U.K. Foreign Secretary William Hague said his 1998 comment that the euro area was “a burning building with no exits” has been proved right and that member countries will have to live with the consequences for decades.
Hague first described the euro in those terms when he was leading the Conservative Party in opposition and Prime Minister Tony Blair favored joining the single currency. In a 1998 speech in Fontainebleau, near Paris, Hague warned that the single currency could damage the stability of Europe by tying together economies that were too different.
In an interview with the Spectator magazine to be published tomorrow, the foreign secretary said the sovereign-debt crisis in Greece and other euro-region nations shows he was right and that the single currency “will be written about for centuries as a kind of historical monument to collective folly.” His comments reflect the U.K. government’s hostility to being involved in any rescue and may rile other European ministers trying to persuade their own voters to back bailout programs.
“I described the euro as a burning building with no exits and so it has proved for some of the countries in it,” Hague told the Spectator. His comments were confirmed by the Foreign Office in London. “Greeks or Italians or Portuguese have to accept some very big changes in what happens in their country, even bigger than if they weren’t in the euro, and Germans will have to accept that they are going to subsidize those countries for a long time to come really, for the rest of their lifetimes.”
‘Difficult to Leave’
In the interview, Hague continued the comparison. “You can have burning buildings where they manage to put out the fire or control it or get more room or something,” he said. “I might take the analogy too far but the euro wasn’t built with exits so it is very difficult to leave it.”
Former Polish Prime Minister Jaroslaw Kaczynski, who’s seeking to regain power in elections Oct. 9, said in an interview two weeks ago that Poland shouldn’t aim to join the euro area in the foreseeable future.
“It would only make our lives more difficult,” Kaczynski said. “To a great extent the floating zloty saved us. Poland will be in need of a shield like this for a long time to come. Unfortunately we don’t have an opt-out clause from the euro.”
Experts from the European Commission, European Central Bank and International Monetary Fund will return to Athens tomorrow as officials race to put in place a package of measures aimed at insulating the rest of the euro area from Greece. Euro-area finance ministers will hold an extra meeting about the country’s finances in October amid international concerns that a default could plunge the global economy into recession.
Greece won’t repay all of its debt and will have to leave the euro area, Otmar Issing, the ECB’s former chief economist, was quoted as saying by Stern magazine in an interview published today.
In his interview, Hague also made clear his party’s view that Britain should scale back its involvement in the European Union.
“The EU does have too much power,” he said. “I haven’t changed that view since being in government, in fact if anything, being in government has reinforced that view. There should be powers that are returned to this country. I think we should be clear in the Conservative Party that that is where we are heading.”
While such moves may be blocked at present by the Conservatives’ pro-European Liberal Democrat coalition partners, Hague told the Spectator he viewed this as a possible dividing line between the two parties in the next election, scheduled for 2015.