Wednesday, 14 December 2011

Hate To Say I Told You So

Over the last few months, the Euro has been focused on a lot by the media and various commentators. It would appear that the currency is under intense, near breaking-point pressure at the moment. Who would have thought that a single currency for 17 very different countries, with very different sized economies, wouldn’t be perfect? It has received a great deal of attention as a recent treaty amendment was proposed by the European Union (EU), and Britain said no to it. It has caused problems, apparently both domestically and internationally. I’d like to have a discussion about some of the events that have taken place and their impact. I should stress this early on – I am a Euro-sceptic so this blog will be biased and it will be biased that way. If that bothers you, there is a little cross in the corner of this window; it might be worth using it. There is a bit of storytelling which I have to dispense with until dealing with my opinion. I have tried to remember it all correctly but if I have made a mistake, then I apologise.

Ok so there has been a great deal of trouble in the Eurozone (the name for the countries inside the EU that have the Euro as their currency) as members of it have run into financial trouble. Greece has been the one which most people have been talking about. They have a relatively small economy anyway and yet they did not control their spending whatsoever (or from what I hear have legislation insisting taxes are paid...) and this, somewhat unsurprisingly, has caught up with them. Other countries in the Eurozone that are in trouble are Ireland, Portugal, Spain and Italy. There may be others but I don’t recall them now. This is causing massive problems for the countries with stable (or what passes as stable in the current market) economies as they are having to create rescue packages (bail outs) for these failing countries. What makes me raise an eyebrow is how anyone thought a single currency would work in the first place as merely an economic union and not a more inter-connected political one. What I mean by this is I am surprised that the countries that are in the Eurozone don’t all have to have the same tax rules, or at the very least have their budgets regulated and approved by the EU. What I am saying it is seemed to me like a flawed idea from the off and it has now shown that is in fact a flawed idea. So a massive rescue package was being debated for a long time by the Eurozone leaders to try and save Greece and finally it was approved (even if it did mean a government change in Greece!). Now, if my knowledge on the subject is right, once this was agreed, there were discussions on increasing the bailout fund for all of the Eurozone which was approved. What followed then was the proposal of a new Treaty of Fiscal Union (which I believe is an alteration to a pre-existing Treaty but I’m not 100% on that). The Treaty was debated by all the EU member states as a way to save the Euro, fronted by Merkel and Sarkozy (Merkozy). David Cameron said he was going to this summit to talk to the other EU leaders with a number of safeguards he wanted for Britain. When it transpired that these safeguards were completely unacceptable for Merkozy, Cameron did not sign the new proposed Treaty. I believe I have got the facts right there but I have tried to be fairly simplistic with this as going into much more detail would be even more storytelling and would be a waste of everyone’s time.

The proposal that was laid out by Merkozy and the Eurozone would have ended up costing the City of London £26bn a year I believe. That is quite a significant amount of money to just sign away (I guess this is one of the reasons why I don’t vote Labour). I don’t blame Cameron at all for trying to safeguard British interests when it comes to Europe. In fact, I fully support Cameron’s actions here by not signing the treaty change agreement. For so many years, British interests have just been signed away. We had 13 years of a pro-Europe Labour government who were pretty much prepared to allow Britain to be shafted by Europe. It is a nice change. However it occurs to me that if the shoe was on the other foot, and Britain was proposing that we change something which would severely affect France, them using the veto wouldn’t be so much of an issue. Let’s say, hypothetically unfortunately, that we turned up at the EU and said “we need to significantly alter the Common Agricultural Policy” – do you reckon France would be expected to just agree to it like we were expected to agree to this? I don’t think so somehow. In fact as pointed out in the letters pages of yesterday’s Telegraph - “French governments have vetoed reform of the Common Agricultural Policy – the EU's single largest expense – repeatedly, without attracting the opprobrium they've unleashed on David Cameron.” Slightly hypocritical don’t you think?

As a side note, I say the proposal laid out by Merkozy as it appears to be those two leaders who are dictating over this issue. The famous photo set which has appeared on the front of our papers and probably papers across Europe are those of Sarkozy refusing, or appearing to refuse to shake hands with David Cameron. One thing which has not received nearly as much coverage as I thought it might was that, allegedly, after Cameron refused to just go along with what Merkozy were proposing, that Sarkozy needed to be physically restrained from punching Cameron. Good to know that is how things work in the EU. Are we on level footing with France and Germany in the EU if this sort of behaviour occurs? I think not somehow.

So, Merkozy are really mad at Britain for not going along with this. Best let the bulldog stay in the house tonight as Britain is in the big EU doghouse. Or are we? Boris Johnson pointed out in an article he wrote for a recent edition of the Daily Telegraph that other British Prime Ministers and other Prime Ministers have blocked decisions or suggestions which haven’t been in their respective countries interests to approve. He said: “The reality is that plenty of prime ministers have blocked things that aren’t in this country’s interests – from Thatcher on the EU budget to Tony Blair on the withholding tax. And plenty of other prime ministers have been far more obstreperous than the British – one thinks of Felipe Gonz├ílez of Spain, who used to hold up EU summits until he felt he had got his hands on enough Irish cod and haddock.”

