Published on The Economist, June 3, 2010.
Despite its current sense of Schadenfreude (german: pleasure derived from seeing others in suffering or in trouble), Britain has much to fear—politically and economically—from the euro crisis.
WIDE-EYED Labour politicians had their loftier illusions beaten out of them by 13 tough years in power. A boom must end eventually, they learned the hard way, and spending alone cannot build Jerusalem. There was a loss of innocence about Europe, too. It was once modish to regard the public’s anti-Europeanism as a flimsy thing, propped up by tabloid jingoism and easily dispelled by any government willing to make the case for the European Union (EU). Yet under Tony Blair, their most avowedly Europhile prime minister, Britons actually grew more hostile.
Still, despite the euro crisis, membership of the world’s largest economic bloc is a no-brainer for the country’s political and business elites—even those who smugly brandish the currency’s woes as vindication of Britain’s decision to shun the euro. Neither is the government the Eurosceptic monolith of continental dread. The Liberal Democrat chunk of the coalition (and in particular Nick Clegg, the deputy prime minister and a former MEP) should take the edge off any Conservative nativism … //
… The European Council, which includes all 27 members, is now the EU’s most powerful body. A notionally two-tier Europe could see its meetings preceded by those of a 16-strong inner council that would compete for primacy, perhaps successfully. Something like this already exists in economic policy-making. The Ecofin meeting of the 27 finance ministers is, at times, essentially limited to rubber-stamping agreements reached in the smaller eurozone conference that takes place a day earlier.
The best, and perhaps likeliest, scenario is that nothing as stark as these dilemmas will face Britain; that Spain escapes the need for outside help while the EU fudges its response to the currency crisis, allowing Mr Cameron to continue muddling through with his vague and piecemeal Europe policy. Coherence can be overrated, especially when set against the need to keep together two parties with radically different takes on Europe.
Even if events unfold so benignly, however, Britain’s discourse on the euro crisis remains alarming. At both popular and political level, it makes two mistakes. The first is to treat the crisis as though it were almost exclusively a problem for the euro zone.
The second error is to assume that the crisis has been a lasting blow for European federalists. The reality could be nearer the opposite. For ardent integrationists, the strategy has always been to make grand European projects a reality as quickly as possible, and then solve any problems that result with more Europe. EU enlargement, for example, was pushed aggressively. Soon afterwards, the case for replacing national vetoes with majority voting was made by federalists, who claimed, often wrongly, that the new members had rendered EU institutions unwieldy.
Something similar may happen with the euro. To survive, the currency may come to acquire a level of fiscal-policy co-ordination that will appal the British. Vigilant Eurosceptics are usually keen to see conniving genius in European federalists. For once, the British may have underestimated their determination never to let a crisis go to waste. (full text).