Sunday, January 27, 2013

Poland, The EU & Myth

Depressingly, a large section of Poland’s political class has come to align itself with the more fanatical advocates of European integration, a stance that has reached new levels of nuttiness with the idea that Poland should press on to the goal of membership of the EU’s catastrophic monetary union, an idea that makes neither economic nor—for those who celebrate Poland’s renewed independence—political sense.
This Monocle interview with Radek Sikorski, the country’s tough and generally savvy foreign minister, gives some handy insights into the thinking behind this shift, and,if only accidentally, how unmoored it is from reality.
But if there’s one thing that does ring true, it is this:
We believe that [the EU] is a strategically crucial project in view of the withdrawal of the United States from Europe, which is a reality.
In that context, it is worth remembering that the Obama administration’s announcement of the cancellation of plans to build missile defense systems in Poland fell, to the day, on the seventieth anniversary of the Soviet invasion of that country. That said, the idea that a sclerotic, chaotic federation foisted on unwilling nations by a small technocratic elite saturated in the pieties of supranationalism could act as a bulwark against a more adventurous Russia or, for that matter, the Islamist challenge is nonsense, Maginot thinking of the most delusional sort.
Mr. Sikorski has become well-known for his attacks on British euroskepticism. That’s discussed in the interview, but this caught my eye in particular:
M: Are you surprised at the Tories’ policy on Europe?
RS: I’m surprised because the education I received in Britain was about pragmatism; about basing decisions on reality, not romantic myths…
Well, we could debate what the EU really is about for a long time, but, if nothing else, it is based on the idea that you can abolish history, nationality and the laws of economics. That’s a myth. Whether it is romantic is a matter of opinion.
Later on, Mr. Sikorski explains why he thinks Poland should join the euro:
Because for a decade it was a boon to all its members, giving everyone the credibility of the Bundesbank, which meant cheaper mortgages, cheaper loans to industry. And then some people went on a spending spree instead of carrying out the same reforms that gave Germany its credibility. People now think there is something inevitable, being the powerhouse of Europe. Fifteen years ago, there was talk of Germany as the sick man of Europe. It was Schröder’s labour market reforms [that fixed Germany’s economy]. The eurozone heightens your competitiveness. The eurozone is good for those who want to pursue sound policies.
Oh dear. Where to begin? For now let’s just say that there was no ‘and then’. That spending spree (largely made possible because of the way the currency union stifled market signals) began to take off very quickly indeed.
I’ll add one other thing: Mr. Sikorski is quite correct that Schröder’s labor market reforms played a vital part in Germany’s turnaround, but Germany has also benefited enormously from the way in which the euro zone represented a concealed German devaluation. I blogged about that back here, but the nub is this:
This [devaluation] operated in two ways. Firstly, a retained Deutschmark would almost certainly been a harder currency than the euro. Secondly the adoption of a single currency removed the ability of Germany’s competitors within the euro zone to devalue ‘against’ Germany. The immense surpluses that Germany has built up since the formation of the euro zone tell their own story, and so does the alarm with which German exporters view the possibility of its dissolution.
To argue otherwise is to propagate, yes, a myth.

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