Robin Cook Has Failed to Clarify Labour's Views on EMU, Instead Adding to the Confusion

By Davidson, Ian | New Statesman (1996), September 13, 1996 | Go to article overview

Robin Cook Has Failed to Clarify Labour's Views on EMU, Instead Adding to the Confusion


Davidson, Ian, New Statesman (1996)


Robin Cook's interview in last week's issue of the New Statesman promised to "square the Euro circle" and make all plain about the Labour Party's attitude towards European Monetary Union (EMU).

Alas, it did no such thing. Cook reiterated the party's familiar mantras on EMU, which are as contradictory as they are unclear. On the one hand, Cook is in favour of monetary union (sort of); that's party policy. But he's not sure if he really likes it the way it's planned now, because it's not sufficiently socialist and not sufficiently Keynesian. And he's not sure whether Britain should join, because he doesn't know whether Britain can compete with the Germans.

But in the interview Cook further complicated the problem by introducing several strange ideas of his own; and the strangest is the suggestion that monetary union could work out all right for Britain after all, if a Labour government takes charge of it as the leader of a coalition of left-wing European states, and then changes the rules.

With Labour in power in Britain, a majority of member states would have left-of-centre governments. So a Labour government could mobilise a coalition of these states to push the fight against unemployment to the top of the agenda. The implication is that the current fight against inflation would be pushed lower down the agenda.

Thus, it appears, Labour will be able, with one bound, to transform the terms of the monetary union bargain. It will have the power to take it away from the deadly grasp of the monetarists, the deflationists and the central bankers, and instead entrust it to those who would promote growth and employment.

Don't get me wrong. I do not mock Cook's preoccupation with unemployment or the dangers of unnecessary deflation. But I question his analysis, and his political prescription seems to me plain daft.

It is quite likely that European governments trying to cut their budget deficits to get in line with the Maastricht criteria may be depressing their economic growth rates, at a time when Europe is only just emerging from economic slowdown. But there is no good time when cutting budget deficits and public debt burdens would be easy. And many governments have vast structural overhangs of unfunded social security spending, on health, on unemployment, or on pensions, which will have to be faced sooner or later, and the sooner the better.

Cook gives a hint that John Maynard Keynes still lives, when he claims that conservative Europe has traduced the vision of Jacques Delors, the French Socialist President of the European Commission, for whom monetary union went hand-in-hand with the promotion of employment.

But Cook's memory is at fault. No doubt Delors would endorse the twin objectives of monetary union and growth. But the Maastricht Treaty, and its plan for monetary union, were signed in December 1991, in the midst of the euphoria at the creation of the single market; whereas the Commission's white paper on growth, competitiveness and employment, which urged a target of 15 million new jobs in Europe by 2000, only came along three years later in 1994, when everyone was becoming alarmed by the economic slow-down and the rise in unemployment.

But the fundamental problem is that the white paper does not offer any European mega-recipe for creating these 15 million jobs. On the contrary, it makes clear that they will depend almost totally on structural reforms introduced by national governments or microeconomic actions taken by companies.

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Robin Cook Has Failed to Clarify Labour's Views on EMU, Instead Adding to the Confusion
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