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Labour must oppose the Greek “bail-out” and support the dismantling of the Euro

Opinion within Labour appears to be moving on the Greek “bail-out”. First, Ed Balls contemplates working with eurosceptic Tory MPs to oppose the use of British cash to fund the bail-out. Not quite principled opposition to the bail-out itself, and not surprising therefore that he was accused of opportunism. Then this week Jack Straw, always somewhat inclined to euroscepticism, argued that, since collapse of the Euro was inevitable, it was better that it happen quickly than for the Euro to endure a “slow death“. And today, Alistair Darling (£) argues that the eurozone cannot survive in its present form with a punitive approach that will not work. Unfortunately, his answer still lacks credibility and doesn’t go far enough:

It (the eurozone) has a choice. It can carry on treating Greece, Portugal and Ireland as bad boys, imposing tough conditions on them that will never work and that will result in further bailouts. Alternatively it must face the fact that, as with any other single currency, the stronger parts of the economy have to help the weaker parts to make the reforms they need, so strengthening their economies.

America, a federal country, has long accepted that the richer part must help the poorer states financially. That does not mean that Greece need not do its bit; its economy desperately needs reform, in or out of the euro. But convergence was never going to be achieved through a set of rules.

Darling himself admits that “there is no appetite for political union at the moment.” The trouble is that the fiscal transfers he advocates, which are a necessary feature of any currency union but one that the Eurozone lacks, would be seen as a major step towards political union. Rightly so — Greece, in spite of its current plight, is hardly a priority recipient of foreign aid.

The only rational solution left is the orderly dismantling of the eurozone. It is not sufficient, either for Greece or the rest of us, for Greece to leave the Euro. What is needed is for Germany and the Benelux (and perhaps a very small number of others) to abandon the Euro, create a new common currency which is allowed to revalue whilst the Euro devalues, and, in time, allow residual eurozone members either to adopt their own currencies or perhaps, in a very small number of cases, to rejoin Germany at a somewhat more favourable exchange rate.

It is no longer sufficient for Labour to claim credit for staying out of the Euro. We must expose and oppose the entire concept. And we should be arguing that amongst European socialist parties.


  1. David Ellis says:

    Why on earth would we want to oppose the Euro? And why do we want governments that devalue their currencies at the expense of their people. That is not socialism it is what the British and US ruling classes are doing right now.

  2. “We need to make sure we do not confuse the crisis of economies with a crisis of currency,” Siemens CFO said. “The euro is fine. It’s not in crisis.”

  3. David Ellis says:

    The Chinese are pouring into the Euro like nobody’s business because they don’t trust the dollar and the pound any more. They are printing them like they have gone out of fashion and guess what they have.

  4. David Vinter says:

    But ‘LENDING’ cash will only make things worse! Like a rich aunt bailing out her erranrt cousin, time after time. Nothing is acheived. Yet ‘GIVING’ cash can go on for ever,the fact is Greece has few foreign earning industries except tourism. Sorry but many countries have few natural resources, the only way out is to keep the population low!

  5. Gary Elsby says:

    So we are all agreed then that it is not the Euro or the Euro one’s fault, it was spendthrift politicians all along whom were economically incoherent in their ways.

    Where is the evidence that belonging to sterling is equal economic competence and lower retirement ages?

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