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Janet Bush: Worried you don't understand the rules of the Euro game?

Independent on Sunday, The, Feb 27, 2005 by Janet Bush

At the start of The Hitchhiker's Guide to the Galaxy, the people of Earth loudly complain when they find out that the planet is about to be destroyed to make way for an intergalactic highway. They are given short shrift by the commander of the Vogon constructor fleet, who points out that the plans have been available for 50 earth years in the planning department of Alpha Centauri.

Replace the intergalactic highway with the new European constitution and the commander with Valery Giscard d'Estaing, the former French president who led the convention that drafted it, and you have a flavour of the black hole between the peoples of planet Europe and the political elite that has drawn up a blueprint for our future.

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Last weekend's referendum on the new EU constitution in Spain, the first of a wave of plebiscites across Europe, produced a yes vote (77 per cent) on the lowest turnout (42.3 per cent) in any Spanish vote since General Franco died in 1975. Nobody thinks the lukewarm approval of the constitution was due to a lack of enthusiasm for Europe - Spaniards are among the EU's keenest fans.

It was because nobody knew what was actually in the constitution. Spain's justice minister, Juan Fernando Lopez Aguilar, was clearly relieved, saying "you don't need to read the European constitution to know that it is good". This is a typical view of Europe's political classes: as long as the constitution means more Europe, it doesn't much matter what kind of Europe.

Barely anyone is talking in a serious way about what the constitution says about how the economic management of the EU is set to develop. There is even confusion on the profound point of currency. The text of the constitution says that the euro is the currency of the EU, which leads one to think that saying yes to the constitution means signing up to the euro without a referendum on it in Britain. Some experts say that this is a "horizontal clause", meaning that Britain and Denmark can keep their opt-outs from the single currency if they so wish (where Sweden is left, outside the euro but with no formal opt-out, is not clear). Others are not so sure. The EU's trade commissioner, Peter Mandelson, suggested in The Independent last week that the Government's "yes" campaign for the constitution might include a pledge not to seek membership of the euro in the near future. The "no" campaign argues that he can afford to concede this point because the constitution will do the job of forcing Britain into the single currency anyway.

Business complains that the constitution embeds even more red tape and regulation. Germany's Die Welt argued this case in a recent leading article, saying that the constitution "is bulky, difficult to understand, and includes requirements that are more likely to hurt a free, competitive, western- oriented Europe than to help it"; and that "nothing could be worse in view of the economic problems which the states of Europe currently face".

In Britain, business is firmly against the constitution, notwithstanding the letter from 11 business leaders on Friday calling for the UK to support it.

Some 49 per cent of business people polled by the Institute of Directors are against and only 29 per cent in favour; Mori found 60 per cent of Britain's largest firms opposed; ICM found 59 per cent of 1,000 businesses against, and a report by Accenture for the Royal Institute of International Affairs at Chatham House found that the number of chief executives agreeing that "the EU is good for my business" had dropped from 75 per cent in 1998 to only 32 per cent, with 63 per cent believing that over-regulation was destroying European competitiveness.

This is not surprising. Mr Mandelson estimated last year that regulation was costing Europe 4 per cent of GDP, far outweighing the 1.8 per cent of GDP benefit of the single market. It is quite shocking to find out that the European market is shrinking. A recent report for the commission by the former Dutch prime minister Wim Kok says: "Intra-EU trade in manufactured goods has been shrinking since 2000: it's the same story in services ... levels of intra-EU trade in services are lower than a decade ago."

At the same time, trade unions and the broad left are opposed to the constitution because, they say, it dismantles and destroys the regulatory structure that has underpinned Europe's social model. The left points out that the constitution hands much more power to the European Commission and that the current commission is the most right-wing in history, dedicated to sweeping European privatisation and liberalisation.

One of the most idiotic aspects of the constitution is that it enshrines into law two of the aspects of the EU's economic governance which have been completely discredited and are crying out for reform. There is broad political consensus in the EU - and that includes the UK and Germany - in favour of dismantling the Common Agricultural Policy, which makes food more expensive for European consumers, favours large agri-businesses over small family farms, and ensures the continuing destitution of farmers in developing countries. Reform has consistently been scuppered by France, which cannot stand up to its feather-bedded farming lobby; now the whole ghastly mess has been written wholesale into the new constitution.

Janet Bush: Worried you don't understand the rules of the Euro game?

Independent on Sunday, The, Feb 27, 2005 by Janet Bush

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