Dominic Lawson: The euro needs a true union – but we can't just invent one from scratch

Supporters of European integration have always found democracy an awkward customer
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Can you imagine a million Britons lining the banks of the Thames waving the flag of the European Union, to celebrate its President as symbol of the people? If you can't, then you appreciate the fundamental problem for those battling to keep the euro afloat.

Last week, this paper published a column by an advocate of the project, under the headline "Europe has to become a country – a new beast – if the euro is to survive". Its central point was one which those of us termed Eurosceptics have been banging on about for 20 years and more: that monetary union without fiscal union is unsustainable and that fiscal union demands political union – in other words a single state.

Yet what is extraordinary in the urgings of the euro's rightly anxious supporters in this country is that they seem to assume such an outcome could be rapidly brought by a group of politicians, regardless of culture, history and even democracy. Perhaps they forget that one reason monetary union took place before political union (the wrong way round) was because the leaders of the countries involved knew their electorates were not remotely ready for a United States of Europe with a single head of a federal state, just as Barack Obama is President of the United States of America.

At least Obama, unlike the EU's first permanent President, Herman van Rompuy, was elected. Those who have driven the project of European integration have always found democracy an awkward customer. The Irish are distinctly unusual in requiring popular consent via referendums, when any new European treaty is promulgated. The EU did try to set up the formal appurtenances of a European state, in the immediate aftermath of the launch of the euro, with the so-called European Constitution. This had to be re-branded as the Lisbon treaty after the French and Dutch electorates (among the most pro-integrationist, as it happens) demonstrated in referendums that they would not buy the idea of a European state.

Yet, even as the necessity of such an entity is increasingly urgent to keep the eurozone intact, the mood of the peoples in the nations concerned is moving in the opposite direction. This is made embarrassingly clear in a poll by the Pew Research Center. Last week, Pew published its findings, based on interviews with 8,000 people across eight European countries: France, Germany, Spain, Italy, Greece, Poland, the Czech Republic, and the UK. Pew's description of its findings was blunt: "There is almost no support for the recently agreed pact giving Brussels greater oversight of national budgets." Its researchers talk of "a full-blown crisis of confidence" in the institutional and ideological pillars of the European project.

It is true that while overall a substantial majority say the euro has not been good for their countries, a majority are also against its abandonment. Although they are not asked to explain this apparent discrepancy, we can hazard a guess: fear that the destruction of the euro would lead to chaos and bank collapses. Yet if there is pitiful support for the only feasible way to square the euro circle – complete control of national spending from Brussels in return for fiscal support for the weaker nations – then this chaos is inevitable, and the sooner it is faced up to, the better.

Pew's research shows that Greece is the nation most opposed to "loss of budgetary sovereignty" (75 per cent are against), while Germans are among the least opposed (only 56 per cent are against). Unfortunately for the advocates of fiscal union, the much more integrationist Germans tend to have a very particular idea of what central budgetary responsibility means: no free lunches for their less competitive southern neighbours. No matter how much pressure she comes under from the most indebted nations within the eurozone, Chancellor Merkel is immovable, playing to perfection her chosen role as the sternly moralistic and stubborn Swabian housewife, whose control of the family's budget is unswervingly cautious and prudent.

She was at it again at the weekend, telling a Berlin audience of her own Christian Democratic Union that "under no circumstances" would she agree to what the rest of the eurozone had been pleading for: eurobonds backed by guarantees from Germany – essentially pooling the eurozone's debt. It has been constantly asserted that Merkel would crack when it became clear that the alternative was the disintegration of the euro, especially as she has also repeatedly asserted that "the euro must not be allowed to fail": but "under no circumstances" does not sound like the phrase of someone about to change her mind.

This is not simply a matter of one woman's stubbornness. Not only would the underwriting of all Europe's debts be in breach of the German constitution: the people of Germany would not tolerate the idea that they should guarantee with their savings, for ever and a day, the rest of the eurozone. Nor is this just a problem in Germany. The Finns, another nation with relatively low debts, are also bridling at the prospect; meanwhile, the Slovaks have noticed that their commitment under the existing European bailout fund amounts to more than their government's annual tax receipts.


Now if we were all one European nation, such debt consolidation would not be remotely unthinkable, but actually normal – which is why the United States, which naively views the European Union as what it says on the tin, can't understand why it hasn't already happened. The US regards the nationalism of individual European states as not just pointless, but perverse. For a nation which itself has a strong sense of its own particular identity and independence, this is a peculiar blind spot, but it helps explain why even highly intelligent American economists can be seen on Newsnight exasperatedly shaking their heads at the inability of European nations to come together as one electorate, sinking their differences in a single demos under a single President.

As it happens, Herman van Rompuy has called for national symbols within the EU to be replaced by European symbols. The waving of countless Union Jacks as the Queen made her way down the Thames is exactly what he finds most dangerous to his own vision. Yet even those who find the notion of a constitutional monarchy anachronistic should recognise that it evokes a popular solidarity the European Union cannot hope to imitate. Bad news for the euro, in other words.