This week Mr Hollande assured Mrs Merkel that the French local election results would make no difference to France’s economic policy despite the poor showing for his party. He confirmed that France would try to stick to the Euro disciplines. In practice France is finding it too difficult to hit the deficit target, but apparently wants to. Meanwhile France and Germany signed up to further joint projects to reinforce the merging of their two economies within the Eurozone and its common framework. Both of them played down the threat to the Euro from Greece, saying they wanted the experts to make more rapid progress assessing Greece’s latest policy offering, and claiming to be relaxed about the Greek visit to Moscow.
Stories circulate that Greece may face capital controls and suspension of bank account convertibility if things get worse, or that Greece is even planning to nationalise the Greek commercial banks and issue a parallel or new Greek currency to pay the bills. The Greek government denies these rumours and has just tabled new proposals to try to comply with some of the requests of their creditors. It seems to me more likely that Greece and the rest of the Eurozone will cobble together a compromise, as it seems clear Mrs Merkel and Mr Hollande do not wish to see an exit of Greece from the currency. Meanwhile the ECB lend more to Greece to keep the banks going.
All this reinforces a central truth for the UK. The Euro is driving relentlessly the process of political union for its members. They will volunteer for more and more joint projects, investments and shared networks as part of a deliberate policy to blur national distinctions and make more matters truly European.They are edging towards a proper banking union, where the ECB is still financing the Greek commercial banks as they are under pressure. They will need to make more progress in achieving common welfare and larger transfers of cash from the richer to the poorer areas. The UK wants no part of this, and will have to battle to stay out or get out of the intrusive features of political union to support the monetary union.
I just hope enough UK people understand the urgency of all this. The Greek drama is driving events at a fast pace. The UK needs a new relationship soon to avoid being sucked into the EU political union. Last night five of the parties present either pretended there is no issue with the EU, or affected to be relaxed about all its current policies, powers, and direction. On this issue these five parties are out of step with a majority of people in the UK. The UK needs the renegotiation and the referendum which Conservative policy offers. Polls also make clear the public is not about to elect a government pledged to leave without negotiation and discussion with the rest of the EU.
Voters who care about self determination and democracy here in the UK need to ask how they can best further that aim in the election.