With the UK still engaged in the process of leaving the European Union, you might consider it a strange paradox that Brexit could eventually lead to Britain integrating deeper into the EU project. On the face of it the country looks as far away now as it ever has from taking the next step on assimilating fully into the union – that being the abandonment of sterling and adoption of the Euro.
If we go back to 1997, a newly elected Labour government notified the EU council that the UK would not be joining the Euro on the 1st January 1999. Instead of being a binding decision, Britain was free to change its stance at any time provided it satisfied two conditions. The first was that the government and parliament would have to take the decision to relinquish the pound, with or without a public referendum. The second was that the UK must meet the EU’s ‘convergence criteria‘ before being accepted into the Euro fold.
Come 2003, an assessment was undertaken by Tony Blair’s government based upon five economic tests that had to be met prior to adopting the Euro. The conclusion they came to was that convergence to the currency could not be guaranteed as sustainable. For now at least, the Euro would not be in Britain’s ‘national interest‘.
When the Conservative and Liberal Democrat coalition formed seven years later, they pledged not to transfer any further powers to Brussels and to maintain sterling as the UK’s currency. Both pledges were honoured throughout the coalition’s five year term, a period which laid the foundations for an in/out referendum on EU membership.
In 2015 when David Cameron’s Conservatives secured a majority in the general election, it was on a promise that the Tories would deliver the referendum to the British people. Just thirteen months later the vote was held and the UK opted to leave. Ever since then the conversation has been geared towards the ‘future relationship‘ between Britain and the EU. Not factored into this conversation is how the Euro could potentially play a part.
To build the case for why Brexit may prove a vehicle for further EU integration, consider the words of former Labour government minister Lord Andrew Adonis. Here is an extract from a speech he made last year at Chatham House in London on the subject of a ‘disorderly‘ Brexit:
We and our children will pay a steadily greater price in economic, diplomatic and possibly security vulnerability until, as we surely will in the next generation, either by our own initiative or through a European crisis, we once again take our place in the EU.
Whether unconsciously or otherwise, Adonis made an correlation between the onset of a crisis and the UK’s re-entry into the union. He alluded to the theory that a no deal Brexit outcome would place Britain in major economic peril, so much so that the country’s weakened financial state – in large part through a sustained devaluation of sterling – would lead to the UK gravitating back into the EU’s arms.
The subject of global planners using crisis scenarios as an opening to enact significant monetary and societal change is one that I have regularly discussed. When you look back throughout history, it cannot be denied that out of crisis has invariably come the consolidation of power to the benefit of globalist institutions.
But just how plausible is it that a country which is supposed to be vacating the EU could in the not so distant future become further entrenched within it? To examine the possibility, let’s trace the progression of the Economic and Monetary Union (EMU) which was founded, along with the European Union, through the Maastricht Treaty in the early nineties.
In 1988 the Hanover European Council established a committee tasked with devising a strategy to consolidate economic power within Europe. It led to the publication of the Delors Report in 1989, named after the head of the committee Jacques Delors who was also President of the European Commission at the time. The report called for a three stage introduction of EMU and a brand new institution to be responsible for the monetary policy of Euro Zone member states. Out of this the European Central Bank was founded in 1998, and the Euro Zone in 1999.
Following the Delors Report, it was recognised that amendments to the Treaty of Rome (signed in 1957 creating the European Economic Community) would be necessary in achieving its objectives.
This is where the Maastricht Treaty comes in. First adopted in 1991 and signed in 1992, it required that members of the European Union join the Euro once each nation had honoured the aforementioned convergence criteria. The criteria is made up of four parts:
Price Stability – inflation cannot be higher than 1.5% above the rate of the 3 best performing member states
Sound and sustainable public finances – government deficit cannot be higher than 3% of GDP and debt cannot be higher than 60% of GDP
Exchange rate stability – member states must take part in ERM II for a minimum of 2 years without strong deviations in currency value
Long term interest rates – should not be higher than 2% above the rate of the 3 best performing states in terms of price stability
In regards to point three, ERM II stands for Exchange Rate Mechanism. The UK joined the original ERM in 1990, but following ‘Black Wednesday‘ in 1992 was forced to withdraw. I wrote about this earlier in the year when debating whether Brexit could trigger the demise of sterling as a reserve currency.
