Europe’s ‘Bay of Pigs’: The Irish case for a London Euro?

2010

In offering the Irish government a bi-lateral

loan of €50Billion the British Government’s
likely motive is to win Dublin as a partner in
the development of a London Euro for the
disparagingly termed ‘PIIGS’, Nations; of
course one could add a third ‘I’, for Iceland.
The paper takes the form of an open letter to
Irish Ministers urging support for London’s
promising initiative.
As the map suggests it’s no secret!
Open letter to the Irish Taoiseach (PM) Brian
Cowen and Finance Minister Brian Lenihan.
Fianna Fail faces the most critical decision in the
Nation’s history, whether to surrender
sovereignty to an ECB/IMF bailout or enter into
bi-lateral arrangements with London designed
to help Ireland adopt a holding position pending
the introduction of a London Euro for the
Atlantic-Med Fringe .
Author: Paul Cassidy M.Sc. RRRP
paul@pdfwebpublishing.com

11/18/2010
Europe’s ‘Bay of Pigs’: The Irish case for a London Euro 2010

DEAR M INISTERS COWEN AND LENIHAN

Perhaps, Ministers, you are so heavily involved in the financial specifics of the current crisis that
you may not be able to see this particular wood for the trees, so I’d like to take this opportunity
Page | 2 to describe an exciting prospect gathering currency, namely a London Euro for the Atlantic-Med
fringe, complimenting the Frankfurt Euro for Europe’s continental mass. To secure a role in this
incipient London Euro project its vital Ireland develop its relationship with London by opting for a
bi-lateral loan from Britain via the European Exchange Mechanism rather than conceding to the
ECB/IMF led intervention which will lead to an immediate an irrevocable loss of economic
sovereignty.

Despite decades of structural fund and common agricultural policy transfers the core-periphery
fault-line within Europe persists opening wider than ever during the current economic crisis. The
Atlantic-Med Fringe referred to cynically as ‘Europe’s Bay of PIGS’, (including as it does
Portugal, Iceland, Ireland, southern Italy, Greece and Spain) is already behaving as a separate
currency zone in terms of the vital economic statistics of the nations and regions concerned
none of which would now comply with the Maastricht Criteria, the basis for the single Eurozone
project in the first instance.

Turkish accession to the EU will extend Europe’s Atlantic-Med Fringe into the Islamic world
bringing with it the prospect of the Middle East Oil Bourse trading in London Euros as opposed
to Dollars anchoring what would otherwise be a comparatively weak currency. Dublin’s proximity
to London and the British governments bi-lateral loan offer, via the European Exchange Rate
Mechanism, is a clear invite to the Irish government to play a catalytic role in the emergence of
the London Euro offering with it the prospect of Dublin’s International Financial Services Centre
acting as a satellite to London’s financial services sector. Ireland’s best option is to accept this
offer and play a holding game pending the launch of the London Euro even if that meant the
temporary reintroduction of the Punt. The Irish government’s negotiating position in terms of re-
entering the Eurozone under the London Euro would be greatly enhanced offering with it the
prospect of defending our corporate tax rate as an aspect of a bi-lateral subsidiarity agreement.
Opting for further funding from the ECB and the IMF will effectively mean an end to our
economic sovereignty and would copper-fasten partition whereas the London Euro offers the
prospect of resolving the national question.

A dual currency Eurozone would not represent a step backwards, towards nation state
currencies, but rather a step forward to a Europe managed by twin cosmopolitan financial hubs
allowing for a greater degree of subsidiarity within the constituent nations and regions and for a
greater degree of flexibility in terms of Europe’s East-West relationships with Moscow and New
York. More importantly it would create a financial and diplomatic bridgehead into the Middle
East and the wider Arab world offering Islamic oil producing nations a veritable surrogate
currency which they would wholeheartedly endorse.
Europe’s ‘Bay of Pigs’: The Irish case for a London Euro 2010

A L ONDON EURO TICKS A LOT OF BOXES IN PROBLEM SOLVING TERMS, AS THIS CURSORY
CHECKLIST SUGGESTS:

