The news that the eurozone countries have arrived at some midnight compromise over the centralised supervision of all banks in the euro area must be welcome to all those who hope for a road map of how the crisis of this currency will play out. There is, as always with these euro agreements, doubts about the when and how, and even perhaps the if, of implementation. Still steaming on the track is the locomotive of the German demand for a pan-euro budget tsar, with the power of veto over national spending. Merkel, backed by the Bundestag and German public opinion, will not sign any bail out cheques until that omni-powerful official is in place. The dynamics of the euro crisis remain as before. Those staying in the euro will have to do things Germany’s way, give or take a little, just a very little, here and there.
It is now clear that to survive the eurozone will have to go down the road which it shunned at the outset, of a significant degree of fiscal and political union, in which sovereign states will be a good deal less sovereign than before. Whether all or just some will do this is not yet clear. Talk of the Greeks exiting the euro remains talk. Remaining in the euro, even to most Greeks, now takes precedence over the structural and social collapse of their country. In all probability these adjustments and upheavals will go on for years and while they do the EU will bump along the economic bottom between recession and minimal growth.
Great Britain, itself facing the prospect of perhaps losing one of its nation states, will have to weigh its options carefully. It is not a simple matter of in or out. It is still a fact that London trades more euros every day than the whole of the eurozone. The EU is the destination of nearly half our exports. Nevertheless the plain fact is that either GB will have to follow the road of greater integration into a federalising Europe, or it will have to drift away. There is no chance any longer that the majority of the British people will vote for further integration and it is therefore stating the stark, if unwelcome, obvious that the time is fast approaching when we must have a plan to drift away.
Such a plan must recognise that our marriage to Europe has been ambivalent and often discordant for the simple fact that GB is already, and always has been, married to the United States. Almost everything we do, whether it is defence, literature, entertainment or business has an echo across the Atlantic. We will need to enhance that relationship for our own and America’s benefit. If we do, almost everything in Europe will have to come past our door.
The reason is this. The combined economies of the US and UK are the biggest in the world, bigger than any other and bigger than the whole of the EU without GB. The US and UK are the greatest military power by a huge margin. They also rank number one and two among the counties who owe the most money. That should certainly guarantee a common focus.
It is an interesting philosophical point that it was President Roosevelt’s determination to clip the power of the British Empire, which he detested. Although Britain was on the winning side at the end of WWII, it actually lost in the long term more than any other belligerent, as its Empire faded into the Commonwealth. This loose and amiable coalition is of little or no interest to the Americans, but the power vacuum left by Britain’s demise was. It stepped in to fill the void. Yet Britain never quite left. It is just that America is now the leader. In weighing its options, the GB family may well feel that to be led by kith and kin over whom one has great influence, is better than being led by an assorted but well meaning multitude dominated by the most powerful Germany in history, over which one has little to none.
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