the euro-crisis will leave Berlin heading a federal Europe.

Before ripping into this, one has to say that some of Ferguson's analysis is spot on. "I think it's worth considering", he says, that the architects of monetary union knew all along it would lead to a crisis and the crisis would lead to a federal solution".

"I'm not sure how far that was articulated, but I think it was implicit", he adds. "In fact you could say it was actually designed to create a crisis".

The thesis, however, is hardly new, expounding as it does the concept of the "beneficial crisis", the term for which I like to think Booker and I coined in our book The Great Deception.

The intention to pursue monetary union was described in a 1969 report as having been set out in Chapter VIII (Monetary policy) of the "Memorandum of the Commission on the Action Programme of the Community for the Second Stage", of 24 October 1962, and in the Commission's publication "Initiative 1964" of 30 September 1964.

The Six formally agreed at a conference in The Hague on 2 December 1969 to the creation of an Economic and Monetary Union (EMU). The use of monetary "solidarity" to secure "convergence" with economic policies (and thus political integration), was set out in a Commission Memorandum of 4 March 1970. It stated:
While it is true that monetary union, if it is to last, needs to be soundly based on economies evolving on compatible lines, with convergent economic policies, it is equally true that closer monetary solidarity enhances the prospects for both such compatibility and such convergence. The interaction of the economic and monetary sides is a powerful factor for greater Community cohesion.

Moreover, current international developments suggest that to delay overlong in giving the Community this greater monetary cohesion might eventually mean that the whole idea of monetary unification lost its point, economic unification was rendered largely irrelevant, and even the Community work already completed might be seriously undermined.
With that, the template was then set up by the Werner Report of 1970, which became the definitive plan for introducing the single currency.

The need to use the "beneficial crisis" dynamic, however, came later, but it was explicitly stated as a requirement to advance the project. We identified it in our book (p.225), citing the so-called Marjolin Report of March 1975, produced by a group formally entitled the "Study Group on Economic and Monetary Union 1980".

It was exploring the reason why there had been such little progress towards EMU since 1969. In so doing, the group came to the conclusion that there had been three principle causes: unfavourable events, a lack of political will, and insufficient understanding in the past of the meaning of an EMU and the conditions which must be fulfilled if it was to see the light of day.

The unfavourable events had been the international monetary crisis which had shaken the western world since the end of the Sixties, together with the financial crisis brought about by the sharp rise in oil prices in 1973 (triggered by the Yom Kippur War).

These profound disturbances, said the Marjolin Group, had not been foreseen when the decision to create a. European EMU had been taken. They had not been foreseeable, at least as regards the form which they had taken and the moment at which they had occurred.

Then came the "money quote", which we marked down as an early exhortation to use what was to become a major tool of the project:
Like all crises, they could have been the occasion of progress, by provoking a crystallization of latent wills. Great things are almost always done in crises. Those of recent years could have been the occasion for a leap forward.
Being such a Great Historian, Ferguson can't be expected to read the work of grovelling minions like ourselves. Nor can he be expected to refer to original Commission documents which define the very phenomenon about which he is called upon to comment, especially as last year, the Failygraph's Peter Oborne managed to identify it without such aids.

But what Oborne and the Great Historian have in common is their willingness to put German in pole position. Oborne in July last year told us "the euro crisis will give Germany the empire it's always dreamed of", and now we have Ferguson telling is that the crisis will leave Berlin heading a federal Europe.

These are two peas in a pod, two men with but a single thought. And they are both wrong.

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Digressing one moment, we have recently seen a meeting of the G8, with the members photographed sitting round a table with Obama, who was hosting the meeting. Even the numerically challenged might be able to do a quick count and discover that there are ten people sitting round the table. The G8 has become ten.

The two extra figures at the feast – with their backs to the camera - are, of course, José Manuel Barroso and Herman Van Rompuy, respectively presidents of the EU commission and council, there representing the government of the European Union, the organisation with ambitions to become the United States of Europe.

The symbolism should be obvious. The EU has acquired an identity of its own – a seat at the most powerful tables in the world. It is not a vassal of Germany. It is a power in its own right.

Now, if we return to Ferguson, we find him talking about "the architects of monetary union". These are the ones who knew all along that EMU "would lead to a crisis and the crisis would lead to a federal solution". But who does Ferguson think were the architects?

If we follow the Peston narrative, we are led to believe that, after initial failures, the single currency was dreamed up by Köhl and Mitterand, in the aftermath of the fall of the Berlin wall in 1989, the latter demanding it as a price for German reunification.

But what is missing from this narrative are two vitally important names: Alterio Spinelli and Jacques Delors. It was Spinelli, as an MEP, who in 1983 commenced work on a "Draft Treaty Establishing a European Union", completing it in 1984, long before the fall of the Wall. And Article 52 of his draft declared: "The Union shall have concurrent competence for the progressive achievement of full monetary union".

Spinelli's work was to comprise one treaty, but it was Mitterand's advisors who suggested it was split, the first part becoming the Single European Act and the second the Maastricht Treaty. And far from making its first appearance in Maastricht, EMU starred in the Single European Act, which embodied a commitment to the "progressive realisation of economic and monetary union", building on the Hague agreement of 1969.

That it was kept in place was the work of Jacques Delors, who was later to describe the commitment as a "signpost". "It's like the story of Tom Thumb lost in the forest who left white stones so he could be found", he said. "I put in white stones so we could find monetary union again".

The drive for monetary union was then formally re-launched at the Hanover Council in June 1988 and examined further in Madrid in June 1989, informed by the Delors Report, which was published in April if that year. "Economic and monetary union would represent the final result of the process of progressive economic integration in Europe", the Delors committee declared.

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Putting the timeline together, the Berlin Wall was not first breached until 9 November, by which time the plans for the Single Currency were already in place. The Peston scenario is fiction. German reunification became simply another beneficial crisis to help the single currency on its way.

As to the architect of the single currency, this is the European Union itself, as a collective. The driver back in the mid-late 1980s was Jacques Delors, the president of the commission, aided and abetted by a former commission official and then MEP, Alterio Spinelli. Not for nothing is the largest office block in Europe - the main building of the EU parliament in Brussels - named after him.

This architect is the EU that has the ambition to become the United States of Europe. If it achieves its ambition, it will be headed not by Germany but the European Commission, currently the embryonic federal government.

Many people are blinded to this by their focus on the Germans, and their mistaken belief that the integration process is controlled by them. 

For sure, the German state is the most powerful within the EU, and has a great deal of influence. But it does not run the EU. It does not run the single currency. Neither does France. The two countries together are the "motor of integration" but the beneficiary of their work is the increasingly powerful Commission, now teamed with a co-operative Council.

And that tells you why the EU is working so hard to keep Greece in the euro. Left to themselves, the Germans would be happy to see the Greeks out of it, but finance minister Schäuble is not playing the German game. He is batting for Europe, and the pursuit of a single currency that has been a formal policy objective, unbroken, since 1969.

Fortified by this single currency, which brought the EU a major step closer to full integration - one which was slated to replace the dollar as a reserve currency - the Commission, and with it the Council under the tutelage of Van Rompuy, represent a new global power.

But with the currency under pressure, they, not Germany, are the ones fighting for survival, and they are the ones to watch. If it survives, the "one nation" called the United States of Europe will be run from Brussels, not Berlin.

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