The future of an illusion

An Intelligent Person's Guide to Postwar Britain - Our Currency, Our Country - A Grand Illusion? An Essay on Europe
April 25, 1997

Whoever is head of Britain's government after the general election will face two major problems in respect of Europe. Problem one: what line to take in the European Union Council meeting to amend the Maastricht Treaty at Amsterdam in June 1997. Problem two: assuming the single currency is still on the table in some form, what line to take when the decisions on its implementation have to be taken about a year further on. The three books under review, all of them published in the last month, have in common a wish to contribute to the debate on these issues.

Otherwise they have little in common, as is true of their authors. John Redwood is a former cabinet minister with experience in the City as well as in Government, and a possible future leader of the Conservative party. He came into the world of business and politics after an outstanding academic career. Alan Sked is still a university teacher but is at the same time the head of the UK Independence party which is fielding a large number of candidates in the election. Tony Judt is a British expatriate holding a chair at an American university who composed what he subtitles "An Essay on Europe" during a sabbatical spell in Vienna.

Sked's book is the one most clearly directed at the average uninformed voter; Judt's book is the most original; Redwood's is the most profound and closely argued, dealing as it does with a question which has unavoidable technical aspects.

The first part of Sked's An Intelligent Person's Guide to Postwar Britain is devoted to demolishing the historians who have written of Britain's alleged decline since the last decades of the last century - what might be called the Correlli Barnett school, and those who see Britain as somehow instinctively hostile to industry and to its scientific and technological base - the Martin Wiener school, so to speak. Sked also makes plain quite effectively what differentiates Britain from her continental neighbours - its long history as an independent nation state with its own pattern of self-government and legal tradition. He also demolishes the foolish notion that because Britain cannot act without taking into account its economic position in the world and the overall balance of forces, it therefore cannot have sovereignty in the proper sense of making its own laws and choosing its own policies. Given the worldwide nature of Britain's economic links, we could be independent again and in Sked's opinion we should make it our business to be. Unfortunately the book does not end there. Sked feels obliged to give us his opinions on every issue, political, social and cultural, that confronts this country; one may agree with some of his opinions or disagree or remain unconvinced, but a series of lay sermons clearly written in haste - hence some factual errors - will not be to everyone's taste.

Judt's A Grand Illusion? is content to offer his interpretations of the history of Europe and of the experiment with the European Communities and European Union in more dulcet tones. Despite his pessimism on many vital issues of our time, his book is curiously enjoyable and sets one thinking. Where the creation of the current "European" institutions is concerned, Judt expands on the theme first adumbrated by Alan Milward, that the European institutions were brought into being not as the result of some over-arching grand idea but in response to specific needs as the continental economies emerged from wartime devastation. To revivify inter-European trade and to compensate for the subsequent eclipse of the native source of energy, coal, and to handle and to some extent limit rural depopulation, were laudable aims and the achievements are not to be sneezed at. What worries Judt is that the current leadership both in Brussels and in Germany, France and Benelux should profess that this history has all been part of some divine master-plan leading to a federal Europe. To claim in addition that it is the European Union (not Nato) which has kept the peace in western Europe over the past half-century is rightly deplored by Judt. However, he is clearly not much interested in the detail of the European institutions - or he would hardly inform us that the European Court of Justice is situated at the Hague, rather than in Luxembourg.

What worries him much more is that the name of Europe is being taken in vain; the part proclaiming itself to be the whole. For what we have now is Carolingian Europe with a few added outliers suggesting that it and its institutions are all that matters and that the rest of Europe, stretching to the Urals and beyond, can be regarded as a mere object of policy dreamed up by western governments and the bureaucrats of Brussels who, at the first test - in the former Yugoslavia - obviously failed. And that policy is instinctively protectionist in striving to maintain a particular set of economic and social priorities, by first inviting guest workers to make up for labour shortages and now (through "Schengen") being occupied with closing the door to the less fortunate Europeans, not to speak of the North Africans, who once shared a Mediterranean civilisation that was in some respects a forerunner of European civilisation.

