Euro Positive Achievements

People living in highly centralised states, such as the UK, do not appreciate that federal states are quite different

Sir, Lord Lawson of Blaby (Opinion, Sept 5) argues that action needs to be taken to protect us from a European superstate. In the very long term the EU may indeed develop into a United States of Europe, but there is no prospect of that happening within our lifetimes, nor does it follow that such a development would necessarily turn the EU into a centralised superstate.

People living in highly centralised states, such as the UK, do not appreciate that federal states (or confederations such as Switzerland) are quite different. Unlike us, they tend to be highly decentralised. For instance, the United States does not guarantee the borrowings of its member states, nor does it control their budgets. If California, through irresponsible public spending eventually becomes unable to pay its debts then this will be a problem for the state of California and for the banks who have lent it money, but not for the US as a whole. If this works for the US, would it not be illogical for the EU to become a federal superstate, in which the budgets of member states are tightly controlled from the centre, with borrowings being underwritten by the EU as a whole? Such a development might be welcomed by the financial markets, but it would not be acceptable to the vast majority of the EU’s member states, or to European voters.

The eurozone’s sovereign debt crisis should be seen as stage two of a continuing banking crisis. Banks and other financial institutions have irresponsibly lent vast sums of money to countries that did not have a record of sound economic management, and that were therefore always at risk of defaulting in the long term. Of course, if these debts were now to be converted into eurobonds, that would save the banks’ bacon. But Angela Merkel and other European leaders are surely right to reject that particular solution. Properly managed there is no reason why some limited sovereign debt defaults should lead to the collapse of the euro, for the defaulting countries are unlikely to find it in their interest to leave the eurozone. Nor should it be impossible for the creditor countries to cope with the write-downs that will be necessary.

At the end of the day the euro is underwritten by the eurozone’s economy as a whole, its relatively modest level of sovereign debt, and by the European Central Bank’s commitment to sound money and excellent track record of keeping eurozone inflation down to a very low level. There is no sign of any of this changing, which is why the euro will continue to be the currency of choice for most of the EU.

John Heykoop
Pulborough, W Sussex

Sir, Lord Lawson, in his highly intemperate attack on European monetary union, states that the decision to embark on the project was “among the most irresponsible political initiatives of the postwar world”. Rather than a plot to deprive Britain of its sovereignty, the vision of the leaders of the union was to create a grouping of countries with a single currency that would allow Europe to compete as a trading entity with the US and the Far East as a world power.

This was progress on a major scale, given the histories of the nations involved, and has led to a period of unprecedented peace and prosperity. The eurozone certainly faces big challenges, but it is unseemly for those who hate its very concept to denigrate its achievements. There is no instance of any recent British politician having the drive and vision to change history in such a decisive fashion.
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Richard Brooke
Brentford, Middx

Sir, The suggestion that Britain should give up its veto in exchange for the right to not apply EU legislation it did not like is not new. The previous Conservative Government decided against pursuing it.

If Britain gave up her veto in foreign affairs, defence and tax policy (the three most neuralgic issues) she would in practice, even if not in law, be affected and constrained by any resulting legislation and policies adopted by our closest neighbours and allies.

Equally, if we were free to disapply common market measures which did not suit us, others would demand the same. So no more single market.

Every British Government since 1962 has concluded that the prize for sharing sovereignty with other like-minded European democracies is worth the price.

Sir Stephen Wall
Foreign Office Private Secretary to Sir John Major, 1991-1993, and British Ambassador to the EU, 1995-2000
London SW18

Sir, Lord Lawson’s arguments on the eurozone are a welcome reminder of Tory policy on Europe:

a free market without any of the social responsibilities which go with it.

His premise that the UK would be better off without the eurozone ignores the economic consequences which face the UK should any EU nation default. Global economics dictates that this is a crisis which we are all in together.

Collective action is the only way forward.

Michael Cashman
Labour MEP, West Midlands
West Bromwich