IRELAND should join monetary union even if Britain exercises its opt out, according to Mr Peter Sutherland, former director general of GATT and now a partner in Goldman Sachs.
Speaking at a conference on Ireland in Europe organised by the European Movement, Mr Sutherland insisted that "technocratic argument on points of detail" must not be allowed to overshadow the fundamental issues of political direction.
"Although the grandeur of the political vision shouldn't override rationality the monetary and economic consequences of EMU are dwarfed by the political," he said.
Mr Sutherland said it is unlikely from any evaluation that Britain will join monetary union at the first stage. However, he added that he believes it will be forced to reconsider and "will end up in".
Referring to the possible economic drawbacks to monetary union outlined earlier in the conference by Professor Brendan Walsh, professor of economics at University College Dublin and Mr Philip Halpin, head of treasury at National Irish Bank, Mr Sutherland questioned whether in an era of global blocs any national government had real control over monetary policy.
"Let us not fool ourselves that running our monetary policy will have an impact on markets. We would be like a cork bobbing on the waves," he told the assembled delegates. "In any case, surely it is better to have credible arrangements for joint determination of monetary policy rather than a European policy effectively determined by the Bundesbank?"
But according to Professor Walsh rigid exchange rates could result in a worsening of unemployment.
"Significant asymmetric shocks have repeatedly hit Europe and will continue to do so. How much more traumatic will future cyclical and structural shocks be tori countries that have adopted a common currency and are forced to place the entire burden of adjustment on labour market flexibility and mobility?" he asked.
For Mr Sutherland this is irrelevant. Speaking to The Irish Times after the conference, he said devaluations had never been of lasting value. "Our best hope is to be part of stable union," he added.
On a proposal from Mr Halpin that a stabilisation fund would prod vide the necessary cushion, Mr Sutherland said he saw "no prospect" that such a fund would be created. "It's always nice to get hand outs," he said. "But it'll never happen."
The main danger to political union will be a failure to proceeds with monetary union even with a core group, the former commissioner said. But he added that those outside the core must intend to join and continue to work towards the economic discipline.
This proposal, reminiscent of the Bundesbank president Mr Hans Tietmeyer's suggestion last week on an EMU II, sparked most conversation among delegates after the speeches.
Professor Walsh and Mr Halpin raised the importance of any interpretation of the exchange rate criterion. Mr Walsh said the phrase normal fluctuation margins is ambiguous. But he also pointed out that the article requires a country to be a member of the ERM in 1996 and 1997 if it is to qualify for EMU. "It seems clear then that the UK cannot qualify as a founder member of EMU," he said.
Finally, Mr Walsh told the assorted delegates that tackling the burden of taxation, the large public sector, various poverty and social welfare traps as well as our dependence on tax induced foreign investment, would make a bigger contribution to improving the long run prospects of the Irish economy than participation in a single currency.
