Valdai Club

The fact of the matter is that Britain is now fighting the disastrous failure of the common 2000-2010 EU Lisbon Strategy. Whatever happens from the referendum results, change is on its way.

David Cameron, the British Prime Minister, has approached his latest political campaign with the same zeal and astuteness of his re-election less than one year ago, and in my modest opinion, lately also armed with the diplomatic aplomb of a seasoned negotiator. It is a fact that he has decided to tackle, nationally and on the European level, the issue which is submerged in British consciousness i.e. Why should Britain be in the EU (not remain)? This is the question which I believe has never been really answered. The Prime Minister in his Bloomberg 2013 speech had declared that ‘participation in the single market, and our ability to help set its rules is the principal reason for our membership” and this is exactly what he appears to be doing. Many in the In or Out ( standing in London, Brexit is passè) campaign use differing arguments from historical to economic, from chronology to power structure, from stronger links to loosely coupled, from security to employment. The British Prime Minister is juggling with his’ four baskets’. To his credit he has managed to get Brussels to concede“an explicit statement” that the UK will be kept out of any move towards a European superstate and to re-interpret the EU’s founding principle of “ever closer union”. This is at loggerheads with the main parties of the European Parliament. Manfred Weber of the European People’s Party, Gianni Pittella of the European Socialists and Democrats and Guy Verhofstadt, the Leader of the Alliance of Liberals and Democrats for Europe have all gone on record to declare that their aim is to set up a United States of Europe with ever closer links. The three will have to accept that Britain is not committed to further political integration and that the principle of ever closer union will solely focus on promoting trust and understanding.

Added to the above is the “explicit statement” that the EU has no official currency, hence making it clear that Europe is a “multi-currency” union. It is another of the cards that the British Prime Minister has played with speed of thought and movement. Another thing to keep in mind is how he concealed what was in his hand. In this the Prime Minister has found many allies, both in Britain and abroad, straddling the In or Out campaign, who believe that the status of the pound sterling as a legitimate currency has been safeguarded, ring fenced and that it will always exist. Even those who started out on a different side of the barricades of a leader of a deep rooted eurosceptic conservative party or who have always argued consistently and principally for an economic decision to remain inside the European Union (which is by far the largest tranche of the in-campaigners) can be consoled that this pillar will remain embedded in the international finance markets. Let us not forget that The Financial Times supported by most independent financial analysts concur that the United Kingdom has long overtaken the United States to take the top spot in a ranking of the world’s leading financial centres. The fact that the eurozone area will now have to ‘respect the competencies, rights and obligations’ of member states outside the euro and that the supervision of banks and markets outside the eurozone will be left to the authority of the respective member states fulfills the UK’s demands of the single market without the vestige of regulations in the eurozone. The hacking of Brussels bureaucracy is very much on the cards – however one has to see what Germany, France, and others will do (after national elections) in the next few years – especially since the package to be agreed has strengthened primarily the hands of national parliaments.

The Third Basket is the crux of the matter and is the major win for David Cameron, as it is also one of the major victories for European national parliaments against Brussels institutions. It is clear that by bypassing the EU institutions (thereby making them largely irrelevant), national governments through their national bilateral links will have a “red card” system to bring power back from Brussels to Britain and to other EU member states. This is not a victory for the House of Commons alone, but will have repercussions from the Assembleia da Republica in Lisbon to the Sejm Rzeczypospolitej Polskiej in Warsaw, and from the House of Representatives of Malta to the Sveriges Riksdag in Stockholm, to mention just four of the twenty eight elected national parliaments. This would give groups of national parliaments the power to stop unwanted directives being handed down and to scrap existing EU laws. I believe that this is one of the most important diplomatic reform victories that David Cameron has succeeded to achieve. The European capitals and their parliaments had been long unhappy with what the unwieldy power of the European Institutions. Now they can exercise that right.

The re-organisation of the EU is very much on the cards. Whatever happens from the referendum results, change is on its way. From the treaty of Rome to the accession of Croatia, much water has passed under the bridge. The EU Commission and the other EU institutions appear to labour heavily on the content but very little on the substance. Many want to revolutionise the workings of the EU – slimmer, streamlined and holding on only to a coordinating function – not the massive leviathan or the hydra which currently exists. Take the heavily financed EU parliament which has never been really taken seriously by the citizens of Europe (one can look at the figures of the voting electorate). Does it need to remain as massive? It has never been explained to the British public (and for that matter to the EU citizens) what is the exact function of this institution or for that matter of other of the hydra’s heads- the Economic and Social Committee, the Committee of the Regions – even the enlightened elite are unsure of their (limited) powers and many question their functions. As it was eloquently acknowledged in Chatham House recently on a debate/discussion involving the former chairman of HSBC, former UK Trade Minister, Lord Stephen Green amongst others, the members of the House of Commons serve only as long as constituents feel the need to elect them – the moment they are considered redundant – they are not ‘returned’. Unintentionally perhaps, the British PM is trying to take the lead in proposing a new structure for the EU itself. For the conservative voters in the UK, the block of 28 nations must be re-organised to ensure that the ‘special characteristics’ of Britishness are preserved, be it in how people vote, in how they are represented, how business and international laws are interpreted and how security is safeguarded. The PM is also set to prevent the nine countries that are not in the eurozone being dominated by the 19 member states that are, with particular protections for the City of London.

