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Crumbling euro

"There is no example in history of a lasting monetary union that was not part of one state," wrote Omar Issing, former governor of the European Central Bank. The problems of the euro arise from the fact that it is the only currency in the world without a state to back it.

Euroland is not a country but 17 different countries and states. Those who thought up the euro hoped that the problems that they knew it would inevitably give rise to would help push the EU and eurozone towards a United States of Europe under Franco-German hegemony, which has been the end point of the EU project. Jean Monnet, the ideological father of the EU, was always honest about this goal, unlike his Irish devotees.

As the undersigned and his colleagues pointed out when the euro was first established in 1999, one cannot have a stable union without a fiscal union -- that is, a system of common taxes and public services. By virtue of having common taxes and services, richer regions of a state automatically support the poorer regions and thereby compensate the latter, at least to some extent, for the drawback of their not having their own currency with which to balance their payments. States do this by means of their richer areas paying, on average, higher taxes, while their poorer areas receive, on average, more public services.

In turn, democratic states derive their legitimacy and authority from the social solidarity and mutual identification among their citizens, which makes people willing to pay taxes to a common government to finance transfers to their fellow countrymen in the poorer regions.

The solidarity of mutual identification -- normally requiring a common language -- which exists in a nation state does not exist at EU level, and cannot be artificially created. That is why establishing a eurozone fiscal union to sustain the euro is impossible.

It is why the EU's annual revenue and expenditure amount to only 1pc of the EU's gross product, whereas the revenue and expenditure of the EU's 27 member states typically range from one-third to two-fifths of their annual national products.

There is no EU or eurozone collective "we" that would ever be willing to pay taxes to a collective EU government out of a shared sense of Europeanness. To imagine otherwise is a fantasy.

These are the basic reasons why the European currency is doomed, at least as a 17-member entity, and why it is only a matter of time before some of its members have to leave it.

Some 80 monetary unions have dissolved since World War II, most of them from the formation of new states.

The Merkel-Sarkozy duo are out to divide the EU and dominate the eurozone by means of the fiscal-stability treaty, which they want Ireland to ratify in the coming months.

Rejecting it does not mean that we would have to leave the eurozone. An Irish refusal to ratify this treaty would be to say no to the Merkel- Sarkozy takeover bid for the EU.

Anthony Coughlan
Director, The National Platform
EU Research and Information Centre Dublin 9

Irish Independent