Political commentary
Beware of snakes
Ferdinand Mount
'I think myself,' Mr Denis Healey once said with that subtle insight for which he is renowned, 'that Giscard's going to make a cock of it.' The Chancellor was alluding in the most general sense to the French president's political prospects. As things have turned out, however, Giscard is now in such a strong position that at this moment he is as nearly able to do what he likes as a politician ever is. And a politician is never more dangerous to bystanders than when he is temporarily free from external constraint. The immediate danger in this case is not to Giscard's own safety but rather, if we may borrow Mr Healey's mode of discourse, that he will screw up the rest of us.
It is certainly Giscard who has unleashed the poisonous snake. If France had not agreed to take part in a fresh effort to fix the value of European currencies against one another, Britain would not now be forced to grapple with this disagreeable, complicated and ultimately pointless scheme. Giscard's well-wishers have offered reasons why he should be so eager to strap the franc and the German mark together in the European Monetary System (known as EMS or the Supersnake —to distinguish it from the existing snake which fixes the relationships between the currencies only of West Germany and her smaller neighbours such as Austria and Belgium). The discipline of having to keep the franc at a fixed value against the mark will, it is said, help Giscard to resist the inflationary demands of the French unions. At the same time, it will inevitably humiliate the British. Either we join — in which case we shall quickly be forced to drop out, but not before we have lost millions trying to keep the pound at the agreed level. Or we opt out, as Mr Callaghan is now apparently being forced to — in which case we stand self-convicted as bad Europeans. And France and West Germany would continue to stand shoulder to shoulder as the leaders of the new Europe, with the British, both pathetic and perfidious, relegated to the also rans.
This argument, though, fails to cope with the objection that all the obstacles to British entry apply with nearly equal force to the French. Their inflation rate is just as high. The West German Bundesbank is no keener to countenance inflation to please the French than to get Mr Callaghan out of trouble. With or without Britain, the scheme remains essentially a convenience for the West Germans. Ah, but we do not know of the secret quid pro quos that Gis card has extracted from Schmidt in return for participation — huge nuclear instal lations, squadrons of missiles. We do not, but to judge by the German stickiness in negotiations with Britain, the quids are likely to be considerably outnumbered by the quos. As one shadow Minister remarked — to lapse into the Healeyesque again — 'this whole thing has eff all to do with monetary union; it's all to do with national politics.'
From the start, there has been a sinister cloudiness surrounding the whole affair. Consider the history. Previous efforts to strap currencies together in a Euro-bundle ended in collapse, the French themselves having to pull out twice, the British once after only six weeks in 1972. Then out of the blue at the Copenhagen and Bremen meet-, ings this year,. the plan re-emerges as an agreed thing between the Nine. Even Mr Callaghan is forced to accept the snake in principle, hoping no doubt that it will go away. But it doesn't. It wriggles alarmingly close. Everyone scurries for details. But details are still remarkably hard to come by. The Treasury and the Bank of England are cagey in a way that suggests their own bafflement rather than any machiavellian strategy. The whole business bears a distinct resemblance to Augustus Melmotte's flotation of the Great South Central Pacific and Mexican Railway in Trollope's The Way We Live Now. 'It was a great thing, a very great thing; — he had no hesitation hi saying that it was one of the greatest things out.' On the other hand, 'it is not expedient just at present to go into matters too freely . . . in affairs of this nature great discretion is necessary . . . unanimity is everything in the direction of such an undertaking as this.'
The prime objection to the scheme is not, as left-wing critics complained at Blackpool, that it will bind Britain into an indissoluble European union, The objection is that it won't work. Even West Germany's own econoThic think tanks are beginning to grasp the fact that it would be very tricky to keep exchange rates steady between a motley crew of nations with annual rates of inflation ranging between 2.5 per cent and 12 percent. The ill-feeling generated by break-up will only create further distrust between EEC governments, apart from wasting huge quantities of time, breath and paper. This might not matter so much to Giscard, in the short term. In the perpetual France-Great Britain challenge match he would be considered to have won the hole if Mr Healey were the first player to be forced to pick up his ball out of the heather. But for the British government the costs, both of devaluing before going in and of resisting further devaluation once inside, could be heavy.
Has Mr Callaghan the energy to take on yet anothet uphill struggle? Until now he has shunted discussion of EMS into a spe ia packed Cabinet committee; he squelched the possibility of a specific vote on EMS at Blackpool. But now he has to face the House of Commons with a dubious Cabinet and a hostile Parliamentary party. Is it worth the aggravation? Have he and Mr Healey already taken a firm decision not to go in, as Peter Jenkins reported in the Guardian? At the Cabinet's meeting with a highly suspicious National Executive this week, the Prime Minister asked his colleagues 'not to believe all you read in the newspapers — normally a sign that you ought to believe a great deal of it. The Conservatives too have gradually come to realise the shortcomings of the plan. The most articulate critic is Mr John Nott who, as a Treasury Minister in 1972, saw our reserves pouring out in a vain effort to keep the pound at the level we had agreed with our European partners. Mrs Thatcher shares Mr Callaghan's distrust of Extravagant European Larks (EELS for short).
If you go in with the pound at the wrong level, you offer speculators a bet they cannot lose, and the whole energy of the goVernrnent is consumed in propping up sterling. If, on the other hand, the government is pursuing steady monetary policies which keep the pound riding serenely high, why bother with snakes? As long as national governments retain their authority over the domesticmoney supply, no artificial European arrangement can impose an international discipline which cannot be cracked by national folly. Moreover, you cannot run your own sound monetary policy and at the same time be a loyal snake member; the two disciplines conflict. Worse than that, the suggested cure only intensifies the draft towards a politician dominated, centralised sort of Europe, in which the impact of government reaches further and further intwour lives. To operate EMS, or any similar scheme, means that politicians must continually be moving megalumps of tax-payers' money to and fro across Europe in order to rectify the huge inequities and anomalies which the scheme itself has created. This is quite different from introducing a new virtuous Eurocurrency — a sort of Nu-gold — or of dismantling exchange controls and allowing British citizens to hold bank accounts anywhere, as John Nott and others want. But such modest and sensible steps do not have the rhetorical appeal of EELS. Giscard claims to be a liberal in the Tocqueville tradition. In Towards a New Democracy, he comes out as a pluralist and declares that 'we are burdened with centuries of centralisation.' And yet behind the civilised and sceptical France of Tocqueville and Montesquieu, there still lurks the other country of windy rhetoric, centralised pomp, and the old confusion between glorY and power. At dusk in the gardens of the Elysee you can still hear the France of corne ille and De Gaulle blowing its own blasted trumpet.
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