The Isle of Wight, with its fish and chip shops and its country pubs, is the perfect English haven. So why is it the only place in England where you can spend an ecu?
Few parts of England look more stereotypically English than the Isle of Wight. Bungalows and red-brick semis, double-decker buses and narrow-gauge steam trains, Norman churches, country pubs, sailing boats and Shetland ponies - in the summer sunshine it is a picture-postcard dream of England, an encapsulation in miniature of all that is prettiest and most readily identifiable about the country.

Around every other corner, it seems, there is a Morris Minor convertible, a Reliant Rialto or a clapped-out Sixties Ford Anglia. Cosy tea-rooms, fish and chip shops, Baptist chapels, buckets and spades: no wonder Virginia Bottomley and her clan holiday here every year. This is where "Every summer we will rent a cottage/If it's not too dear", as Paul McCartney sang in "When I'm Sixty-Four". Every year, millions of visitors second that nostalgic emotion.

How strange then, how disturbing and how inexplicable that the Isle of Wight - of all places - should have turned its back on England, directed its attention steadfastly towards Brussels, declared itself "a region of Europe" and started issuing its own ecu s.

The "tokens", as they are carefully described (it is illegal for anyone except the Royal Mint to issue coinage) were dreamed up by Morris Barton, the Liberal Democrat leader of the island's county council, after a chance encounter with the head of Pobjoy Mint, Britain's biggest private mint, during Cowes Week.

The first four designs were issued in April, priced at pounds 3.95. They may be used to buy items in tourist-information shops or to pay community- charge bills, but their face value is only pounds 2, so most have been purchased as souvenirs. The initial batch of 3,500 almost sold out in the first week, and the demand and interest has been sustained.

But two weeks ago, as John Major prepared to go to war with Brussels over BSE, the Treasury urged the council to withdraw the tokens from circulation, warning them that they could be in breach of the 1971 Coinage Act (the council did not receive Treasury permission before issuing the tokens). But the council, declaring that it had done nothing wrong, declined to obey. ecu s remain on sale.

About the size of an old crown, the island's ecu s bear its coat of arms on one side and on the other, the words "3 ecu s - 2 pounds". Four different versions have been minted. The one best calculated to raise Europhobic hackles depicts the crests of the three German Lander - Ostholstein, Coburg and Auerbach - with which the island has twinned.

The Isle of Wight's ecu may be no more than a harmless stunt, a cheeky gambit to draw attention to the island while using the profits to help fund a skills-training programme for young people. But it has also helped to draw attention to the fact that, despite the jingoism orchestrated by the Tory press in response to the Government's desperate flailings over the BSE crisis, and the rising background noise of negativism about the European project, there are areas of this country where the notion of an "ever-closer union" inspires not paranoia and fear but excitement; where a carefully cultivated relationship with Brussels and Strasbourg is seen not merely as a means of supplementing local revenue but also as a way of bolstering local autonomy and self-determination in defiance of the relentless centralising of Westminster.

The Isle of Wight has been governed by the Liberals (as they were then) since 1981; it was the first county council in the country to fall under Liberal control. Since then they have steadily tightened their grip: today they hold 35 of the 48 seats in the council, while the Tories and Labour have five and three respectively.

The Liberals have had the most consistent and unambiguous pro-European line of any of the parties since the days when Jo Grimond was leader. But what gave the notion of wooing Europe added urgency was the island's problematic economic position within Britain.

Geographically the Isle of Wight is part of south-east England - visually it is quintessentially so. But because of the inherent disadvantages of being an island, its economic situation is far worse than one might suppose.

"We're constantly held back by being thought of as part of the prosperous South-east," says Steve Cowley, dairy farmer, Liberal Democrat and deputy leader of the council. "In fact, we're much worse off than the rest of the South-east. For example, we have the lowest percentage of people paying the high rate of income tax of anywhere in the UK - just 3 per cent. Our gross domestic product is the lowest in the country, along with South Glamorgan.

