Throughout the 1990s we were told that a minor economic miracle was under way in Wales. Labour and Tory politicians, the (misnamed) Welsh Development Agency, the Institute of Welsh Affairs, some publicity-conscious academics, and media hacks by the dozen insisted that a manufacturing renaissance, thanks largely to incoming multi-nationals, was really changing things. Productivity was rising, a new "mind-set" was sweeping through industry and the cultural industries were booming (Cool Cymru etc). Suddenly, just over a year ago, the line changed 180 degrees. The very same people began telling us that Wales is in dire economic straits and desperately needs outside help.

It would be nice to believe that this synchronised U-turn had something to do with a new spirit of openness associated with devolution. But of course, the real reason is not that things have changed but precisely that they haven't. Where it was useful a few years ago to play the "economic renaissance" card, it is now useful for the very same groups to play up doom and gloom. The old speaker notes were shredded because a big pot of money came into sight, which could only be brought within reach if Wales could be re-packaged as a poor country.

The cause of all this is Objective One. This is the largest of the so-called European "Structural Funds" intended to help Europe's poorest regions and is targeted on areas with an average income per head (GDP per capita) of less than three-quarters of the EU average. The feeding frenzy began with the discovery that Wales could be rendered eligible for the latest, and final, round of spending under this heading which begins this year. So was born The Western Mail's most persistent page one story, apart from Cerys Matthews wearing another dress, or Catherine Zeta Jones not wearing one. The saga behind the headlines is more interesting than at first appears, because it involves all the major political, economic and ideological actors buzzing around the New Wales and concerns some of the most important issues we will face in this new century - the relationships between globalisation and devolution, and between Wales, Britain, and Europe.

Within academia this narrative of imperatives is rapidly losing what little credibility it fleetingly enjoyed, but in the world of policy punditry it is doing well. This is because it expresses a world-view which dovetails perfectly with the kind of economic policies to be found throughout the Western-dominated world, known in the trade as the "Washington Consensus". But the story is bogus. If manufacturing really was rushing around the world seeking out the cheapest labour then Africa would be booming. Most investment goes to rich countries, not poor ones. The blame for our employment crisis lies not with dirt-cheap foreign workers taking our jobs away but with our own governments. Their economic policies reflect not the inescapable logic of a "globalised world" but the political power of the affluent and the acceptance of a morality which says it is OK to dump on the less fortunate. "Globalisation" is the excuse, not the cause.

So the first big test of devolution has shown it to be a useful addition to the British government's toolbox for dismantling the once-benign European ideal. And Wales's hired intellectuals have not been slow to sink to the challenge of providing the required sophistry. Objective One has at least fuelled one of our few real growth industries - the business of reinventing Wales in a manner geared to the dominant interests of the day (see also Cool Cymru).

Objective One is nothing like the life-or-death matter those with a stake in it claim. But it should help some worthy ventures, and the accountability which it will bring with it could challenge ways of doing things in Wales far more than anything else the Assembly has signed up to. In the long run this will be its most important feature. Those involved sought a pot of money for reasons of self-interest and institutional survival. But when they open it they may find it is a Pandora's box.