|Monday, 18 October 2004||
The continent of Europe changed on 10 June 2004. On that day the frustration of ordinary people at autocratic rule from Brussels finally made itself felt. The surge in the Eurosceptic vote may have been fuelled by different priorities in different lands (the desire for outright independence in Britain, concern at the cost of modernisation in the Czech Republic, alarm at Germans buying farms in Poland, and hostility to unfettered immigration in Greece), but it was still a firm vote against integration.
Yet, while the man in the street may be very clear about what he does not want, he is not so certain when it comes to positive alternatives. Again and again while canvassing, the same response is met: the EU is no good, but we’re stuck with it – we’re in too deep now to get out. It is this fatalism that this paper seeks to address by exploring the real practical alternatives to the European Union and assessing the impact of withdrawal.
But first it is necessary to define two words which will be used frequently in the following sections, for in popular parlance they have come to mean different things to different people. In this paper, a ‘Eurosceptic’ is one who seeks to reform the European Union but who does not wish to withdraw, while the word ‘Eurorealist’ is used to mean a person who believes that the EU is beyond reform and that therefore the only option is withdrawal.
But withdraw to where? Europhiles have repeatedly misrepresented the Eurorealist manifesto as xenophobic and nihilistic. In reality, Eurorealists are keen to maintain good trading relations with all neighbours, and have always qualified the demand for freedom from the European Union with the rider “and its replacement with a free trade area, which is what we thought we had voted for in the first place”.
At the end of the day, then, the challenge of withdrawal boils down to just two fundamental questions: first, where do we go, and second, exactly how do we get out?
Few are aware that Britain is not only a member of the European Union but is simultaneously a member of the European Economic Area. The EEA was set up in the mid-nineties specifically to accommodate the preference of nations like Norway who wish to trade with the EU but do not wish to be submerged by it. The EEA consists of Norway, Iceland, Liechtenstein and all EU member states.
The EU’s own website explains the EEA thus:
“The EEA was maintained because of the wish of the three remaining – Norway, Iceland and Liechtenstein – to participate in the Single Market, while not assuming the full responsibilities of membership of the EU. The Agreement gives them the right to be consulted by the Commission during the formulation of Community legislation, but not the right to say in the decision-making, which is kept exclusively for Member States……….The Agreement is concerned principally with “four freedoms” – freedom of movement of goods (but agriculture and fisheries are included in the Agreement only to a very limited extent), freedom of movement of persons, of services and of capital. Horizontal provisions relevant to these four freedoms in the areas of Social Policy, Consumer Protection, Environment, Company Law and Statistics complete the extended Internal Market. It is in these areas that the EEA EFTA States take over the Union’s rules.
“As it is one of the primary obligations of the Agreement to ensure equal conditions of competition, the substantive competition rules of the Agreement correspond to the relevant “acquis communautaire”. This covers the rules concerning cartels, abuse of dominant positions, merger control, state monopolies and state aid. The Agreement also includes the areas, which have an impact on the competitive position of enterprises such as consumer protection, environment and certain elements of company law”
Rodney Leach, in his influential Europe: a Concise Encyclopaedia of the European Union, describes it in the following terms:
“The EEA Treaty was signed in 1992. It initially comprised the EU member states plus the EFTA countries of Austria, Finland, Iceland, Liechtenstein, Norway, Sweden and Switzerland. The Swiss, however, rejected the Treaty in a referendum, so that the EEA did not come into being until 1994. The Treaty was prompted by the entry into force of the single market and was designed to create a Europe-wide free trade zone … albeit on terms dictated by the EU.
The essence of the arrangements is that the EFTA countries accept the acquis communautaire and are bound by Community legislation, over which they have no influence. These features are often said to demonstrate the futility of the EFTA position, highlighted by the defection of Austria, Finland and Sweden to the EU in 1995, following the end of the Cold War. Membership of the EEA does not, however, commit the signatories to the Common Foreign and Security Policy, to co-operation in Justice and Home Affairs, to EMU, to the Common Agricultural Policy or to the Common Fisheries Policy. Moreover, the institutions of the EEA, including the EFTA Court, are expressly stated to lack the sovereign authority claimed by the institutions of the EU. Thus most of the areas that define national independence remain within the competence of the three EEA states (Iceland, Liechtenstein and Norway) that have elected not to join the EU. At the same time they escape the most intrusive and costly of the EU’s policies … altogether perhaps a better bargain than the EU would care to admit for surrendering a say in the framing of single market legislation.”
So, in exchange for accepting the regulations defining the Single Market, and paying a small membership fee, those three nations get to trade in the Single Market on the same terms as EU member states. (As reported by the Foreign Secretary in Parliament on 16 June 2004, Norway pays a paltry 230 million euros [£151m] a year, compared to the British net contribution of about £4,300m p.a.)
In a letter to The Daily Telegraph in November 2003, Leon Brittan wrote that EEA membership is unattractive because members do not have any say in the formulation of the regulations that govern the Single Market. What he rather archly forgot to mention is that EEA members are also not constrained to remain in the Area, as EU members states are. In other words, any time that Norway feels that the Single Market no longer works to her advantage, she can just walk away.
