Hugh Dykes’s Vision for Europe

Liberal Democrat peer Hugh Dykes sets out his (and mainstream LibDem) understanding of the vision that is needed for the whole of the European Union, not just filtered through the spectacles of apparent short-term national interest. This piece was originally published on the European Movement’s Euroblog:

What we need is a vision for the whole of the European Union.

by Lord Dykes A few weeks after the PM sadly refused to attend the Nobel Peace Prize award to the European Union in Oslo, I had the chance to ask my noble friend Baroness Warsi, Minister of State at the Foreign Office, what further opt-outs we would now seek in Brussels. She very kindly stated that ”the Government always seek outcomes that are in the national interest … our priorities include … the single market and … fair competition”. I spend a lot of my time in France and have the opportunity to observe public life and politics there at close quarters. It is interesting that such a proud, indeed, sometimes overly patriotic country, sees absolutely no contradiction between its own direct interests and those of the European Union. It considers them intimately connected and pursues one as an expression of the other.  As in Berlin and Madrid, and most other EU capitals, the EU flag flies proudly in Paris alongside the national tricolour. They do not feel the one cancels out the other. The UK is the only major member state where government buildings never, ever fly the European flag. Why are we so nervous about the EU? Why are we so immature? It is very self-defeating if leading Conservative Ministers and politicians refer to the over-repeated phrase “the British national interest” as if that were wholly different from our membership of the European Union and in opposition to that of all the other member states. The explanation for the use of such language is simple; an unusually large number of old-fashioned nationalist Conservative MPs have a notion of national sovereignty which is, literally, at least 100 years out of date. The fundamental premise upon which the European project is based is one which argues that pooling sovereignty by way of signing EU treaties, achieved by unanimity, is not a loss of real sovereignty, it is a means to protect it and enhance it. We have done so through other international treaties and membership of international organisations like the UN, WTO, NATO, even FIFA, all over the world, to no ill effect. It is quite extraordinary that the blind commitment in our so-called “special relationship”, which has led us to go into rather questionable military adventures in the not so distant past (which we usually later regret), is rarely questioned, while we suffer hot flushes when confronted with a perfectly sensible measure of consensus-based EU co-operation. Mr Cameron is now launching a risky plan which is designed to appease these wilder anti-EU MP colleagues, and which could quickly get out of control. His wish to renegotiate our terms of membership, in effect to get Britain out of its Treaty commitments, which have been voluntarily agreed and dully ratified by our own Parliament, can only cause resentment across the EU and raise questions among our international partners about how committed we are to our membership of the biggest economy in the world. It comes after Mr Cameron made himself unpopular through a series of tactical mistakes. The bitterness felt by the European People’s Party, the biggest, and incidentally, centre-right political family in the EU, about the Conservatives deciding to set up their own group in the European Parliament still lingers. Vetoing the Fiscal Compact and complicating efforts to address the sovereign debt crisis in certain parts of the Eurozone has not been forgotten either. As Peter Ludlow said recently “The argument that the rest of Europe will simply acquiesce in whatever kind or arrangement (we) opt for, because … our partners need us … more than the UK needs them, is a total illusion”. What is needed is a vision for the EU, one that is not based on the narrow national interest, but one that caters for the wider and common interests of the European Union and all its members. One that seeks to build on the successes of EU co-operation, but does not try to reduce it, discount it or compromise it. The best way to achieve that is through partnership and consensus, rather than ultimatums that risk a potential exit of the EU.   The European Movement UK is Britain’s longest standing pro-European organization, campaigning for decades to inform the debate around the benefits of EU membership.   We are a not-for-profit, non-governmental organization, funded exclusively by our members. Visit http://www.euromove.org.uk to see how you can join us and help keep Britain in the EU.

