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Friday, May 11, 2012

EU Referenda games: staying in, leaving or renegotiation - it's all complicated

With Europe as fluid as ever, talk of some sort of EU referendum is heating up in the UK (well at least in the Westminster bubble).

The always excellent James Forsyth of the Spectator argued in the magazine yesterday that London Mayor Boris Johnson’s support for a referendum and UKIP’s rise taken together “make it highly likely that Britain will have its first vote on Europe since 1975 within the next five years."

He also notes that,

"The popularity of Cameron’s EU veto made his circle realise how much of a political asset Euroscepticism could be, if used in the right way. There is also concern in No. 10 that if the Tories don’t offer the public a vote, Labour will."

He goes on to say that,
"One source intimately involved in Tory electoral strategy told me recently that a referendum in the next manifesto was ‘basically a certainty’...My understanding is that, at the moment, the favoured option is to propose renegotiation, followed by a referendum on the new arrangements within 18 months. During the campaign, the Tories would argue for staying in if new terms could be agreed but leaving if the rest of Europe refused to play ball." 
The equally excellent Paul Goodman over on Conservative Home today echoes Forsyth, listing a range of reasons why a referendum draws nearer.

And Forsyth's colleague Alex Massie also picks up on this on the Speccie's Coffee House blog, looking at all the complications involved in trying to square an EU renegotiation with a referendum (the "on what?" question always looms large). We've looked at the various options for a referendum in detail before, so this is all familiar (if you're interested in the different options, we strongly recommend reading this piece).  Massie makes a good point though. An EU referendum is too often seen in Tory leadership ranks as being about "a matter of party morale, discipline and tactical positioning", not getting something that actually works for the UK.

We agree. The thing is, this is far too complicated an issue to make a matter of mere party management. It will be part of the equation, of course, but making it subject to pure party politics will reduce the discussion to the usual Westminster back-and-forth on vague concepts such as "influence", "isolation" or "sovereignty" - it will be Mandelson land.

But where Massie - and a whole range of other commentators and politicians - get it wrong is when they say that in contrast to the renegotiation option, "an in/out plebiscite at least offers a choice between easily-grasped options."

No it doesn't. Staying in raises a whole range of complicated questions - what does the UK do if the eurozone takes that quantum leap towards further integration? What happens if the EU merely becomes a political extension of the eurozone (which Britain can't join)? In other words, if we want things to stay as they are, things will have to change.

And the "out" option? It sounds easy at a superficial glance, but in a serious discussion, it would raise far more questions than answers. In fact, there's virtually no "out" option (save perhaps one) - all options to withdraw from the EU treaties (which is what 'out' must mean, though it is rarely defined), involves joining something else. Doing a "Norway" would be suicide for UK, i.e. accepting 2/3 of EU laws but with no say over them; a Switzerland would be slightly better but still immensely complicated. A different type of Free Trade Agreement altogether involving business paying hefty fees or facing new admin burdens on exports to the EU, which contain some imported components? A customs union a la Turkey meaning being stuffed on market access on services? Simply falling back on the WTO's Most Favoured Nation (MFN) rules, with a range of costly barriers to trade and movement?

Answers anyone? The truth is that most of the complications that apply to renegotiation, also apply to the "out" option, including the need for some sort of "approval" from other countries for whatever alternative arrangement the UK enters into (apart from the WTO option) possibly. The truth is that all three options: staying in on current terms, renegotiation or withdrawal from the EU treaties are massively complicated. To whet your appetite, we're about to publish a comprehensive report looking at the different options for the UK was it to vote to decide to leave. And trust us, it's complicated.

What we do know is that both Britain and the eurozone will simply have to move. It's therefore right that No 10 is now considering different options.

But again, it should be for the right reasons.


Rollo said...

A promise of a referendum in the Tory manifesto (or the lib-dem or labour manifestos) would be valueless. They all lied last time and they will again. Remember Cameron's cast iron pledge? Remember Clegg leading the lib-dems out of the commons to avoid a referendum on the constitution because he wanted an in-out referendum? Why are these lying cheats not in prison?

Len Underwood said...