He then said in this column that he suspects he knows the real reason why Merkozy are angry with us at the moment. He argues that they are angry because Britain has been proven right over the Euro. He says we have, for the last twenty years supported the single market idea but doubted that a monetary union would be a good idea. For twenty years, we have been saying the reason it wouldn’t be a good idea and wouldn’t work without a political union, which would not be democratically possible. This strikes me as being completely plausible. Here we are on our little island, as a part of Europe – as one of the major countries within the EU (apparently) but we’re not signed up to the Euro. We’ve said from the beginning that without becoming the United States of Europe, this plan wouldn’t work. Now it hasn’t worked and the French, Germans et al really dislike the fact that we were right. “I hate to say I told you so...!”

Boris also points out one major fact which seems to be being glossed over quite a lot and that is simply that Cameron didn’t actually veto anything. “They blame David Cameron for “vetoing” a new EU treaty, when really he has done no such thing. It is perfectly open to the other EU countries now to go ahead and form their own new fiscal rules. If they want, they can decide to create an economic government of Europe. They may decide that now is the time – even though electorates are already feeling alienated from the political process – to hand sensitive decisions on tax and spending to unelected bureaucrats. It strikes me that this would be an amazingly dangerous thing to do, since the peoples of this Supra National and Fiscal Union (Snafu) would rapidly discover that they could no longer remove their government from office. I doubt very much that it would work, since there seems no particular reason why national governments should respect a collection of new “binding” rules any more than they respected the “binding” rules of Maastricht – not unless there is some secret proposal to enforce them by violence with a Euro-army”. So, we haven’t blocked the EU from doing anything. The members of the Eurozone and members of the EU outside the zone can sign up to any agreement they want to. All Cameron did was refuse to sign Britain up for it.

One comment that has been said repeatedly is that Britain is now cut off, isolated and marginalised from Europe (mostly by the BBC and Labour that. Odd – wouldn’t expect to see a connection there....). We are in a group of one inside the EU. It remains to be seen whether or not this is actually the case or not. One thought which does occur to me though is that when Britain was exited from the European Exchange Rate Mechanism back in 1992 (after ‘Black Wednesday’), the economy started to grow again and continued to grow and grow. In fact it continued to grow until this happened



Anyway, one interesting thing to come out of this decision by David Cameron is that it would appear there is a nice split to deal with now in the coalition government between the Conservatives and Lib Dems. Well, this is certainly what the media was attempting to portray anyway. Just looking at the headlines, you could be forgiven for thinking that the coalition was about to split up. This is not the case at all. Cameron faced parliament on Monday to justify his decision to not sign up to the treaty change and noticeably, Nick Clegg (the Deputy Prime Minister and leader of the Liberal Democrats) was not present. Now, it is fairly obvious why he wasn’t present and that is because he wanted to try and show everyone just how upset at Cameron he was. Despite the fact it has been widely reported that before Cameron went to the EU summit, Clegg agreed to the bargaining position of Britain. He agreed to it, yet it very unhappy about it. He justified his decision to stay away from parliament as he didn’t wish to be a distraction; instead he ended up looking cowardly. If you need proof that the coalition isn’t about to split, it can be seen by looking back at parliament on Monday during Cameron’s statement. Instead of slamming Cameron, all the Lib Dems (including Sir Menzies Campbell, the former Lib Dem leader) wanted was a reassurance that we wouldn’t be leaving the EU and we would still be at the centre of all decision making. Even if Cameron had turned around to his Lib Dem coalition partners and said “actually, I’m going to tell the EU where they can shove it” – I can’t see the Lib Dems breaking up the coalition. Some may resign their government posts but I just don’t see them ending the coalition because that would end in a general election, they would undoubtedly get smashed. Anyway, they got their reassurances that we wouldn’t be leaving Europe. My question is though, should we consider going?

I’m not going to reopen the whole debate on Britain’s EU membership now. What I am going to do is focus on the events of the last few days. What has happened basically is we have seen the Eurozone develop into an in-group, a clique if you will, inside the EU. As Merkozy are the leaders of the two biggest countries inside the Eurozone, they are running the show. Because they are essentially running the Eurozone, it almost seems like they think they are running the EU and that everyone should just agree with what they say and what they propose. This would explain their reaction when Cameron said that Britain would not sign up for the proposals Merkozy made. Now, as I’ve discussed, I am in agreement with Boris on the fact they are not mad at us for saying no to the Treaty but they were already mad at us for being right over the Euro. This was made apparent when Sarkozy told Cameron to “shut up” when it came to advising the Eurozone about what to do. Will we be marginalised in Europe because of this? It is hard to say. What is the case though is that it is becoming increasingly difficult to work with these people and now it might be time to consider picking up our ball from Brussels and bringing it home. These people don’t want to work with us and are looking to cause us problems at all times? If that is the case then we should go. Clegg said the decision we made could jeopardise jobs and this is always the argument which is trotted out when the idea of leaving Europe comes up. Along with the argument about trading. On the jobs front, there may be some job loss following out departure from Europe. But the people that are doing the important jobs will no longer be in the job because of the EU, they will be civil servants because the country needs them. On the trading front, I would be amazed if the EU refused point blank to trade with us if we left. But even if they did, there are other places we can trade with. It would be foolish if we left to not explore further trade options with China and the USA. We are not dependant on the EU. I genuinely believe they need us more than we need them. With the goings-on of the last few weeks, I believe we should seriously consider calling the referendum and asking the British voting public “do you believe Britain should remain a member of the European Union?” Based on the opinion polls following Cameron’s decision, I feel the country would mostly agree with me, it is time to go.

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