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A few weeks ago, I wrote something which was intended to be half jokey, half serious. I said that the inventors of the Euro could congratulate themselves on their ingenuity. They had created a problem which was beyond the power of the human mind to solve. Forget the jokes: that sounds more like the unadorned, literal truth. No-one knows what should happen, let alone what will happen.

One point does seem clear. A disorderly end to the Euro would cause chaos. Most European banks would be insolvent. The new national monetary authorities would be landed with an immediate crisis. Inter-bank lending would virtually cease, with dire consequences for trade and credit. There is a counter argument, based on the propensity of the human race to work, earn, spend and save. The Euro is condemning the peoples of Europe to low growth and high unemployment, indefinitely. Surely a short-term disruption is better than that? That is when you lick your finger and hold it to the wind.


Yet at Eurozone governmental level, there seems to be far less pessimism – or realism – than there ought to be. Among the political classes, the lure of Euro-grandeur seems undiminished by the reality of Euro-stagnation. At the moment, it looks as if there will be a fiscal treaty. What will happen when the electorates of the Eurozone realise that they are being conscripted into a superstate? Surely that will lead to political turbulence? Again, we are in the unknown.

That is also true of David Cameron. Some of his backbenchers are becoming alarmed. They would like him to do everything possible to obstruct the fiscal treaty: veto, and go on vetoing. He will reject that advice, and rightly so; it would not work. One of the few, but recurrent, intellectual weaknesses of British Euro-scepticism is the illusion that there is only one sovereign will in Europe: ours. But if the Eurozone 17 really decided on fiscal union, we would not be able to prevent it. Far better to seek allies among the other non-Eurozone members, and among the 17. President Sarkozy does not speak for the whole of the EU.

There is a lot of anxiety on the continent about the threat to free trade. We have vital interests to protect; so do others. Mr Cameron is now taking them at their word. His view to them is: you say that you wish to create a fiscal union. In that case, here is what you must do. But I will insist on safeguarding Britain's trading rights and protecting the City.

That way, we will have a realistic prospect of retaining goodwill, at least outside France. We cannot bring down the Eurozone. We cannot tell the 17 that they may not have a fiscal union. We can only protect our own interests. That is an exceedingly tricky task. It will need strong nerves and subtle diplomacy, abetted by the occasional bout of hypocrisy.

Hypocrisy is all very well when dealing with Europe. It is most unfair on Stephen Hester, as his decision to give up his bonus confirms. In effect, Mr Hester was hired by the last government to save the Royal Bank of Scotland. He has made considerable progress in difficult circumstances. True, the bank is 84 percent owned by the taxpayer. But the taxpayer is far more likely to get his money back if Mr Hester is allowed to succeed. His salary – around £2.2 million including the bonus – will appal a lot of people. By the standards of bankers at the highest level, it is a bargain. Moreover, the value of the bonus is ultimately linked to the successes of the company.

Suppose a football team threatened by relegation were to hire a new centre-forward for £45,000 a week. Would the supporters denounce the deal on the grounds that as the club was at the foot of the table, it ought to be hair shirts all round? I think not. I am also told that there is one thing wrong with my analogy. It would be impossible to acquire a game-changing forward for as little as £45,000 a week. If we can be realistic about paying footballers, the same should be true of bankers.

Boris Johnson thinks not. Boris is allegedly paid £250,000 a year for writing one column a week, which takes him about an hour an a half. Mr Hester is paid nine times as much, but he does not work a thirteen and a half hour week. Boris has some excuse. He has a hard battle ahead with a cunning populist. David Cameron has much less justification. Of course, the timing of the Hester bonus announcement was politically inconvenient. But Prime Ministers sometimes have to tell the voters unpopular truths. As it is, Mr Cameron was in danger of sounding weak. Worse still, he was in danger of…sounding like Boris Johnson.

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