ANOTHER VOICE
Thank Heaven, we can no longer bank on the Germans
CHARLES MOORE
You probably know versions of that slightly depressing joke that Hell is a place where the British are the cooks, the Ger- mans are the police, the French are the politicians etc., etc. The creed of European Union believes in turning this joke on its head and creating Heaven. This Heaven is made by mingling the best aspects of the main participants: the Germans teach us how to look after the money; the French provide the brilliant administrative elite; and the British contribute parliamentary democracy and the rule of law.
For various reasons, including not only Britain's late joining of the Community but also the lack of real interest in parliamen- tary democracy in many Continental coun- tries, the British aspect of the celestial mix is the least developed. The European Par- liament is the least powerful of the Com- munity's main institutions, the role of the national parliaments in scrutinising Com- munity legislation is negligible and the rule of Community law, through the European Court, is politicised.
But the other aspects of the New Jerusalem seem to be nearer to comple- tion. Germany already dominates Euro- pean monetary policy, and it will provide the dominant model for the European Cen- tral Bank and its administration of the sin- gle currency which, we all (yes, all — Britain signed) agreed at Maastricht, will come into effect in 1999. As for the running of the Community through the Commis- sion, France long ago determined the style and structure, and still contributes the sin- gle most powerful group of administrators.
But as the moment of apotheosis approaches, even the believers begin to doubt. They fear that they may turn out to resemble those small sects one sometimes reads about in 'In brief' columns in newspa- pers who gather in a earpark in Geneva or a field in Co. Antrim, wait for the Second Coming predicted by their leaders, and then return, rather sheepishly, to their homes when the earth has obstinately failed to quake and the heavens to disgorge any fiery chariots. The big day may not be very big after all or it may not even come.
We learn, for example, that there is now a good trade in deutschmark bonds which, after the year 2000, can be converted into Swiss francs. That suggests that the people who think about these things most concen- tratedly — money-market men rather than government economists — believe that the deutschmark will not re-emerge unscathed from its transformation to the ecu, euro, florM or whatever the single currency may be called. If they believe that — and there are more and more signs that they do — and if the German people come to agree with them — and 70 per cent of them now tell opinion polls that they oppose a single cur- rency — then the transformation will not happen because Germany will not allow it.
At present we are in a strange situation in which all formal gatherings continue to agree to adhere to the timetable and civil servants and central bankers beaver away at the European Monetary Institute and other preparatory steps while at the same time the politicians who hope to make the actual deci- sions make it plainer and plainer that they think the timetable won't work. Now even Chancellor Kohl says it may take two years more, which, in view of his likely political lifespan, is like saying Apres moi le deluge'.
Those of us who have been against the whole thing all along are making ourselves obnoxious by saying, 'Told you so', but although we certainly did tell you, we prob- ably gave you the wrong reason why. Nicholas Ridley famously, incautiously, and in this paper, said that EMU was 'a Ger- man racket designed to take over the whole of Europe'. But EMU is becoming increas- ingly unlikely, not because of fear of the Germans, but because of German fear that the racket will not work: Germany won't take over the whole of Europe; on the con- trary, Germany will cede control of its soundest post-war achievement — proper money — to a committee of many nations, dominated by France.
The heavenly model of European Union described earlier turns out not to work for the. same reason that oil and water don't mix. You can't have a Bundesbank for Europe if you also have a French form of administration. Because banking is a highly technical matter, people tend to forget that the strength of a central bank is not techni- cally based at all, but arises from culture and politics. The Bundesbank is what it is because of the German defeat in 1945. It 'Hello glovies.' emerged from the Bank Deutscher Lander devised by the victorious allies to decen- tralise and depoliticise the care of the cur- rency. It became for Germany the sanitised way of recovering power and pride. Energy that could not be spent on weapons or armies, or even on an adventurous foreign policy, could be devoted to the currency.
The paradoxical, though not really sur- prising result is that the Bundesbank is political nowadays because it is Germany's most successful institution. The debate is between those, mainly politicians and mainly of Dr Kohl's generation, who think that the political power it has won for Ger- many is best extended by folding it into the European Central bank, and those, led by increasingly talkative central bankers, who think that the best way to look after your currency is to keep it. And the very fact that France — or rather, the administrative class that makes almost every decision in France — is prepared to accept such eco- nomic sacrifice to get a single currency is making more and more Germans suspi- cious of conceding one.
To understand what it would feel like for a German to give up the deutschmark we should not imagine what it would be like for us to give up the pound, though that would be traumatic enough. It is more like being asked to give up the House of Com- mons. Of course there are any number of people who would say, 'What a wonderful idea!' — the Commons attracts plenty of contempt, unlike the Bundesbank. But if it were seriously proposed that we did give it up and allowed it to be amalgamated into a European Parliament decked out with a few British features — an adversarial chamber, perhaps, with Miss Boothroyd in the chair — most British people would see that it mattered a lot, that the 'bongs' of Big Ben on News at Ten symbolised some- thing important. At the very least, they would want to know very precisely what they were getting in return and why it was worth having before they handed over their most famous institution forever.
Or perhaps another analogy is better. Would we cede the command of our armed forces to the European Union, even if we knew we would be primus inter pares in the new structure of command? I think the answer is clear. I do not know enough about Germany to be certain that the analogy applies, but it is beginning to look as if it might.
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