Britain, Ireland & Europe
Dublin
May 22nd, 2013
Dublin is a good place to discuss the future of Europe and the European Union, and the debate about Britain’s place in it – or out of it. This matters to me as a British citizen. And it also matters to me as someone leaving politics in Britain to work from a base in the US in the field of humanitarian relief, where the EU’s massive global effort has been positively influenced by British development policy over the last 15 years.
Sitting on the West of Europe, you have seen massive economic and social change in the last two decades, some of it powered by your position in the EU. Like us in Britain, you are a deeply plugged into the global as well as European economy; you have strong links to the US; and you are working through the triple challenge of repair to financial systems, fiscal balances and the wealth creating base. Unlike us, you are in the Euro, and your governing parties are united in their commitment to a future in the European Union. So there is contrast as well as commonality – and of course competition as well as cooperation.
I don’t need to tell you that the work to resolve the Euro crisis is still ongoing. You have nationalised banking sector debts, turned the current account to surplus in part through big productivity driven improvements in unit labour costs, renegotiated loans, turned the economy to positive growth, but still face rising national debt and banking sector challenges. So there is a pressing economic question of what European efforts could help promote sustained and stronger growth. But there is also a wider question coming into view – dramatically so in the British case. It is whether reforms in the Euro area will make the position of non Euro members like Britain in the EU untenable – or whether in fact the resolution of the Euro crisis need not lead to a two-tier Europe. I think it is vital that pro Europeans enter this debate with humility but also passion. There should be no glossing over the scale of the problem facing countries of the EU. Too many citizens feel we are now on the wrong side of economic history; and that the EU is making the problem worse not better. We need to understand this, and engage with it.
There are five themes running through my remarks today:
- First, that deep trends rather than short term policy choices provide good reason to see Europe as a risk in the short term but as strong in the medium/long term. The EU has a powerful logic and purpose in the 21st century.
- Second, in the debate about fiscal consolidation and structural reform, the best option for western economies – the balance of deficit reduction, incentives for innovation, and macroeconomic stimulus – has not yet been achieved, but there are some signs of change coming out of Brussels.
- Third, that politics and economics – over migration, sharing of sovereignty, welfare reform - are pulling in opposite directions and need to be reconciled.
- Fourth, that the Euro is not the EU, and that reform of the Euro must not kill off the EU as an alliance of equal partners. In saving the Euro it is vital not to neglect the EU of 28 countries, from trade to energy to services. We need alliances across the in/out divide to achieve this, and Anglo-Irish alliance is a good place to start.
- Finally that Britain and Europe are better off with the UK in, but there is real danger of a semi detached status. I don’t think Britain will leave, but it is not in our interest or Europe’s for our potential exit to be the defining question of our engagement. The Director of the British CBI’s warning last week is well-timed and absolutely right.
Global Change
The place I want to start this lecture is not in the thicket of the European debate, but with a broader view of global changes that affect all countries, in or out of the Euro, in or out of the EU. The truth is that the context for domestic and European policy for western countries like ours is changing rapidly. There is the seismic shift of economic power away from the industrialised economies of the west, and towards the emerging economies to the East and South. There is a radical democratisation of access to information, that is affecting public and private sector alike. There is a resource crunch, epitomised by the rise in the price of non oil commodities over the last decade. There is the growth in power of Muslim majority countries from Turkey to the Gulf to Indonesia, so that it is now fair to say that no global problems – from security to economy to humanitarian relief where I will from September be devoting my energies – can be addressed without partnership with the power and influence of the Muslim worlds. And then there is the reality of a hyper-connected world, where economic, social connections are not just wide and deep but all but instantaneous.
It is this latter point that I want to start with. It is not contentious to say that from health to terrorism to finance, the world is more closely connected than ever before. But the implications are contested. And nowhere more so than in the debate about the future of regional organisations like the EU.
One school of thought argues that the future is all about ad hoc alliances across the globe, virtual and flexible networks that take advantage of the smaller world to forge ties of mutual benefit. In this conception, countries like Britain and Ireland should be looking to South Korea as much as to Poland or Germany for cooperation. For reference the population of South Korea is 50 million, and GDP per head $23 000, for Poland 35 million and $13 000, for Germany 85 million and $41 000.