Indeed, as noted above, the Swiss did exactly this. Switzerland was supposed to be a founder member of the EEA, but in a referendum the Swiss people rejected their Government’s recommendation to join. As a result, today Switzerland is a member of the European Free Trade Association, a much looser free trade area.
EEA membership does not compromise sovereignty. Norway maintains control of her agriculture, fisheries and oil and gas reserves, while enjoying good trading relations with the EU, including the free movement of persons. Many would say she is having her cake and eating it. Perhaps that explains why Norway has a far higher per capita GDP than the United Kingdom.
The idea of freeing Britain from EU control by simply leaving is met with scare stories of economic Armageddon in the left-wing press. Most remarkable was the full front-page attack on UKIP’s policies by The Independent on 16 June 2004, claiming that withdrawal would cost the nation £23bn a year, according to the National Institute of Economic and Social Research. What the newspaper failed to mention was that just a few days earlier, Civitas had announced that its research h
ad shown that withdrawal from the European Union would generate a boost to the British economy of between £19.33bn and £30bn p.a. Counting beans is a dangerous business.
In this debate, spurious statistics abound. The Big Lie, oft repeated from the Prime Minister down, is that withdrawal would cost 3.5 million jobs. But the importance of our trade generally, let alone with the EU, is repeatedly exaggerated. “55% of our trade is with the EU” trumpeted The Independent (actually closer to 45% when invisible earnings are included). But 80% of our economic activity, as measured by GDP, is between different parts of the UK. Put another way, a more meaningful statistic would be to say that 80% of our trade is internal, 11% is with non-EU nations, and only 9% is with the EU (UK Import-Output Analyses, ONS, November 2001: ISSN 1475-7354).
In that same front-page attack of 16 June 2004, The Independent announced sternly that “Every year the UK imports £129bn worth of goods from its EU partners and exports £105bn to them” … and then a few lines further down wailed “We need the EU more than it needs us” when, from its own statistics, the reverse is palpably true. The United Kingdom is the fourth largest economy in the world (soon to become the third if the German economy, shackled to the euro, continues to collapse). It is not necessary for Britain to tug her forelock to any continental power.
The Civitas study brings together reports from the National Institute for Economic and Social Research and from the US International Trade Commission, both of which concluded that withdrawal would be jobs-neutral. The average tariff on non-EU goods is only 1.5% anyway, and the World Trade Organisation would quickly quash any economic retaliation, however improbable.
The findings of the Civitas study have been backed up by Liverpool Macroeconomics Research which reported in September 2004 that EU membership costs Britain between £25bn and £35bn p.a. The report warned that the UK is paying prices for its manufactured imports “some 20% – 80% above world levels” because of anti-dumping penalties on outsiders who try to sell their goods in the EU for less than the official market price. Patrick Minford, Professor of Economics at Cardiff University and member of the Bruges Group’s Academic Advisory Council, pointed out, as an example, that the cost of computers is 50% higher inside the EU than out.
Finally, all of this is irrelevant to the act of withdrawal from the political EU. Because the United Kingdom is currently a member of the EEA, on withdrawing from the EU the UK will still be trading in the Single Market for so long as the Government of the day considers it to be in Britain’s best interests. There will be no economic dislocation. And before withdrawal it will not be necessary to engage in complex negotiations as to future trading relations with the EU, as those relations are already defined by our current membership of the EEA.
But is the Single Market actually good for Britain? Many believe it is not. The paperwork it generates ties down the British entrepreneurial spirit as the Lilliputians tied down Gulliver. The Single Market favours multinationals by offering economies of scale while working to the detriment of small businesses that find the bureaucratic burden crippling.
Concern has also been expressed that Single Market legislation has the potential to be used to regulate areas not obviously relevant to trade, for example provision of health care on the ground that it is ‘exportable’ (or rather, that the patients can come to it). Potentially, the Single Market is the thin end of a very dangerous wedge: leaving the EU but not the Single Market could leave Britain exposed to reincorporation by stealth.
The conclusion of the Civitas study is that the Single Market itself neither benefits nor hinders the British economy, but that EU regulations in general cost us not less than £6.33bn p.a. and the CAP £9bn p.a. Add to that the £4.3bn p.a. net budget contribution, and the minimum cost of the EU to Britain works out as £19.63bn p.a.
EFTA, the European Free Trade Association, is the final destination favoured by a majority of Eurorealists. It is this option that promises to generate the ‘independence dividend’ estimated by the Civitas study to be in the region of £20bn to £30bn p.a.
It was created by the UK in 1960 specifically as a counterbalance to the Common Market. The other original signatories were Austria, Denmark, Norway, Portugal, Sweden and Switzerland. EFTA later expanded to include Finland, Iceland and Liechtenstein. Gradually its members have drifted away to join the EU, so that today all that remains of EFTA are Iceland, Liechtenstein, Norway and Switzerland (the first three being simultaneously members of the EEA).
