Editorial
Time to sink the Euro
AS THE GOOD ship Euro prepares to set sail on the choppy world financial waters, an unseemly fight has erupted on the bridge as to who should be the captain.
The key factor in maintaining the single currency will be the authority and tight-fisted monetarist commitment of the European Central Bank, a continent-wide quango whose six board members will be appointed for an 8-year term, and who will not be subject to the control of any elected government or the European Parliament.
Control of the ECB is therefore a vital issue, and the German government has been pressing hard for Wim Duisenberg, a Dutch banker, to take the top slot as president, with Bundesbank fat cat Otmar Issing as his deputy.
This has triggered a major row with the French government, which has insisted that Bank of France boss Jean Claude Trichet should get the job.
The Dutch-German stitch-up has apparently broken a secret deal struck by Helmut Kohl and Francois Mitterrand in which the bank would be in Frankfurt, but its first president would be French.
Repeated efforts to resolve this angry bust-up have failed – even Tony "Mr Peace Process" Blair has been unable to soothe French feelings, while Duisenberg supporters have rallied all the main political parties in the Netherlands in the run-up to their general election, with the Finance Minister warning that "If he does not get the job it would be even worse for us than losing to Germany in the World Cup".
This is just one expression of the tensions that are being carefully covered over as the main players drive on towards the single currency.
Missed target
Last month’s announcement that eleven EU countries had qualified to join European Monetary Union was rather soured by the publication of figures showing that six of them – including Germany and the Netherlands – had failed to meet the target of reducing government debt to a maximum of 60% of Gross Domestic Product.
In the case of Italy and Belgium, despite frantic fiddling and massaging of figures, the debt figure – at 118% of GDP this year – is almost double the target set by the Maastricht Treaty, and far worse than the 107% notched up by Greece – the only EU country ruled out of applying.
These problems have not gone unnoticed, and there is growing opposition to Italy joining the new currency, especially in the Netherlands, where the government has threatened to vote against it unless there is a tough new austerity budget, and among conservative German bosses, fearful that the new currency would be weaker than their beloved deutschmark.
Duisenberg has nailed his colours to the mast, warning that countries entering EMU will have to take further steps to cut public sector debt – policies which seem likely to trigger new cuts in welfare spending.
The complications of imposing a single currency are underlined by a new survey showing enormous variations in levels of poverty across the EU member states. Parts of Greece, Spain and Italy receive less than 20% of the annual income of the richest regions. The EU "poverty belt" includes the whole of Portugal except Lisbon. Average per capita income in Britain (£11,400) is less than the £12,000 EU average.
Any new austerity package would further widen these gaps – and with this price tag, as French Communist Party leader Robert Hue said in April, the Euro would benefit only the bankers and financiers. Far from a step towards internationalism, the Euro will intensify national rivalries and conflicts, and leave no democratic levers of control over the European economy.
Opinion polls in Britain show that support for the Euro is largely confined to those on the £50,000-plus income bracket. Even the Guardian’s chief cheerleader for the Euro, Mark Atkinson, has warned that in many prospective member countries it is seen as "something which has been thrust on them from above by the financial markets and political elites."
Tied to Maastricht
Nevertheless Tony Blair has declared his ambition to press forward with the launch of the single currency, while Gordon Brown’s economic policy is already tied in to the Maastricht criteria and the demands of a future European Central Bank. He must be stopped.
This is why it is so important to build a major protest demonstration to challenge the single currency and Maastricht austerity at the EU summit in Cardiff on June 13.
Much of the British left is now committed to support this initiative, with the promise of strong support from other European countries. There is still time to sink the Euro, before it drowns more jobs and welfare services in its wake.