Sunday 15 December 2019

James Downey: In this time of uncertainty, the last thing Europe needs is division

James Downey

ROBERT Peston's great book on the world financial crash begins with a question and an answer. The question, which is also the title of the book: "How do we fix this mess?" The answer: "I don't know."

After ploughing through the following 400 information-packed pages, the reader, like the author, still doesn't know. He or she will have gained enlightenment on what has happened, and how and why, but no indication of a way out.

This week, the dedicated searcher for solutions might have turned to another source of wisdom when the Mighty of the Earth, or at any rate a representative sample, gathered in Davos for their annual talking shop.

But the omens were not good. The crisis is now in its fifth year, and most of the mighty ones are still as baffled as the rest of us.

That, however, does not allow us to dismiss Davos as a waste of breath. Networking is useful, though perhaps more useful to journalists than to political and business leaders.

At an assembly like Davos, every swing of a television camera brings another bigwig into focus. And the bigwigs have plenty of interesting and even useful things to say.

Unfortunately, though, this week they did not necessarily relate to Mr Peston's question.

Unplanned events disturb the best-managed agendas. This week's event was David Cameron's announcement of his plan for a European referendum. The flaws, from every viewpoint, were all too easy to spot.

So the picture from Davos that sticks in my mind is not Enda Kenny banging a gong but Peter Sutherland looking the very picture of gloom as he pointed out the flaws.

Mr Cameron proposes to renegotiate Britain's terms of membership of the European Union. He may get some unimportant concessions. He then intends to hold an "in or out" referendum – in 2017.

And if anything could be worse than the possibility of British withdrawal from the EU, it is the timetable. In 2015, there will be a UK general election. Most likely, the Conservatives will have to give way to a Labour government or a Labour-Liberal Democrat coalition.

Let's assume that the new government goes ahead with the referendum. I don't agree with those who seem so sure the British public will vote for withdrawal. The voters may not like Europe much, but they will listen to the business leaders who queued up this week to express their alarm at the proposal.

And the trouble now facing them is not just the possibility of a catastrophe at a distant date – though an actual withdrawal would indeed be chaotic – but, in the short term, the serious consequences of Mr Cameron's decision.

Investors hate uncertainty, and Britain and Europe now face years of uncertainty as the story unfolds. Chief among the nasty probabilities is a fall in foreign investment.

If you were a German, you might look on all this with a certain amount of complacency.

It does not invalidate Angela Merkel's prescription for "more Europe", which means, specifically, banking union. But "more Europe" means less Ireland, less Italy, even less Germany, in the sense that it involves a transfer of the powers of nation states to a federal-type system.

I'm in favour. I always have been. I believe in the "ever-closer union" proclaimed by the founding fathers.

Still, I shared the general shock when the EU-ECB-IMF troika arrived in Dublin and we realised that we had lost our economic sovereignty. We must have some sympathy for our neighbours when they look back wistfully to a time when they made their own decisions.

As to ourselves, the Government has no choice but to keep on agitating for a better deal on the bank debt and keep on enlisting powerful people to support our case.

Mr Kenny did some networking in Davos. He's good at that. But the deal, when we get one – and we will get one, though perhaps not a very good one – will not be the end of the story.

Mr Cameron is looking in the wrong direction. Even a country of Britain's relative strength should accept "more Europe".

There cannot be a British answer, much less an Irish answer, to the question "how do we fix this mess?"

The mess is global. Only the United States, and just possibly China, can find their own solutions.

European countries must act together, or decline in both economic and diplomatic standing in the same way that the former imperial powers have done.

And the question of the banks must top the agenda. If Mr Peston has a lesson for us, it is that until we fix the banking system, we will have achieved nothing.

Irish Independent

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