The source of Europe's many and long-standing divisions is the main focus of Judt's essay. On the whole the west has been luckier than the east. One lucky element has been that the west has seen the formation of nations capable of generating states. East of the Elbe and downstream from Vienna the peoples have for the most part been incorporated in empires. While cities in the west have flourished as capitals in governmental, economic and cultural terms, the cities of eastern Europe have generally flourished independently of their surrounding peasantries - largely inhabited and managed by aliens: Germans, Poles, Jews.

In the circumstances in which these countries find themselves - the situation of the countries of the former Soviet Union is harder to assess - the desire of some of the intelligentsia to "get back into Europe" through membership of the European Union is, by virtue of its very unreality, a spur to reviving the nationalisms which (with some collectivist underpinnings) are again dominant. These countries could only take part in what is now the European Union if its basic rules were substantially altered. The union can cope with Greece, which does not belong in Carolingian Europe in any respect; it could not cope with any more such deviant cases.

Germany is to some extent back in eastern Europe where it was in earlier times, the source of capital and technical and entrepreneurial skills. Chancellor Kohl's view that German predominance can be made palatable by calling it "European" simply obfuscates the whole complex of human issues that Europe as a whole will have to face.

Redwood's book in its earlier chapters confirms much of what Judt (and indeed Sked) have to say, although he gives more weight to the influence of ideology than either of them. What we are seeing now is a determined attempt to create a single country called "Europe" with a single government organised on federal lines and happier to see regions rather than nation states as its lower tier. But since basic differences in culture, above all in language, persist even within the present 15 members, this ambition cannot be realised within any foreseeable future.

Nations exist where the sense of mutuality is so considerable that people are prepared to make sacrifices for the common good, whether by rallying to their nation's defence or through taxation that transfers wealth from more favoured to less favoured regions. The United States is a nation for this very reason, even though its path to full nationhood has received setbacks, including a major civil war.

People who talk about a single currency without understanding its political background are fooling themselves. Even if it were the case that the objectives of many of its protagonists were merely economic, rather than political, it would still be true that a single currency could not work unless there were a single government to control the entire gamut of fiscal and monetary policy. Given broadly similar economies, such an arrangement might be tolerable, since government policies would presumably affect the member countries in much the same way. And that is why, if currency union does occur, it may well be confined to Germany, France and the Benelux countries - Belgium being carried along as the poor but deserving relation. For the 15 it is bound to be unworkable, even overlooking the special case of Britain.

As the United States example shows, the safety valve in a single currency and hence single monetary area is the mobility of capital and above all of labour. Even if all legal impediments were removed this mobility could not be reproduced in continental Europe for obvious reasons. Existing inequalities might be exacerbated rather than levelled out. Nationalism might become more rather than less acute.

What we have seen among sections of the German elite is a refusal to face these facts and a determination to press ahead with the single currency scheme even to the extent of condoning departures from the Treaty of Maastricht that call into question the legality of the whole enterprise. At the same time the advocates of the "euro" engage in double talk. For the Germans it is to be a hard currency, so they will not regret the disappearance of the Deutschmark; for the French, a weak currency so that they can compete against the dollar and against European currencies that may stay outside the system.

Redwood's general case is fortified by his arguments about the British position. He admits that there are a number of British firms of medium size which would benefit from the absence of exchange-rate fluctuations. But the really large firms would not be assisted since the commodities in which they deal - oil in particular - are always traded in dollars. Small firms, which give much employment, would be unaffected, since they for the most part do not trade abroad. And the costs of transition, particularly to the retail sector, are always left out of account.

Britain's economic future is as a player on the global scene, to which its experience, especially in the City of London, is highly relevant. To give up our currency is indeed to give up our country - why should we? For the sake of a "Grand Illusion"?

Lord Beloff is the author of Britain and European Union: Dialogue of the Deaf.

An Intelligent Person's Guide to Postwar Britain

Author - Alan Sked
ISBN - 0 7156 2449 X
Publisher - Duckworth
Price - £12.95
Pages - 186

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