You are here: Home > Opinion > Columnists

Adjust font size:

Saw VII: EU edition [By Jiao Haiyang/China.org.cn]

It's often said that hindsight is 20/20 (i.e. perfect vision), but the ongoing euro crisis suggests the concept of European monetary union is basically flawed.

Trying to force a single currency on a disparate set of nations with vastly different degrees of economic health (right now, make that ill health) was not perhaps a sensible idea. In fact, for the first time, the unthinkable is now being voiced that only by deserting the euro will some countries be able to survive.

To solve the crisis, Germany as the dominant force and France as the 'me, too' parrot, are promoting a new EU treaty to create fiscal probity covering not only the 17 eurozone members, but probably everyone else in the 27-nation EU club (although how Britain, now in splendid isolation, will take that remains problematic).

This is because those countries originally opting out of monetary union have always held out the prospect of eventually joining; hence, it is argued, they have no real choice but to go along with the new treaty or sacrifice any hope of influencing its development.

This will impose strict new budgetary rules, including a cap of 0.5% of GDP on their annual structural deficits and requiring every country to submit their budgets for European approval, and, even more contentious, require tax harmonization – surely a surefire recipe for disaster.

Thus, countries would have to give up any control over the central plank of normal governance – being able to decide what taxes to levy and what to spend public money on – and be left with about as much power as a village council.

This is what the British, fed up with "Brussels meddling", have long dug in their toes about. It's interesting that, despite being castigated by some for his negotiating "ineptitude" that effectively make Britain the pariah state in Europe, Prime Minister David Cameron's public approval rating has improved significantly.

And, he may well prove to be on the side of the angels, after all.

There are predictions the eurozone will slip back into recession in the first half of next year, making the salvage attempt even more difficult, especially when the banking sector is going to need a further large State financial bailout we're not to end up losing all our money.

I find this rather obscene when it was the greed, arrogance and stupidity of these very banks that got us into this mess in the first place.

1 2 Next

Print

E-mail