South Korea is democratic, fast-growing, and highly educated. It has a lot to teach us. But that does not mean that we can turn to the South Koreas of this world as an alternative to our membership of the EU. The alternative argument that needs to be put is that in this more connected, smaller world, neighbourhood still matters – and matters a lot.
In fact, the strong version of the argument is that in the context of weak global governance, regional association grows in importance; that security, cooperation, shared rules and shared endeavour in your own archipelago are even more important; and these regional associations do not just increase power and strengthen protection; they also make more likely and more effective the international engagement with emerging powers, whether South Korea or any other. This is the modern case for the European Union: helping countries get the best deal for their own citizens in the world as it exists today, not at the expense of global partnerships, but as the best basis for them. Put another way, unless we band together in the EU, then we will be at the mercy of the decisions of others in years to come.
This is the case that the European single market is a hard-won advantage in the global economy; that trade agreements are better for us when we negotiate together rather than alone; that shared effort on piracy in the Gulf of Aden by eight European navies has achieved what any one country could never have achieved; that cooperation on migration is the only way to manage global flows of people; and that a pooled development and emergency aid budget can achieve much more than the diluted strength of 27/28 such budgets, as I saw for myself in Brussels two weeks ago with my new colleagues from the International Rescue Committee, discussing the crisis in Syria and its neighbours, humanitarian relief in Afghanistan, Pakistan, Myanmar and Thailand, plus endeavour across Africa.
Shared geography is not a guarantor of shared culture – one just has to look at the intra-regional conflict in Syria to see that - but it is a driver of shared interest, and because of shared history and memory often the basis of shared values. This is the very strong view I have of the European Union. That it was not just a great project for the post-war peace, when binding the wounds of war above all between France and Germany was such a challenge; nor that it was only important during the Cold War, and after, as an anchor for European unity and hope for the countries of the Soviet bloc (who are now the most pro European countries of all); but that the modern European project is an important support for our prosperity and security in a world that becomes not just smaller and more competitive but also in some ways more chaotic by the day.
Far from regaining power and sovereignty by opting out of international bodies, we actually surrender our influence by doing so. The call to strike out for “independence” is a mirage in the modern world. There is no opting out of the global challenges we face, and less chance of addressing them separated from our neighbours.
The Case for British Withdrawal is Flawed
Lord Lawson has now put the opposite case high on the political agenda. But read his article in the Times and it is deeply flawed. He says Britain should leave essentially for three reasons. First, that the Eurozone is a bloc which will come to override the rest of the EU. President Hollande’s proposal for a President of the Eurozone will exacerbate his fears. But the negative reaction to the proposal shows the folly of Lawson’s argument that the Eurozone is a unified bloc. The Euro crisis has taught us the opposite. The countries within the Eurozone have different views of how to promote competitiveness. And countries like Germany, Netherlands and Ireland have a lot in common with countries like Britain, Sweden and Poland.
The second argument is that there is a European plot against the City. Leave to one side George Osborne’s boast that he has tougher regulation than the rest of Europe. In fact Britain never lost a vote on financial regulation in the EU – until this year, when our refusal to make alliances on the bonus tax left our position without supporters. The best way to maintain the benefits of Britain’s financial services industry is for the government to represent our interests in Brussels.
The third argument is that the single market is somehow cosseting British industry, and they would prosper better by looking outside the EU. The experience of British players in emerging economies, buffeted by local politics, is not always an encouraging precedent. But this neglects the basic point that the rest of the world has trade agreements with the EU. There are 46 of them. All would have to be negotiated by Britain if we left the EU. And of course the Transatlantic Trade and Investment Partnership is now under negotiation with the US.
The House of Commons Library confirmed for me that membership costs £1 per person per week. So to me the case that European membership is an untenable burden for Britain falls apart. But if the case for membership is so strong, then there is an obvious question which arises: if the European Union is so necessary, why is it not more popular?
Europe Needs Reform
The statistics, not just in Britain and Ireland but also more widely, are pretty clear. According to recent Pew polling, those with a favourable view of the EU fell by a median of 15 per cent across Germany, Britain, France, Italy, Spain, Greece, Poland and the Czech Republic in the space of the last year. They didn’t poll in Ireland but I would guess the statistics are similar.
But the reason for this is quite simple, and actually quite sensible. If you wanted to dream up a cocktail for draining support from the European Union then you would include the following:
- A long period from 2002 to 2007 when the EU was preoccupied with internal institutional navel-gazing.