As long ago as 1972, the EC signed agreements with EFTA members, setting up a free-trade area of over 300 million consumers. But nowadays the organisation is overshadowed by the EEA, to which all EFTA members bar Switzerland belong.
EFTA has concluded free trade agreements with Bulgaria, Chile, Croatia, Israel, Jordan, Macedonia, Mexico, Morocco, the Palestinian Authority, Romania, Singapore and Turkey. It is presently negotiating a free trade agreement with the Republic of Korea.
In early May 2004, in a desperate attempt to cow the British electorate, Pascal Lamy, then the Small Trade Commissioner, warned that if Britain dared to vote No in the referendum, the nation would become “like Switzerland”. Intrigued to discover what dreadful fate lies in store for the United Kingdom, The Daily Telegraph despatched Graham Turner to the Confederation to find out. He discovered a nation which was concerned at an unemployment rate of 4%, whose inflation rate had just risen (to 1%), and whose citizens are ‘burdened’ with a VAT rate of 7.6%. For a Swiss leader to even mention the EU is political suicide. Michel Dérobert, General Secretary of the Swiss Private Bankers Federation, said that he expected that in a few decades the EU would either collapse or mutate into a genuine free trade area. Edouard Brunner, one-time Swiss Foreign Minister and also ambassador to first Washington and then Paris, stated baldly that Swiss bankers will not lend to the EU because they have no idea where the money goes.
The North American Free Trade Agreement was signed by the USA and Canada in 1988 (when it was known as the US-Canada Free Trade Agreement), and by Mexico in 1992, but was not approved by Congress until late 1993. It came into force in 1994.
It is unpopular amongst ordinary workers in the United States, being blamed for creating unemployment as American businesses have shifted their operations to Mexico with its cheap labour. Conversely, it is extremely popular in Mexico except with farmers who have lost their subsidies and are having to compete with the huge American agricultural conglomerates and their economies of scale.
NAFTA’s chequered success story suggests that to be truly effective a free trade area needs to link nations of broadly comparable per capita GDP. Advocating NAFTA as the UK’s final destination may also create political problems for Eurosceptics. While joining may enhance trade with the United States, there is also the danger that the nation would be just exchanging economic dominance by one power for economic dominance by another.
Intriguingly, as long ago as August 2000, the US International Trade Commission published a report entitled The Impact on the US Economy of Including the United Kingdom in a Free Trade Arrangement with the United States, Canada and Mexico, so clearly those on the other side of the pond have been considering the implications of the UK leaving the EU for nearly as long as British Eurorealists.
Withdrawal will bring with it the challenge of disentanglement. The EU now pervades virtually every aspect of our daily lives. Simply repealing the 1972 European Communities Act is not enough. Countless Statutory Instruments derive their authority from the ECA: repeal the Act, and the Statutory Instruments fall too.
Many of these Statutory Instruments may be valuable in their own rights. It is important not to throw the baby out with the bath water. Areas of particular concern are those Statutory Instruments in the fields of Health & Safety and of contract law.
The solution is to enact enabling legislation to allow all Statutory Instruments to remain in force for an interim period following repeal of the ECA while committees examine them for any intrinsic worth. Interest groups could lobby such committees, but on the strict understanding that the presumption is that the regulations should go. It would be up to the interest groups to prove their ‘innocence’.
Fortunately, EU Directives have been largely implemented using their own individual Acts of Parliament, and can therefore be repealed without complication.
All the points made in this paper so far relate to the situation as at the time of writing (the Constitution signed but not yet ratified): that is to say, withdrawal can be effected simply by repealing the ECA 1972. However, if the EU Constitution is ratified by all member states other than Britain, then the situation changes radically and in ways that are not entirely clear.
The EU Constitution has been taken apart and debated over many weeks in many circles, but even eminent journalists and political commentators have failed to appreciate the fundamental nature of the beast, repeatedly misinforming the public that, because of Article IV-8, it requires unanimity from all 25 members for it to proceed. This is a simplification of the true situation.
The Single European Act, Maastricht, Amsterdam and Nice were all amending treaties, that is to say treaties amending the Treaty of Rome 1957, and as such required unanimity. But the Treaty Establishing a Constitution is not an amending treaty. It is a stand-alone treaty, a brand new treaty, and as such does not ultimately require unanimity of all member states (as opposed to signatories): it has merely chosen to aspire to unanimity (Article IV-8).
Or, looked at another way, Article IV-8 is a nonsense. By definition, a treaty cannot include within itself a clause stating when the entire treaty is to come into effect, since that clause would have no power until the treaty had come into effect, at which point the clause would be redundant anyway. Article IV-8 is pure window-dressing and, perfectly legally, may be discarded if found to be inconvenient.
So the Eurocrats have been rather clever. Imagine a club consisting of 25 garrulous old men who never agree on anything, to the exasperation of its officers. In the pursuit of change, rather than seek unanimity from this troublesome membership, the officers of the club have gone into the next room and drawn up the rules of a brand new club, much more to their liking. They have then invited each of the old men, individually, to change rooms and join the new club. Only one thing they insist: nobody can be a member of both clubs.
