Last week, Debating Europe held a head-to-head debate on the consequences of a eurozone collapse. We brought together British Conservative MP Bill Cash and former Irish Taoiseach (prime minister) John Bruton to discuss the possible effects of what many consider the worst-case scenario: a break-up of the single currency. We’ll post a few highlight clips from the debate today, and tomorrow we’ll be putting online the full video with a couple of extracts responding to comments we received from Debating Europe readers.
It was a fascinating debate, with the two participants holding almost polar opposite views. Bill Cash MP argued that we are witnessing a crisis of democracy, and that we need to renegotiate the EU treaties in order to produce a more democratic, looser coalition of nation states. In light of the debate on treaty reform that we saw at the “State of Europe” roundtable, it’s interesting to hear that British eurosceptics are also pushing to re-open the treaties.
Bruton, however, argued that what we’re seeing is a problem of globalization and interdependence. We don’t have political arrangements that are swift enough to cope with the speed that markets now move at. According to Bruton, though, the EU is still better placed to deal with a crisis than an intergovernmental coalition of states would be. He argued that the EU needs to remedy its existing design-flaws, then it could be “an example to the rest of the world” in how to handle crises.
What would a eurozone crisis actually look like, though? Whilst Bill Cash agreed that the immediate consequences would be dire, he also argued that there’s “always a silver lining to every cloud”. The consequences of the “jolt” of a eurozone break-up would force reform on the European institutional arrangement and make it more democratic and more realistic.
Bill Cash also criticised the “socialist inspired ideas that might be good in theory but aren’t actually affordable” – which he blamed for getting us into the crisis. Might a more humble Europe, living within its means, with a more democratic intergovernmental arrangement between member-states, be the “silver-lining” behind the crisis?
John Bruton, however, completely disagreed. He argued that, if the euro were to break-up, we would witness competitive devaluations between states – something that led, in the 1930s, to the Great Depression – and the re-imposition of capital controls. This would mean an effective end to the single market and result in European economies becoming more fragmented and inefficient at a time when large markets like China, the US and India are dominating the international order. All of this, Bruton argues, would speed up the relative decline of Europe.
What do YOU think? Would you agree with Bill Cash that we need to renegotiate the EU treaties so the organisation resembles more a loose coalition of nation states? Or would you agree with John Bruton that, if the EU can fix its design-flaws, then it can be a model for the rest of the world? Would a eurozone break-up have a “silver lining”? Or would it just speed up European decline? Let us know in the form below and we’ll take your comments to policy-makers and experts in the run-up to the European Council meeting on 23rd October.