- A policy mix in the Eurozone that in wake of the financial crisis seems to have lengthened the tunnel rather than bringing closer the light.
- An institutional structure that is opaque at best and incomprehensible at worst.
- National interests that have blocked even the creation of a single home for the European Parliament.
And of course the Euro crisis is not over. I think European leaders have demonstrated their absolute determination to preserve the Euro. The ECB has shown that it can successfully play a game of chicken with the financial markets, driving down bond spreads across the Continent. And European citizens in countries including Ireland have shown remarkable resilience in the face of big hits to their living standards.
But the core imbalances between creditors and debtors are still real, and in some cases growing. The policy mix is still too pro-cyclical, so that the deflationary impact of fiscal consolidation is drowning out the benefits of structural reform. Banking systems in some countries are still vulnerable, as the IMF warned in its recent assessment of Ireland, highlighting the nearly quarter of loans that are non performing; and proposals for Banking Union are being rebuilt, our of timber rather than steel, to use the metaphor of German Finance Minister Schauble. This is not a heartening basis on which to be looking at the challenge of recession or weak growth in the core of the Eurozone.
The EU’s unpopularity should be a spur not to exit but to reform – and critically reform that embraces the 28 countries of the EU, deliberately crossing the Euro in/Euro out divide, making the EU work better rather than tinkering with the structure. I would prefer a more expansive list than the focus on the Working Time Directive proposed by David Cameron. There was a missed opportunity on the budget, where the focus on limiting the size of the budget obscured the importance of reforming the budget. But there are other things that countries like Britain and Ireland could argue for together:
- Last June’s European Council, at the prompting of the ECB, identified a key role for the European Investment Bank in plugging market failures in the supply of corporate credit across the European economy. There was agreement for more aggressive deployment of the EIB balance sheet in the periphery of Europe. But it hasn’t yet happened, and needs a big push.
- The completion of the single market is challenging but right, and needs to be allied to strong European commitment to the trade deal with the US. This is not just about the economic bounce it involves; it is also a geopolitical statement of intent to set the standards for global trade and cooperation.
- The increasing cohesion of European engagement with Russia – Poland more cooperative, Germany less rose-tinted – has no greater challenge than in the field of energy. This is high finance and high politics, for example with Russian pipelines circumventing Ukraine speaking to deep questions of identity and political alliance.
- In this country, you know that 30 per cent of your unemployed – who total some 15 per cent of the labour force – are unemployed for more than two years. Youth unemployment now afflicts 26 million people across the EU. The June summit is pledged to action on this, but we cannot afford implementation that takes years to reach the frontline.
- European migration and border policy is critical, and involves help for countries like Greece as well as assurance for countries on the Continent.
- There is a vital task of using the budget reductions to squeeze efficiency out of the system, and improve delivery.
- And I still hanker for real engagement of National Parliaments in European decision making. It would be smart politics as well as high-minded for the European Parliament to see the benefit of this.
This is an agenda squarely focussed on how the EU works, not how it is structured. But I hold to the belief that it is the delivery deficit rather than the democratic deficit that is Europe’s biggest problem. Restore growth, extend opportunity, protect citizens, improve efficiency, build the economic infrastructure of the future, and the EU will not reverse the decline in trust in all governing institutions overnight. But it will be part of the solution rather than be perceived as part of the problem.
There is in any case very little enthusiasm on the Continent for Treaty revision, and the Parliamentary and popular approvals that are then required. So changes are going to have to be achieved within the existing Treaties. And that leads directly to the British debate, because the British government is banking on Treaty revision by 2017.
You read the newspapers and talk to friends, colleagues and relatives. My own diagnosis is that the rise of UKIP, much commented upon, is more a revolt against the mainstream parties than against Europe, more a blast against politics as usual – of which the EU is sometimes a part – than against the EU.
But this should not be a cause of complacency. Europe is unpopular. Some grievances are real. And there is a fever in the Tory party on this issue. It has been long in the making, and is deep in its festering. It is impossible to get through a Tory selection meeting without an arms race on European policy. And if the Tory tragedy is activists obsessed with Europe, Labour’s tragedy is the opposite: not that everyone asks about Europe at selection meetings, but that no one asks about it.
There are obviously two issues for you in Ireland.
