Executive Decision

At long last there are signs of some clarity in the continuing EU debate. The UK Prime Minister’s recent long-awaited speech on the future of the UK’s relationship with the EU and the reaction to it have brought about widespread discussion on the nature and future of the EU from which it is possible to discern the way ahead. Of course, and perhaps inevitably, David Cameron’s speech did not actually pose the key question that logic demands be posed, but the subsequent debate has allowed others to do so. But first, one reaction to the speech.

The French Foreign Minister made it quite clear that the UK was likely to receive little support from France for any re-negotiation of the EU treaties in favour of the UK: if you are invited to a football match you cannot expect to play by the rules of rugby, he said. Quite right and, by so saying, Laurent Fabius has struck at the heart of the matter. What was on offer when the UK joined the EU (or the EEC, as it then was) was to take part in the football match of ever closer economic and political union whereas the UK government told the electorate that what was on offer was the chance to take part in the rugby match of freer trade with the other members of the EEC, having to adopt only those rules of the game that were necessary to facilitate that goal. And despite the UK having been, rhetoric aside, an exemplary member of the EU, the feeling that we are playing with the wrong shaped ball and different goals has caused unnecessary tension ever since. Unnecessary, because it arises from the British people having been lied to by successive governments, a degree duplicity that is perhaps unparalleled in the long democratic history of our nation, and which would have been avoided had the politicians been honest. Little wonder both the British and the other Europeans have been frustrated by the apparent lack of mutual understanding.

After 40 years of trying to reconcile the irreconcilable, different shaped balls and different goals, but both teams thinking that they were playing by the same rules, a solution is on the horizon. Not, I think, because anybody seriously expects the UK government to be able to achieve what it would like – access to the single market and not much else – but because the nature of the EU itself has changed which renders a discussion at this level increasingly irrelevant. The grand project of the Euro has now become the main focus of the EU with measures perceived to be necessary for the Euro zone itself increasingly having an impact on the single market. There is a clear intention among those countries at the core of the Euro zone to use such measures as a way of bringing about the goal of ever closer union. In other words, the single market is no really any longer single. Taken to its logical conclusion, this change of emphasis must mean the eventual full political union of those countries that adopt, or wish to remain in, the Euro which in turn must mean that there will be no place in the EU at all for those countries that do not or, rather, there will be little point in membership of the one without the other (an argument developed by Wolfgang Münchau in the Financial Times this week). Thus the question that David Cameron did not pose but should have posed in his speech and the question which the referendum promised for 2017 should also pose: do you wish the UK to join the Euro or to leave the EU?

This question will have to be asked by all countries currently outside the Euro zone (and perhaps even some inside) as the implications of true monetary union become more widely understood: does the country agree (whether the electorates will actually be asked is a different question) to full political union which means agreeing to all key political and economic decisions affecting the Euro zone being taken in Berlin. In other words, does the country agree to become part of a greater Germany or not, because this is, in effect, what will be the ultimate price of Euro zone membership. The process has already started and unless Germany ceases to be the economic powerhouse of the EU will continue (please see Other People’s Money).

For the UK, the answer is clear – no. World trade is becoming freer and it seems most unlikely that as part of the terms for leaving, as opposed to staying in, the EU the UK (a country with a long tradition of free trade and very open markets) – along with other countries that will no doubt take a similar view – would not be able to agree on the terms for access to the single market, the benefits of which are probably going to look increasingly overstated in the future. For Poland the answer is more difficult, as it is for the many other EU member states that do not enjoy the democratic tradition or even the settled existence which the United Kingdom has enjoyed for centuries. Poland clearly wishes to be at the heart of Europe, as it sees it, and will accept almost any price to be anchored firmly in the German economic camp. Looked at from a historical perspective this is wholly understandable, if not ironic. For other countries Berlin may attract little more excitement than being ruled from Madrid or Vienna, under the Hapsburgs. Of course, there is always the hope that a proper federal United European state be created with the relations between individual states and the federal government being set out with the clarity of the US constitution but this seems unlikely, given the current lack of respect for the democratic voice within the EU.

When it comes, the decision will not doubt be difficult, but if the adoption of the Euro and full political union with Germany is not what an EU member state wants, there is little to fear from the alternative. After all, a single market is not the same as a free market and history has shown that it is the latter that triumphs in the end.

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