23 NOV 2010
By Fraser Nelson | Spectator
Are we witnessing the start of a very long death scene for the Euro? Asked if the Euro will survive, William Hague replied simply: “who knows?”. The new president, Herman Von Rompuy, has said that the Euro faces an “existential test”. We are looking at the very real prospect of the Euro’s collapse. And that “if we don't survive with the eurozone, we will not survive with the European Union”. This would, by necessity, require a new treaty - and give Britain an unprecedented opportunity to renegotiate its membership on terms the public regard as acceptable. In my News of the World column today, I say (£) that this presents Cameron with what would be the greatest foreign policy opportunity of his premiership.
The EU works on a ratchet mechanism: countries get roped in further than they want and are told there’s no way back other than leaving the EU completely. It always was unsustainable: there’s only so long a project can go on in defiance of public opinion. Countries vary in degree of enthusiasm for the EU project, but the Brits routinely rank amongst the most hostile to it - on every measure taken by the European Commission. Our voters were promised a referendum on the EU Constitutiution, that promise was broken and the Lisbon Treaty - passed in defiance of Labour’s manifesto and public opinion - put the UK’s relationship with the EU on a basis that David Cameron described as “unacceptable”. As William Hague famously put it, he would “not let matters rest there.”
Look behind the Irish crisis, and you see something rather odd. They didn’t want a loan, and they’re dictating the terms on which they take the money - refusing to cut their corporation tax. Why so bold? Because they sense the fear and desperation amongst the Eurocrats is as great - if not greater - than their own. Brussels fears that Ireland is a domino standing next to Spain. And if Spain wobbles, then it’s game over for the Euro. German taxpayers are angry enough about bailing out the Greeks, but when they see Spain coming down the tracks - with an economy four times the size - then their patience will snap. It is Spain that the attention should really be on: it’s the cornerstone. The EU is desperate to stop that happening, hence the panic about Ireland.
Crashes do not always happen in slow-motion. Our 1976 bailout went far faster than anyone expected. The Black Wednesday fiasco showed how the government could be absolutely ruling out a collapse one day - then everything changes in the space of an afternoon. My point: there is no predicting when the Euro will collapse. It could do so in a year, in three years - but there’s a decent chance of it happening in Cameron’s premiership.
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