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Monday, August 22, 2011

"Europe" won't leave the Coalition alone

The weekend's papers saw several interesting articles on the Coalition's Europe policy in the wake of the eurozone crisis.

Here's Tory MP Dominic Raab, hitting the nail on its head in the Sunday Times:
"This fluid geopolitical landscape opens opportunities for a third choice for Britain — between integration and withdrawal. And it is popular. YouGov found 50% want to halt or reverse integration; it would win over many of the 37% who favour withdrawal.

What would such a plan look like? Britain should ditch its ideological baggage in favour of a pragmatic euro-realism. Take the free movement of goods, services, capital and people — a potent force for good, promoting business growth and jobs. The single market is not perfect. Some aspects won’t get better unless the UK negotiates at the table to liberalise services and curtail state aid and agricultural subsidies. There is no economic reason why Britain could not opt out wholesale of the EU social and employment regulations, which cost our economy an estimated £148 billion between 1998 and 2008. Likewise, Britain could insist on immigration controls on prospective members such as Turkey.

The crossroads ahead offers Britain a unique opportunity to come up with a positive blueprint for our relationship with Europe."

Meanwhile, the Sunday Telegraph looked at the formation of a new group of Tory MPs, which is gaining traction, due to the initiative of Chris Heaton-Harris, George Eustice and Andrea Leadsom (amongst others) aimed at reversing European integration. In his Sunday Telegraph column, Tim Montgomerie made this very astute observation:

"...there are two good reasons why [Tory MPs] shouldn’t be in a rush to renegotiate the relationship with Brussels. First, any deal that happens soon will have to be signed off by Nick Clegg. The Liberal Democrats are Britain’s most Europhile party, and they won’t allow a big departure from the status quo. Renegotiation will be more substantial if it happens at the end of the parliament, and David Cameron can turn the terms of a deal into an election issue. Second, there is no plan for renegotiation. Tory Eurosceptics are large in number, but there’s a People’s Front of Judea quality to their organisation."

We hasten to add that, in general, Tory Eurosceptics also need to develop a better understanding of exactly how fluid and fast-moving the situation in Europe is - and of the various forces at work - if they want to achieve a strategic vision of how to capitalise on the shifting politics. Sounds obvious, but Europe can no longer be reduced to some sort of black-and-white struggle between 'federalists' and 'eurosceptics' (it probably never could but even less so now), nor a sceptical Britain vs. the Rest.

Looking at the Franco-German deal last week, we note over on Guardian Comment is Free that,
"aside from the disappointing content, the latest Sarko-Merkel political charge is very interesting for wider reasons – particularly for the UK. Alas, it has been widely misunderstood in Britain and beyond. First, it is not part of some sort of German grand plan to again become the dominant force in Europe – no one in Germany is interested in "colonising" countries in any form."
We go on to argue - and this is important:
"Second, the Franco-German proposal is not a step towards "EU federalism" per se. In fact, the letter circulated by the two leaders envisages a limited role for the European commission in the eurozone's economic governance, with the eurogroup's 17 members instead meeting separately.

In Brussels speak, this is known as intergovernmentalism, often described as the opposite to federalism...Why does this matter? Because British reflexes tend to favour intergovernmentalism modelled around decisions made by sovereign states rather than the Brussels-based institutions. Far from counteracting British thinking, this Franco-German proposal seems to reinforce it."

There is another reason, we note,
"why the agreement seems in line with what many Brits would instinctively argue for: European variable geometry. Responding to the opposition this proposal generated in many capitals, German foreign minister Guido Westerwelle said in private (according to Financial Times Deutschland) that any member states that don't implement the Franco-German plans "shouldn't be allowed to stop the rest" from doing so, adding that "there should be more differentiated co-operation", presumably both in the EU and eurozone.

This is an acknowledgement that, in order for it to work, the EU simply needs to be broken down into smaller units. It's the type of flexible approach to European co-operation which many in the UK would feel most comfortable with – and also a reminder to those who argue a two-speed Europe is defined by euro membership alone (with Britain in the slow lane) that such a division is simplistic.