In short, ERM II was devised in 1999 as the successor to ERM to ‘ensure that exchange rate fluctuations between the euro and other EU currencies do not disrupt economic stability within the single market, and to help non euro-area countries prepare themselves for participation in the euro area.’
Whilst participation is voluntary, as part of the convergence criteria for adopting the Euro a nation is required to take part in ERM II for at least two years before qualifying to join the currency. At present there are seven EU nations not in ERM II, including Sweden, Hungary and Croatia. Indeed, Sweden voted in a non binding referendum in 2003 to reject adoption of the Euro and with it ERM II. But all seven countries joined the EU after the Maastricht Treaty, meaning they are duty bound to take on the Euro at an undesignated point in the future.
That said, there are no time limits with ERM II participation. For example, Denmark has been in it since 1999 and is still using their own national currency the Krone. In 2000 the Danish people rejected joining the Euro in a referendum, and since then no further plebiscites have been held.
A key aspect of Maastricht as touched on above is that countries joining the EU after implementation of the Treaty are obliged as part of their accession treaties to eventually adopt the Euro as their currency. The treaty does not specify a specific timetable for joining the Euro Zone, but out of 13 countries that joined the EU back in 2004, 7 of them are now part of the zone. More broadly, 19 of the 28 states that make up the EU now use the Euro.
Of the nations that adopted Maastricht in 1991 (including Germany and France), only the UK and Denmark managed to negotiate opt outs from having to take part in stage three of the Economic and Monetary Union. This ensured that they would not be required to sacrifice their own national currencies in favour of the Euro.
Former Conservative Prime Minister John Major was credited with securing Britain’s opt out, which came in the same year that the Anti Federalist League was established in the UK in opposition to the Maastricht Treaty. The AFL was later succeeded by the UK Independence Party (UKIP).
The opt out clause was enacted when the UK formally approved the treaty in 1993. As a consequence, Britain only took part in stages one and two of the Economic and Monetary Union. Stage one allowed free movement of capital between member states, with stage two being the convergence of member states economic policies and the founding of the European Monetary Institute (a precursor to the ECB) as preparation for the Euro.
Those who took part in stage three, which commenced in 1999, committed to the gradual introduction of the Euro and a common monetary policy under the auspices of the ECB.
Stages one and two are now fully complete. With a number of member states having yet to adopt the Euro, stage three remains ongoing.
It will probably not surprise readers to learn that in recent years the EU has been vocal in wanting to complete the Economic and Monetary Union once and for all. The Five President’s Report published in 2015 underscored this fact. According to the report, completing the EMU would require progress on four fronts:
Towards a genuine economic union
Towards a financial union
Towards a fiscal union
Towards a political union that would provide the foundation for all of the above
Page five of the report states that preparing the ground for a ‘complete architecture in the medium term‘ would ‘inevitably involve sharing more sovereignty over time.’ Therefore, a ‘genuine‘ EMU would mean member states having to accept ‘joint decision-making on elements of their respective national budgets and economic policies.’
The target year for completing the EMU ‘architecture‘ is 2025 – the same year that is synonymous with the Bank for International Settlement’s Innovation Hub programme and when central banks are seeking wholesale implementation of new payment systems. The aim of 2025 was reaffirmed in a 2017 publication called, ‘Reflection paper on the deepening of the EMU.’ One particular passage from the paper reads:
Fifteen years after the launch of the euro, ten years after the crisis hit us, it is time to look afresh at where our Union should be in the next decade, and to lay the common ground for such a future.
In terms of wanting to finalise the EMU, crisis has undoubtedly opened up an avenue of opportunity. In separate instances, departing President of the European Commission, Jean Claude Juncker, used his 2017 State of the Union address to call for full EU integration. Months later Martin Schulz, leader of Germany’s SDP party and the former President of the European Parliament, called for a ‘United States of Europe‘ by 2025, with sovereignty being ceded to the European level and the creation of a centralised Eurozone budget.
