Once upon a time, we were taught that visitors came humbly to Europe to wonder at the magnificence of the white man’s civilisation. Now, the caricature is reversed. This week, three leading non-Europeans, one black, one brown and one yellow-skinned, arrived in Cannes. The President of the United States, the Prime Minister of India and the Premier of China certainly looked puzzled by what they found, but whatever they were lost in, it was not admiration.
In the dim, distant days of last week, President Nicolas Sarkozy must have felt happy that he would be the host of the G20 summit just as he was gearing up for his re-election campaign. In his view, and that, briefly, of the markets, he had (with a little help from eurozone colleagues) pulled off a plan to save the euro, recapitalise the banks and sort out Greece. He might be a small chap, but he had at last got his hands on the “big bazooka” which David Cameron said was needed, and was firing it like Rambo.
But by the time the world statesmen gathered in Cannes, the threat that the people of Greece might be consulted at the ballot box about their own future was causing panic. The dignitaries ignored one another’s speeches and sat checking their BlackBerrys for news from the Greek parliament. Even when, in the course of Thursday, Mr Papandreou decided not, after all, to try out a spot of the democracy which his country invented, there was little relief. Everyone could see that the mighty of the eurozone were not in control of events.
This week must have been the first in history when Eastern leaders arrived in the European continent and saw a system of economic management markedly inferior to their own. We know that some of them expressed disquiet. The Indian prime minister, Dr Manmohan Singh, worried in public about “the known deficiencies in having a monetary union without a fiscal union”.
What about in private? I wonder if Dr Singh formed up to his host and asked him a few simple questions like, “So when you Europeans started this monetary union, how did you think it could work without a lender of last resort?”, or, “These Greeks – what ever made you think they qualified in the first place?”. I wonder if Wen Jiabao, of China, asked: “Since you won’t put enough of your own money into your own zone, why are you asking me to do so?” I wonder if Mr Sarkozy and Angela Merkel didn’t feel a bit humiliated. Mr Sarkozy certainly looked very tetchy.
Until this week, eurozone leaders always had a general answer to such criticisms. “Yes, there are problems,” they would say, “but these are only transitional. Europe moves always in the same, correct direction of ever-closer union. Each crisis pushes us nearer to our goal.”
Suddenly, this is no longer their answer. Many observers pointed out on Thursday that the eurozone leaders had now admitted for the first time that a country (in this case, Greece) could drop out of the euro. This showed, they noted, how much more likely such an event had become. But they missed the theological significance. This was the crucial break with sacred doctrine. It was like the Pope saying that he was not infallible.
The phrase “ever-closer union” in the original Treaty of Rome was not, as British politicians so often claimed, a mere piece of windy continental rhetoric. It expressed the whole purpose. It meant that all new treaties must tend towards integration. It meant that the “acquis communautaire” – the powers which the European Union has gathered to itself – could never be relinquished. It caused the rhetoric in favour of the Union to be a metaphor of transport. Europe was a bus, a boat, a train with a single destination and a one-way ticket, and countries (usually Britain) which were slow to recognise this would miss the journey.
The most precarious transport metaphor was that Europe was a bicycle: if it didn’t keep pedalling, it would fall over. (Euro-bicycles, for some reason, were not supplied with brakes.) So it was necessary from the EU point of view that the Maastricht Treaty, which brought the euro into being, had no provision for getting out of it. The creed must admit of no doubt. William Hague warned of “a burning building with no exits”. But the euro-believers did not see the fact that everyone was locked in as a design fault: they were positively proud of it.
Of course, Thursday’s remarks about the possibility of Greece leaving were uttered as a threat. As such, they seem to have worked. Poor Mr Papandreou dropped his referendum. But they stand. Now we know that the eurozone leaders think it could happen, and that they may have to let it do so. So now they are planning the terms of the divorce, and preparing to get on the right side of the nasty argument which will ensue – “You never loved me anyway! You lied to me about who you were! You didn’t come up with the money you said you had!”
Once the doctrine has changed, and the possibility of departure is admitted, why should it stop at Greece? Can Portugal survive? Can Spain? At the other end of the scale, the Germans are now quietly putting it about that they have a contingency plan for what to do if things unravel. Until now, hedge funds, which study these things cold-bloodedly, have calculated that the political will has been such that the eurozone, however misshapen by the endless struggle to make one size fit all, will muddle through. Now they are starting to doubt the strength of the institutions set up to enforce that will. They are beginning to bet differently.
Since September 2008 and the collapse of Lehman Brothers, this column has had the mantra Everything Is Different Now. It is a banal thing to say – a version of the desperate journalist’s sign-off “One thing is certain: things will never be the same again”. But, as is the point of clichés, its strength comes through repetition. Everything is different and goes on being so. The credit crunch was not like a terrible hurricane which devastates an area and then blows away. It is more like an immune deficiency which remains uncured, and keeps breaking out in different bits of the body. It began with “sub-prime” Americans who couldn’t keep up with their mortgage payments. It moved to banks. For some time now, it has been attacking countries. Its side effects include the MPs’ expenses scandal, the contraction of the BBC and the crisis of the Murdoch empire.
Which brings me to the oddity of Britain’s stance. The problems of the eurozone do not surprise Mr Cameron or George Osborne. In fact, they prove them right in their determination to keep out. Yet the policy of the Government is to do its quite expensive bit to help keep the show on the road and to squash anyone who talks of alternatives. “Integrate!”, cries Britain, “Create a fiscal union.” We are asking the eurozone to reconcile all its existing impossibilities by inventing something more impossible still. I do hope we don’t mean what we say, because these are the tired voices of the status quo. They are not the words of good Tory modernisers.
This week in the Commons, a junior Treasury minister admitted, sotto voce, that Britain too has a contingency plan for what to do if the euro collapses. Good. But I doubt it is nearly big enough for the change that is coming.