We should take advantage of weak Eurocracy
SO that’s all decided then. Greece should definitely leave the Euro. But there is one hole in the debate. Greece leaving the euro might save both Greece and the euro; it might not just be desirable, but also inevitable. Unfortunately, it is also impossible.
Many people, including myself, predicted even before it was launched that the single currency’s internal tensions could lead to it fracturing. But this outcome was inconceivable to the officials and politicians constructing Europe’s grandest project, and so they didn’t build an exit door.
As William Hague, then Conservative leader, memorably put it in 1999, “the single currency is irreversible. One could find oneself trapped in the economic equivalent of a burning building with no exits.” Hague was derided for predicting that the Euro could “lead to huge booms and deep recessions” and a “full blown banking and financial crisis”, but he is being proved spot on.
The problem is that there is no provision in the treaties for Greece to leave the euro. There is no legal way for Greece to bring back the drachma – it could only do so by ripping up its treaty obligations; or renegotiating the treaties with all other EU countries. Even the mighty European Court of Justice, which bends sovereign governments to its will, has no chance of overruling the economic and political chaos in Greece.
You see, this is not just an economic crisis, but also a potential constitutional one. Of course, no country would want to stand in the way of the inevitable, but it raises lots of issues. One might even say, opportunities. You wouldn’t want to waste a good constitutional crisis.
If Greece wants to renegotiate its treaty obligations to return interest rate setting powers to Athens, why shouldn’t other countries such as Britain throw in their demands? We can make the whole process easier, but what do we want in return? We might think it is not cricket, but then Brussels isn’t cricket – it is horse trading. The best time to get concessions from people is at their moment of weakness, and the Eurocracy is weakened by this crisis. After all, they used the financial crisis to move control of UK financial services regulation from London to Brussels. A Greek default would also set an interesting precedent that countries can, under certain circumstances, decide to return powers to themselves. Under what other circumstances could that be made to happen?
This is the sort of war-gaming and scenario-testing that French diplomats are past masters at, which is why they so often get their way. It is time that we played them at their own game – and started thinking a few more moves ahead.
Anthony Browne is a board member of The CityUK