One cannot have an independent State unless it has its own currency, and with that control of either its interest rate or exchange rate policy, for these are fundamental economic instruments for advancing a people’s welfare. Those who fought for an Irish Republic historically took for granted that national independence meant that an Irish State would have its own currency and the related economic instruments. The rate of interest is the internal “price” of money, so to speak, and the currency exchange rate is its external “price”. A Government cannot control either unless it has a currency of its own in the first place. That is why former EU Commission President Romano Prodi exulted when the Monetary Union was set up for a minority of EU States in 1999: “The two pillars of the Nation State are the sword and the currency and we have changed that.”
The fundamental problem for the Eurozone and its 17 Governments is that there cannot be a stable, lasting monetary union that is not also a tax and public spending union, and hence a Political Union, so that its component Member States are compensated for loss of their ability to influence their competitiveness by varying their exchange rate – for they have no independent currencies any longer – by automatic transfers from richer to poorer States through a common federal-style Eurozone tax and public service system. The latter means a Political Union like the USA, and the dream of building a United States of Europe on similar lines to the US has for decades been a dream/fantasy of the Euro-federalists, of whom there are many in the leadership of the Fine Gael and Labour parties.
A system of common taxes and public services exists within national States, but it does not exist cross-nationally. It cannot exist cross-nationally because the social solidarity, the sense of community and mutual identification, the sense of being a common political “We”, which is what makes people pay taxes freely and willingly to a common Government because it is “their” Government, does not exist at EU level. A democracy or democratic State is impossible without a “demos”, a people; and there is no EU or Eurozone “demos”, in contrast to its component Nation States.
This is the fundamental fallacy of the EU integration project, the attempt to turn the EU into a quasi-State, even though already half or more of the legal acts made in each of the 27 EU Member States each year are on average of EU origin. Free trade is one thing, and is normally a good thing. A common currency, credit and exchange rate policy for very different economies is something totally different. The resistance of German public opinion to financing Greece, Ireland, Portugal etc. in the current Eurozone crisis is but one small example of this. The solidarity needed for such continual resource transfers between the Member States of the Eurozone to enable it hold together does not and cannot exist. Nor can it be artificially created.