In September 2016, the referendum on United Kingdom membership of the European Union is likely to be held. With less than twelve months to go, The Europe Dilemma: Britain and the Drama of EU Integration by Roger Liddle, published in 2014, is valuable reading. He provides insight into how Britain’s relationship with European institutions has affected both parties. At the date of its publication, the travails of the Conservative Party was Liddle’s main focus in his conclusion; while they are still more likely to suffer internally from divisions on Europe, the debate within the Labour Party has reignited since the election of Jeremy Corbyn as leader, notwithstanding his recent commitment to remaining.
Lord Liddle is an unashamed europhile, whose major regret is that Tony Blair (whom he advised on European affiars) adopted an obsequiousness towards the Murdoch press that led to the United Kingdom’s non-participation in the euro single currency. In his analysis, living within the euro would have forced a tighter fiscal policy on Britain, and slowed the decline of British manufacturing.
Liddle’s case is that Britain’s leaders from Macmillan on let their country down by not participating as they could have in the European project. He argues that Britain paid a continuing price for its late arrival. Not only were they perceived with wariness by the original members, but they lost the opportunity to shape the Common Agricultural Policy, which would later become a source of grievance for the British. In Liddle’s view, the same could be said of their approach to the euro, where Britain lost an opportunity to steer it in their favour. Rather than viewing involvement in the European Union as an important venture in global politics, in positive terms, British politicians consistently talk of standing up for national interests. Liddle analyses the attitudes of the two major parties towards Europe from the 1960s to the time of his writing, both in government and in opposition, with particular spotlights on the 1975 referendum held by the Labour government on whether to remain within the EEC, and the failure of the United Kingdom to join the single currency.
David Cameron called the referendum in response to pressure from within his own party, from UKIP outside, and from the eurosceptic press. If Cameron is a moderate on Europe, Blair was an enthusiast. Yet he found himself pushed into taking stances he could not have desired. He did not stand up to those who were less committed, many of whom were part of the New Labour project. For example, Foreign Secretary Jack Straw insisted that there would have be a referendum on the 2004 Constitutional Treaty, which Blair initially resisted, it being less important in substance than either the Single European Act or the Maastricht Treaty. This public pledge led to the referendums in France and the Netherlands, which scuppered the Treaty (though it was substantially reformulated in the Lisbon Treaty).
Liddle also highlights Blair’s weakness against Brown, allowing him to set the terms for any entry into the single currency. It is clear that Blair had begun to have doubts about Brown as a successor, yet was unwilling to confront him in any serious way. Liddle marks out as the great conundrum of Blair’s premiership, that “if Brown was so unfit to be prime minister, why did our hero Blair allow a situation in which that became inevitable”. If instead of simply demoting Robin Cook from the Foreign Office in 2001, Blair had switched his portfolio with Brown’s, to have a more committed europhile in the exchequer, he might have achieved the legacy he intended of bringing Britain into the euro.
However, Blair receives praise for his commitment to enlargement, and for waiving the 7-year derogation on the free movement of labour (which the Irish government under Bertie Ahern did too, to its credit). Unlike the Labour Party that fought the 2015 election, Blair continues to affirm the merits of this policy. Liddle writes that is “depressing that the entire British political class has run away from explaining the benefits of eastern migration to economy and society”.
Liddle is naturally more critical still of Cameron, in decisions such as Britain’s opt-out of the Stability Treaty, of which he writes that it “did wonders for his rating in the party and the country, but at the price of severe damage to national interests”. His Bloomberg speech, in which he announced his intentions to renegotiate Britain’s membership of the EU, paradoxically couched Britain’s in more positive terms than anything from a Tory leader since Major in Bonn in 1990. Cameron now finds himself looking for a symbolic gesture to present to the British public in a referendum, just as Harold Wilson found presenting a change in New Zealand milk quotas as a significant renegotiation. I would also speculate that Cameron is privately more open to immigration than his push to drive down numbers entering Britain would suggest.
