Economic malcontent

A breathless email from a good friend of mine, sent today:

“You should have come here. There was a big riot in Riga. I have not seen anyone write about it. I would have thought it would have been ideal for [a euroskeptic journalist that we both know].

Apparently IMF conditions are hurting. Should never have pegged to euro. Now it seems too late. Floating now would really hurt. Went for wage cuts instead.

Apparently the parliament building was smashed up.

How’s things?”

This evening, I decided to do a search on the Riga riots, which you can read about here.

The worrying thing is, this could be an ominous portent of things to come.

When I first started out in journalism, naively hacking away for the EUobserver.com, I made a bet with a couple of friends about when the EU would collapse. There was no debate about whether it would, only when. One of my friends said 2016. I said 2017. The other said 2018.

I’m still trying to work out whether the bet was a sensible one, or made in naivity. Surely the EU is like Terry Pratchett’s Death? Timeless.

Here’s why the EU might falter and collapse. The endeavour, whilst worthy in intent, is built upon lies and vested interests. It does not have the popular support of the people. The Irish vote on the Nice Treaty was fudged, as was the Danish vote on Mastericht before it. It looks as though they are going to ask Ireland to vote again about the Lisbon Treaty. Neither Tony Blair or Gordon Brown had the balls to put either treaty to a national referendum, because they had a very good chance of losing. The single currency was as much a political move as it was an economic one – intended to bind the countries ever closer together, on the highly questionable premise that a single currency would never work without strong political co-operation. Ergo: if you’re pegged to the euro, you cannot leave. A scary thought.

Here’s why the EU might continue ad infinitum. Or at least until their is a nuclear holocaust and even the Berlaymont building, which houses the Commission, has to shut down. There is simply too much at stake for it ever to collapse. Too many people are profiting from its existence to ever let it fail. When the single currency was introduced, there was always the argument that it would ultimately be a lot better for bigger countries to be pegged to it than for smaller ones. In good times, everyone is generally happy, because there is not much fluctuation in economic performance. But, as soon as we hit problems (and boy have we hit them now), then the smaller countries start to feel the pain. The Germanies and Frances of this world, those that can shout loudest within the EU, hold the reigns of fiscal policy – and everyone has to go along with it.

Which leads to pain and suffering.

Which leads to…

Well, you get the picture.

It could lead to one of two things. A sudden realisation that the euro was an ill-conceived project, done for political reasons with some reputable economy sucked into the project to give it legitamacy.

Or – and here I might be tempted to place my bet – we will find a situation where people are prepared to fight to keep the EU, and others who are starting to feel the pain have to fight back to make their voices heard.

Just before I left Brussels, I had lunch with a die hard eurosceptic. We were talking about the collapse of the EU and my rash bet of some years before. He said: “I don’t know about you, Blake, but I personally do not want to live through a war. And that is exactly what will happen.”

Could we be seeing, in Riga, the beginning of the break-up of the EU?

Or might it simply be the start of a war, caused by those cronies who refuse to see the problems with the European project?

(This entry is slightly more eurosceptic than I intended. I should add that there are a great many things I admire about the EU, such as the way it has pulled countries together and fostered distribution of wealth. But these comments can be for another entry.)

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