EU finally puts on a show that is worth watching

In case you missed it, the EU has done something completely out of character. It has become interesting. Consider the countervailing developments that shook the EU last month. In a referendum, Ireland conclusively endorsed the Lisbon Treaty, an administrative reform plan that supporters say will make the common market more efficient. The Irish "aye" pressured David Cameron, the British parliamentarian who is due to become the prime minister next year once he undergoes the formality of an election, to declare whether he sides with extremists in his Conservative Party who oppose British membership of the EU.

Mr Cameron, who has implied he would dismantle at least some of Britain's EU commitments, has led the offensive against the former prime minister Tony Blair's bid to become the union's first president, an office provided for under the Lisbon Treaty. (The presidential seal, a yellow swoosh on a blue field, looks like something a superhero would wear on his cape. This begs the question: could "Euroman" be far behind?)

Economically, EU states are splitting ranks as countries such as Germany and France display signs of recovery while others, such as Spain and Ireland, are still sucking wind. At the same time, several of the EU's powerhouse members continue to pile on debt to stimulate growth. France, for example, has just announced a budget deficit for next year worth 8.5 per cent of GDP, while Germany has indicated it will begin to dismantle the ?50 billion (Dh270.56bn) stimulus package it launched in January.

The European Central Bank (ECB) has suggested that unless Europe's debt-engorged economies agree to shed their large public shortfalls, it will be obliged to raise interest rates to keep inflation within the 2 per cent limit ordained by the 1992 Maastricht Treaty that established the euro. Norway, rich in oil and a non-EU member, last week became the first European country to raise credit rates, a reminder that inflation may be less remote than many economists once averred and a warning that the 16 EU states that share the euro, a currency bloc that does not include the UK, may pay a price for failing to co-ordinate their fiscal policies in the global downturn.

That appeared to be the subtext of remarks made this month by Jean-Claude Trichet, the president of the ECB, about the consequences of an "uneven" recovery in euroland. While assuring investors that the bank's base interest rate would remain at its record low level of 1 per cent for the time being, Mr Trichet also said eurozone inflation was likely to turn positive "in the coming months". Lest reporters doubt the resilience of his delightfully dry sense of humour, the ECB chief also restated his faith in Washington's official "strong dollar" policy - reaffirmed to general hilarity by the US Treasury last week - despite the dollar's 17 per cent decline against the euro this year.

Suddenly, the dull business of European integration has become a rollicking feast of tension intrigue, and self-parody. Anyone concerned that the departure of Mr Blair, with his Bill Clinton-like craving for love and attention, would starve official Europe of the odd prurient thrill can breathe easy. (Raise your hand if you think Silvio Berlusconi, the Italian prime minister, had lost his subtle, ironic touch.)

Now we have forceful Europeanists such as David Miliband, the British foreign secretary, who warned in the Financial Times this week that splitters such as Mr Cameron were "dangerous to Britain, dangerous for our influence, dangerous for our interests". And in case anyone is wondering, Mr Miliband, 44, "is not a candidate" and is "not available" for that EU president's seat. Who would have thought that on the 10th anniversary of the birth of the euro that the EU in general and monetary union in particular would incite such passion? Did not the euro protect Europe from an Icelandic-style currency collapse? Has it not served as a popular safe haven for investors in these uncertain times?

The terms of Maastricht may seem draconian to Eurosceptics as member countries are forced to relinquish control over monetary policy. But what is the alternative? A withering cycle of competitive devaluations of the kind that prevailed in the 1930s? What, after all, was so special about those drachmas, pesetas, and liras? If the Germans can give up their precious deutsche mark, that potent symbol of Teutonic redemption, why can't the British dispense with their pound?

If anything, the world should welcome the expansion and internationalisation of the euro, which despite its success remains very much a regional unit of exchange. At a time when the dollar's long-term prognosis is for continued weakness - official US sentiments aside - the need for a viable alternative to the world's fiat currency is not only preferable but necessary for global monetary stability.

Will Mr Cameron indulge the reactionary wing of his party and wrench Britain from the continent? Will the ECB pre-emptively lower the boom on the EU's Keynesian revival? Will Mr Miliband be voted off the island? Stay tuned for the next new episode of "Lost in Euroland". @Email:[e-mail]