To save Europe, the euro has to go

As a blogger, I would like to claim that I am immensely prescient.  The truth is usually otherwise, unfortunately.  But there is one exception, which I can't help mentioning.  This is what I said in my first Lib Dem conference speech in 2001 (actually, it was my second, but we draw a veil over the first):

"There is a fundamental problem at the heart of the euro that makes me fear for the future of Europe. And it’s this: single currencies tend to favour the rich and impoverish the poor.  

They do so because changing the value of your currency, and varying your interest rate, is the way that disadvantaged places are able to make their goods more affordable. When you prevent them from doing that, you trap whole cities and regions – the poorest people in the poorest places – without being able to trade their way out...

That’s the danger of the euro as presently arranged, and don’t underestimate it. It means success for the cities that are already successful. It means a real struggle for the great Lib Dem cities of Liverpool and Sheffield. It means a potent recruiting ground for the next generation of fascists in the regions that no longer count."

I can't say I convinced the hall or won the day, and there are obvious elements which date this - Lib Dem Liverpool, for example, and the fact that I was talking about Britain in the euro, which never happened, thank goodness.  But I was right, and the plight of Greece and other countries in southern Europe make it all too clear.

Apart from celebrating a rare moment when I called it correctly, my reason for writing about this now is that UKIP and an imploding Conservative Party are not the only reasons why the European Union is a key political issue.  The truth is that Europe is facing its own crisis, and that crisis stems largely, but not entirely ,from the euro.

It was, and is, a Napoleonic project, dangerously centralising, naive in its economics and potentially terrifying in its effects - as the rise of the Far Right and other weird peculiarities suggest.  It transforms the EU into a colonial project, demanding abject agreement from economies that cannot work with an interest rate set to suit the German economy.  It is bound to fail and, until it does, it threatens to bring down the European Union with it.

I have often wondered whether it was historically inevitable that the UK would eventually leave.  We always find ourselves resisting Napoleonic projects.  We always resist ultramontanist ones too and any other centralising directives from Rome - or Brussels, as we call it these days.  We follow the Reformation path and it may be inevitable that will repeat Henry VIII's secession.

I am not in favour of the European Union because I believe in the central control of the continent.  Or even because it is a de-regulated trading bloc - though it is this aspect of EU rules that the UKIP tendency usually objects to (and even leaving the EU wouldn't rid them of regulations governing electrical goods or the shape of vegetables).  

I am in favour of the Union because it has kept the peace of Europe for two unprecedented generations.  A European war is unthinkable now, but it wouldn't be unthinkable without European institutions that can settle disputes.

That is the moral case, the Liberal case, for Europe - and the celebrations in August 2014 are an opportunity for putting the case again.  

But we can't assume that the European Union can be a Liberal institution, because that is now in doubt.  These issues are tough ones for Liberals, because I don't believe the Union can survive as the policeman of a single currency.

The euro might survive, but not in its current form as the only currency for most of the continent.  We don't have to go back to national currencies, though regional ones would be useful - and may emerge by default from the struggling cities of southern Europe.

Either way, the sooner the great straitjacket can be loosened and the Napoleonic yoke lifted again, the better for all of us.  Then maybe the Union can survive.  But not otherwise, and - if it doesn't happen soon - the UK will have left it, and that would be tragic for both sides.