Death of the nation state

Europe is finally experiencing a moment of truth about what a single currency means for nation states.
At Cannes, the Italian leader Silvio Berlusconi appears to be under a form of political house arrest as members of the 17-strong eurozone frogmarch him into financial reform.
There has also been the astonishing - and some would say wholly improper - story that Germany's Angela Merkel has been in contact with the Greek opposition leader Antonis Samaras to push him towards forming a coalition government.
Jose Manuel Barroso, the Commission president, put it plainly this morning when he said that Greece is now expected for form "a government of national unity".
It is a Expected by whom?  By the other members of the euro group, who want hapless George Papandreou replaced with someone more in line with their thinking.
None of this surprises British Eurosceptics, who have argued for 30 years that monetary union and sovereign nations cannot co-exist. 
But they have identified  an apparent contradiction between the idea that Greece and Italy are now regions of the eurozone and the fact that both are likely to receive a vastly increased amount of help from the International Monetary Fund, some of it underwritten by the British taxpayer.
The IMF, they argue, has never just bailed out failing economies in the past.  It always insists on radical internal measures like devaluation or debt default as part of a comprehensive repair.  The euro countries can offer austerity measures but nothing else because their interest rates and currency value is decided for the whole zone.  Bailing out Greece is therefore like giving money to a council that has overspent: A sticking plaster rather than a solution.
This tension will be at the heart of the debate when British MPs vote on an increase in the IMF contribution. A big Tory rebellion is inevitable. 

Joe Murphy

Comments

[Boudicca]

A big tory rebellion is only on the cards IF the Commons has to vote on a further donation to the IMF. Apparently Cameron thinks it is not necessary! There's a surprise (not).

One has to hope that the more solvent members of the Eurozone, who could leave the Euro and still run a very respectable economy, will have watched Merkel, Sarkozy, Barosso et all bullying and dictating terms to Greece and Italy and will draw the obvious conclusion: if they want to remain a Sovereign Nation, free to run their own countries, they had better get out PDQ.

I will be amazed if the Finns don't bail out and (although in a much stickier situation) if Ireland doesn't also conclude that membership of a Franco-German Reich wasn't quite what they had in mind. Pass the semtex, Paddy.

[The Debt Collector]

I always said that a Common Currency would never work, when it was first mooted in the 1980s as the ECU.

Howe can you have a Common Currenct, when you have Countries with such volatile currencies such as Italy, Spain etc, with traditionally strong one like Germany and England (not withstanding in our case the devaluation of decimilasation).