If the EU, in the wake of this crisis, is heading towards a more intergovernmental, variable approach to European co-operation – sometimes merging policies and institutions, at others keeping them separate, as national democratic preferences dictate – this could well be in Britain's interest."

This is not an endorsement of the content of the Franco-German deal (which we hopefully have made abundantly clear) nor an endorsement of the greater role envisioned for Council President Herman Van Rompuy. It's merely a reflection on the fact that, when European policy strikes at the heart of national democracy (the eurozone crisis has now fully entered the domain of taxation and spending as opposed to regulations, complex treaties or judicial cooperation), intergovernmentalism is still king.

Although we shouldn't read too much into it, the subtext of the Franco-German summit may prove to be a turning point.


Mike Hanlon said...

While I always like the sound of the case for a 'pragmatic euro-realism', where I start to part company from its advocates is how pragmatic the method of achieving the desired change really is.

Raab says "There is no economic reason why Britain could not opt out wholesale of the EU social and employment regulations". True, but there is a very big political reason. Namely, very little likelihood that all other EU countries would agree to it.

And there's the rub. All that can potentially be retrieved via renegotiation is unlikely to be significant enough to end the problems of our current relationship with the EU. Anything that rocks the boat too heavily will be vetoed by the others who plainly won't share our government's decentralising ambitions nor would wish to encourage other countries to demand their preference of powers returned.

So can 'pragmatic euro-realism' in fact only start with an exit from ALL our current EU treaty obligations and to begin anew with the always appealing-sounding deal that we want with today's EU?

I'm increasingly convinced that's the case. It has its own political challenges, of course, but the mechanisms are at least more controllable, national ones.

Andrew Smith said...

Raab claimed that we have to remain "at the table to liberalise services, and curtail state aid and agricultural subsidies", but this does not make sense in the British context. We can rely on WTO rules for fair trade access in goods and services and limiting state aid. Besides, we have such an enormous trading deficit with the EU that any unfair behaviour by them could easily be dealt with.

As a free nation we can represent ourselves and make our own alliances within or outside Europe; we cannot do this as an EU Member State.
On agricultural subsidies, our case would be made alongside and largely in agreement with the bloc which has so far been opposed by the EU in our name but largely on behalf of France. As a large net importer of agricultural products, we could easily manage things to our liking, even if we cannot get an ideal solution, whatever that is in the farming sector.

More than anything else I am regularly irritated by the habit of all "stay-in-ers" when they put up silly arguments on behalf of some imaginary opposition group which they proceed to rubbish, as if to justify their position. Raab did it when he wrote about "spurning the continental market"; has he or has any reader heard any of the various anti-integrationist or Better Off Out campaigners ever suggest "spurning" anything, least of all open markets with the EU.

The point is also often made in the context of the crises of the Euro when we are told that economic chaos there would damage Britain - as if that is some sort of miracle discovery. As if anyone else thinks the opposite, but it is not a good reason to waste our money, political capital or anything else on supporting a doomed adventure.

It is also apparent that any group led by these MPs will not be "outers" or even ardently in favour of recovering powers; they will be "let's try to reform it" types whose approach has been a failure for 410 years.

Open Europe blog team said...

Thanks Mike - interesting thought. Do you think that the implicit possibility of UK leaving the EU altogether would give it the same bargaining power in Europe as would be the case if it de facto withdrew and then cherry picked areas it wanted to opt back into?

Anonymous said...

Meanwhile, N-Tv quotes German Finance Minister Wolfgang Schäuble saying of the financial transaction tax, “I will personally plead for the tax in the eurozone…Most member states are not yet fully prepared to accept the necessary limitations on national sovereignty…but trust me, the problem is solvable.”

Note the words 'are not YET fully prepared..to accept the NECESSARY LIMITATIONS on national sovereignty'

Is this an example of intergovernmentalism? Sounds like UK will become bankrupt after such a tax is approved...with the risk to our national independence and loss of our national negotiating power that inevitably entails.

