WEEKLY COMMENT 12-11-2015
By Barry Edwards
The Eurosceptics Paradigm
David Cameron finally set out the terms that his government wants to negotiate with the EU for the UK to stay a member. All of the points have been discussed at length by commentators and the reaction was as expected depending on which side of the argument you support. The case for remaining within the EU is fairly straightforward assuming that the bulk of the demands are agreed. What would happen if the electorate voted ‘no’ is the discussion that has attracted most comment since the announcement.
George Osborne made it very clear in his speech last week what is required concerning the relationship between the Eurozone and those countries which are not members. Basically, he asked for an open trade union, free from the policy of ‘ever closer union’ and a more competitive EU which has always been the fundamental problem in my view. The contentious point in the prime minister’s letter is immigration, which may not be such a big problem now the EU has a massive refugee crisis.
The Eurosceptics have always made this the main reason for leaving the EU. However, the matter has been discussed within the EU bureaucracy for some time since the same problem applies to many countries in the union and not just the richer northern members. The recent refugee crisis has concentrated attention on this subject and it is possible that a resolution could be devised that would prove satisfactory for some of the Eurosceptics. If that did happen then the case for remaining in the EU would become much stronger.
If the UK did vote to leave, the interesting debate is what would be the conditions for trade agreements with the EU, the USA, China and many other countries. There has been a big silence from the Eurosceptics on this point when the matter is raised. Exploring the possibilities that could arise is where the discussion has to concentrate if the Eurosceptics are going have a chance to win the day.
It is reasonable to assume that if the EU accepts the terms presented by David Cameron and there is a solution to paying in work benefits to immigrants from the EU, then many people could be persuaded to vote to remain a member. Whatever the result of the negotiations, the Eurosceptics still have to present their case for leaving and explain the trade arrangements the UK would have with the rest of the world.
The example of Norway, Iceland and Switzerland is presented as being a solution but it does not remove the immigration problem or the acceptance of all rules and regulations from the European parliament. Consequently, it would not meet the Eurosceptics’ terms and conditions for complete independence which demand control of the borders and the sovereign power of the UK parliament to decide all the rules and regulations.
Therefore, a complete separation would be the only acceptable outcome. That requires new treaties to be agreed with the rest of the world and would take many years to put in place. Most major countries have already stated that they would prefer the UK to remain part of the EU because they find it much easier to deal with one bloc of all European countries and those agreements are currently working well now; they also make the point that the UK is a good base to use to trade with the EU. The USA and China have stated that they would not agree favourable terms for the UK outside the EU. That means the Eurosceptics have got to explain how this proposed independence would operate successfully for companies to trade worldwide.
This is where silence reigns for the time being and it is left to commentators to discuss the problems of finding a solution. The UK is not the only country where Euroscepticism is prevalent; we know from the European elections that there is a sizable minority in many EU countries and their ranks are growing in strength especially now the refugee crisis is upon them. There is clearly a distinct possibility that this crisis and the UK leaving the EU could spark a breakup of the Eurozone and maybe the EU completely. If the terms presented by David Cameron were not agreed satisfactorily, it would send a message that the EU is not prepared to modernise creating doubt amongst the southern and eastern countries.
Defence is another issue that would become important especially with Russia making problems around the EU borders. The Americans are not keen on increasing their commitment to the defence of Europe anymore and would demand more contribution from EU countries if the UK left. This is one of those subjects that could only be discussed privately but the EU would be aware this could be a serious problem for them. Therefore, there are some issues that the EU has to consider carefully which makes it more likely the UK could get most of the terms being requested.
If these arguments did not persuade the EU to settle, then the only sensible way forward for the UK is to become a low tax, pro-business country attracting major companies from around the world to headquarter in the UK. The City of London is already the international financial centre of the world and it could become the prominent financial capital without much difficulty attracting massive inflows of capital for investment worldwide. It could become the centre for high-tech production with government investment which would increase exports substantially bringing the UK back into current account balance. Most of this cannot be done while the UK is a member of the EU because of trade agreements negotiated worldwide.
There is definitely a lot of potential outside the EU but it is a big risk and could go horribly wrong. The Eurosceptics would have to be very certain something like this could be achieved and be very persuasive in the process. Is the UK ready to take a risk like this? The forthcoming debate may reveal whether that is feasible or not.
That’s all for this week, more observations next week.