One issue, the least likely and the least talked about, is that Britain does indeed pull out of the EU, and sets out on social and economic policy deliberately to undercut the competitive position of Ireland and other European countries. This could be about corporation tax or social policy. And there are some in the UK government who argue that the case for getting out of Europe is to avoid costly regulations. But in truth the minimum wage and other items of social legislation are national not EU creations. They can be amended in the EU as much as outside.
So the second issue is more real. It is not that Britain leaves the EU, but that Britain is weak in the EU, and that on a whole range of issues where Britain and Ireland have common interests and common cause, we get left behind. This is the more serious danger.
I know from my experience that give and take in Brussels, the search for consensus, depends on a feeling that all partners are committed to some version of the European project. And the danger for Britain is that it gives the impression that it has no such vision, which creates a vicious circle, where more decisions seem to run against our interests, and more grievance is built up. There is already evidence that, in the metaphor of European Council President Van Rompuy, putting your hand on the handle of the exit door means people in the room are less likely to want alliances with you. So the danger is that our influence wanes.
There are big decisions ahead. Not just on the single market but on Justice and Home Affairs and the make-up of the next Commission, to name but two. These need a strong British voice. To the extent that the Prime Minister articulates the case for membership he will help that; if he looks to be in hoc to his backbenchers, it hurts.
Conclusion
The sad truth is that the Euro crisis has provided fodder for Federalists and for Sceptics – who form a strange alliance in arguing that only a fully-fledged federal union can make the Euro work. The difference between them is that while the Federalists want it to happen, and fear it won’t, the Sceptics don’t want it to happen and fear it will.
But neither Federalism not Scepticism are an adequate response to the crisis. Federalism neglects the foundations of political legitimacy in the nation state. Scepticism neglects the power of shared sovereignty on key issues. The EU needs both the legitimacy that comes from one nation one vote, and the efficiency that comes from Qualified Majority Voting. It isn’t neat, but it is necessary.
Timothy Garton Ash has written of a “dysfunctional triangle” of national politics that is enduringly strong, European policies that seem remote, and global markets that are demanding and fickle. It is a powerful analysis. But the answer is different Europe, not less Europe or out of Europe.
In this, Britain and Ireland have much to offer each other. We both need each other. We are strong allies in Europe, and long may it stay that way.
Dublin
May 22nd, 2013
Dublin is a good place to discuss the future of Europe and the European Union, and the debate about Britain’s place in it – or out of it. This matters to me as a British citizen. And it also matters to me as someone leaving politics in Britain to work from a base in the US in the field of humanitarian relief, where the EU’s massive global effort has been positively influenced by British development policy over the last 15 years.
Sitting on the West of Europe, you have seen massive economic and social change in the last two decades, some of it powered by your position in the EU. Like us in Britain, you are a deeply plugged into the global as well as European economy; you have strong links to the US; and you are working through the triple challenge of repair to financial systems, fiscal balances and the wealth creating base. Unlike us, you are in the Euro, and your governing parties are united in their commitment to a future in the European Union. So there is contrast as well as commonality – and of course competition as well as cooperation.
I don’t need to tell you that the work to resolve the Euro crisis is still ongoing. You have nationalised banking sector debts, turned the current account to surplus in part through big productivity driven improvements in unit labour costs, renegotiated loans, turned the economy to positive growth, but still face rising national debt and banking sector challenges. So there is a pressing economic question of what European efforts could help promote sustained and stronger growth. But there is also a wider question coming into view – dramatically so in the British case. It is whether reforms in the Euro area will make the position of non Euro members like Britain in the EU untenable – or whether in fact the resolution of the Euro crisis need not lead to a two-tier Europe. I think it is vital that pro Europeans enter this debate with humility but also passion. There should be no glossing over the scale of the problem facing countries of the EU. Too many citizens feel we are now on the wrong side of economic history; and that the EU is making the problem worse not better. We need to understand this, and engage with it.
There are five themes running through my remarks today:
- First, that deep trends rather than short term policy choices provide good reason to see Europe as a risk in the short term but as strong in the medium/long term. The EU has a powerful logic and purpose in the 21st century.
- Second, in the debate about fiscal consolidation and structural reform, the best option for western economies – the balance of deficit reduction, incentives for innovation, and macroeconomic stimulus – has not yet been achieved, but there are some signs of change coming out of Brussels.
- Third, that politics and economics – over migration, sharing of sovereignty, welfare reform - are pulling in opposite directions and need to be reconciled.
