Dec 7th on the BBC’s World at One: London Mayor Boris Johnson, speaking about the €uro, said “To use the rather graphic phrase of someone the other day, we’re saving the cancer, not the patient”. For good measure, Boris also insisted that we should have a referendum following the current Treaty negotiations. (Some academic should do a study of the frequency of EU Treaties. We’ve only just implemented Lisbon, and we’re already well into the next one. Lesson: However you structure the EU, it just doesn’t work).
The same “saving the cancer” line from Boris was quoted December 8th on the front pages of both The Times and the Daily Telegraph.
On December 3rd, writing in the Daily Telegraph, Peter Oborne said: “Many Tory MPs believe that Mr Cameron is asking the wrong question. Tory MEP Roger Helmer remarked yesterday that the question “Can the euro be saved?” is rather like asking a cancer patient how we save the tumour. “The euro is the disease, not the patient.” Mr Helmer probably expresses the views of the majority of the Conservative Party”.
I especially like that “Mr. Helmer probably expresses the views of the majority of the Party”. That’s what I’ve always tried to do — often against great opposition from the Party leadership.
This all goes back to a Tweet which I posted on Dec 2nd, where I said: Asking “Can the euro be saved?” is like asking a cancer patient how we save the tumour. The euro is the disease, not the patient.
I developed this theme at some length on the Conservative Home website at http://conservativehome.blogs.com/platform/2011/12/roger-helmer-we-need-to-save-the-patient-europe-not-the-disease-the-euro.html
It’s interesting how a simple thought in a Twitter format can find its way into a major article in a broadsheet newspaper, and onto World at One, in a few days (though I could have hoped that Boris might have given me a name-check!).
But just to recap a couple of key points. When Angela Merkel speaks of “fiscal union”, she is either deceiving herself, or seeking to deceive us. A fiscal union would be backed by a proper central bank able to support the currency (unlike the ECB, hedged around with Treaty rules that prevent it from acting as the Bank of England or the Federal Reserve would act). It needs common bond issuance. It needs common tax policies and a central authority collecting and disbursing government revenues. And perhaps most importantly it needs major fiscal transfers from rich areas to poor areas, as we have in the UK (from London to Scotland, for example) and in the USA (from New York to the Rust Belt, I guess).
The European Commission knows this. The 1977 McDougal Report said that between 6 and 8% of EU GDP would be required in fiscal transfers to sustain a common currency. It is shocking that EU leaders (including Jacques Delors, recently trying to exonerate himself of blame for the débâcle) in the full knowledge of this, but chose to ignore it, with the consequences we see today.
Merkel’s “fiscal union” looks nothing like that. It is merely a set of rules and sanctions, aimed at imposing German-style austerity on the PIGS. In fact it’s little more that Maastricht Criteria Mark 2. But Mark 1 didn’t work, so it’s difficult to see why Mark 2 should be any better. In particular the threat of sanctions is not credible. A country already bankrupt and under water simply can’t pay draconian fines.
Moreover Merkel’s is politically unsustainable. It will create such fearful and grinding poverty, hardship and deflation in the PIGS that there will be blood on the streets long before her policies deliver. I’ve said it before, but I can’t say it too often (quoting Sajid Javid MP): The €uro is a Bankruptcy Machine.