Bruce Anderson: The EU battle isn't over for Cameron

Although a short-term crisis has been averted, a longer term crisis is inevitable
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The Independent Online

David Cameron had no choice. On Lisbon, the Government behaved contemptibly. It lied and broke its word. Even without Lisbon, Gordon Brown would have gone down in history as the man who ran a government which was weak, bossy, dithering and dishonest. We must now add despicable. This is a Prime Minister without a single redeeming feature. He deserves to be derided out of office and to spend the rest of his life skulking in obloquy and ignominy.

But that is not the Europeans' fault. They cannot be blamed for taking advantage of Mr Brown's breach of faith. If Mr Cameron had tried to re-open Lisbon, he would have been pushing against a firmly-locked door. If he had persevered, there would have been a crisis in our relations with the EU, whose outcome no-one could foresee. These are not the ideal economic circumstances for such a crisis.

In the aftermath of deceit and betrayal, many angry Tories were not in the mood for calculation. They wanted to hit back, whatever the consequences. Yet the red haze of rage is not the right light for complex decisions. In resisting anger's temptations, David Cameron was not being weak. He was being Fabian, in the proper sense of the word, following the example of Quintus Fabius Cunctator. Generals have to know when to give battle, when to order a tactical retreat. There has been such a retreat. The forces of euro-scepticism have suffered a temporary reverse, but not a terminal defeat. Although a short-term crisis has been averted because of Mr Cameron's caution, a longer-term crisis is inevitable, and it will not only be a matter of Britain versus the rest. The EU itself is unstable.

This is Helmut Kohl's fault. When he bulldozed the European single currency into being,he knew that he was creating an unstable structure and did so deliberately. It was a combination of the fox with no tail and Marxism. If the Germans had to make do with war guilt, why should other Europeans be able to enjoy nationhood?

In his desire to persuade all the other foxes to cut off their tails, the German Chancellor assumed that the economics would determine the politics. In the early Nineties, he often said emphatically – he was good at emphasis – that monetary union could not succeed without political union. How else could the same monetary policy operate from Cadiz to Copenhagen, from Dublin to Dusseldorf?

The USA could run a common monetary policy despite wide regional divergences. But Uncle Sam devotes at least twenty per cent of GDP to fiscal transfers. That would not be possible without political union. So Chancellor Kohl saw the euro as the way to create a USE. But that is not going to happen. Though there will certainly be political interference, as the euro-nomenklatura uses its increased powers, the sort of political union which could create a stable fiscal basis for monetary union is a fantasy.

From 2012 onwards, there will be an almighty row over the EU's budget. Forget US levels: it currently stands at 1.24 per cent of the EU's GDP. The poorer nations would support an increase. That is nothing to do with political union. They would just like more cash. They are unlikely to get it, for none of the net contributors are in a giving mood, even in Germany. War-guilt has lost is mesmeric effect on the German wallet.

The French might be persuadable, but only if all the extra money went straight to French farmers. Most other countries now acknowledge that the CAP, long since renamed the corrupt agricultural policy, is a scandal and an anachronism, which also works against the interests of Third World producers.

Heated arguments are inevitable, and unless British diplomacy is extraordinarily inept, we should not often find ourselves in a minority of one. It will be more a case of bellum omnium contra omnes, and there is a further dimension to the conflict. Poor countries have usually deployed two methods of self-improvement: a cheap currency and cheap labour. In that way, they attract foreign investment and foreign markets. But the EU is likely to prevent its poorer members from adopting those policies. The French and the Germans have handicapped themselves with high labour costs and inflexible labour markets. They want to impose the same burdens on the rest of the EU. If the rest of the EU has any sense, it will resist.

The belief that one size can fit all is the fundamental Euro-fallacy. The Germans are so good at manufacturing that they can just about generate the productivity and the value-added to finance their labour costs. Other countries cannot do this. If Central and Eastern Europe were obliged to follow the Franco-German model, they would have escaped from Comecon into the Procrustean embrace of Eurocon. Their peoples' hopes and ambitions would be blighted.

In nascent democracies, that could be unhealthy – and not only in the former Soviet bloc. Neither France nor Spain has a securely-rooted democracy. In both countries, the levels of youth unemployment are frighteningly high, which is already leading to social unrest and increased crime.

That leads us to another basic problem. Many of the EU's social and economic generals are out of touch with reality because they are still fighting the last war – or rather, afraid of the last war. Germans of Helmut Kohl's generation were not just tail-less foxes. Many of them had an idealist's vision of a united Europe, freed forever from the threat of war. Yet the anxiety which fuelled the idealism was unnecessary. France and Germany would never again have fought one another over Alsace-Lorraine; 1945 saw to that. The new danger does not come from conflict between nations, but from conflict within nations, as an alienated underclass grows in size: in many cases, an alienated Muslim underclass.

The European single currency was a typical Enlightenment project: an attempt to sweep away traditions and particularisms in order to reshape society and lead mankind onwards and upwards to a better future. It was espoused by intellectuals, who are always adept at suppressing data which does not harmonise with their theories: always quick to disregard the cautious caveats of commonsense.

In an EU which is not moving towards political union, the euro is a federalist anomaly. As such, it will fail. But in the interim, it could do a lot of damage. That will come to be a far greater preoccupation for British policy-makers than the Lisbon Treaty. We can only be grateful that this wretched government did not manage to lie and cheat us out of the Pound.