Eurozone Crisis

Lord Alderdice Excerpts

Thursday 1st December 2011 Grand Committee

[Lord Alderdice]

My Lords, I start from the position of one who has been for many years, and still is, very committed to the European project, not just for reasons of political principle and doctrine but because of my experience in my part of the United Kingdom. It was the European project approach that inspired us as traditional enemies—unionists and nationalists—to meet each other across the table rather than across trenches, virtual or otherwise. It was that model of the institutions—cross-border and council of Ministers—that enabled us to find our way forward into practical political ways of co-operating east-west, north-south and within Northern Ireland. It was the European context that brought the United Kingdom and the Republic of Ireland together and produced a framework of relationships in which political leaders and civil servants were able to work together. However, I confess to having been profoundly disappointed by two approaches and three attitudes within the European project that have been profoundly damaging in recent times.

From the start, I wanted to see the development of a Europe of the regions, because it seemed the way for us to move beyond the nationalism that had been so damaging in the last century and towards a federal Europe. However, as time went on it became increasingly clear that political leaders were not terribly prepared to give up the national power of Governments and pool sovereignty sufficiently to make a Europe of the regions a serious possibility. That to me was finally made clear by the appointment, late in 2009, of Herman Von Rompuy and the noble Baroness, Lady Ashton—very fine people in themselves—which was a mark of the lack of preparedness of European leaders to appoint those who would really drive Europe forward. For many of those leaders, and for many of their people, the European project had become a vehicle for the accumulation of power and wealth, not the management of conflict.

The second was the debate between deepening and enlargement. It seemed that one had to choose one or the other. Many of my colleagues, particularly in the rest of Europe, disagreed. They said, “No, no. That is very old thinking. It is wholly possible to have deepening and enlargement at the same time”. I always begged to differ. I could see value in both, but I could not see the possibility of both being done at the same time. That struck me again at Copenhagen in 2002, for example, when a number of new members were brought in who did not necessarily abide by the rules. I think particularly of the admission of Cyprus when it was quite clear that the Cypriot problem had not been resolved and that this would ensure that it would be impossible to resolve the problems not only of Cyprus but of our relationship with Turkey. Tragically, so it proved.

Those were not the only rules that were broken. Here I move on to the three attitudes. The attitude to the rules was defective, as the noble Lord, Lord Desai, mentioned. The stability pact was already being broken long before we ran into the recent economic problems. It seemed as though the project itself and its political dynamic were so important that one could afford to close one’s eyes to the breaking of rules both by southern and northern countries for their own short-term purposes.

There was a second attitude that disturbed me. I wholly realised that the appointment of the Commission as an institution that could drive things forward when national interests would sometimes have held them back, was a necessary thing for the starting and development of the European Union. However, if it continued for too long, a tendency would develop in which European elites and bureaucrats felt that it was not really necessary to bring all the people along all of the time. Again, while I see the short-term requirement for the new Governments of Greece and Italy not to be properly democratically anchored, it is a very dangerous development that thoroughly undermines our capacity to turn to autocrats in other parts of the world and recommend the European project.

Finally, as time went on, the fundamental purposes of the project became lost and submerged. Increasingly, countries wanted to join the European Union not for the political reason of preventing a return to political instability and war in Europe but because they thought that it was a short-cut to wealth and comfort. Many countries joined without any real intention of finding a way to measure up to the kinds of requirements that were in place. At the same time, politicians saw the European project as a way of gaining a platform on the world stage, where they could compete with the United States, China and the developing powers. However, while that may have been their ambition, it was not the purpose of the project and was frankly not what Europeans themselves wanted. They were not interested in that kind of competition. They wanted peace, stability, reconciliation and economic progress in Europe.

As we move down this road, it has been extremely damaging to us within the European Union. Of course, the noble Lord, Lord Desai, is absolutely right. The economic problems we face are not solely problems for Europe; they are much wider. However, today we are concentrating on Europe. In appreciation of the noble Lord, Lord Lamont, I hope that this debate is the first instalment of a wider consideration of issues that are absolutely critical for our country and need further, longer discussion in your Lordships’ House.

Noble Lords will not be surprised that, as a doctor, I will focus on diagnosis before coming to treatment. There are serious questions about whether the diagnosis of the economic dilemmas that we face has been correct. We were told from the start that it was a liquidity crisis. Then it was a problem of bank capitalisation. Then it was a recession, perhaps even a depression. All these things may be around but, fundamentally, what we face is a differential and massive correction. Some countries have simply been living within Europe way beyond not only their current means but any means that they are likely to be able to acquire. That is a very serious matter because, when we come to the resolution of the problem, some of those countries will not be able to return to the way of living that they had three, four or six years ago. As my noble friend Lord Ashdown said, we could be among those countries; there have been indications of that in recent times.

A solution was put forward by some of our colleagues. I heard Guy Verhofstadt, the former Belgian Prime Minister and a good liberal in many ways, make a diagnosis and treatment proposal that I had heard from him before. He said last week in Palermo that a state without a currency was possible but that a currency was not possible without a state to back it up—therefore, we need more Europe and a European federal state. My difficulty is not in thinking how we can find rules for such a thing to happen. As I said, the problem is in persuading people to live by the rules. Although I can understand that a fiscal union could be developed on a German model, I remain to be convinced that even if it is applied to Greece, the culture of Greek society would accept a German-style implementation of those kinds of rules. So I have difficulty in seeing not the theory but the political practicality of making it work. We need to go back to where we made some earlier mistakes.

If it is not possible for all the countries to maintain the requirements of staying within the euro, as seems to be the case, it may be unhelpful for us to insist that Europe moves forward with all those countries within the euro—unhelpful for them and for Europe. The interests of this country economically and politically require us to have a sensitive and nuanced approach to our European colleagues, not to try to press them in a direction that they cannot sustain. There are rules and debts have to be paid, either by the debtors, the creditors or the whole society through inflation or something else. However, if we do not find a new way in which to run Europe with a more variable geometry that allows all of us to remain together in peace and with variable but significant economic and political prosperity for all of us, I fear that, tragically, questions over the fundamental purpose of the European project—to maintain economic and political stability—may hove back into view. That prospect should make all of us shudder.