I completely agree with Rollo.
I remember these cast iron pledges.
Even when I was at school, one of the most despicable things to be called was a WELSHER, and here we are,with the politicians not giving a damn about having that tag !!
They are all beyond despicable.
My WORD is, and always has been,
No-one can ever call me a welsher.
Len Underwood

christina Speight said...

Both Len and Rollo are misleading. I deplore Cameron's PERCEIVED breaking of a cast-iron promise (but read the small print which qualified it which nobody noticed) but the real point is that it was NOT in the Tory manifesto. So restrain your outrage and deal with NOW.

The problem is that we are so entangled with the EU that 'leaving' will be a protracted process of mind-boggling complexity. The devil - as they say - is in the detail. Having sorted out all the nuts and bolts (licensing, trade marks, criminal and civil law, agriculture and fisheries, and a host of other detail) we turn to the fundamentals - including The Single Market, Freedom of Movement, and the other 'biggies'.

All this might take at least 5 years and in the interim we must be clear of the Euro Court and only make token payments as things like agriculture are phased out. Of course the EU may say sorry we don;t want to negotiate and at that pint a crisis willoccur and it's anybody's guess who blinks first!

I'm glad Open Europe has floated the subject before us - thanks!

Anonymous said...

This analysis introduces complication where absolutely none exists.

If the UK people say we get out of the EU, then we get out.


We go our own way.

Become a sovereign nation again.

It really is that simple.

The rest is merely conjecture and grist for a mill that Open Europe usually doesn't misuse in the way it is misusing it on the in/out issue.

Let's have an in/out referendum.

And if we vote out, we get out.

christina Speight said...

Anonymous - REALLT!!! "Deciding" to get out is the simplest thing in the world but if you were in government and made that facile remark every industry in Britain, every farmer in the land would scream blue murder and the EU would rub their hands as they saw a sucker coming ripe for the plucking.

Government is a complicated business and this is NOT a school debating society. I want out probably as much as you but don't pretend that the process is simple.

Rik said...

1. First of all the UK is not Norway. It is probably on the worldstage as important as Germany and more important than EZ's no 2 France. France gets its importance by being an important part of an important group.They did well that the UK did awful.
2. The problem with EFTA is and was that it is simply small s**t. Together something of the size of Holland (a country you cannot find on the globe).
3. Furthermore the UK could likely get support from some other major players both inside and outside the EZ/EU. These are not going to rally behind a Norway, but might be behind a UK.
4. Germany and Co probably would be served best if it took their view on Europe and have the UK on the right and France and the Busts on the left (and end up with exactly what they want).
5. This for the European situation. If they donot realize that change the conditions for safety etc. of products and they will know what it is to loose a 60 Mn. person market.

6. At home the UK is a democracy. For important longer term decisions you better do what the elctorate wants unless you want to become the main opposition party.
7. Mr Bob Marley (and some people before hime already said): you can fool some people some time but etc.
The Tories simply have run out of time on this one. They have to do it are will be seen totally uncreditable. The alternative is having the UKIP as a permanent presence likely stealing 10-20% of the Conservative vote.
8. The only room to do things is in the question for the referendum.
9. Imho Cameron as basically his cabinet could fall within a reasonably short time should take this forward combine it with reneg on the EU. With that at the background they likely will move harder than before (and get the Turks and Russians in plus create goodwill in the EU's North).

10. Not a no risk but, no risk will not solve this issue.

Bugsy said...

Len, our word is our bond and we gave our word on COMMON MARKET, not the current egofest that is destroying Europe so lets not go there.
If Europe won't cure its ills, and there are many, then we have no choice but to leave.
Our politicians may not be worldly but they should be intelligent!! (really) enough to negotiate, the details of leaving while maintaining advantages.
Getting control of our border, our fishing and farming and getting rid of the endless red tape would be a start. Perhaps we could start by getting out of the separate ECofHR. That would be a huge relief.

Denis Cooper said...

We could start, now, with a referendum on the radical EU treaty change that was quietly agreed on March 25th 2011:


Idris Francis said...