- Fourth, that the Euro is not the EU, and that reform of the Euro must not kill off the EU as an alliance of equal partners. In saving the Euro it is vital not to neglect the EU of 28 countries, from trade to energy to services. We need alliances across the in/out divide to achieve this, and Anglo-Irish alliance is a good place to start.
- Finally that Britain and Europe are better off with the UK in, but there is real danger of a semi detached status. I don’t think Britain will leave, but it is not in our interest or Europe’s for our potential exit to be the defining question of our engagement. The Director of the British CBI’s warning last week is well-timed and absolutely right.
Global Change
The place I want to start this lecture is not in the thicket of the European debate, but with a broader view of global changes that affect all countries, in or out of the Euro, in or out of the EU. The truth is that the context for domestic and European policy for western countries like ours is changing rapidly. There is the seismic shift of economic power away from the industrialised economies of the west, and towards the emerging economies to the East and South. There is a radical democratisation of access to information, that is affecting public and private sector alike. There is a resource crunch, epitomised by the rise in the price of non oil commodities over the last decade. There is the growth in power of Muslim majority countries from Turkey to the Gulf to Indonesia, so that it is now fair to say that no global problems – from security to economy to humanitarian relief where I will from September be devoting my energies – can be addressed without partnership with the power and influence of the Muslim worlds. And then there is the reality of a hyper-connected world, where economic, social connections are not just wide and deep but all but instantaneous.
It is this latter point that I want to start with. It is not contentious to say that from health to terrorism to finance, the world is more closely connected than ever before. But the implications are contested. And nowhere more so than in the debate about the future of regional organisations like the EU.
One school of thought argues that the future is all about ad hoc alliances across the globe, virtual and flexible networks that take advantage of the smaller world to forge ties of mutual benefit. In this conception, countries like Britain and Ireland should be looking to South Korea as much as to Poland or Germany for cooperation. For reference the population of South Korea is 50 million, and GDP per head $23 000, for Poland 35 million and $13 000, for Germany 85 million and $41 000.
South Korea is democratic, fast-growing, and highly educated. It has a lot to teach us. But that does not mean that we can turn to the South Koreas of this world as an alternative to our membership of the EU. The alternative argument that needs to be put is that in this more connected, smaller world, neighbourhood still matters – and matters a lot.
In fact, the strong version of the argument is that in the context of weak global governance, regional association grows in importance; that security, cooperation, shared rules and shared endeavour in your own archipelago are even more important; and these regional associations do not just increase power and strengthen protection; they also make more likely and more effective the international engagement with emerging powers, whether South Korea or any other. This is the modern case for the European Union: helping countries get the best deal for their own citizens in the world as it exists today, not at the expense of global partnerships, but as the best basis for them. Put another way, unless we band together in the EU, then we will be at the mercy of the decisions of others in years to come.
This is the case that the European single market is a hard-won advantage in the global economy; that trade agreements are better for us when we negotiate together rather than alone; that shared effort on piracy in the Gulf of Aden by eight European navies has achieved what any one country could never have achieved; that cooperation on migration is the only way to manage global flows of people; and that a pooled development and emergency aid budget can achieve much more than the diluted strength of 27/28 such budgets, as I saw for myself in Brussels two weeks ago with my new colleagues from the International Rescue Committee, discussing the crisis in Syria and its neighbours, humanitarian relief in Afghanistan, Pakistan, Myanmar and Thailand, plus endeavour across Africa.
Shared geography is not a guarantor of shared culture – one just has to look at the intra-regional conflict in Syria to see that - but it is a driver of shared interest, and because of shared history and memory often the basis of shared values. This is the very strong view I have of the European Union. That it was not just a great project for the post-war peace, when binding the wounds of war above all between France and Germany was such a challenge; nor that it was only important during the Cold War, and after, as an anchor for European unity and hope for the countries of the Soviet bloc (who are now the most pro European countries of all); but that the modern European project is an important support for our prosperity and security in a world that becomes not just smaller and more competitive but also in some ways more chaotic by the day.
Far from regaining power and sovereignty by opting out of international bodies, we actually surrender our influence by doing so. The call to strike out for “independence” is a mirage in the modern world. There is no opting out of the global challenges we face, and less chance of addressing them separated from our neighbours.