How can this latest proposal from France and Germany be in Britain's national interests?

Mike Hanlon said...

@ OE blog team

I wouldn't think so, no. On what of any substance would such an 'implicit possibility of leaving' be based?

Let's not underestimate. We're looking here for something capable of pressuring the EU to reverse its entire modus operandi to date and hand back to us vast chunks of the powers it has accrued (risking others demanding the same and the potential unravelling of the whole project).

To me, I'm afraid an 'implicit possibility of the UK leaving' really doesn't sound sturdy enough.

Firstly, I have little faith that David Cameron would condone being associated with having encouraged the idea that, if he is not satisfied, leaving the EU would gain irresistible momentum. So how would any greater possibility of this be communicated implicitly?

Secondly, even if the EU were somehow made aware of this implication of their failure to agree, the equation of;

(1) there will be no greater possibility of our leaving unless Cameron somehow then overtly encourages the prospect or concedes a referendum; plus

(2) EU non-confrontation and non-consultation of the public being a known bottom line for Lib Dem participation in the coalition; plus

(3) the assumption that Cameron wants to preserve his government above all policy objectives;

(equals) the EU seeing the threat of such a possibility gaining momentum as an extremely weak one.

Consider, alternatively, the bargaining power of our first having taken a decision to exit the current treaty, perhaps via the next governing party or a majority in Parliament across party lines having been forced to support a referendum.

In practice, for a smooth transition, we would no doubt negotiate our replacement deal before a deadline to exit the current treaty, so we are highly unlikely to 'leave' in the sense that EU-statists always scaremonger as 'isolation'.

Some kind of continuing co-operative deal will be struck to maintain activities of mutual benefit; the only question would be its terms.

And our bargaining position for a start would offer preferential trade benefits, for the smooth continuation of which European businesses will surely lobby the EU very strongly and the EU-UK trade deficit would make the EU very foolish to snub.

But I'm sure that's far from all we can offer. I'd see a credible assessment of our 'exit decision first' bargaining position as a very useful contribution to achieving the kind of reform we all want to see.

Open Europe blog team said...

Anonymous - which is why we say "FTT would be suicide if the EU went it alone – something to which the Germans now seem open... Since the UK accounts for roughly 73% of all financial transactions in Europe – and would therefore lose out massively in the absence of a burden-sharing arrangement – the Treasury has little choice but to strangle this proposal at birth." The UK has a veto over this proposal, and it'll be vetoed by the Dutch, the Swedes and possibly some of the eastern members as well, meaning that Germany can only take a handful countries with it.

It's this model of flexible, inter-governmental cooperation (which Schauble has little choice but to recognise), not the content of the agreeement, that it's in the UK's interest. Think we make that pretty clear.

Anonymous said...

Member states seeking to reimpose internal borders within the Schengen area will have to obtain permission from Brussels for any period longer than five days, under a draft proposed by the Commission, reports the FT.'

Another example of how the intergovernmental model won't work?

Anonymous said...

And yet another example of the hopelessness we come to expect from EU agreements:
Government concedes it is forced to accept “disappointing” new EU employment laws
The Telegraph reports that business leaders have urged the Government to delay the implementation of the EU’s Temporary Agency Workers Directive until the economy has recovered. An analysis by the Department for Business shows that firms will face costs of more than £1.8bn a year as a result of the new laws, under which agency workers will effectively have to be treated as full-time workers after 12 weeks.

Business groups have pushed for new amendments to the rules to reduce the burden of the legislation, due to enter force in October. However, the Government says that, because the EU rules required a deal brokered between the CBI business group and the TUC trade union, unpicking it could lead to legal challenges to other parts of the Directive and mean that employers could be forced to give agency workers equal rights from day one rather than after 12 weeks. A spokesman for the Department for Business conceded that the rules were “disappointing” and that, “Unfortunately it was not possible to find a way forward that would be acceptable to both parties.”