The detail of the problems we will face when we leave are irrelevant compared to the certainty of democratic and economic disaster if we stay. To misquote Nichols Ridley, the alternative to staying in a burning building is to jump - even into unknown or dangerous alternatives. As tennis players know, never change winning tactics, always change losing tactics - and BOY! have we been losing for 40 years!
That said, the prospect of a referendum on leaving the EU, afteer 2015m, is fast receding - who still thinks that the EU, let alone the euro - will still be around in 3 years' time?
Apart from its totalitarian intentions - increasingly obvious to Greeks, Irish and even former British Europhiles, the EU's problems include:
a/ Total incompetence, not least because they STILL believe that a successful country/economy can be run by large numbers of Eurocrats telling everybody who actually does something useful - produce, provide services, finance etc - how to do everything they do, every minute of the day. The USSR with its 10 year plans, fake tractor production figures and near starvation tried it and guess what? IT DOESN'T WORK.
b/ Totally corrupt AND DESIGNED TO BE CORRUPT to ensure ample slush funds and compliant eurocrats to force through what no democracy ever could.
c/ The EU elite KNEW that the euro could not work - ample evidence has emerged of that - but went ahead anyway to the astonishment of those who opposed it who also knew it could not work - because they WANTED IT TO FAIL to provide another "beneficial crisis" that would allow them to grab even more power, power that they had realised in the late 1980s they could never achieve democratically.
Unfortunately for them they failed to allow for the world economic crisis of 2007+ that turned what they expected to be a controllable crisis into the disaster we see now - with civil war imminent for the exact same reasons Milton Friedman predicted in the 1990s.
Lets get real and return to basic principles - PLEASE! The basis of principles is that they provide a bedrock of certainty to return to when facing apparenty difficult choices: For example:
If you found that the company you had joined was crooked to the core, would you stay because of a good salary? OF COURSE NOT!
If you found that an organisation with which you made agreements welched on every one, that the words you agreed suddenly meant something completely different - or were null and void - would you carry on dealing with them in the hope of profits before the roof fell in? OF COURSE NOT!
If you found that an organisation you dealt with suddenly expected you to take on their staff whether you had work for them or not - and provide homes and food for their families - would you carry on or walk away? OF COURSE YOU WOULD!
So let's get back to basic principles shall we? Let's get some backbone and some self-confidence - lets just say "Enough is enough! These people are not just crooks but incompetent crooks, they will destroy us if we stay.
As for renegotiation - I have the script here ready: - see next comment

Anonymous said...

As far as the difficulties of leaving the EU, they have been tightening the red tape tentacles on us for 40 years just to make it difficult to leave but with the will that can be accomplished quite quickly. Of course politicians and senior civil servants will make it their business to muddy the waters because that is what they do it is their raison d'etre. We need a Union of the English Speaking Nations.

Idris Francis said...

As for renegotiation - I have the script here ready: - see next comment

A phone rings in Brussels and a voice says "Hello - Barroso? This is 10 Downing Street here. I have to tell you that 10 minutes ago we passed the European Communities (Repeal) Act - we are no longer members of the EU, with immediate effect.

Do not send any more invoices - we will not pay them. Do not expect any payments - there will be none.

Do not send any more orders or diktats - we will ignore them.

Do not expect us to obey the ones already in place, they have been repealed.

NOW - about trade. Doubtless you will wish to continue to sell us all the products you do - here is our one and only offer:

Free trade both ways. No exceptions, no hidden barriers, just free trade. If you turn it down, that's also fine by us - if you impose tariffs on us we will impose them on you, and your trade surplus with us will ensure substantial net cash flow to us, useful not only for schoolsnhositals but to pay for dismantling your job-destroying soul-destroying all-embracing rules and regulations, without which we will flourish, especially compared to you if you keep them.

As you may have realised by now Barosso, this is not the renegotiation that has for so long been used here as an excuse for further capitulation, but a once in a lifetime, take-it-or leave it offer you can't refuse. After all, in business it is not normal for sellers to give orders to buyers.

Was that a Yes? Thank you and goodnight - or rather, Goodbye.

David Barneby said...