The Case for British Withdrawal is Flawed
Lord Lawson has now put the opposite case high on the political agenda. But read his article in the Times and it is deeply flawed. He says Britain should leave essentially for three reasons. First, that the Eurozone is a bloc which will come to override the rest of the EU. President Hollande’s proposal for a President of the Eurozone will exacerbate his fears. But the negative reaction to the proposal shows the folly of Lawson’s argument that the Eurozone is a unified bloc. The Euro crisis has taught us the opposite. The countries within the Eurozone have different views of how to promote competitiveness. And countries like Germany, Netherlands and Ireland have a lot in common with countries like Britain, Sweden and Poland.
The second argument is that there is a European plot against the City. Leave to one side George Osborne’s boast that he has tougher regulation than the rest of Europe. In fact Britain never lost a vote on financial regulation in the EU – until this year, when our refusal to make alliances on the bonus tax left our position without supporters. The best way to maintain the benefits of Britain’s financial services industry is for the government to represent our interests in Brussels.
The third argument is that the single market is somehow cosseting British industry, and they would prosper better by looking outside the EU. The experience of British players in emerging economies, buffeted by local politics, is not always an encouraging precedent. But this neglects the basic point that the rest of the world has trade agreements with the EU. There are 46 of them. All would have to be negotiated by Britain if we left the EU. And of course the Transatlantic Trade and Investment Partnership is now under negotiation with the US.
The House of Commons Library confirmed for me that membership costs £1 per person per week. So to me the case that European membership is an untenable burden for Britain falls apart. But if the case for membership is so strong, then there is an obvious question which arises: if the European Union is so necessary, why is it not more popular?
Europe Needs Reform
The statistics, not just in Britain and Ireland but also more widely, are pretty clear. According to recent Pew polling, those with a favourable view of the EU fell by a median of 15 per cent across Germany, Britain, France, Italy, Spain, Greece, Poland and the Czech Republic in the space of the last year. They didn’t poll in Ireland but I would guess the statistics are similar.
But the reason for this is quite simple, and actually quite sensible. If you wanted to dream up a cocktail for draining support from the European Union then you would include the following:
- A long period from 2002 to 2007 when the EU was preoccupied with internal institutional navel-gazing.
- A policy mix in the Eurozone that in wake of the financial crisis seems to have lengthened the tunnel rather than bringing closer the light.
- An institutional structure that is opaque at best and incomprehensible at worst.
- National interests that have blocked even the creation of a single home for the European Parliament.
And of course the Euro crisis is not over. I think European leaders have demonstrated their absolute determination to preserve the Euro. The ECB has shown that it can successfully play a game of chicken with the financial markets, driving down bond spreads across the Continent. And European citizens in countries including Ireland have shown remarkable resilience in the face of big hits to their living standards.
But the core imbalances between creditors and debtors are still real, and in some cases growing. The policy mix is still too pro-cyclical, so that the deflationary impact of fiscal consolidation is drowning out the benefits of structural reform. Banking systems in some countries are still vulnerable, as the IMF warned in its recent assessment of Ireland, highlighting the nearly quarter of loans that are non performing; and proposals for Banking Union are being rebuilt, our of timber rather than steel, to use the metaphor of German Finance Minister Schauble. This is not a heartening basis on which to be looking at the challenge of recession or weak growth in the core of the Eurozone.
The EU’s unpopularity should be a spur not to exit but to reform – and critically reform that embraces the 28 countries of the EU, deliberately crossing the Euro in/Euro out divide, making the EU work better rather than tinkering with the structure. I would prefer a more expansive list than the focus on the Working Time Directive proposed by David Cameron. There was a missed opportunity on the budget, where the focus on limiting the size of the budget obscured the importance of reforming the budget. But there are other things that countries like Britain and Ireland could argue for together:
- Last June’s European Council, at the prompting of the ECB, identified a key role for the European Investment Bank in plugging market failures in the supply of corporate credit across the European economy. There was agreement for more aggressive deployment of the EIB balance sheet in the periphery of Europe. But it hasn’t yet happened, and needs a big push.
- The completion of the single market is challenging but right, and needs to be allied to strong European commitment to the trade deal with the US. This is not just about the economic bounce it involves; it is also a geopolitical statement of intent to set the standards for global trade and cooperation.