That this is the true nature of the Treaty becomes clear by reading Article IV-2, which requires each signatory to repeal all existing domestic legislation relating to the old European Union. Were the Treaty merely an amending treaty, ‘a tidying-up exercise’, such a clause would make no sense at all.
Also, Valéry Giscard d’Estaing, the architect of the Constitution, appeared on television just after the Convention completed its work, and said that he fully expected one or two nations to fail to ratify it. He was relaxed as he replied. It is difficult to imagine he would be so unconcerned if the culminating ‘triumph’ of his life could be threatened by a single recalcitrant nation.
So what does happen if one or more signatories fails to ratify? A declaration towards the very end of the Treaty Establishing a Constitution, lost amongst obscure protocols on domestic violence and the future of the island of Mayotte, states that if after two years four fifths of the member states have ratified but one or more members have “encountered difficulties”, then the whole matter will be referred to the European Council, whatever that may mean.
However, we know from the utterances of four influential continental politicians at different times how they see the matter being resolved.
“If the alternative for the EU in the face of the irrefutable challenge posed by eastern enlargement is indeed either erosion or integration, and if clinging to a federation of states would mean standstill with all its negative repercussions, then, under pressure from the conditions and the crises provoked by them, the EU will at some time within the next ten years be confronted with this alternative: will a majority of member states take the leap into full integration and agree on a European Constitution? Or, if that doesn’t happen, will a smaller group of member states take this route as an avant-garde, i.e. will a centre of gravity emerge comprising a few member states which are staunchly committed to the European ideal and are in a position to push ahead with political integration?”
Joshka Fischer, German Foreign Minister, Humboldt University, 12th May 2000
(Integrationists like to think of themselves as the ‘avante-garde‘ and those who prefer to remain behind as ‘laggards’: however, when one finds oneself suddenly amidst the Gadarene Swine, it is rather comforting to be somewhere near the back!)
“Jacques Chirac, the French president, yesterday called for a two-tier Europe in which France and Germany would lead a ‘pioneer group’ of member states pushing ahead with integration. Although Mr Chirac said he opposed new bureaucracies, he suggested the pioneers could set up ‘a light secretariat’ to co-ordinate their affairs as part of a process that could end with a form of European constitution. His vision – set out in a 45-minute address to the Bundestag in Berlin – marked the latest contribution to a German-led debate about how to organise the 15-member European Union as it prepares to take in as many as 13 new members from southern, central and eastern Europe. Mr Chirac said the pioneers would pursue policies covered by the existing EU treaties as well as new activities. Subjects could include foreign affairs and defence and the fight against organised crime. The creation of a new inner core is likely to raise concerns among member states, notably Britain, about the creation of a multi-speed Europe.”
The Financial Times, 28 June 2000
“If a State does not ratify the text, then it cannot participate in the future system. But it is more probable that an individual country is unable to accept certain points from the Constitution. In this case we will follow the example of the Monetary Union which means a universal framework for everybody but also the possibility to abstain for some.”
Valéry Giscard d’Estaing, quoted in Der Spiegal, 21 October 2002
“In a newspaper interview, Italian Foreign Minister Franco Frattini this week said that Rome would suggest a system for forestalling a crisis if any EU country refused to ratify the Constitution. Italy will propose an opt-out ‘which will enable any country that doesn’t ratify to stay outside but still have the possibility of automatically coming back in after it changes its mind’, he explained (Agence France Presse, 23 October).”
Reported by Vote 2004
However, in a more belligerent mood, Giscard d’Estaing has also said:
“We have to abrogate the [EU] treaties that exist. If a country says that it does not like the n
ew treaty, there’s no existing structure for them to cling to, they cannot seek refuge in the old agreement … you can maintain an economic role, but you can no longer be in this political system.”
as quoted in The Financial Times, 11 November 2002
The implication therefore is that if one or two nations fail to ratify, then the EU will simply have the Treaty signed again but this time exclude those grumpy old men who did not ratify the first time round. Clearly, because this is a stand-alone treaty, no nation has a permanent veto. A nation which fails to ratify will simply not be invited to the second attempt.
And note in particular, that the words towards the end of Article IV-8 (2) are ‘signatory State’ not ‘member State’. The Treaty of Nice includes a specific clause permitting ‘enhanced co-operation’ between individual member states, eurocode for a two-speed Union. ‘Signatories’ can now be a subset of ‘member states’.
So if Britain alone failed to ratify, we could find ourselves in a most interesting position. While the other members went off to found their integrated superstate on the second attempt (following a new signing by the avant-garde alone), Britain would be the sole remaining member of the original European Union. We would have regained our freedom by default, without having to go through the bother of withdrawal at all. (Intriguingly, we would also, technically at least, have inherited all the EU’s assets … although no doubt it would prove difficult to secure vacant possession of the centre of Brussels!)