Croatia, New Kid on the EU Block

On 1 July, Croatia will become the 28th member state of the European Union, having cleared all the accession hurdles. It may come as a surprise to British Eurosceptics that there is still a queue of countries wanting to join the EU, but despite the ongoing economic and financial problems of the eurozone the EU project remains something to which newly democratic countries of eastern Europe, in particular, remain committed. This point was stressed by Croatia’s Ambassador to London, Ivan Grdesic, when he spoke at a lunch hosted by the Association of European Journalists (AEJ) British Section at Europe House in Smith Square today. Croatia will be one of the smaller EU states, with a population of under 5 million (even including Croats living in Bosnia Herzogovina, most of whom hold joint citizenship), but it recognizes that being part of the EU brings not only the benefits of being part of the Single Market but also should strengthen democratic transparency inside Croatia and the fight against corruption, which remains a factor in several Balkan nations. Of course there will be some downsides; when Croatia becomes a full member of the Schengen Agreement it will have to consolidate its borders with non-EU states, and it is going to have to introduce visas for tourists from countries such as Russia and Turkey. However, Croatia will be a significant beneficiary of EU funds, helping develop its infrastructure, industry and agriculture. There was some lively discussion with the Ambassador about the legacy of not only Communist Marshal Tito but also the distinctly right-wing and authoritarian President Franjo Tudjman, who was in power during the 1990s, not to mention the unfortunate earlier period of Croatia’s existence as an “independent” state during the Second World War when the fascist Ustasha ruled. It is a remarkable tribute to how far Croatia has come from those dark days on 70-odd years ago that now it is on the doorstep of EU membership. And who is next waiting in the wings? Probably Iceland!

Cyprus Banking Crisis

Thoughtful piece from Petros Fassoulas of the European Movement on Cyprus, the banking crisis and the EU:

18 March 2013

Is the Cyprus deal the lesser of all evils? In case anyone thought that the bank and sovereign debt crisis that has engulfed certain parts of the eurozone has produced all its dramatic twists, events this weekend came as a rude awakener. Eurozone leaders agreed early on Saturday morning a deal to bailout and restructure the Cypriot banking sector. The most controversial part of the deal sees a tax levied on depositors to raise about 5.8 billion euros, to add to the €10 billion committed by the Eurozone and (probably) IMF. A 9.9% levy will be imposed to deposits over 100.000, while deposits below 100.000 will face a levy of 6.75%. So for the first time depositors, who were considered sacrosanct until now, are forced to share the cost of a bail-out. A lot has been said about how this decision was reached. The blame shifts depending who one talks to, but the Financial Times give a good account. It seems that considerations about the future of Cyprus as an off-shore financial centre played a role when deciding how widely to spread the pain among depositors in Cypriot banks. It was feared that taxing only non-resident depositors would scare investors away. So the main bone of contention (in an overall contentious decision) is that smaller depositors are put on the firing line, in a move that is seen as unfair and dangerous. Asking working people and pensioners to sacrifice their savings in the service of a failed banking sector is indeed cruel. But WSJ’s Simon Dixon makes a fair point, there is an element of fairness when asking locals to contribute to the bail out of their country’s banking sector, especially when that sector represents such a huge part of the country’s economy. Many argue that it should not have come to this at all, that depositors should have been spared all together. But as Hugo Dixon of the Reuters argues the Eurozone and the Cypriot government had very little choice. Imposing a haircut on government debt, like it was done in Greece’s case, was not possible because most of the country’s sovereign debt is held under English law (making a Greek-style restructuring hard) and the remaining is held by Cypriot banks, making a hair-cut self-defeating. Hence the decision to impose a tax on depositors, many of whom are non-resident, predominately Russian and in many cases suspect of money-laundering. It would have been a hard task politically to explain to taxpayers across the Eurozone why they should contribute more to a bail-out that would have, to some extent, helped Russian oligarchs. The most important thing that one should consider is what would be the cost of an alternative. In the absence of a bail-out deal (one that the Cypriot government had delayed long enough) Cypriot banks (which are already under ECB life-support) would collapse, taking the Cypriot economy with them. Lest we forget that the banking sector in Cyprus is more than 5 times the Cypriot economy. The one good thing that can come out of this is the de facto reduction of Cyprus’ banking sector to a size closer to the EU average, as the Eurogroup statement, that followed the bailout agreement, calls for. As we have seen in other European countries like Ireland and the UK, an oversized financial sector holds huge risks for the host country, especially for one whose economy is as small as that of Cyprus. To a large extent this is a banking crisis, rather than a “euro-crisis” and no matter what the structural inefficiencies of Eurozone’s governance (and European politicians inability so far to separate bank from sovereign debt) what Cyprus is faced with is the collapse of a banking sector that grew too big for its own good and made far too many bad decisions. There is still a lot to play for, not least a parliamentary vote to approve the bail-out deal. Until then there is time and room to reconsider how the burden will be spread among depositors, and there are many proposals on the table on how to shield small depositors and reduce their contribution to the bail-out pot of money. Some reports talk about reducing to 3% the levy imposed to deposits up to €100.000. One last thing. The situation in Cyprus shows that in an interconnected world we are not immune to what happens “over there”. Capital as well as people are mobile, the banking sector interconnected and as a result banks and people’s savings are affected, irrespectively whether we are part of the Eurozone or not. The fact that British citizens who live and hold deposits in Cyprus will have to be part of the bail-out levy shows how important it is for the British government to be as involved as possible in Eurozone governance and EU-wide efforts to address the systemic faults of Europe’s financial sector. Petros Fassoulas, European Movement