- The increasing cohesion of European engagement with Russia – Poland more cooperative, Germany less rose-tinted – has no greater challenge than in the field of energy. This is high finance and high politics, for example with Russian pipelines circumventing Ukraine speaking to deep questions of identity and political alliance.
- In this country, you know that 30 per cent of your unemployed – who total some 15 per cent of the labour force – are unemployed for more than two years. Youth unemployment now afflicts 26 million people across the EU. The June summit is pledged to action on this, but we cannot afford implementation that takes years to reach the frontline.
- European migration and border policy is critical, and involves help for countries like Greece as well as assurance for countries on the Continent.
- There is a vital task of using the budget reductions to squeeze efficiency out of the system, and improve delivery.
- And I still hanker for real engagement of National Parliaments in European decision making. It would be smart politics as well as high-minded for the European Parliament to see the benefit of this.
This is an agenda squarely focussed on how the EU works, not how it is structured. But I hold to the belief that it is the delivery deficit rather than the democratic deficit that is Europe’s biggest problem. Restore growth, extend opportunity, protect citizens, improve efficiency, build the economic infrastructure of the future, and the EU will not reverse the decline in trust in all governing institutions overnight. But it will be part of the solution rather than be perceived as part of the problem.
There is in any case very little enthusiasm on the Continent for Treaty revision, and the Parliamentary and popular approvals that are then required. So changes are going to have to be achieved within the existing Treaties. And that leads directly to the British debate, because the British government is banking on Treaty revision by 2017.
You read the newspapers and talk to friends, colleagues and relatives. My own diagnosis is that the rise of UKIP, much commented upon, is more a revolt against the mainstream parties than against Europe, more a blast against politics as usual – of which the EU is sometimes a part – than against the EU.
But this should not be a cause of complacency. Europe is unpopular. Some grievances are real. And there is a fever in the Tory party on this issue. It has been long in the making, and is deep in its festering. It is impossible to get through a Tory selection meeting without an arms race on European policy. And if the Tory tragedy is activists obsessed with Europe, Labour’s tragedy is the opposite: not that everyone asks about Europe at selection meetings, but that no one asks about it.
There are obviously two issues for you in Ireland.
One issue, the least likely and the least talked about, is that Britain does indeed pull out of the EU, and sets out on social and economic policy deliberately to undercut the competitive position of Ireland and other European countries. This could be about corporation tax or social policy. And there are some in the UK government who argue that the case for getting out of Europe is to avoid costly regulations. But in truth the minimum wage and other items of social legislation are national not EU creations. They can be amended in the EU as much as outside.
So the second issue is more real. It is not that Britain leaves the EU, but that Britain is weak in the EU, and that on a whole range of issues where Britain and Ireland have common interests and common cause, we get left behind. This is the more serious danger.
I know from my experience that give and take in Brussels, the search for consensus, depends on a feeling that all partners are committed to some version of the European project. And the danger for Britain is that it gives the impression that it has no such vision, which creates a vicious circle, where more decisions seem to run against our interests, and more grievance is built up. There is already evidence that, in the metaphor of European Council President Van Rompuy, putting your hand on the handle of the exit door means people in the room are less likely to want alliances with you. So the danger is that our influence wanes.
There are big decisions ahead. Not just on the single market but on Justice and Home Affairs and the make-up of the next Commission, to name but two. These need a strong British voice. To the extent that the Prime Minister articulates the case for membership he will help that; if he looks to be in hoc to his backbenchers, it hurts.
Conclusion
The sad truth is that the Euro crisis has provided fodder for Federalists and for Sceptics – who form a strange alliance in arguing that only a fully-fledged federal union can make the Euro work. The difference between them is that while the Federalists want it to happen, and fear it won’t, the Sceptics don’t want it to happen and fear it will.
But neither Federalism not Scepticism are an adequate response to the crisis. Federalism neglects the foundations of political legitimacy in the nation state. Scepticism neglects the power of shared sovereignty on key issues. The EU needs both the legitimacy that comes from one nation one vote, and the efficiency that comes from Qualified Majority Voting. It isn’t neat, but it is necessary.
Timothy Garton Ash has written of a “dysfunctional triangle” of national politics that is enduringly strong, European policies that seem remote, and global markets that are demanding and fickle. It is a powerful analysis. But the answer is different Europe, not less Europe or out of Europe.
In this, Britain and Ireland have much to offer each other. We both need each other. We are strong allies in Europe, and long may it stay that way.
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