My question at this point would be whether the UK is deemed by globalists as part of that vision. The introductory page to a separate paper published two years ago, ‘Reflection paper on the future of EU finances‘, appears to suggest not:
Europe should preserve its leading role on the global stage, as a major humanitarian and development aid donor and as a leader of the fight against climate change. That must be achieved with an EU budget that will only get smaller following the departure of the United Kingdom.
The EU is nearing the end of a seven year budget cycle that began in 2014 and lasts until the end of 2020. Over the seven years the budget amounts to almost €1.1 trillion. To give an idea of the UK’s contribution, from 2007 to 2013 Britain provided £77 billion – 10% of the budget and the 4th largest contribution in the EU.
It is not inconceivable that we may gradually be heading towards a ‘you need us as much as we need you‘ scenario, whereby an EU budgeting crisis coalesces with severe economic turbulence in the UK off the back of Brexit. What the last twenty years has demonstrated is a persistant lack of public support in Britain for adopting the Euro. But if we were to hypothesise that behind the scenes there exists an objective to assimilate the UK fully into the EU ‘architecture‘, then at this point I could only conclude that the likeliest way of achieving it is for the UK to leave the EU and rejoin at a later date under a new accession treaty.
Remember that if and when the UK departs the EU in a volatile manner, the current treaties that bind the country’s membership (which include an opt out of joining the Euro) would cease to apply. They could not simply be reactivated in the future. For that reason it is almost certain that if the UK sought to go back into the EU, one of the requirements would be a commitment to join the Euro, in line with every other nation that has joined the union since the inception of the Maastricht Treaty.
What might prompt the UK seeking re-entry? Most likely a severe and permanent devaluation of sterling. Since 2016 we have seen warnings over how Britain leaving the EU could jeopardise the pound’s position as a reserve currency. According to official foreign exchange reserves figures published by the IMF, pound sterling accounts for 4.43% of global reserves (£488 billion). Compare that to the Euro at 20.34% (€2.2 trillion). A drop below 3% of global reserves was touted by S&P Global Ratings in 2016 as the level where they would no longer consider sterling as a reserve currency.
These warnings have tied in with the possibility of the UK’s credit rating being cut substantially amidst uncertainty over Brexit. One consequence of that would be higher borrowing costs for the government. It is curious that in the current general election campaign all the leading parties are pledging tens of billions more in spending amidst the spectre of a no deal Brexit. Increased borrowing and debt servicing costs, amidst significant currency devaluation, is just one potential cause for holders of sterling to lose confidence – holders that include central banks.
My biggest concern is that Brexit is connected to a larger plan to destabalise global reserve currencies, perhaps to the point of either their demotion or abolition, and in the process fundamentally weaken the economies of countries such as the UK. It is well established that figureheads within the central banking fraternity are gradually beginning to question the current model of fiat currencies, most notably the Bank of England’s Mark Carney who back in August raised the prospect of reducing dependence on the dollar with the introduction of a digital ‘synthetic hegemonic currency‘. In Carney’s words, this could be provided ‘perhaps through a network of central bank digital currencies‘.
Globalists are not sentimental when it comes to currencies. They were perfectly content to dis-empower sterling a century ago in order to advance their own economic ‘new world order‘ agenda. Prior to World War I sterling was considered the world’s pre-eminent currency in global trade. Through two global conflicts it was abandoned in favour of the dollar. Whilst the pound remains a reserve currency, its global reach is now significantly diminished.
What should be appreciated is that economic pain, whether on an individual or collective level, makes people malleable. A financial collapse blamed on Brexit could quickly turn the UK public in favour of rejoining the EU and willing to surrender the pound for what many may perceive as economic security. It would not be instantaneous. Britain would first have to satisfy the convergence criteria before being allowed to join the Euro Zone, a process that would involve joining ERM II over thirty years since being forced to withdraw from its original incarnation.
A great deal would have to materialise for this elaborate theory to become a reality. Allowing the UK to leave the EU in 2020 would be a first step.