Andrew Duff’s Eurovision

While far too many people in Britain are pondering the question “Should the UK leave the EU?”, our continental neighbours are more concerned with debating the issue of how the European Union should now evolve. Evolve it must, as the prolonged crisis in the eurozone has highlighted that the current methods of governance are no longer fit for purpose. Probably they never were. Instead, there will have to be a form of fiscal and banking union, though that is something Britain is likely to remain detached from for the forseeable future. Last night, at a Federal Trust seminar at Europe House in Westminster, arch-federalist and LibDem MEP for the East of England, Andrew Duff, set out his vision for the future, arguing that the EU’s treaties need to be revised as soon as possible, as the Lisbon Treaty is being stretched to breaking point by the current crisis. He predicted that there will be a Convention kicking off the new treaty process in the Spring of 2015 (once the European elections are out of the way and a new Commission is in place). It falls to the federalist movement to draft a new constitutional treaty for a federalist EU, Andrew said — and of course he would normally be part of that, having been intimately involved in preparations for the last draft Constitution, which had to be dropped because of public opposition in several member states.

Andrew also once more floated the idea that in future there will need to be a group of MEPs in the European Parliament who are elected from transnational lists. And more controversially, he developed his concept of associate membership of the EU, describing four possible categories: (1) Norway and Switzerland, (2) Serbia and other aspirant member states which still have a lot of changes to make domestically, (3) Turkey, and (4) the UK and any other member state which feels it does not wish to be part of a federal union. This all led to a lively debate; as ever Andrew was thought-provoking and the discussion was far more intelligent than what one hears in the House of Commons or reads in most of the British Press.

Why the EU Needs to Integrate More

It’s 40 years since Britain joined the EU and siren voices among UKIP and the Tory right are arguing that it’s time to turn the clock back and pull out. They couldn’t be more wrong. On the contrary, this is the time for the EU to integrate more — as the eurozone now seems destined to do — and Britain should be an enthusiastic participant. In the 1950s it was clear to the Founding Fathers (sorry, ladies, they were all men) of what developed into the EU that a degree of economic integration, notably between France and Germany, was necessary to make wars between western European states impossible. That goal was so smoothly achieved that European peace is taken for granted, especially by the young. A second huge victory since 1989 has been the absorption of formerly Communist states of central and eastern Europe ino the EU. This year, Croatia will be the next. But there is an urgent reason why EU integration should move ahead, namely the way that the global economy is developing, with the rise of new heavyweights including Brazil, Russia, India and China — the BRICs. As EU Commission President José Manuel Barroso has rightly pointed out, by 2050 not a single individual European country will be among the world’s top 10 economies* — not even Germany. So in order to compete — indeed, to survive as an economic force — Europe must unite further and start operating more as not just a single market but also a single economic force. It would be madness for Britain to stay out of that, condemning itself to a form of offshore irrelevance. It is not the Europhiles in Britain who are unpatriotic, as some of our critics allege, but rather UKIP and the Europhobic Tory right who want to consign us to the role of an historical theme park. 

