David Cameron’s ‘tough decision’ to veto the emergency talks on the Euro was probably the least surprising event of the year so far. Any attempt to create a functional ‘fiscal union’ among all European states was always going to be resisted by a British government made up substantially by former bankers. Having made their own personal fortunes in the City of London and regarding it, wrongly, as the most significant element of the British economy, they were hardly likely to sign up for anything that would curb its excesses.
This of course maintains a problem for the Eurozone because, loath as I am to agree with anything Sarkozy says, the privileged and largely unregulated nature of London’s own xenospace has been a significant factor in the Euro’s problems. British-based banks are not uniquely responsible for the reckless lending that has brought so many European states to their knees. But the financial system that centres on the City, driven by that heady combination of greed, arrogance and wilful ignorance, undoubtedly fuelled the crisis far beyond what might otherwise have happened.
That said, the vampiric nature of the City and of Europe’s many other offshore centres (Switzerland, Leichtenstein, the Channel Islands, etc.) is hardly new and should have been recognised by the architects of the Euro long before now. This failure to realise that Europe has more than one economy and that the one using the Euro might not be the predominant one, suggests that the designers of the Euro were, to put it mildly, somewhat blinkered in their understanding of the nature of economic spatiality. They happily forged an international currency that looked a bit like a normal national currency, but without the many formal and informal institutions that might support such an entity. The belated scramble for some form of limited fiscal union seems woefully late in the day, even if it succeeds. And that success is dependent not only on Europe’s leaders being able to rein in the xenospaces of offshore, but on the members of the Eurozone being prepared to cede a considerable part of their ‘fiscal sovereignty’ to Brussels. Britain, predictably, has been the first to refuse to do this, but others are bound to follow.
The idea of European fiscal union is not new, but has never previosuly been attempted in any serious way because of the inevitable resistances it would produce from sovereign states (including, most prominently, Germany). It is a measure of Europe’s desperation that it should now, finally, be attempted. Not without irony, however, the first calls for it came not from Merkel or Sarkozy, but from Britain’s own buffoonish Chancellor of the Exchequer: former banker George Osborne. In a rare moment of clarity when the extent of the Eurozone crisis really became apparent in August 2011, it was Osborne who first called for European fiscal union as the only way to resolve the currency’s problems. He changed his tune pretty quickly afterwards, of course, but someone perhaps should remind David Cameron that what he has just walked away from, was Osborne’s idea in the first place.