Cameron should not believe that by putting this referendum, which he hopes and expects to win, that he will settle the European question for a generation, or give him rest from the anti-EU sections of his party. Such are the lessons of history from the Labour Party; eight years after holding a referendum in which two-thirds of voters supported remaining in the EEC, the party stood in the 1983 general election on a platform of withdrawal, and had lost many of its more pro-European members to the newly formed Social Democratic Party (later to join with the Liberal Party to become the Liberal Democrats). It took many years for the Labour Party to resolve these internal battles in the New Labour project.
The New Stateman asked this week, Can anything sink the triumphant Conservatives? With Labour out in Scotland, thanks to the SNP, and undergoing an identity crisis since Corbyn’s election (watch Shadow Justice Secretary Lord Falconer outline the differences he holds with his party leader, and these tensions are there across the shadow cabinet), it might seem like the Conservatives are indeed in for a few years of plain sailing. But if anything can put them off course, it may be this referendum, and the divisions within the party, whatever the results.
Do check out Liddle’s book over the course of this debate!
Tomorrow morning, I will vote Yes in the Referendum.
This is for two main reasons, that the fiscal limits make sense for countries to adopt in the context of a single currency, and that we almost certainly will need funding from an international fund, and that the European Stability Mechanism provides the best opportunity for this.
With a transnational currency, there have to be certain constraints on government deficits to prevent contagion from one country to another. These constraints do not mandate further austerity.
In the short term, we are in a program managed by the Troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). They are lending us money to fund our government’s current inability to borrow on international markets. The restrictions on the government’s spending, mandating a combination of spending cuts and tax increases, are from the Troika, rather than any requirements of our euro membership. As things are, the state spends much more than it takes in, a gap that will have to be filled, but in a managed way in the hope of ensuring stability.
Balanced budgets in the long run are not the same thing as austerity. A balanced budget, or rather a deficit limit in this case, is about limiting the difference between the state’s income and expenditure. These concepts are explained in this video, produced two nights ago by friends of mine.
Governments can maintain both balanced budgets and relatively high levels of public spending, if they make that political choice. The Nordic countries have for years maintained both.
This Treaty was not designed with the Irish case in particular in mind. It was more focused on the case of Greece, which did overspend. So I accept the case of those who say that it would not have prevented the excessive spending here in the 2000s. That is not a reason to vote No. We need a currency that’s viable, and that means ensuring that a country like Greece could not put others at risk through its spending decisions.
I would like to see rules put in place to prevent governments within the euro area insuring debtors, rather than just depositors. What happened in September 2008 should not have happened, and the banks should not have been allowed to expect for that to have been on the table. But justified anger at this decision, and at the manner in which the European Central Bank is slow to reduce the amount to be repaid is not a good enough reason to reject this treaty.
We have no reason to expect that there would be a better deal on banking debt on offer before the end of the year on offer if we vote No. The very fact that it can come into force with 12 countries means that it was set up in a manner which allowed countries to opt out.
We will probably need funding. The best way to be sure of that is to vote for the Treaty. There is no way it could be easier or cheaper to get funding, whether from the IMF or if in some manner by a late entry to the ESM, than by passing this Treaty now. To quote from the preamble to the Stability Treaty,
STRESSING the importance of the Treaty establishing the European Stability Mechanism as an element of the global strategy to strengthen the economic and monetary union and POINTING OUT that the granting of financial assistance in the framework of new programmes under the European Stability Mechanism will be conditional, as of 1 March 2013, on the ratification of this Treaty by the Contracting Party concerned…
A post yesterday I read yesterday outlined the options we’d have for funding were we to vote No. None of them are appealing.
Even if we don’t need a second bail-out, to reject the mechanism by which we could receive one would send a signal of uncertainty to the markets. It is for these reasons that a survey of economists by Indecon showed that 90% believe that it is on balance in Ireland’s best interest to vote Yes. Similarly, in a survey by Dublin Chamber, 86% of business people are voting Yes.