*A new entry at number 10, however, could well be Turkey, which makes it all the more important that Turkey be embraced into the European family.

Vicky Pryce’s Debt Write-offs

Though many — perhaps too many — Brits rub their hands in glee that the UK is not part of the troubled eurozone, and therefore may sometimes benefit from currency fluctuations, only UKIP MEPs and other delusionists could relish the thought of the single currency’s collapse. “Europe”, as so many in Britain continue to refer to the Continent, as if we are somehow not part of it, is still the biggest single market for British goods and is likely to remain so for some time, despite the rise of the BRICs — Brazil, Russia, India and China. Moreover, those who would like us to become another Norway, being part of the European economic area but having no say in the rules and regulations that govern it, are positively unpatriotic, in my view. I was glad that Vicky Pryce, former Chief Economist at the Department of Trade and Industry and later working with Vince Cable at the Department of Business and Skills, stressed, at a Pizza and Politics put on by Islington Liberal Democrats this evening, that the UK is far better in than out when it comes to the EU. The author of a recently acclaimed book, Greekonomics*, she has since her departure from government employment become something of a guru on what is happening in Europe’s economy, with particular in relation to Greece, whence she originally hails. Indeed, she is forever popping up on the TV and radio as the one commentator who knows what she is talking about on the subject, yet does not slag off her compatriots as good-for-nothing lazy tax-dodgers. That is, alas, the image still in the minds of many Germans, for example, though they would do well to acknowledge just how well Germany has done out of the single currency — selling goods left, right and centre — even if they are now expected to bail out the declining European periphery. I was struck by Vicky’s comments about the possibility of the need for a debt write-off for Greece and possibly some others, as their debt levels are unsustainable and will only drive them further into the sloough of despond. I was reminded so strongly as she spoke of the Latin American debt crisis that I used to commentate on for the BBC in the late 1980s. I asked her whether she could ever envisage Britain during the euro — as Peter Mandelson, amongst others, have suggested. She was cautious about the possibility — more so than myself — but she didn’t rule it out completely.

* Biteback Publishing

20 Years of the European Single Market

When people ask me ‘What has the EU ever done for me?’ my answer usually relates to the Single Market, which has given individuals and businesses four basic freedoms of movement throughout the 27 member states, relating to goods, people, services and capital. The EU is now celebrating 20 years of the Single Market, though given the current problems in the eurozone it is not, as Internal Market and Services Commissioner Michel Barnier has said, the right moment for a birthday party. Nonetheless, it is appropriate to take stock of what the Single Market has achieved and what still needs to be done. So in member states across the EU events have been going on bringing together interested parties from government, business and civil society to discuss the Single Market 20 Years On. Today the EU Commission’s London Representation has been hosting a conference subtitled ‘ What’s in It for the UK?’. The star speaker this morning was Lord (Leon) Brittan, a former Vice-President of the Commission and one of the leading pro-Europeans in the parliamentary Conservative Party. Unlike many of his colleagues he sincerely believes that Britain should be at the heart of Europe; indeed, he says Britain will probably join the euro one day, when the eurozone has sorted out its problems and, alas, the UK is experiencing its own. It is worth reminding ourselves that it was a Tory peer and Commissioner, Lord Cockfield, who largely designed the Single Market and persuaded Margaret Thatcher to endorse it. And of course it was another Conservative, Ted Heath, who took Britain into the EU in the first place. The Europhobic headbangers of the Tory right should ponder on that more often. Interestingly, the Chair of the European Parliament’s Internal Markert and Consumer Protection Committee, Malcolm Harbour, is also a British Conservative; he spoke constructively this morning too. But I’ll leave the final word to Leon Brittan who declared that ‘we have to sell the EU of consumers and citizens and that is done through stories’. We pro-Europeans have some very good stories to tell and it would be good to hear more of them out in public discourse.