I. For Germany the London Euro would effectively prevent Europe’s peripheral economies
Page | 3
from collapsing the continental Eurozone by creating a default currency option still
subject to the EU Commission and Parliament;
II. For the British the financial risks of acting as the cosmopolitan hub for the project would
be entirely off-set by the prospect of the Middle East Oil Bourse shifting from Dollars to
London Euros;
III. For the US losing the oil bourse to a key NATO ally, likely to maintain currency rate
symmetries between the New York and London currency markets, is far preferable to
losing it to Frankfurt; and for the money markets it presents the prospect of getting all
their ducks in a row: New York, London, Frankfurt, Moscow, Tokyo;
IV. For Islamic oil producing nations anchoring the London Euro with their oil bourse would
give them significant diplomatic and economic leverage over London effectively offering
them a surrogate currency of major international standing;
V. For the Holy Land it would bring an end to the hegemony of US intervention and open
the way to a diplomatic accord providing Israel with the kind of melting pot it requires to
resolve its fate in partnership with Palestine and the surrounding nations;
VI. For Ireland it creates the prospect of renegotiating the terms of our entry into the
Eurozone, of protecting our corporate tax rate and our neutrality as part of a bi-lateral
subsidiarity agreement with London, and of opening the way for talks on unification of
the Irish political system under a London based fiscal system; and
VII. For Iceland (and perhaps Norway also) it offers a way in from the cold into a closer
relationship with the UK, Ireland and the Atlantic-Med fringe.

Any idea that ticks that many boxes, just in rough sketch, is worthy of serious consideration.
Add to that London’s offer of a €50Billion bi-lateral loan via the European Exchange Rate
Mechanism and its clear Ireland is being invited to realign itself in currency terms. Ireland needs
to avoid being further implicated into a continental Euro which has clearly failed to address the
core periphery divide, despite best efforts. Losing financial sovereignty to London with whom we
can negotiate on favourable terms is a far superior option to surrendering fiscal sovereignty to a
centralising European system which will impose terms and conditions and manage remotely.
Membership of the London Euro on the contrary is likely to see Dublin increase the status and
function of its own International Financial Services Centre.

SUBSIDIARITY: THE PATH TO A EUROPEAN REGIONAL RENAISSANCE & COMMON ACCORD

A dual currency Europe far from diminishing the EU would make new accessions possible not to
mention a major diplomatic and fiscal accord with the Islamic world. Europe would still have a
single political centre, a single Commission and legislative framework. As a regionalist the most
exciting aspect seems to me to be the veritable regional renaissance which a dual currency
system would give rise to; invigorating the principal of subsidiarity and allowing Europe’s
intricate medieval regional tapestry of regions to gain new expression around two major
Europe’s ‘Bay of Pigs’: The Irish case for a London Euro 2010

cosmopolitan ‘City-state’, hubs. This is not a betrayal of the European vision but a logical
enhancement and deepening of it.

For Ireland it is a bold step to change tack and face down intervention from the ECB and IMF in
favour of developing a bi-lateral relationship with the UK in anticipation of the emergence of a
Page | 4 London Euro. Adopting a holding position for a five year period will be the most challenging
aspect of the decision as it will bring with it some challenging decisions of its own. Ireland needs
the focused problem solving ‘Rationalpolitik’, approach which only Fianna Fail can bring to the
current crisis and this may mean the temporary reintroduction of the Punt. Absenting ourselves
from the Euro temporarily would see a massive reduction in the unemployment numbers as
migrant workers moved to Eurozone countries and younger Irish workers considered gaining
work and language skills abroad, offering them the benefit of highly favourable exchange rates
in terms of savings electronically transferred to domestic banks. Our labourforce is top-heavy
for these recessionary times. Rather than allowing people fill themselves with bitterness and bile
we need to focus them on opportunity by creating an incentive to work abroad; and what better
way than to provide them with the opportunity to exploit very favourable exchange rates. For
the balance of the laborforce it means increased job opportunities and social welfare security at
home as we apply ourselves to getting the country back on its feet.

IN CONCLUSION

Dublin’s International Financial Services Centre was the brainchild of your predecessor Charles
Haughey, a flawed genius perhaps, but one who pulled the IFSC project out of the hat in similar
dark times. It proved to be a beacon light at the time. Imagine quadrupling its size and
redeveloping the entire docklands with it, not on the basis of surfing some transient economic
wave, but on the basis of permanent functions derived from London in the management of a
London Euro for the Atlantic-Med Fringe. For decades now the Irish and British governments
have been partners in peace, now they need to become partners in prosperity as well; and in
that context resolving the national and regional issues which have dogged relations between us
for so long. In doing so we would also be pointing the way for Europe as a dual currency system
helping to put the absurd low level bureaucratic cold war between Britain and Germany into the
past, where it belongs.

My advice Ministers is not to stare this particular British gift horse in the mouth and to send the
ECB and IMF packing instead. The reality for Ireland is and always will be that we are an Island
on Britain’s western flank. It’s time we grew up, recognised and took advantage of that fact. If
history has thought our two peoples anything it has been to respect the differences between us.
Having done that now is the time to work on the commonalities we share and to extend the
partnership for peace we have forged southwards, via Turkish accession, to the Islamic world
and into the Holy Land itself.