MY friend Peter Bauer, the distinguished development economist who died in 2002, used to say that the only true unemployment in a modern economy was among satirists: for satire in the modern world was prophecy. You had no sooner to think of an absurd idea than for someone somewhere to make it the basis of policy.

The award of the Nobel Peace Prize to the EU, however, shows that the spirit of satire is not quite dead: for surely the present state of the continent can hardly have escaped the notice of the committee that awarded the prize. It is a bit like awarding the prize in economics to Bernie Madoff or that in medicine to Harold Shipman, the British doctor who found a way of killing 200 of his patients without detection.

The president of the European Investment Bank, Werner Hoyer, said this after the award, and what he said was typical of the reaction of the eurocrats:

«It is a great, touching moment for the EU to get the Nobel Peace Prize 2012 for the decades of working on peace, democracy and wealth on our continent. Although the focus of current discussions within the EU lies on the financial crisis, this decision reminds us that all the contributions to solve this crisis contribute to a much higher goal to secure what has been achieved for the people on our continent over the last decades, as well as making this continent ready for the challenges of globalisation. We, as EIB, are proud to be part of this overwhelming peace project.»

Let us overlook the fact the hard-bitten expense-claimers of Brussels are not the kind of people to be deeply touched by anything except a reduction in their privileges, that the EU came into existence only in 1993, that it did not require much in the way of peacemaking to prevent Belgium from attacking Slovakia or Luxembourg from attacking Sweden, that what is meant by peace is the prevention of war between France and Germany, and that the EU is the consequence of an imposed peace between those two countries and not the cause of it. Let us, rather, think about the part played by the EU in the financial and political crisis that it is now trying, not very effectively, to solve.

The monetary union, which was an act of the most obvious political hubris, and for which there was never any economic argument or need, led very quickly to a gross misallocation of funds, leading to incontinent private borrowing in Spain and Ireland, and equally incontinent public borrowing in Greece. Would European banks, for example, have lent more than $100,000 per man, woman and baby in Ireland if the debt had not been denominated in euros? When the crash came, Irish private debt quickly had to be converted into public debt, not to save Ireland but to save the German, British and Belgian banks.

If Spain, Ireland and Greece had kept their peseta, punt and drachma, none of this would have happened and there would have been no crisis. Thus the EU is not the solution to Europe’s problems, economic and social, but the cause of them.

Thanks to the EU, Europe faces a stark choice between the Scylla of debauching its currency, with all the dislocations that rapid and perhaps uncontrollable inflation brings in its wake, or the Charybdis of fiscal rectitude that will strangle the economies of those countries whose government plays a predominant role in the economy.

It is obvious that the interests of the creditors and the debtors in this situation are not the same, to put it mildly; and also that, for very obvious economic and historical reasons, Germany is not very keen on the mutualisation of debts or their elimination by means of inflation. The situation is ripe for deep but unresolvable conflict: Germany is strong enough to block the wishes of the other debtor states but not strong enough to impose its will on them.

In any case, solutions imposed on or by Germany are not to be recommended. Whatever solution, or rather policy, is chosen, it cannot be democratically acceptable to every country in Europe: the will of some country or countries must prevail over others. This is not a recipe for peace. Transfer payments between regions of countries are already tearing them apart. Catalonia wants to secede from Spain and Flanders from Belgium, but the recipients of Catalonia’s and Flanders’ largesse do not want them to secede. Yet what has been created in Europe is a Greater Belgium, to which indeed it would be a good idea to change the name of the European Union: the GB instead of the EU.

The Greater Belgium is the best we can hope for, with its interminable but peaceful quarrels over language and subsidies from productive to unproductive parts. More likely we will get Yugoslavia, with nasty little wars to re-establish national sovereignty. If there were a Nobel prize for the creation of conditions for conflict and war, then it could be awarded to the EU without irony or satire.

Theodore Dalrymple is the author of Spoilt Rotten: The Toxic Cult of Sentimentality.