The EU’s Nobel Prize

I confess that when I heard that the European Union had been nominated for this year’s Nobel Peace Prize I was somewhat surprised — and I was even more taken aback today when I learnt that it had won it, against competition from over 100 other organizations and individuals. Predictably Nigel Farage, UKIP and the Tory Euro-sceptics immediately went on the offensive, and they got far more coverage in the British media than they deserve. But such is the nature of the UK tabloid Press (and the Daily Telegraph). The more I thought about the award, however, the more I realised how well deserved it is. The EU and its various predecessors have made war between France and Germany unthinkable, which was the prime motivation of the founding fathers. And even more remarkably, the EU has enabled formerly Communist countries of central and eastern Europe to glide back into the mainstream of Europe where they belong, with astonishing speed. Of course the eurozone is going through a difficult patch, but let’s not forget that the global financial crisis began with the sub-prime mortgages in the United States, the collapse of Lehman Brothers and irresponsible practices by bankers, not least in the City of London. That is not the EU’s fault; on the contrary, a more cohesive EU offers the best possible route out of the current problems. It is also notable that the Peace Prize is decided by the Norwegian Nobel committee and that Norway is not a member of the EU. That is basically because Norway has a relatively tiny population and an enormous sovereign wealth fund based on its huge earnings from hydrocarbons extraction. But that did not stop the committee understanding what has been happening in the wider Europe. And I can see Norway one day joining the EU, just as one day Britain will probably be forced to join the euro, after the pound sterling slides into oblivion. But in the meantime, what the Norwegians have said is: ‘the EU has brought peace and stability to our often war-torn continent, and shows every sign of continuing to do so, once the current troubles are over.’

Is the Eurozone Doomed to Fail?

This lunchtime I was at Dr Challoner’s High School for Girls in Chalfont, opposing the motion that This House Believes the Eurozone Is Doomed to Fail. Proposing it was David Moller, a former Reader’s Digest journalist, on behalf of Civitas. The audience were a group of 30-odd Year 12s who have been studying economics. A vote on the motion was taken before either of us spoke, with the Aye side winning 18:4. I set out the benefits that the European Union had brought, not just for the eurozone members, and pointed out that the crisis we are going through is a global one that originated not in Europe but in the United States. It is probably true that Greece should not have been allowed to join the euro until it gots its economy and taxation revenues in order; new countries wishing to join have to pass more stringent criteria. But my main point was that the eurozone countries do not want the single currency to fail. Indeed, even countries outside the eurozone – including Britain, with its ‘moderately eurosceptic’ Prime Minister — do not want the eurozone to fail, and therefore they will do everything possible to make sure it survives. Moreover, despite the eurozone’s current woes, the euro has been a remarkable success, establishing itself in just ten years as the world’s second global currency. So what needs to be done is to assist economic readjustment in some of the weaker periphery countries and, as Angela Merkel has said, have ‘more Europe’, not ‘less Europe’, in the sense of greater coherence in economic and fiscal policy. When a fresh vote was taken at the end of the debate the Ayes only won by a single vote, 12:11 — a significant and pleasing shift!

(photo: Fiona Glen)

John Palmer’s Prognosis for EU

The next few years will be decisive for the future of Europe, according to veteran EU journalist and pundit John Palmer. The eurozone will either have to forge a closer union or else the EU as a whole will start gradually to disintegrate, he said. John was speaking at the AGM of the European Movement in London at Europe House in Westminster and stressed that the eurozone crisis is part of a much wider global crisis triggered by the US real estate crisis and the consequent banking crisis. He pointed out that the total deficits of the eurozone countries are proportionately lower than those of the US and the UK; the problem lies with several countries on the periphery. But we would be deluding ourselves if we believed that Greece could leave the eurozone without provoking a serious knock-on effect. “You can’t build an effective wall around Greece alone,” he added. If Greece left, the integrity of the Single Market would be challenged, which would have dire consequences for all of Europe, including Britain. But John believes that the austerity timetable currently imposed on Greece is unrealistic and counter-productive. “Certainly, there need to be major structural changes, but in the context of a programme for growth.” Greek voters go to the polls again this weekend, though the outcome is predicted once more to be inconclusive. And towards the end of the month there will be a crucial EU Summit. There have been other EU Summits that were meant to come up with a solution to the crisis but frankly didn’t. This next one cannot afford not to.

Link: http://www.euromove.org.uk