Some more sovereignty?

Alfred Sant: Malta u l-Ewro, Union Print Co. Ltd, 2011, 345pp

There’s a morose Mayan calendar prediction that the world will end this year. That probably would be the kindest end the euro, the gasping EU currency, could suffer. Europe collapsing – if we survive year’s end – is the biggest single crisis Western economies face.

Sant seems to blame largely Brussels, Germany and France for the euro’s woes- Godfrey Grima

A new currency was supposed to shelter us from fierce market forces, create economic buoyancy and help the eurozone countries sprint out of the 2008 recession faster than others. Or so politicians promised.

Instead, in just a decade, the euro took a pasting of untold magnitude. It will take time and treasure for it to head back to the sunny uplands.

To save it from collapse, countries already economically on their hind legs have been blitzed with side supply economics, a terrible thing to do while economic growth is stalled.

It may have been the law of unintended consequences but it drove the currency into a vortex of repetitive fissiparous misadventures, each giving birth to the next. Labour market reforms and brutal cuts in social security swiftly turned the lives of millions in Greece, Spain, Portugal and Ireland- soon to be joined by Italy – upside down.

Three of the eurozone’s largest and often prosperous economies have collapsed, two governments fell, one prime minister was ousted and still global investors are not convinced it’s all over.

All this had nothing to do with the world financial crisis. It was caused by fundamental mistakes, political indecision in the EU, a stiff defence of the European Central Bank, French and German banking interests and worldwide market uncertainties over the euro’s future.

For the euro to recover, Germany and France now demand deeper integration, a fiscal union of eurozone countries with their national sovereignty clipped further.

It’s not the first time the EU has asked, “May I have some more of your sovereignty please?”Meanwhile, a mountain of cash, totalling €700 billion – which incidentally will balloon our own national debt by 10 per cent – is being offered to struggling countries to drown deeper in debt.

In the ongoing drama, if Greece, or Spain or, God forbid, Italy should default on their debts, the euro – and the entire European construct – will face enormous consequences. That is why a world without the euro is inconceivable – and why nobody wants the euro to collapse.

These are some of the main themes Alfred Sant presents for our consideration in his latest publication, Malta u l –Ewro. Sant’s skilful writing is a bonus. It makes his analysis more easy to follow.

In many respects, this book – a compilation of the author’s think-pieces published locally, his speeches in parliament on the issue, contributions made at international meetings and views expressed on his own website – is pretty much an accepted version of the truth: a number of eurozone states first grew addicted to loans; then debts became unsustainable causing international investors to slow clap the euro and charge more for iffy government bonds.

Earlier the EU got the fundamentals of a common currency wrong by not, first, setting up a central treasury to avoid tension between the different sized economies – a complaint echoed recently by Jacques Delors, father of the single currency project.

Sant discusses how eurozone countries refused to devalue their overrated currencies – including Malta – before joining the eurozone, causing inflation to spiral at the strike of 12 even as the revelling was still going on. All this, Sant argues, made the euro a fair-weather currency. It buckled in the first squall.

Some of the arguments to which Sant returns over and over again are not new. It’s useless making the point, as he does, the euro is largely a political not an economic project. Money is political. A currency is a tool of power. Germany and France have no wish to release their grip.

Also, Sant seems to blame largely Brussels, Germany and France for the euro’s woes. But what of Jean Claude Trichet, head of the European Central Bank and worse still his vice president, now the Greek Prime Minister? How could they have been unaware of the blindingly false statistics the Greeks were filing – and the grave dangers the Irish government was running pledging to underwrite all Irish bank debts?

This all took place on their watch and that of 27 prime ministers. How, on God’s good earth, with so many elites sitting at so many summits, did anyone fail to raise the alarm before five eurozone economies began crashing into walls? The response now is bailouts but throwing good money against bad doesn’t seem to be a very clever idea.

As far as Malta is concerned it seems little can be done. We have, as Neil Kinnock once put to me “the most tiniest of voices”. But that can’t be right.

The EU was, is and will remain nothing if not about national interests. In the next episode of the euro saga we shall soon learn how our own national interest is to be defined – either by clutching on to our sovereignty or joining the fiscal union on German and French terms.

People should feel concerned about this. The world, after all, might not blow up in December.