Dreams broken on the streets of Paris

For most Europeans, the federalist project has been synonymous with progress. Now the prospect of monetary union is forcing a reappraisal; The federal destiny demands insecurity and cuts
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The Independent Online
European History is happening, too slowly to notice. We become bogged down in acronyms, endless abstract debates about institutions, all the bureaucratic blather and hogwash of today's Europe. Our eyes glaze; our minds wander. Is this the birth of a new super-state or the death of a dream? Who knows? But concentrating on it is like trying to watch a butterfly hatch or water freeze.

Did other great turning-points in political destiny have the same anaesthetising effect on those who lived through them? Did newspaper readers in Rhode Island and Boston yawn as they flipped yet another wearisome report of the confederalists' latest proposals in Philadelphia? Did voters in Munich and East Prussia shrug at the windy garrulity of the National Socialists in the Reichstag and make ancient jokes about the pointlessness of politicians?

Previous crises have at least been tinged by violence or the threat of violence. Dying soldiers and smashed glass tend to concentrate the least political of minds. This time, as we try to focus on yet another European summit, to recall what the ''reflection group'' is up to and whose proposals on QMV will dominate the agenda for the IGC, we have only had the Parisian riots to make us stop and think. This isn't real, European-style violence. But at least the workers of France have snapped their fingers.

We need to hear them. For we are at a turning-point, even if the corner is gentle and long. After half a century of chugging quietly towards a certain idea of European unity, the realisation is spreading that we may not get there. Not soon. Not ever.

And the reason is straightforward - the power of the global economy. Up to now, there has been a vague equation in the minds of European voters between the notion of European union and prosperous modernity. The federal project unfolded alongside the creation of European welfare states, the regulation of labour markets and the transforming effect of post-war prosperity. During good times, voters don't much care what their leaders are scheming, so long as for them life ripens.

The arrival of freer world trade, entirely mobile capital and the Asian century kills this cosy equation. The lethal connection is monetary union, declared to be the next stage of European union. Once, perhaps, that could have been accomplished through a grand European-wide Keynesian institution, coupled with equally widespread welfarism. But these days monetary union has to be on the orthodox bankers' terms. Nobody in power dissents from that proposition and, indeed, it is written in letters of fire into the Maastricht treaty.

Monetary union on these terms is incompatible with the continued levels of welfare, industrial subsidy and government borrowing to which a vast swathe of the European middle class is accustomed. The link between federalism and voter-gratification is broken for public-sector workers and pensioners, as it had already broken for farm workers.

Suddenly, the next stage of political union is rasping against the self- interest of millions of voters at the heart of Europe. Once the Community seemed synonymous with security and wealth. Now the federal destiny demands insecurity and cuts.

There is a grim belly-laugh to be wrung out of all this. Part of the motivation for European union, particularly in France, was that it would build a political Europe which could withstand the malign neo-liberal orthodoxy of malign Anglo-American capitalism. Yet here is the EU itself acting as the bridgehead for that ortho-doxy. Have the barbarians entered the temple? No, worse still - the priests have converted to barbarism!

British Tories shouldn't laugh too hard, however. For the other side of the coin is that all the things which London has argued are virtuous and more important than monetary union (cutting deficits, honestly facing up to demographic pressures on welfare budgets, and so on) are being driven forward on the Continent by the allegedly irrelevant Maastricht timetable.

What a mess. Reforms which the British took from Thatcher because she argued that they were good for Britain might have been accepted by the French on the grounds that they are good for France. They are far harder to sell on behalf of an abstraction like the Maastricht process. And if this is how France reacts, what is coming elsewhere? The architects of union may live to rue the day that they linked monetary orthodoxy so tightly to cross-border fraternity.

Keynes famously said: ''When the facts change, I change my mind. What do you do?'' Prudence would hold an early summit to revise the Maastricht treaty and put the timetable for monetary union into abeyance. The single currency would be declared something that would be delivered when there was pressure on the politicians from their voters rather than the other way round.

Prudence would do this - but the French, German and other key governments are most unlikely to countenance such an embarrassing U-turn. They are politicians of the will, not of opinion polls. So at Madrid they will turn, instead, to the enormous question of what to call the new currency. Enjoy, boys.

If it happens according to the timetable (and I believe it won't), monetary union is likely further to alienate continental voters from their rulers and to drive a wedge between the inner core who go ahead and the rest. As French voters took the strain, the consequences would surely include a surge of support for Le Pen's National Front and the other anti-Maastricht politicians of left and right. What would that do for Franco-German relations?

Meanwhile, this troubled core Europe would face competitive devaluation from the nations encircling it, leading to worsening political relations between the two groups. Would it lead, in the end, to the barriers going back up? Though Sir James Goldsmith's polemics on the need for European protectionism have cut little ice in London, they may start to seem compelling to continental politicians struggling to retain their post-war social contracts.

And, in case there be the faintest whiff of British self-congratulation detectable here, let us remember that these are not nightmares from which London can blandly request an opt-out. Today British Conservatism celebrates the effects of devaluation and freedom from European social legislation, coupled with all the benefits of European free trade and the inward investment that full membership of the EU brings. And that isn't sustainable.

What is lacking is any alternative model to the implacable federalism of the post-war dream, or the smugly rejectionist politics of Britain. For me, the answer is a confederal Europe, in which a smaller but powerful central authority oversaw trade, basic human rights, environmental and some security issues, while everything else was reserved as ''nation-states' rights'' - a Europe that was a place in which to live and trade, not a new country.

That kind of union may happen, though conversation about it has barely started. Before it does, we are likely to go through a time of political crisis in which the old order is threatened, challenged and messily dislodged. And perhaps this crisis has already begun: when European History speeds up, it tends to start on the streets of Paris.