The less than jubilant trio aboard the Garibaldi

The leaders of the three largest countries in the EU — once Britain leaves — have been meeting on the Italian island of Ventotene. At the end of it they gave a press conference on the deck of the Italian aircraft carrier Giuseppe Garibaldi which was appropriate because most of what they spoke about publicly was defence.

But when in private discussion, defence would have been the least they would have spoken about. (NATO is already in existence for that purpose.) What’s much more important is how is the EU going to hold together. ¬†Historically, currency Unions — when several countries share the same currency — have never yet held together for very long.

The reason is that one size — that is, the same value of the common currency and the same interest rate — does not fit all. A euro interest rate that suits Germany does not suit Greece. A low interest rate that would suit Greece and attract foreign investment and consequent prosperity would deprive Germany of funds and Germany would suffer in due course.

In their haste to become a political nation-state 50 years ago the founders of the EU forgot that it has to be an economic nation-state first. It needs centralised accounts and budgeting before all else. This is the fatal flaw in the EU and what Francois Hollande, Matteo Renzi and Angela Merkel would have really been talking mostly about during their hours together on the island.

They didn’t find the answer or else they’d have announced it jubilantly on board the carrier.

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