Christopher Howarth is a senior Political Analyst at the think tank Open Europe. Prior to Open Europe he worked as a Conservative Foreign Affairs Adviser and senior researcher to a Shadow Europe Minister. Follow Open Europe on Twitter.
The last year has been in a fast moving year in the Conservative EU debate.
At the Windsor Conservative Renewal conference we had a lively discussion as to whether the Conservative party should commit to holding an IN/Out referendum on the EU – and if so when it should be held. At the time Conservative MPs had just been whipped to vote against an EU referendum. Since then we have seen Conservative MPs whipped in the opposite direction to vote for an In/out EU referendum in 2017.
The great French Statesman Tallyrand is once said to have observe that the difference between patriotism and “treason is a matter of dates” – a believable observation for one who successively served the French Monarchy, Republic, Empire and the restored monarchy.
But his observation also appears to holds true for today’s Conservative Party. Sometimes if you wait long enough and you are no longer a rebel.
It is important to realise how far we have already come. When Open Europe was founded as Business for Sterling, pointing out the problems with the Euro was a fringe activity in the Conservative Party. Now even Europhiles like Nick Clegg dare not speak of his love for it.
So before exploring what we want from the EU lets bear in mind that today’s heresy’s can easily become tomorrow’s party policy.
What should we want from the EU?
Some Europhile politicians say that you cannot have the good bits of the EU (such as free trade) without paying the costs, i.e a wasteful budget and overregulation. This has always seemed to me to be a strange form of Euro masochism.
Yes I want to have the benefits of the EU and no I don’t want to have the costs.
That seems to me to be an entirely logical point of view, and one that other states would do well to share. There is nothing virtuous about destroying jobs and wasting hard earned money in the name of EU integration.
When some in Europe see the EU as an end in itself I see the EU as a means to an end.
And primarily that end should be the single market. We, like all EU states, benefit from access to the single market and we should push that forwards.
But there are costs which make the EU a balance of good and bad. We should therefore expend our energies mercilessly reducing the costs of the EU. This can be done by
- Exempting ourselves from whole areas of policy where there is no reason to be involved.
- Reducing the EU’s budget, and
- Removing the ability of the EU to create burdensome regulation
Here are some examples:
1. There is no reason why the EU should conduct a costly and wasteful regional policy. Where even rich countries pay into the EU and have to apply to get their money back. Removing that would save us hundreds of millions and devolve power back to a national level.
2. There is no reason why we need to have an activist EU Court overseeing Judicial and Police Cooperation. We cooperate with other states around the world without attempting to create a new EU legal order.
3. There is no reason why the EU has to conduct an expensive and wasteful agricultural policy, particularly now the WTO has got rid of production linked subsidies.
4. There is no reason why the EU should set legally binding illogical targets form renewable energy that ignore cheaper ways of reducing CO2 emissions and needlessly drive up our fuel bills.
If we were constructing an EU from scratch, it would have none of these things.
EU decision making
In other areas the problem with the EU is the decision making process. The European Commission‘s right to initiate legislation should be curtailed. The relentless growth in the European parliament’s powers (vastly extended by the Lisbon treaty) should be reversed.
If it was not so easy to pass regulations we would not see so many.
The Single Market needs rules, but it needs well drafted market liberalising rules and yes rules need a Court. But increasingly we see politicised rule making overseen by a politicised court.
To give one important example, it is obviously not in the UK’s interests to have regulation over our key financial services industry held hostage to committees of politicised MEPs representing states with little or no financial business.
We have recently seen whole rafts of politicised financial regulations justified on Single Market grounds that have would do nothing to promote cross-border trade or reducing systemic risk in the banking system.
One approach could be to continue what we already do fighting each individual regulation, like Canute battling to save his Kingdom from an ever deeper sea of EU regulation. Another would be to embrace radical EU reform. We should change the European Parliament, Commission and Courts remits to ensure the stream of bad regulation and case law dries up.
Lets not use insect repellent, lets drain the swamp.
In short we should aim to return to the EU’s core mission of increasing European trade and competitiveness.
But if it is so bad, would it not be easier to leave?
The problems with the EU are well known. But the alternatives to the EU are less well known and they all present problems. If they did not we would never have joined in the first place.
If we have a referendum in 2017 and the UK decides to leave there are a number of examples we could follow.
- Norway. Norway is in the European Economic Area, which gives them access to the single market but no say over how the rules are made. It does to be fair give them more freedom in external trade, Fish and agriculture, important but no so significant to us.
