That Hideous (EU) Strength

One of the more intriguing – or maybe even enlightening – aspects of middle adulthood is re-reading some of the books you read in your youth and finding, in the contemporary sweep of events, parallels with the stories – or warnings – those books tried to convey.

C S Lewis’ dystopian novel That Hideous Strength was published in 1945. It features the National Institute of Co-ordinatedThat_Hideous_Strength_by_Gibberish17 Experiments (N.I.C.E.), an agency for scientific and social planning, dedicated to the exploitation of some of both nature’s and humanity’s instincts towards implementing totalitarian ends, controlled by adherents operating in deep background. Its power, the Hideous Strength of the title, lies in its ability to arrogate human emotions like pride and ambition to its own purposes, which are ultimately to render individual achievements stemming from pride and ambition impossible, subordinated instead to the malign intentions and purposes of N.I.C.E. itself.

The activities of the EU during the past two weeks relating to Cyprus and the euro have prompted some unflattering comparisons with N.I.C.E., because there has appeared to be, in the measures demanded of, and imposed on, Cyprus by the Troika of the EU, ECB and IMF, a desire not merely to rescue parts of its banking sector to protect the flawed and failing euro project, but to punish the entire economy.

For the first time, the Troika decreed that small and large savers alike must undergo collective punishment. It first proposed that savers in all banks, even those that remained solvent, should be subject to straightforward state appropriation – for that is what it was and is, irrespective of whatever euphemistic label is applied to it – amounting to either 6.75% or 9.9%, depending on balance, of their funds.

Later this was amended to cover only the two banks most representing the systemic risk to the sector, but the terms are harsh. Savers with over €100,000 at Laiki Bank will lose 80% of their money, if they get anything back at all. Those at the Bank of Cyprus will lose 40%. In addition, capital controls limit withdrawals to €300 a day, credit card use abroad is limited to €5,000 a month, and all departing passengers are being physically searched to prevent cash leaving the country. Cross-border trade is severely curtailed. The economy will be decimated, with a loss of up to 20% of GDP being predicted, and will take years to recover.

The argument about bail-in, hitting investors/depositors, versus bail-out, hitting taxpayers, is a cogent one, with connotations about the precise nature of property rights and even capitalism itself, but it must be left for another occasion. What strikes me as instructive here is the N.I.C.E.-like nature of the sanctions and what they say about the hideous strength of the EU and its determination to deploy it.

Cyprus Financial CrisisFor that deployment is most certainly counter-productive. It destroys in all but presentation the concept of the euro and EMU as a currency union – in practical effect a Cypriot euro is no longer legal tender outside Cyprus – and furthermore, the injudicious comments of the Head of the Euro-Group, Dutch Finance Minister Jeroen Dijsselbloem, to the effect that the EU Troika’s Cyprus template will be the model for any future “rescues”, looks likely to trigger, or accelerate, capital flight from the other troubled €-zone countries of southern Europe. So why deploy the hideous strength to such a potentially counter-productive end?

The answer, I think, lies in the recent history of EMU’s principal protagonists. In Britain we are lucky: our political institutions have evolved over hundreds of years from the ground up: our democratic polity, whatever its flaws of detail, is relatively secure from its being able to develop, subsist and flourish from ours being an island nation, not subject through geography to the constant threat of cross-border invasion. It’s easy to see why we view the EU as primarily an economic construct, and are amazed almost to the point of disbelief that its enthusiasts will accept so much economic pain just for what seems a democratically-imperfect utopian supranationalism.

ECBThe experience of Continental Europe, though, has been very different to ours. Its political systems have largely been imposed, top-down, rather than evolving, ground-up. Spain and Portugal, fascist or semi-fascist dictatorships in the lifetime of anyone aged over 45: Italy, unified as a nation only since 1861 and since then a fascist dictatorship, occupied by Germany once, and forever plagued by political instability, economic under-performance and a weak currency: France, invaded three times since 1870 to be occupied or partly-occupied each time, politically stable only since the founding of the Fifth Republic in 1958, and with a chronically uncompetitive, state-burdened economy: Germany, a nation only since 1870, with the first seventy-five years of its life characterised by three destructive wars with its neighbours to the west and their allies, governance by either authoritarian Prussian militarism or totalitarian National Socialism, devastation and partition.

None of this, dire as it undoubtedly is, should excuse their repudiation of the liberal democratic nation-state as the most stable and economically-optimal form of polity – such a repudiation is, in, my view, profoundly wrong and at the heart of my philosophical and conceptual antipathy to the European Union – but it does perhaps go a little way towards explaining why the EU’s principal nations see it as a more stable, more modern and more respectable alternative to their recent pasts, giving them what they see as a durable strength, malign though it can be, for possibly the first time in their collective history. Perhaps it goes some way, too, towards explaining why they are prepared, like N.I.C.E., to deploy That Hideous Strength against even a minnow who represents the barest conceivable threat to the Project.

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