Of course, this is only the technical position. The practical problems of such an outcome would be so daunting as to appear almost insuperable. Politics being what it is, a Europhile government would no doubt find a way to fudge the issue and tag along behind the integrationists in the hope that some subsequent ‘neverendum’ would produce the answer of which the Prime Minster now only dreams.
If Britain has ratified the Constitution, the process of withdrawal becomes fraught with complications. Article I-59, defining the process of withdrawal, must now be one of the most famous articles in the entire Constitution. It is reproduced here in its entirety.
Article I-59: Voluntary withdrawal from the Union
3a. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in Council or European Council discussions or European decisions concerning it.
A qualified majority shall be defined as at least 72% of the members of the Council, representing the participating Member States, comprising at least 65% of the population of these States.
Considering its importance, the second paragraph is vague in the extreme. Does the ‘agreement’ mentioned cover only post-withdrawal trading relations or is it supposed to also include the actual business of withdrawal, including its date? If the former, then Paragraph 3a, excluding the representative of the withdrawing nation from the second side of bi-partisan trading negotiations, is logical and understandable. But if the latter, then the withdrawing nation is in danger of being put into an impossible position, forced to kick its heels for two years while the integrationist powers set about sapping that nation’s political will to withdraw. The Constitution even includes the ability to suspend a nation’s membership (while continuing to collect budget contributions, of course), which could be used as a blunt stick to bludgeon an independently-minded member back into docility.
In his seminal work, A Constitution for Europe: A Legal Assessment of the Draft Treaty (Congress for Democracy, November 2003) in a footnote towards the end, Martin Howe QC warns:
“The Vienna Convention on the Law of Treaties, in the absence of an explicit secession or ‘denunciation’ clause, creates a presumption that treaties may not be terminated unless the right to terminate is evident from the express or implicit agreement of the parties.”
So, at that level then, Eurorealists should at least be grateful an exit clause exists at all, even if concerned at its vulnerability to manipulation. And Article I-59 does have one useful knock-on effect that the clever Eurocrats probably never appreciated. There are plans afoot for the European Union to regulate political parties and to stifle dissent by cutting off all funding to any ‘subversive’ party, that is to say one that does not support the concept of the European Union. Until Article I-59, any party espousing withdrawal, like UKIP, was in danger of proscription as, effectively, an illegal organisation. But now Eurorealist parties can argue, in classic Catch-22 style, that advocating withdrawal is not sedition but is a legitimate political objective because all that is being sought is implementation of part of the EU’s own Constitution! In pan-European terms, Eurorealist parties like UKIP now form the ‘loyal opposition’.
And, so far as withdrawal under I-59 is concerned, fortunately there is a second, more powerful, string to the bow. In the Metric Martyrs’ case, Lord Justice Laws made an intriguing ruling: that Parliament does not have the power to divest itself of its own sovereignty. In Britain, sovereignty is derived from the people and, effectively, lent to Parliament.
“…Parliament cannot bind its successors by stipulating against repeal, wholly or partly, of the 1972 Act. Thus there is nothing in the 1972 Act which allows the [European] Court of Justice, or any other institutions of the EU, to touch or qualify the conditions of Parliament’s legislative supremacy in the United Kingdom. Not because the legislature chose not to allow it; because by our law it could not allow it. That being so, the legislative and judicial institutions of the EU cannot intrude upon those conditions. The British Parliament has not the authority to authorise any such thing. Being sovereign, it cannot abandon its sovereignty.”
This ruling echoes John Locke’s argument that:
“The Legislative cannot transfer the power of making laws to any other hands. For it being but a delegated power from the People, they who have it cannot pass it to others.”
Accordingly, when Parliament decides (whether before or after ratification of the Constitution) that the United Kingdom will leave the European Union, the nation shall withdraw the very moment Royal Assent is given, reclaiming by that action Britain’s sovereignty which, in reality, was never transferred or shared, but merely misplaced. From that moment, the EU Constitution shall cease to apply, regardless how the European Council may
And, after all, the very first paragraph of Article I-59 does state “in accordance with its own constitutional requirements”. We can argue that one of Britain’s constitutional requirements is that we ignore Article I-59 from the very moment Royal Assent is granted!
There is a difference between legality and legitimacy. A usurper may legislate, to define legal and illegal behaviour, but once his legitimacy is successfully challenged, all his legislation falls. And because legitimacy is subjective, there can be parallel legitimacies vying for the loyalty of citizens simultaneously.
In our history, the most obvious example of parallel legitimacies is Henry VIII’s break with Rome. The Pope’s immediate response was to excommunicate Henry, something that to Protestant minds was irrational. From their perspective, since Henry was no longer a Roman Catholic, he was ineligible for excommunication anyway. Yet, viewed from the Pope’s perspective, Henry remained a member of the Roman Catholic Church whether he liked it or not, and therefore subject to excommunication.
From Britain’s perspective, then, there is no point pussyfooting around once the decision to withdraw has been made, especially given our simultaneous membership of the EEA. Once we have enacted withdrawal in Parliament, the EU Constitution immediately becomes of supreme indifference to us, including article I-59, and we are free to proceed as we wish. Of course, over in Brussels, the remaining members of the superstate will no doubt subscribe to a parallel and different legitimacy. Fortunately, our economic strength and importance as a market to our erstwhile partners should ensure that our point of view prevails rather quickly.