Idris Francis I quite right !!!
Britain needs a clean break from the EU right now . Renegotiaton is a nonsense , a pretence that ends up where you started , achieves nothing . chrisina Speight , you look at all the negatives , to funk leaving the EU , that is just what Cameron and Co. are doing now . The only way to leave the EU is to just do it and tell Brussels without any discussion or argument . Repeal all the EU laws back to 1972 and start a fresh .
The EU has far more to lose than Britain does . David Cameron should call for a referendum , now in the present parliament , leaving no room for going back on the decision as he has done before .

Rik said...

@Open Europe
As we all know and also can see from most of the comments here things are getting a bit emotional.
Which is as such not bad or good it is just part of human nature.

However trying to solve a very technically complicated issue like EU membership resp. exit could lead to some real damage, especially in international (trade) relations.
Imho it would be wise that some thinktanks like yourselves start by making a proper inventory of that issue, plus of what would have to be changed to make the new situation after say a Euro exit workable.

Both in the UK itself (say the VAT laws assume that the UK is part of the EU) (but you often can adjust that on the ground by ordering your civil servants), but mainly internationally.
A lot of the UKs trade relations with EU but not less important non-EU countries are shaped that they run via the EU. If the UK would be no longer an EU member means there won't be any (usually benificial for trade) provisions applicable anymore. Or possibly confusion on this point by a far away country's Customs how to deal with things and subsequently going there for the no-risk approach (which is often not allow it to be imported).
And a lot of other things, like central EU agencies for several tasks.

Anyway these kind of things will likely make it impossible to go for an unnegotiated exit (if any). But imho there should be a proper strategy for all possibilities (no exit, reneg, hard exit).
And with your Mr. Cameron who basically invents strategies the moment a problem comes up, if you would leave it there it will likely end in tears as half the essential issues will be missed.

It is like with Greece possibly leaving the EZ or EU,it clearly shows that people simply doesnot have a clue in general what would al be required to do so and make it manageable. Next to the whole financial world dumping the country of course.

Rollo said...

The longer we leave it, the more damaging it will be. Every Industry crying out if we leave? RUBBISH!. I am in Industry. Most of the wealth in this country is made by SMEs, and most want OUT.
The EU is a cancer which is wriggling its tentacles into every bit of the body of Europe. It will soon die of it. We want out before we go down with it. The proportion of world trade from the Eurozone has diminished from 22% in 1991 to 14% in 2012. We are tied to a sinking ship. Cut Free!

Rik said...

Your suggestions simply have a low chance of success. No negotiated exit will most likely mean a mess.
Furthermore your slow moving politicians will be even more unlikely to go for it.
It is furthermore moving away from the way things look to move now. Basically forcing Cameron into a referendum or something similar (by cutting off his escape routes).

SMEs might want that now, but being confronted with things like long term pre financing VAT on imports or not being able to get your UK exported goods past Customs in Farawayistan as they donot know the UK they only know the EU, will hardly keep them enthousistic.

Prepare, and the better prepared you are, the harder you can negotiate. Be unprepared and the harder you negotiate the bigger the mess will be you end up in.

David Barneby said...

Rik , yours is a total " Wet Blanket " approach like that of a civil servant . You are right though that Cameron could be counted on to make a " Pigs Ear " of it . Imports via the EU are to ensure tax is paid to the EU . Most Farawayistan places have never heard of the EU . Certainly leaving the EU will not be without some need for future planning . The EU isn't going to refuse to sell to Britain and with tarifs they would be the losers . Perhaps the answer is for everyone in Britain to vote UKIP . Nigel Farage would soon get Britain out of the EU , just as Idris suggests . If you start negotiating you will never do it your wet behind the ears politician will be persuaded out of it .

Rik said...

I clearly should explain this better, sorry for that.

In the relation EU-UK probably the UK is the strongest party as the import more from the EU-rest than the other way around.
Nevertheless simply calling Barosso with we are getting out, means that the EU would still have to change its law partly and that will take months at least. It is not that Barosso just can decide this, there are formal rules how that should be done and look at approvals for the Euro rescue 6-12 months even under pressure is normal. It is hardly helpful for the UK that the EU countries would have similar problems in the UK. You might stop most of the trade with the EU for maybe even 1 year or make it highly complicated. Maybe the situation for the EU is even worse but that hardly helps the UK. Customs simply react: 'do not know or cannot happen according to our book, keep it at the border'.