Many had thought that British Euroscepticism was an elite project or that the risk of being ‘touched’ by the Brexit fever comes from academic or social acrobatics, This had some potency in the beginning but not as the day of reckoning arrives. I also beg to differ on the ‘Scary monsters’ ploy that was attributed to the Prime Minister, i.e. invoking Islamic State, Migration, and of course, why not, Russia. The fact of the matter is that Britain is now (perhaps inadvertently) also fighting the disastrous failure of the common 2000-2010 EU Lisbon Strategy. We must remember that the main fields were economic, social, and environmental renewal and sustainability. The Lisbon Strategy was heavily based on the economic concepts of Innovation as the motor for economic change (based on the writings of Joseph Schumpeter), The "learning economy" and the social and environmental renewal were the then buzzwords of Brussels – meetings, conferences, seminars, projects were all organised in support of this concept. By 2005 the failure of the Lisbon Strategy was widely commented on in the media, in national parliaments and by member states’ leaders. The common population of the EU did not know and still does not know what it stood for, and interestingly the EU member states’ verdict was that the non-binding character of the Lisbon Strategy contributed to its failure. Of course not much was learnt from this experiment and the EU reacted by setting up another agenda - the 2020 agenda. Now it is imperative that this should be revised in the light of what happens after June in the UK. As the elected leaders of EU member states have all appeared to have gone out of their way to make sure that David Cameron is in a position to win the referendum – I am sure that Europe will hold them to account once the referendum is decided.

I vividly remember being told (and reprimanded) in 2003, during an accession negotiation session with the then EU Commissioner for Enlargement, Günter Verheugen (a German national), that the EU does not offer a la carte menus for membership. So large states and small states with different histories and distinct cultural and financial baggage, for example, have had to abide by the same rules, not only the same principles – even when it was clear that size does matter. Thankfully, today we have come round (finally) to debate this. The discussion is also around the fact that everyone (except the die-hard federalists) understand that a one-size-fits-all EU is absurd. Those voting in the UK will use the ballot to underline this. In a way this is a European delegated vote for Britain, Europe will be voting by proxy, as what is decided will have an impact on the future of the European ‘super’ state. This is compounded by the fact that the In and Out campaign structures are reminiscent of the motley crew nature of a referendum with declared elements of wide political variety or incongruity. The Conservative grass roots have been neglected – although a year ago – they were behind the election of the Prime Minister. Each side has taken great pains (relevantly the Out campaign, as I write, is still clearly divided with no real transparent leadership – and we are in February – most analysts are still expecting a ‘coming out’ by key political figures (Ministers?) in and out of the government’s cabinet) to play a key role on the two sides of the barricades, and on positioning themselves as the safer choice for Britain. The European Project is definitely to be re-defined in Britain. The ‘Better Together’ campaign ranges from the self-declared diplomatic victory elements of the negotiation with the EU, to the economic and business voices of better in Europe, to the militant Europeans for ‘better and worse’. In other words from the European idealists to the economic protectionists, passing through the academic and agnostic elite.

I believe that the choice in Britain for Europe will be made by the ‘pragmatic’ majority. The same which voted in so forcefully David Cameron (last year) and unshackled it from the Liberal Democrats’ compromised co-existence. I contend that this referendum is a window of opportunity for the European project more than it is for the UK. The fact that other member states (through their elected leaders) have been measuring what movement they can make on the a la carte menu is indicative of the shared concern for the need of change. That is not the work of a ‘pushover’. It is also an opportunity to start a reflective exercise to reform the institutions of the EU, to re-invent Europe and to unharness each member state to develop according to its strengths with respect to its traditions and its potential (recently so many nationally elected European leaders have voiced their support to this concept, that I have stopped counting) – in cooperation and with shared European beliefs, but in understanding that Alicante is not Klaipeda. Europeans sharing expertise, embracing the same key concepts, promoting mobility of goods and people, does not necessarily mean taking the same road or walking the same route. Walking in snow comes easy to a number of Europeans, like swimming in the sea comes to others, making everyone go skiing or sailing, does not kick start any European future, it only ignites dreams or nightmares and leaves many nursing injuries worse than the financial crisis and its victims. Thanks to the ‘artful dodger’, it may be that Europe is drinking at the last chance saloon. From London, with the faculty of seeing all the relevant data in a meaningful manner, there is an indication that whatever the electorate will decide, Britain will survive and thrive – I am not so sure of where that leaves the EU project, any way it goes. The question of what it means to be European is at the heart of this open debate. Does being European mean being able to generate successfully economic growth, foster human rights, accelerate free movement of goods, and sustain mobility of people – or does it entail thinking of a proper neighbourhood policy, which is outward looking, not a fortress Europe. One thing I am certain of, the role of Britain as a key European member state is enhanced by this democratic exercise not weakened. It is ironic that David Cameron followed precisely and to the letter what Alan Johnson (at the launch of the Labour Party In Campaign) suggested in his pro-EU pitch in December of last year: “The way to achieve reform is through being committed, using patient argument, building alliances, playing our part — no sulking near the exit door muttering threats and insults.” That is exactly what he has delivered. Will Britain follow? And more importantly will Europe reform after this soul searching exercise?