The five worst decisions ever made by the European Union

The European Union. Love it? Loathe it? All of the above?

The Wall Street Journal writes that Euro chic is back in fashion. EU chic — to be precise.

The 12 gold stars that form the EU flag are not exactly selling clothing lines like hotcakes. But a Brussels PR firm plans to introduce T-shirts and a whole range of Euro clothing extolling historical EU figures, like Robert Schuman, the French foreign minister in 1950, who was one of the “fathers” of EU integration.

How über-cool. This really captures the zeitgeist.__ A certain je ne sais WTF croix. Like, yo. Dudette.

PR firms — well, they’re paid to lie. But history tells a very different (and rather less auspicious) story of European integration.

So I thought we’d focus upon Five Epic EU Fails. Drum roll, Maestro. The envelope, please. The nominations are …

5. Going bananas

So you thought that tale about the EU regulating the shape of bananas was an urban legend? Think again.

The 1994 regulation (you can read the full enchilada here) stated that bananas could have “slight defects in shape”. This gave rise to the “bendy banana” legend, as the EU Commission regulation referred to “abnormal curvature”.

Moving from crescent-shaped fruit to cucumbers, the 1998 rule (Regulation 1677/1988) on the concombre stated that they must be “well-shaped and practically straight (maximum height of the arc 10mm per 10cm of length)”.

In 2008, the Commission tacitly recognised how stringent food regulations were becoming, as shops were apparently refusing to stock up to 20% of food and vegetables, because they didn’t meet EU regulations. Consequently, the Commission noted that it was wasteful to simply throw the food away. Sanity prevails.

The EU’s food regulations were bananas. robin_24

4. The farmers are revolting

Staying with foodstuffs, the three favourite swear words of the Australian farmer are Common - Agricultural - Policy (CAP). Established in 1962, this complex mechanism of farm production supports and export subsidies was implemented fully in 1967–68. By 1969, the CAP budget blew out 800%.

In fairness, the CAP is about ensuring that strategic food supplies are maintained and raising farm incomes. In practice, it led to massive over-production: wine lakes and butter mountains. It made food more expensive, imports prohibitive and ruined crop production in the Third World, as excess EU produce was dumped on developing countries. It also produced billions of dollars’ worth of US Farm Bills as Washington responded with its own subsidies. Meanwhile, the long-suffering, efficient Australian farmer got crushed in the middle of the CAP sandwich. Go figure.

Oh yes, and some wag once worked out that if you sent every single cow in Europe on a first-class around-the-world air trip, it would still cost less than subsidising the cattle under the CAP. Moo to you too.


Exchange-Rate Mechanism II was part of Phase II of the Euro’s introduction. Following the horrendous currency crashes of 1992 and 1993, Italy’s lira collapsed and withdrew from the basket of currencies that formed the embryonic Eurozone. Under “ERM I”, the lira could appreciate or depreciate a maximum of 6% within the currency’s band of adjustment.

ERM II, by contrast, was introduced in 1995 to accommodate weak currencies, so they could (re)join the transition to the euro, scheduled for 1999. ERM II introduced a much wider band of adjustment for currencies: +/- 15%. A 30% band, in effect, was close to a free float. It worked. The lira joined ERM II in 1996. The rest is, er, history. Well, the Italian economy is, anyway.

2. Britain’s entry into the EC (1973)

Britain had missed the boat. Twice. In 1951, the British were invited to join the European Coal and Steel Community. They declined. In 1955-56, at the Messina Conference, London could have opted to sign up for the 1957 Rome Treaty, which established the European Community. Harold Macmillan’s government said “no” once more. But Harold Mac was to regret this, as the UK economy declined to such an extent that he launched Britain’s first bid for membership in 1961.

Without consulting his partners, the French President, Charles de Gaulle, called a press conference in January 1963 and famously said “non.” Britain was “not ready” for EC membership.

Le grand “non”: Charles de Gaulle declines EC membership to Britain. ThomasThomas

In 1967, Britain, this time under Harold Wilson, tried again. De Gaulle exercised a veto once again.

Finally, in 1970-72, with de Gaulle dead and gone, Edward Heath’s (does anyone remember him?) government secured UK membership, but at a price: Macmillan and Wilson had demanded associate membership of the EC, or at least special trade access privileges, for the British Commonwealth.

Not Heath. Desperately, he gave up all claims and left the Commonwealth out in the cold. In Australia, this was known as the “British betrayal”. Britain finally entered the EC on 1 January, 1973. The EU has been regretting this ever since.

Fun fact: Princeton’s Professor Andrew Moravcsik in his book The Choice for Europe (1998) found in his archival research that de Gaulle named-checked Australia among his private reasons for vetoing British EC membership in 1963. Australia’s farm sector, de Gaulle opined, was so deadly efficient it could ruin the nascent Common Agricultural Policy, if Britain were permitted to bring the Commonwealth in.

So it’s all our fault.

I suppose a Brussels PR firm could put Ted Heath’s beaming visage on a hoodie. But I bet it would sell about as well as a Paris 2012 Olympics T-shirt.

And the winner is…

1. Greece’s admission to the Eurozone

Beware of Greeks bearing false national accounts. Athens didn’t make the cut in 1999, when the original Eurozone was established with 11 members.

But some creative accounting, most likely recommended by Goldman Sachs, led Greece to understate its fiscal deficit in 1999, the reference year for its eventual admission in 2001. The revisions helpfully left some defence expenditures accounted for inaccurately, while the EU Commission adopted a “don’t-ask-don’t-tell” policy by failing to question either the methodology or the data set provided by the government.

It gets worse, of course. In 2004, the new government at least revealed the earlier anomaly. The EU Commission admonished Greece. Not for the cover-up, but for being too honest. Fortunately, financial markets, who were busily watching Iraq and the Brent crude index hit stratospheric heights, looked askance.

But wait — there’s more. In 2009, the Greek government announced a revision to the 2008 fiscal deficit figure, raising it from 5% to 5.6%.

Then they decided the budget deficit in 2009 would not be 3.7% after all. No. Or Oxi, if you prefer. It would be 12.5%.


Support evidence-based journalism with a tax-deductible donation today.