Even pro-European commentators in Britain have been turning against monetary union and questioning the EU's democratic credentials. Charles Grant says that Emu would not have the dire economic consequences they predict and that Brussels institutions are imperfect but reformableby Charles Grant / October 20, 1996 / Leave a comment
Published in October 1996 issue of Prospect Magazine
Britain’s eurosceptics have always opposed “Brussels,” but its Europhiles could be counted upon to defend it. No longer. The tide of Euroscepticism now laps around the feet of many essentially pro-European commentators.
Last November, Will Hutton and Martin Kettle wrote in the Guardian calling for a weaker European parliament. They also argued that Economic and Monetary Union (Emu) would be deflationary and should be scrapped. In June this year, in a Prospect essay, Timothy Garton Ash claimed that Emu would require fiscal harmonisation and political union, and therefore should be abandoned. And in the same month, Andrew Marr, in a full page editorial in the Independent, argued against Emu and for reducing the power of Brussels institutions.
These writers are sympathetic to European integration. They are repelled by nationalism and xenophobia. Yet they have partly accepted two essential tenets of Eurosceptic faith-that Emu is dangerous and unnecessary and that EU institutions are irredeemably undemocratic. My own starting point is that of a former Brussels correspondent who observed the European commission, parliament and court of justice close up. I believe that, although these institutions need reform, they do not, overall, do a bad job.
Let us examine the canard that monetary union would require fiscal and even political union. If this were the case then much of the opposition to Emu would be justified. It is true that many continentals believe that a single currency ought to lead to a fiscal union-the Beneluxers, because the centralisation of budgetary policy would be a step towards their goal of a federal Europe; the French, because they fear that the European central bank would impose a monetarist economic policy on the union unless EU finance ministers created a common fiscal policy; some Germans, because they worry that, if a profligate government such as Italy can borrow as much as it wants, interest rates will rise elsewhere in the EU; and other Germans, notably Bundesbank officials, because-while not openly admitting hostility to Emu-they hope to undermine the project by arguing that it would require huge payments from rich countries to poor ones.