- Switzerland. Switzerland is not in the EEA, but has concluded a series of bilateral deals with the EU. Trade flows relatively freely but they are constantly in danger of being frozen out of the financial services market.
- Turkey. Turkey has a strange deal whereby it is in the Customs Union but not the single market. They have no say over their external trade or EU regulations. This is not a good model for the UK.
Of course we do not need to follow these models. Potentially we could invoke Article 50 of the Lisbon Treaty, and use the 2 year negotiating window set out in the treaty to negotiate a free trade deal better and more suited to the UK than either Norway or Switzerland have achieved.
This is possible, but the fact that someone has put up a 100,000 euro BREXIT prize to spell it out should give some clue as to the complexities. – incidentally please contact the IEA by 4pm on Monday if you think you have the answer and the money could be yours.
The real answer is not that it is impossible to leave the EU, or that the UK would not survive outside the EU, it is that the trade deal we would have outside the EU is most likely to be not as good as staying in a new reformed lower cost EU.
So we should attempt to reform the EU. If we succeed we will have created an option for the UK perhaps better than the alternatives. If we fail, we will know where we stand and the referendum option will still be open to us.
[There are those who, for understandable reasons, would like to see an IN/OUT referendum now. I believe that would be a mistake. Firstly holding a referendum now would disenfranchise those who wish to see if a new EU is possible, but it would also run the risk of an IN vote confirming the UK’s place within an unreformed EU. I would say to those who believe reform is impossible and exit is the only option, if they are so certain reform will fail, why risk a referendum now, why not wait until reform is rejected and their chances of an out vote are increased?]
Will reform succeed?
Well the real answer is that we don’t know. The only certainty is that if we do nothing there will be no reform.
But there is every reason to be hopeful.
Amongst the more serious politicians in places such as the Netherlands, Sweden and increasingly Germany there is a growing realisation that the EU needs to change. This is an opportunity the UK should use.
Now the moves towards ‘ever closer union’ have hit a headwind of EU public opinion the UK should put up an alternative.
Angela Markel’s favourite saying is that:
“Europe today constitutes a little more than 7% of the world’s population and generates 25% of global GDP, but it needs to finance 50% of all global social spending, so it is obvious that it will have to work very hard to maintain its prosperity and its style of life.”
The Dutch Foreign Minister unveiling a Dutch study on the balance of EU powers said recently:
“The cabinet is convinced that the time of an ‘ever closer union’ in every possible policy area is behind us.”
Not our cabinet but the Dutch Cabinet.
The EU will be a very different place in 5 years’ time, if it is not we are all in trouble. Angela Merkel and the Dutch Government, among others, realise things must change. It is vitally important that the UK also plays a role in shaping the future.
[Real reform has a real chance. Even hardened Europhiles like EU Commission head Jose Barroso, Nick Clegg, and the Socialist MEP Martin Schultz all now feel the need to mention reform when discussing Europe. Granted their ideas for reform tend not to include the idea of actually devolving powers back to the member states, but the fact they feel the need to use the word means something – with massive youth unemployment across the eurozone only a fool would disagree.]
Is the Government showing leadership?
In his January Bloomberg speech David Cameron set out a vision of a more competitive economically liberal EU. This needs to be built on.
Since the speech we have not seen any fleshing out of the bones. No doubt the Coalition makes this difficult but the early signs are not promising.
We have had the beginning of the “balance of competencies” review – the audit of EU powers – but that exercise is largely civil service driven and because its remit does not allow it to say otherwise has concluded that the status quo is about right! That is a pity because other reform minded states follow our actions closely.
So if we can do nothing in Coalition before the election the Conservative manifestos for 2014 and 2015 must explain in more detail what a Conservative Government will attempt.
The Conservative party should set out a bold agenda for EU reform based on returning powers from the EU institutions. This should include areas such as EU regional policy, Crime and policing law, climate change policy and return the EU to its core project – the Single Market.
We should argue for more powers for national parliaments, less powers for the European parliament and a restatement of the commitment to a referendum in 2017.
[And with the spectre of a renewed Coalition stalking the land – the manifesto should make it clear that the EU referendum is a “red line” in any future Coalition negotiations. If there is any more creative ambiguity on this point, such as the subtleties of “if the Conservatives win the Election” and “If I am Prime Minister” trust will evaporate. ]
The EU is changing and we have a real chance to play our part.
No longer should the EU feel like something that is done to us. We should use this opportunity to show some leadership and we may be surprised by the number of people who will support us.