I do not believe that we could vote No without risking social and political unrest. I read today sincere articles written by those I know from left-wing and from libertarian perspectives who would argue a No vote is needed to force fundamental restructuring. Perhaps they’re right. But as I look across the political situation in various European countries, I don’t want to see what might happen politically if an immediate adjustment to our budget had to take place.
So I am voting Yes as a small element in managing a recovery, and hopefully a new way of politics both domestically and in Europe.
We must campaign against the democratic deficit and waste of taxpayers’ money in European institutions. We must push against crony capitalism, and reassess how government should spend its money.
But we can do this and support the Treaty. So I will be voting Yes.
Published in The Irish Times, 29 May 2012
A chara, – Seán L’Estrange (May 28th) voices concern about the wording of the amendment. He will be reassured to know that the wording is no different to the form that has routinely been used to allow the State to ratify European treaties. In 1972, we voted to insert a new Article 29.4.3°, “The State may become a member of the European Coal and Steel Community (established by Treaty signed at Paris on the 18th day of April, 1951), the European Economic Community (established by Treaty signed at Rome on the 25th day of March, 1957) and the European Atomic Energy Community (established by Treaty signed at Rome on the 25th day of March, 1957). No provision of this Constitution invalidates laws enacted, acts done or measures adopted by the State necessitated by the obligations of membership of the Communities or prevents laws enacted, acts done or measures adopted by the Communities, or institutions thereof, from having the force of law in the State.”
On Thursday, we are being asked to ratify only the treaty agreed on March 2nd of this year. Any further changes which would conflict with our Constitution would have to be put to the people, as was done seven times between 1972 and this year’s referendum, on each occasion with a similar form of words. – Is mise,
Bray, Co Wicklow.
This morning, Denis Donovan, a former Deputy Director at the IMF, clearly stated his view that without signing up to the agreements outlined under the Stability Treaty, the IMF would not fund us if we needed more money:
The IMF has made it pretty clear throughout this euro debt crisis that they only go in in partnership with Europe. That’s because they don’t want to put their money at risk…The IMF is very worried about getting repaid, it’s a big concern. If the Europeans are not willing to take the risk to lend to Ireland, there’s no way, in my view, that the IMF will be able to do it.
This corroborates and goes even further than the view of Karl Whelan, an economist from UCD, and a favourite of Sinn Féin, who when considering the possibility of emergency funding from the IMF only, wrote “What is clear, however, is that any programme approved would provide Ireland with far less funds than a second EU-IMF programme. This will mean more austerity not less”.
So there we have it. If we opt out of this Treaty, and if we need emergency funding, our chances of getting IMF are between non-existent or one that’s much harsher than what we’re currently experiencing.
And as to Gerry Adams’s suggestion on The Week in Politics last night that we could avail of funding from the European Stability Mechanism (ESM) without signing up to this Treaty. If we were Johnny-come-latelys to this the Stability Mechanism, they would equally be in no humour to be generous about terms. There’s nothing in this Treaty in terms of budgetary constraints that could be avoided if we needed emergency funding after this.
The only honest view on funding on the No side that I’ve encountered is that of Cormac Lucey. Writing in Business and Finance, he bases his argument on the very basis that voting No will mean that we will not have access to the ESM, “Allowing Ireland access to the ESM cookie jar from 2014 onwards would only give the public sector another excuse to delay its long-overdue adjustment to reality.” A fiscal hawk like Lucey would like us to get a harsh budgetary adjustment over and done with in one foul sweep, without any loans from outside to ease the process.
This is what those ton the left have to answer. If it is austerity they are campaigning against, why are they advocating a position that will make austerity much more likely?
It may be the land of Voltaire, Benjamin Constant and Fréderic Bastiat, but it is rare that a liberal today can hope for much from the politics of modern France. In this case, in terms of who I hope to win the French presidential election, the first round tomorrow, I am considering negatives as much as positives. In 2007, I thought Nicolas Sarkozy, who represents Union for a Popular Movement (UMP), the largest centre-right party in France, would bring the economic reforms France needed. He delivered on some of this program, such as raising the retirement age from 60 to 62, but he has otherwise been disappointing.