And there is a further wrinkle to consider. Should a referendum result in a No vote, yet the Prime Minister proceed to ratify the Constitution, then his action would lack legitimacy from the start. (It is accepted worldwide that in constitutional matters those seeking change require the support of a majority of the electorate, not merely a majority of those voting: if the Prime Minister disagreed, then, following a close vote, the question of legitimacy might very easily arise, as it did in Malta in 2003, when the Yes vote was slightly greater than the No vote but still less than half the electorate).
Withdrawing post-Constitution is thus potentially a very messy business indeed, and yet another reason to campaign strongly for a No vote in the promised referendum.
Those who want to see the UK withdraw from the European Union are the most forward thinking people in British politics today. Like Cassandra, for years they have been crying out in Parliament Square to anyone who will listen: “Hey, wait a moment! Do you really think it is such a good idea to bring that great wooden horse inside the city walls?” Now at last, following the Eurosceptic swing of 10 June 2004, they are being listened to respectfully.
For there are chilling comparisons between the EU and the Soviet Union which convince this author that the European Union has no future. So not only is withdrawal patently important for the economic health of the nation, but, less obviously, it also needs to be done soon, before the sinking ship drags us all down with it.
First, like the Soviet Union, the EU runs a command economy. The lip service it pays free-marketeers fools no one. We are required to import some 20% of our milk requirement in spite of the fact that our farmers are perfectly capable of providing all the milk we need. Rather than allow agricultural policy to ‘float’, responding gently to market opportunities and pressures as they ebb and flow, farmers are bribed to ‘set-aside’ land, which might otherwise generate agricultural surpluses inconvenient to the EU planners. The fishing industry, what little is left of it, is heavily regulated to the extent that, because the quotas are inflexible, dead fish are routinely thrown back into the sea.
The European Union’s obsession with ‘unfair competition’ stifles innovation. For example, in recent years, RyanAir has established imaginative deals with a variety of regional airports, including Charleroi in Belgium. The airline agreed to route flights through that small airport in exchange for the airport and regional government subsidising its landing costs, down from £1000 per landing to £100. Everybody was happy. The passengers were happy because the fares were lower. The shareholders were happy because turnover was up. And Charleroi was happy because the passing trade from the new arrivals was worth more than the subsidy.
:What was the response of Charleroi’s rivals? Did they grudgingly acknowledge that this was a brilliant marketing strategy and seek to make similar deals with other airlines? Did they rise to the challenge and dream up some completely new scheme to re-establish their market-share? No. They sneaked to teacher. Zaventem airport in Brussels complained to the European Commission that Charleroi’s subsidy amounted to unfair competition. In January 2004 the Commission agreed, and RyanAir has been forced to abandon the practice. Thus instead of encouraging innovation and entrepreneurial spirit, once again the EU has just dragged everyone down to the lowest common denominator.
The second way the EU mimics the Soviet Union is in its institutional corruption. For nine years, the EU’s auditors have refused to sign the accounts. Imagine how Companies House would react if a British company failed to submit audited accounts for even a single year!
When Marta Andreasen, the Chief Accountant, spoke out against irregularities, she was sacked. She warned that EU procedures were worse than at Enron. Of particular concern was that the computer system, based around Excel, left no paper-trail: a functionary could alter figures without any log being kept to show by whom and why such changes were being made.
In 2003, the Eurostat scandal broke. Between 1996 and 2001, about 5 million euros were siphoned off into secret bank accounts, mostly to pay inflated fees to contractors allegedly owned by some of Eurostat’s own officers. Yet despite the gravity of these allegations, there has so far been only one arrest … of the journalist from Stern who broke the story! His files and disks have been confiscated while the Belgian police attempt to discover who inside Eurostat tipped him off.
But it is not all doom and gloom for those who fight EU corruption. Two of the most cheering results of the poll on 10 June were the elections to Strasbourg of Paul van Buitenen and Hans-Peter Martin. The former is the whistleblower whose revelations led to the resignation of the entire Commission in 1999. The latter made public the expenses-fiddles being perpetrated by fellow MEPs, with the result that he was sacked by his own party. Together, these two upright gentlemen have won four seats, just revenge from a public sick of institutional corruption.
Most alarming, though, is evidence in certain EU institutions of a nascent police state. This is the third area where the EU is beginning to look like the Soviet Union.
The European Arrest Warrant, now in force, deals a body-blow to traditional British values. A Justice Minister in any member state, including one only recently liberated from the dead hand of communism and therefore lacking our tradition of civil liberties, can have a British citizen in the UK arrested and extradited to face trial for an offence that is not a crime in British law. Some of the crimes, such as xenophobia, are not even defined. A British judge has no right to intervene, and the arrest can be made by a Europol officer.
