Why fiscal faults should not spell Europe's doom

Solely economic arguments for the European Union are largely futile, but politically and sentimentally the union still makes a lot of sense.


Whatever the reasons for Britain’s EU membership, I concluded last week, they cannot be economic. So have I turned into a newly converted eurosceptic? Far from it. I remain an unrepentant EU fanatic.

Where I differ from many pro-Europeans in the UK is that I simply do not need any economic reason to arrive at this position, or any rational reason at all for that matter. I am like a six year old in this respect. I want the EU because I want it. Maybe it is a cultural thing, maybe the result of learning Latin as a first foreign language, some trip abroad in my youth or a long forgotten encounter. I have no idea. Whatever it was that turned me into a pro-European a few decades back, it was not the joyful anticipation of productivity gains from a single market.

There is a big difference between why we are who we are, and how we rationalise our position later on. In the 1980s, pro-Europeans could still shut up an average eurosceptic with the nuclear argument that the EU has brought peace. Who could be against peace? By the time this was no longer considered sufficiently sophisticated, the argument became increasingly economic.

In the late 1980s, pro-Europeans would pull out a very important looking research document showing, beyond reasonable doubt, that the single market would bring a rise in gross domestic product by 2 per cent. Who could be against getting richer? It was all bogus, of course, but persuasive for a while. When the euro debate started, the same happened again. The euro was indefensible on economics alone. But this did not stop some of its advocates from defending it in those terms. The EU’s history is littered with economic errors. Remember the exchange rate mechanism?

When you reduce EU membership to economics alone, you invariably end up where the UK is today. If you form your opinion about the EU on the basis of an input-output analysis, you may well arrive at the conclusion that the benefits are not there. That is especially so if you are from a large country with a relatively small manufacturing base, a net contributor to the EU budget and not in the eurozone. It is no accident that we are having this debate in the UK, for example, and not in Belgium.

The pro-Europeans are paying the price for failing to point out the non-rational reasons for membership. If you just base it on rationality, you may find that people consider it rational to enter into an alliance when the benefits are clear and then leave it when they are not. Without any emotional glue, the EU is very hard to defend as an institutional framework designed to last forever.

Why have pro-Europeans allowed themselves to be pushed into this pseudo-rational trap? Do they really believe that the single market has brought those benefits? Or that it is so wonderful for the City of London to be someone else’s financial centre? Or that one could shape the whole of Europe in the mould of a Thatcherite or Blairite Britain?

Maybe the pro-Europeans concluded a long time ago that the best way to win the argument against the eurosceptics would be to appear pragmatic. So they avoided talk about European unification, common citizenship, all the ceremonial stuff that one can find in the preambles of the European treaties. But those preambles matter, not in a legal sense, but because they express a sentiment and provide direction. If you do not share the sentiment, you are far more likely to agree to a divorce when the common destiny no longer seems expedient.

This is why I would be careful not to jump to the wrong conclusions from last week’s poll by Pew Research, which showed the EU’s approval rating to be even lower in France than in the UK. Do not think for a second that the French are about to leave the EU as well. Euroscepticism is clearly on the rise in France too but the support for the EU and its institutions runs emotionally much deeper. France was a founding member of the EU. Through the euro and passport-free travel, the EU has become part of everyday life.

There is a clear and present danger that Europeans may turn away from Europe if the serial mismanagement of the eurozone crisis continues. But sentiment in the UK and on continental Europe is worlds apart.

If one must have a rational reason in favour of EU membership, it is probably best to stick to politics, not economics. EU member states share common values and common interests that deserve global representation and enforcement. The best rational argument is thus the idea of the EU as a superpower - as opposed to a superstate.

There are clearly pan-European interests at stake in a world with many emerging industrial powers. The EU would be a far more stable and potent partner for the US and Russia than a panoply of midsized member states. If you want to make a rational case for the EU, it is better to make it on the basis of political power, not economic efficiency.

But even for such an argument to work, you need to have some notion of “Europeanness” as part of your citizenship. I struggle to think how those who have avoided precisely this type of argument in the past will of all sudden be able to pull together an emotionally and rationally coherent argument ahead of an increasingly certain referendum.

Copyright The Financial Times 2013.

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