One of the dangers in times of recession is a rise in nativism. This manifests itself in a retreat to the nation at the political level. In economic terms, this is protectionism and a preference for produce of the country. But for any country to be competitive, it must be willing to compete in a global world. If French people are not buying enough French products, it is a signal that they must adjust either their quality or price. Firms seek to grow, and they can only expect foreign markets to be even less forgiving than those of their compatriots. This principle does apply at a European Union level, where President Nicolas Sarkozy wants a “But European Act”, but more so yet at a national level, where he would seek such a measure in lieu of European protectionism.
One focus of the Fine Gael Ard Fheis, taking place in the National Convention Centre today and tomorrow, will have to be the upcoming referendum on the Fiscal Stability Treaty, a relatively short agreement between 25 of 27 EU countries. If we want this country to remain part of the mainstream of decisions on the euro, we will have to vote Yes. Because it only requires 12 member states to ratify it to come into effect, there is no possibility of voting No once to get better terms in a second vote. This was possible with Nice between 2001 and 2002 and with Lisbon between 2008 and 2009 as these needed the support of all then 15 and 27 member states to pass.
It is not a perfect treaty in that it is not comprehensive. As one designed to prevent the fiscal difficulties countries have found themselves in, I had hoped that it would address banking, which was where Ireland most particularly suffered, rather than a focus on public debt and deficit which was where Greece and Italy got into trouble. Specifically, I had hoped for a constitutional bar or limits on future guarantees by governments of investment debt.
But the Treaty does make sense. These are terms that should have been in place from 1992 with Maastricht, and in effect from 1999 with the introduction of the euro. Fiscal supervision is a naturally important part of a monetary union. The Irish people could certainly benefit from measures reqiring balanced budgets. It is not about imposing austerity, but about putting in places mechanisms to prevent a requirement for future austerity. It is a way of saying Never Again to fiscal imprudence. It is distinct from our fiscal program under the troika of the EC/ECB/IMF and those terms will not be affected by this Treaty. There is in fact very little that’s new in it.
We will also need to support this Treaty to gain access to the European Stability Mechanism, i.e. if we needed a further bailout. I don’t think we will need that. But if there were only a five percent chance that we would need to access this fund, we would surely not want to cut off that option for ourselves.
Though not a vote on our membership of the euro, it is a vote on the nature of that membership. If we vote No, we will be very clearly outside the mainstream of decision-making on our own currency.
This is not a partisan matter for me, one that I’m supporting because of my membership of Fine Gael. If anything, the reverse is in some part the case. I campaigned for the Lisbon Treaty in both 2008 and 2009, and it was after the second campaign that one of those I worked with in the offices of Ireland for Europe and Generation Yes, who is now President of Young Fine Gael, particularly encouraged me to get involved in Fine Gael. This will be the first European Treaty referendum fought with Fine Gael in government and we will have to launch a serious and focused campaign, fought on the merits of the compact itself. It will not be good enough to complain if other issues are brought into the debate. It will be up to the Yes side, in all parties and civic society groups, to steer the debate in the way that addresses the issue at stake.
So I look forward to a good campaign on this.
Nigel Farage, United Kingdom Independence Party MEP, used the occasion of the first visit of Herman Van Rompuy, the new President of the European Council, to let him know exactly what he thinks of him, going as far as to call Belgium a non-country.
Leave aside the fact that Mr Farage undermines his argument by his lack of basic courtesy, given President Van Rompuy’s standing, his power and influence cannot be seen to be overbearing in the way suggested. As I have written before, someone like Herman Van Rompuy is the best person for the job for those who worry about the encroaching power of the European Union. Given a choice between Mr Van Rompuy and someone with greater presence, surely Mr Farage should rather fear the alternative.
Personally, I think we’d be better off having someone whom President Obama would naturally think to meet at summits. Or else, damn the lack of words in French vocabulary, rename Mr Van Rompuy’s position Chair of the European Council, which is all it really is, so that José Manuel Barroso, President of the European Commission, is the clear occupant of the top role, rather than the multiplicity and confusion we have now.