The madness of welding together economies as disparate as an industrial Germany with those of rural Southern and Eastern Europe was bound to fail. And it has. The euro is a laughing stock, unable to control its standing in the world. The problem of the PIGS (Portugal, Italy, Ireland, Greece, Spain) economies is nothing to do with us, and we must insist on staying out of the picture.
We will be told that it is in our own interests to prop up the euro – Peter Mandelson has even suggested we join it! He’d have the British people accept even higher tax rises and deeper cuts in order to ease tax rises and spending cuts in countries whose governments have been even more lax and corrupt than our own. We won’t buy it. The British people have so far made it politically impossible to push through euro membership – this is our chance to bury it once and for all.
Like Ireland and Portugal, Greece has no manufacturing sector to speak of. Its economy is based on agricultural exports to the rest of Europe and tourism, both badly hit by the strength of the euro – also the reason why the decline of Greece as a tourist destination coincided with the popularity of Turkey. Joining the euro was a fools’ paradise. The Athens government wanted to hitch a ride from the stronger countries and was allowed to cover up its weakness by borrowing.
Although the Thatcher government pioneered the myth in Europe that a country can prosper without manufacturing by dint of unfettered borrowing and speculation, other governments have been enthusiastic converts. If Alex Salmond had had his way Scotland would have followed Ireland and Iceland to the top of the arc of prosperity and back down the other side.
The ECB turned a blind eye to the level of borrowing in EU countries in order to maintain the fiction of the euro project for one simple reason: the euro is not about economics but politics. It is a single currency for a single federal state. It is the European dollar. Greece has never met the criteria set out for membership and blatantly cooked the books in order to join, as did Italy and Portugal.
Now the bills are coming in. Outgoing EU Economic Affairs Commissioner Joaquin Almunia said that Greece, Portugal and Spain have all suffered “a permanent loss in competitive capacity since becoming a member of EMU”.
Greece needs to leave the euro. The cheaper drachma would revive the tourist industry overnight and make its agricultural produce competitive again. Of course, if one country takes the logical step of recovering economic sovereignty the whole single currency project will unravel. And a good thing too.
The EU is trying to take over the failing economies, using its new powers under Article 121 of the Lisbon Treaty, allowing it to issue “recommendations” for reforms to Greece’s pensions, healthcare, labour markets and private commerce. The German government’s demand that Athens impose drastic austerity measures did not stop it from insisting that Greece buy expensive Eurofighter jets, made in Halbergmoos, Germany. Commission President Jose Manuel Barroso said, “Economic policy isn’t a national, but a European matter.”
The concept of “pooled sovereignty” so beloved by the europhiles means no national sovereignty at all. Already Greece has been stripped of its EU voting rights. It stands to have its economy taken over under Article 126.9 of the Lisbon Treaty. The British people’s suspicion of the European project and the euro in particular has proved well founded.