The issue is that allthough it is very likely that the population of Farawayistan have never heard of the EU but has probably heard of England (likely their former colonial masters),the Farawayistan Customservice likely has the EU in its regulations and has for many thinks never heard of the UK. Meaning higher customsduties and alike, often formalities not met meaning it simply not can get imported. The way EU countries are often looked at by them is as part of the EU, not longer part of the EU you are simply donot exist.
This is likely a very serious issue. Simply as these Customs are often a) very stupid and b) very corrupt. It is difficult enough to get things properly imported in say Nigeria ot Indonesia, or Russia or India etc with your paper work in order. Not a clear set of rules applicable you simply basically get stuck at the border and most likely they only way to solve it is paying heavy bribes (unless the goods are competing with the ones the Minister's uncle imports then you can totally forget it).
This could play with basically all countries. Some of the major parties are likely considerably easier but less developped especially are likely a disaster. This could effect a huge part of your export.

That is why I say you have to make a proper inventory first and preferably arrange things before which will however be difficult.
It might be not that bad but you simply donot know it before you have made the check.

Nearly all international trade is simply regulated with other countries on EU level (and not with the UK seperately). That will simply fall away with a onesided exit and could be replaced by rules from before the EU or there simply might not be rules. Meaning the highest importduty rate often limitations, problems with certificates for health, safety etc..
Just to give you an indication it takes with 'new' countries often a year or 5 or (much) more to get the treaties in place. It is basically a formal treaty and there will be a lot of them and some most likely will want to get some extra's out of it. And before you can start to negotiate you need to know what should be in them.

As said it might not be that bad but it might kill half of your international trade as well, you simply donot know that. And the latter is something you simply as a country cannot afford.

For legitimite international trade basically rule 1 is have your paperwork in order as it will simply be approached by the guy who has to give the green light as a civil servant as that is what he is.

David Barneby said...

Rik , There is always the possibility that the EU may disintigrate by itself , perhaps that's what Cameron has in mind .
As things stand it is almost certain that Greece will default and leave the Euro . Greece may be followed by Italy , Spain , Portugal and maybe Ireland .
Austerity in all the countries is causing popular unrest . I do not believe the EU has ever had the democratic , popular support that it believed it had . People across Europe have suffered the EU , but today they have had enough . The EU/Euro has been the fundamental cause of the ruination of the mediterranean countries that should never have joined the single currency . People blame the banks , the recession of 2007 , but without a single currency there would not have been the speculation and fraud . European people are caught in a tangled mesh of bureaucracy and laws as bad as a bramble thicket . The EU has an unsolveable problem , there are no means by which to put it right , there is a danger of civil war in every European country .

David Barneby said...

Rik , There is always the possibility that the EU may disintigrate by itself , perhaps that's what Cameron has in mind .
As things stand it is almost certain that Greece will default and leave the Euro . Greece may be followed by Italy , Spain , Portugal and maybe Ireland .
Austerity in all the countries is causing popular unrest . I do not believe the EU has ever had the democratic , popular support that it believed it had . People across Europe have suffered the EU , but today they have had enough . The EU/Euro has been the fundamental cause of the ruination of the mediterranean countries that should never have joined the single currency . People blame the banks , the recession of 2007 , but without a single currency there would not have been the speculation and fraud . European people are caught in a tangled mesh of bureaucracy and laws as bad as a bramble thicket . The EU has an unsolveable problem , there are no means by which to put it right , there is a danger of civil war in every European country .

Rik said...

Fully agree they do basically everything to make the EU as impopular as possible with large parts of the population.
So when we get a shock (like a couple of countries going bust and leaving the EZ and probably where Cameron is waiting for to bring the issue to the table) and measures for a workable solution to continue might be required we could end up with a Greek situation (even if it is basically stupid to pull the plug out yourselves, you still do it just to get rid of the thing, see a lot of the comments here for instance).

Now you bring it up. As far as the trade problems that it would cause they will not be less if the UK goes out of the EU because it stops to exist. Another good reason to make an inventory and work on emergency measures so these can be used when necesary.