Friday, July 22, 2005

If you love something, set it free

"The European Union ... has ceased to be completely reliable." So says Robert Cottrell, formely of the Economist a couple of days ago. He was arguing that the strict links between the EU and the ECB and thus the Eurozone should be broken. This would allow the currency to float freely and would allow countries such as Ukraine or Turkey, or even Paraguay to join the Eurozone, without joining the EU. However there would be one strict rule governing this new free floating currency zone. No bail outs for basket cases. This all seems eminently sensible, but I did notice one small flaw in
the argument. If anybody can join the 'zone', then surely anybody can leave as well?

This is how he sees it improving the EU,
"Even the EU might work better as a result, since it would no longer be divided into two camps, eurozone ins and outs. Indeed, EU countries that have resisted the eurozone until now for fear of getting caught up in a political union might find it easier to join a separate monetary union with no such associations. Europe would get
more, not less, integrated".

The missing words are that people would also feel free to leave if there were not such massive ramifications.

This piece has been followed up by a very odd piece in the current edition of European Voice. The piece is authored by John Wyles, of the Brussels lobby group GPlus, is a former FT correspondent in Brussels and worked for the EU where he drew up the respected
propaganda campaign
for the introduction of the Euro.

Titled "Doomsday could beckon for the Euro in your pocket" (behind subs firewall), it footnotes the recent HSBC document European Meltdown (which famously hints at the possibility of Italy leaving the zone), but seems not to have taken its arguments into account. Like Cottrell, Wyles is a true believer, unlike Cottrell he was paid to believe.
So he makes the following telling comment,
"it now seems that the European Union must take seriously the possible collapse of its Economic and Monetary Union".
Coo, to read such words from such a man is quite something, but of course he reverts to type,
"This is such a Doomsday prospect for European integration that flat denial is the most tempting, and possibly the only appropriate response".
So ostriches all round then John? Just by wishing it, economic reality won't go away.

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