"We've got severe unemployment problems, both structural and seasonal. Because the Government has changed its criteria of unemployment for the purpose of statistics, most areas have seen their unemployment rates drop. But ours has stayed the same. It's about 10 per cent now, but in winter it goes up to 14 or 15 per cent. We've got the same employment problems as all other parts of the country - companies downsizing, and so on - but because we're entirely surrounded by water and because we're in the South-east, we get no government subsidies and can't attract other industries. Therefore, we've been unable to trigger the sort of investment that other areas have got."

To compensate, the council has gone at the European idea hammer and tongs, so that now the island has a barrelful of acronyms after its name, like a celebrity professor. It belongs to the CPMR (Conference of Peripheral Maritime Regions), the AER (Assembly of European Regions), takes money from half a dozen initiatives in the ESF (European Social Fund), is signed up to SPRINT (Strategic Planning for Innovation and Technology Transfer) and it belongs to the Arc Manche, a body made up of the English counties and French regions facing each other across the Channel. Most of these initiatives yield income, ranging from the modest - pounds 13,624 from New Directions, a European Social Fund to help the long-term unemployed - to the impressive. As a "defence-dependent area", and therefore deemed to be suffering the consequences of the end of the Cold War, the island was recently granted pounds 1.7m under the so-called Konver Scheme to help it overcome this handicap.

None of these initiatives occurs spontaneously, so it is no surprise that the main grouse of the councillors' constituents is not the European relationship per se as the fact that councillors are forever gallivanting around the continent servicing it. Morris Barton, council leader, is presently in Germany, nurturing some scheme or other; while I was in Steve Cowley's office, another councillor called from Alicante to report in ("Sink a bottle of good vino for us, won't you," Cowley boomed down the telephone).

Cowley himself, a Falstaffian figure with a belly, a beard and a jovial grin, says sternly that there has to be a good reason for a trip: "You can't just fly off for the sake of shaking hands with someone." But then he rather spoils the effect by admitting that he felt constrained to back out of a planned Eurobash to Guadeloupe in the West Indies (as a French colony, it is considered part of the EU) because it was scheduled for two weeks before the local elections "and it wouldn't have looked very clever".

No wonder it is so easy for the Tory papers to whip up a storm of jingo about Europe. With its baffling array of funds, initiatives and partnerships - dozens of different ways of redistributing the British taxpayers' money - and the trips to sunny or at least sophisticated places that are required to obtain it, the European relationship can readily be depicted as the corruption and seduction of a rugged but simple innocent - us - by the fiendishly over-civilised. No wonder that the simple but virtuous hearts of the average Daily Mail reader - as conceived by its editor - recoil at such a seduction and yearn for a return to innocence.

Fortunately for the Isle of Wight, its councillors are not in thrall to such infantile fears. For Steve Cowley, the island's involvement in Europe is a way of not only fighting the ravages of economic decline but also of asserting the right of the islands to run their own affairs.

"When you talk to people about a federal Europe," he says, "they don't know what you're talking about: for them it really is the 'f' word. But what it really means is subsidiarity; of decisions taken at the most local level possible. Unfortunately, we have a government that thinks subsidiarity begins and ends in Westminster.

"We have the most centralised government of any country in Europe, and this makes it very difficult for us here to deal with Europe directly: because information and access to funding is cut off at Whitehall. All the other regions in Europe - the German Lander for instance - have direct and easy access to European institutions such as the Commission. For us, it's much more difficult." These frustrations have prompted the council to decide to open an office in Strasbourg, shared with Hampshire, Dorset and Lower Normandy - all members of the Arc Manche - to circumvent the Whitehall roadblock.

How far has the corruption of the Isle of Wight by Europe advanced? There's no doubt that it's getting pretty serious. A Euro Fun Day was held last month to celebrate Europe Day. Baguettes were ostentatiously consumed, boules was played in Newport's St Thomas's Square. Garlic and cherry tomatoes have become important local crops: the island has become a major producer of garlic (some of it is exported to France), and in summer more than 200 local people are employed in the business, which is celebrated in August with a garlic festival, in which garlic- flavoured beer and ice-cream are offered for sale.

Clearly there is no hope for the place. All stout-hearted Daily Telegraph readers are advised to decamp forthwith.