If that all sounds rather esoteric, readers should remember the British plane-spotters arrested in Greece in 2003 for writing down aircraft serial numbers at an air show open to the public. That is not a crime in Britain, but had the plane-spotters returned to the UK before the
Greek authorities had decided to act, they could now be arrested in their own homes by a foreigner and extradited to Athens to face trial, with no recourse to British law in the meantime.
EU property cannot be searched: it enjoys the equivalent of diplomatic immunity. EU officials are also immune from prosecution. The Belgian police are still unable to prosecute Edith Cresson, a Commissioner in 1999 facing allegations of gross corruption.
Europol, too, has immunity from prosecution. Why? All our policemen are accountable for their actions, and so is Interpol. Europol is authorised to gather information on political and religious beliefs, ethnic origins, and sexual activities. One employee has already been caught selling information from the Schengen database to criminals. Since 1215 it has been one of Britain’s constitutional bulwarks that no person, not even the monarch, is above the law. Why, then, have we had to accept that such a shady EU task force, unknown to most people, should be allowed to delve into the most intimate aspects of our private lives, without defamed and injured citizens having any recourse in law against it?
The fourth and final similarity between the European Union and Soviet Union is the lack of democracy. What sort of parliament is unable to initiate legislation? Even when the European Parliament stands up to the bullying of the Commission, there is a complex ‘conciliation’ process which invariably results in the Commission getting its way in the end.
If the European Union is such a wonderful thing, why won’t they let us elect the Commissioners and President direct? The answer is that they daren’t, because the bulk of the Commissioners elected would probably be Eurosceptics with a mandate from the people of Europe to undo everything the integrationists have done this far.
These four systemic flaws (a command economy, corruption, legal immunity for state organs and a pervasive anti-democratic culture) are the very same ones which brought down the Soviet Union.
What will be the straw that breaks the camel’s back? In the EU’s case, it looks likely to be its precipitous expansion eastwards. By 2007, two things will have occurred. First, in 2006 the new EU budget will have been agreed and, secondly, in 2007 Romania and Bulgaria will have joined.
In recent years, Britain’s net contribution to the EU budget has been of the order of £4.3bn p.a., comparatively modest compared to the gross contribution of about £11bn p.a. This is because we presently have four Objective One areas (the highest priority for eurogrants): West Wales, Merseyside, South Yorkshire and Cornwall. The problem is that to be eligible, an area is required to have per capita GDP less than 75% of per capita GDP averaged across the whole of the European Union. With the accession of the twelve new members (including Romania and Bulgaria), EU average GDP is expected to fall by about 16%. The lowered ceiling will leave the first three areas ineligible. Only Cornwall is expected to continue to fulfil the criterion for Objective One funding from 2006. Since this funding is primarily disbursed as wages, its loss will force up unemployment.
Presently, during this transition period, the new members are not receiving their full eurogrant entitlement … much to the fury of their citizens. Romano Prodi has already stated that, to fund eastern Europe, he wants to see the EU budget rise for the next funding period (2006 – 2013) from £62bn p.a. to £100bn p.a., a contributions’ hike of 61%!
There is also the looming continental pensions’ crisis to reckon with. We in Britain constantly fret over the pension provision that will be required by our aging population over the next thirty years or so, but our situation is nothing compared to the lack of any meaningful funding for the future in many continental member states. The reason this is important is that the EU Commission thinks not only in terms of community resources (which means seizing British oil and gas reserves for the common good) but also in terms of community liabilities (which means funding pensions across the entire EU from a single centralised pot). Almost unconsciously, the European Union has adopted the discredited communist mantra “From each according to his ability, to each according to his need” (discredited, because such naivety merely discourages enterprise and encourages laziness).
Until commentators understand that this is what lies just over the horizon, Jacques Chirac’s response in 2004 to France breaching the 3% deficit ceiling of the Stability and Growth Pact seems non-sensical. He announced appropriation of the pension funds of Electricité de France and Gaz de France. This infusion of much needed capital was intended to reduce the national debt below the 3% ceiling, but at the cost of the state taking on responsibility for the pensions of the electricity and gas workers in perpetuity … except that of course it wouldn’t be the French Government paying those pensions, but the EU supported by the British taxpayer. Clearly, Robert Maxwell is alive and well and living in the Elyseé Palace.
In 2006, therefore, Britain is going to face a double whammy: a staggering rise in gross contributions at the very moment that the present healthy receipt of eurogrants all but dries up. The EU will be in crisis, pulled eastwards by the clamour for equality in eurogrant allocations, pulled northwards by a revolt of taxpayers.
And hostility to the European Union is not limited to the UK. The newly-formed Independence & Democracy Group in the European Parliament consists of 11 UKIP MEPs, 10 Poles, 4 Italians, 3 Swedes, 3 French, 2 Dutch, 1 Dane, 1 Czech, 1 Irish and 1 Greek (most of whom are Eurosceptic rather than Eurorealist). The funding mechanisms of the European Parliament are designed to force MEPs to come together in such groups (witness the love-hate relationship between the Conservative Party and the EPP), with the result that the British contingent in the ID certainly has some quite strange bedfellows. Nonetheless, it seems likely that such Eurosceptic continental parties will become increasingly Eurorealist in the coming years, if only to increase their political clout.
