London, 16 January 1998 (RFE/RL) -- One of Britain's leading Euro-skeptics says the planned single currency will deprive voters of a say in decision-making, and lead to resentment and extreme nationalism throughout Europe.
Former Conservative defense minister Michael Portillo also said that EMU -- European Monetary Union -- is an undemocratic attempt to foist political unification on disparate European peoples.
In a speech two days ago to a Conservative think tank, the Institute of Economic Affairs in London, Portillo said: "If we shoe-horn the nations of Europe into an artificial union, we will not abolish nationalism, we risk stirring it up."
Portillo is only a former government minister and he doesn't even
hold a parliamentary seat, having lost it eight months ago in the landslide general election win by the Labor Party of Tony Blair.
However, his speech commanded wide attention because it is seen as an officially-sanctioned bid to consolidate the opposition Conservative Party behind a position of outright rejection of the single currency, due to be launched on January 1, 1999.
The speech is billed by party activists as a major philosophical critique of monetary union, and its dangers to the stability of Europe, by a politician regarded as an intellectual heavyweight.
The single currency-- expected to be joined by all except Britain,
Sweden, Denmark and Greece -- is seen as the most important European economic policy decision since World War Two.
Portillo said those driving the European integration process -- and
the single currency -- portray themselves as modern and forward-looking, whereas, in fact, they are the opposite.
He said they are mainly motivated by a fear that the past may repeat itself -- that Franco-German rivalry, or rampant German nationalism, may re-awaken. Thus they propose a centralization of power that runs counter to the "march of history."
He said: "We can see around us that the old empires or unions of
states have collapsed in failure. The Soviet Union and Yugoslavia both
failed in their attempts even using coercion to sustain a centralized
system of governmental control over a wide area, covering many diverse peoples and nations."
Portillo seized on the central objection to the proposed economic and monetary union -- that it is undemocratic.
He said none of the bodies charged with running the single currency is democratically accountable, not the European Commission, the Council of Ministers nor the European Central Bank.
This carries a serious political danger because these bodies will make decisions for a vast area, composed of many countries.
He also said the single currency involves a bigger step towards
centralized decision-making than any taken before in Europe.
He said the responsibility for monetary policy will pass from
governments of member states, or from their central banks, to the EU
Central Bank. This will limit governments' freedom to decide levels of
public spending, the rate of taxation or interest rates.
He quoted Bundesbank Chairman Hans Tietmeyer: "A European currency will lead to member states transferring their sovereignty over financial and wage policy, as well as monetary affairs. It is an illusion to think that states can hold onto autonomy over taxes."
Portillo also quoted German Chancellor Helmut Kohl who said: "We want the political unification of Europe. If there is no monetary union, then there cannot be political union and vice versa."
Portillo said advocates of the single currency say there is not much difference between giving responsibility for interest rates to a national central bank or passing it to a European institution.
He said: "There is a huge difference." He said a national central
bank should be responsible to the national parliament, its role is
embedded within a democratic constitution, and it should be accountable for its performance. Its failure can be punished by dismissal of the governor or the board.
He said: "The European Central Bank will not be responsible to any
democratic body, and the single currency is irreversible."
Portillo said Central Bank decisions on interest rates in effect will become decisions about rates of inflation and unemployment in different areas of the EU -- a highly sensitive policy matter.
He said: "If people feel that in elections they are unable to give
their view of economic management through their vote, or change the people who have made the policy, they will rightly feel that their democracy no longer counts for much." He said: "What will be the point of voting for political parties if they are powerless to change policy? Electors will feel resentful and cheated."
"When people feel like that, they are vulnerable to extremist
influences. Once large numbers of people cease to have faith in the system, extremism can take hold, including extremist nationalism."
Portillo said that when Britain was forced to make an ignominious exit from the European Exchange Rate Mechanism, people were free to vote against the Conservatives who had taken them into it, causing the loss of many homes, businesses and jobs.
"If we were members of a single currency, and the key decisions taken by the European Central Bank, voters would no longer be able to vote out the people who made harmful economic decisions."
He said the argument that democratic accountability for the European Central Bank should rest with the European Parliament is a problem because the Strasbourg-based body is not perceived as having much democratic trust and authority. "Unaccountable bureaucracy does not produce better decisions than democracy. . ."
Portillo said those most influencing the future of Europe have become confused because they "believe that European integration is the only guarantee of future security, and they are pursuing the objective with a single-mindedness that borders on fanaticism."
Portillo said: "Integration is being designed in a way that sharply
reduces democratic control. The danger is that we make people feel their national interests will be overlooked, and that they cannot assert them through the ballot. Moving away from democratic control is dangerous, because disillusion and grievance provide a breeding ground for nationalism and extremism."