ID has already achieved a notable success. In exchange for its support for Barroso’s nomination as the next President of the Commission, finally, after years of trying, Jens-Peter Bonde has persuaded the Commission to reveal the number of secret committees working for it. Books on the EU state that a couple of hundred committees exist; a Swedish scientist identified 1352; but the staggering reality is that there are now admitted to be 3094 committees of well-paid Eurocrats beavering away unremittingly to make all our lives more difficult.
A particularly interesting member of ID is Greece’s Popular Orthodox Rally (LAOS), a new controversial far-right party that is supportive of the Greek Orthodox Church, stands on an anti-immigration platform but has also been accused of anti-semitism. Ostensibly, it is merely Eurosceptic, opposing further integration and Turkish accession, and demanding that Greece retain control of defence and foreign policy. But in reality its core anti-immigration policy could only be implemented following withdrawal.
In its first Euroelection, LAOS secured 4.12% of the vote and one MEP. What is interesting about this result is that, between joining in 1981 and the accession of the new member states in 2004, Greece has been the single greatest financial beneficiary of the European Union, and until now the nation has been staunchly Europhile. It is a sign of the times that, even in Greece, there are now some people who believe that independence and control of immigration may be more important than eurogrants.
Now that the swing towards Euroscepticism across the entire continent has been confirmed, we can expect brand new political parties calling for withdrawal to emerge abroad in the next few years. The two nations to watch are
the Netherlands and Germany. The Netherlands makes the highest per capita contribution of any member state, and it is interesting that it was the Foreign Minister of this usually Europhile nation who before the elections called for the repatriation of some powers to national parliaments. An official study of the overall impact of EU regulations on the Netherlands has put the figure at 2% of GDP.
But the joker in the pack is undoubtedly Germany. In its current economic doldrums, some taxpayers must already be wondering if their huge net contribution to the EU budget might not be better spent at home. Historically, it has always been war-guilt that filled the EU’s coffers. But the present generation of taxpayers rightly feels no connection with Hitler.
Indeed, there have already been clashes between the ECJ and the German Constitutional Court. In the Manfred Brunner case in 1994, the German Constitutional Court rejected the primacy of the European Court of Justice with the following words:
“…the protection of basic rights provided by the [German] Constitution is not displaced by supra-national law that could claim precedence.”
In the late nineties, the German Government put on notice its concern that the German contribution to the EU budget was unacceptably high. And Germany keeps up her sleeve a very useful ‘Get Out Of Jail Free’ card: by her Constitution, it should have been the states, not the Federal Government, that signed up to the European Union.
Presently, the only parties calling for withdrawal are neo-Nazi pariahs. But this could change rapidly. It is wrong to stereotype Germans as unimaginative plodders. In the early eighties, a single charismatic leader, Petra Kelly, in a few short years brought the German Green Party from nowhere to participation in provincial and then federal government. Tragically, she was murdered in 1992. But somewhere in the Federal Republic today, outrage is no doubt growing in the breast of a new Petra Kelly. And this time she will be the champion of German independence.
The rise of UKIP has brought into focus the need to debate unemotionally the advantages and disadvantages of withdrawal as opposed to reform, that is to say Eurorealism versus Euroscepticism. This paper has attempted to go some way to make the case for withdrawal.
But there is a larger problem which undermines the Eurosceptic argument at every turn. All proposals for reform founder on the simple question “Why should the other member states agree?”, for each has a veto in the European Council.
Take the Common Fisheries Policy, for example, and the obvious need to reclaim control of our waters. Why on earth should Spain accept the curtailing of a nice little earner? And if Britain tried to act unilaterally without first leaving the EU, she would just be fined heavily by the European Court of Justice until she stepped back into line. Seeking reform without the threat of withdrawal is like an armed robber who storms into a bank, demands all the money but then tells the cashier “Oh, by the way: the gun’s not loaded”.
There are many in British politics today loyally continuing to wear their party’s Europhile or Eurosceptic badge but who privately (and not so privately) recognise that withdrawal is the only practicable solution to an almost intractable problem. It began with John Major’s ‘bastards’ attempting to block the Maastricht Treaty (one of whom, Roger Knapman MEP, today leads UKIP). But it now extends across the entire political spectrum. As Lord Stoddart, independent Labour peer, asked rhetorically in a speech in Exeter in October 2003, “Why is it that being patriotic is considered right-wing?”
But most significant perhaps was the following statement from Vincent Cable, Liberal-Democrat Treasury Spokesman, on the eve of the poll:
“The worrying thing about Europe is that it is impossible to think of a single example of a competence taken by Europe, and made subject to Qualified Majority Voting, that has been handed back to a nation state.”
When Liberal-Democrats, arch-integrationists for a generation, begin to see the cracks in the façade, the nation’s love affair with the European Union must truly be on an ebb tide.
By Marcus Watney
This article first appeared on http://www.brugesgroup.com