The final requiem for the “three milion jobs” myth?

European Union photoIt was always a myth. There was never any official report saying that three million British jobs would be lost if we withdrew from the European Union. The figure of three million jobs, or more exactly, 3.2 million jobs, which were linked to our membership of the EU, first appeared in a report produced by Dr. Martin Weale in 2000 for the National Institute for Economic and Social Research. However, the report actually said:-

Detailed estimates from input-output tables suggest that up to 3.2 million UK jobs are now associated directly with exports of goods and services to other EU countries. This has given rise to popular concern that some of these jobs might be at risk if Britain were to leave the Union. Opponents of membership on the other hand argue that many of the benefits flowing from the increasingly integrated European Economic Area might still be available even if the UK were to withdraw, particularly since the Uruguay Round Agreement has imposed significant limits on the trade barriers that the EU can place on non-members. In conjunction with the potential gains from withdrawing from the Common Agricultural Policy and no longer paying net fiscal contributions to the EU, there is a case that withdrawal from the EU might actually offer net economic benefits.

The report did not say that these jobs would be lost if we left the EU. Far from it. It suggested that withdrawal may actually be beneficial. It was the Britain in Europe cross-party group, which campaigned unsuccessfully for Britain to join the euro and which included such figures as Ken Clarke, Tony Blair, Michael Heseltine and Charles Kennedy, who started the scaremongering. Unsurprisingly, Dr. Weale was furious at this distortion of the findings of his research, describing it as “pure Goebbels” (a reference to Hitler’s Minister of Propaganda), and saying, “in many years of academic research I cannot recall such a wilful distortion of the facts.” However, it has been repeated over and over and over again, perhaps in the hope that if the lie is repeated enough it will become accepted as truth. Nick Clegg regurgitated it in January 2013 in the wake of David Cameron’s announcement of a referendum on our membership of the EU and John Prescott followed suit four months later. Danny Alexander, the Treasury minister, recycled this rubbish to an audience in Washington as recently as June 2014. It seems like some people never give up.

There is hope that at last, the final requiem for this nonsense may be only round the corner. It should have happened a long time ago. Professor Tim Congdon’s booklet Europe Doesn’t Work (Published by the Hampden Trust in 2013) proved from government data that EU membership had actually destroyed British jobs. Of course, given Professor Congdon’s involvement with UKIP, the Europhile establishment were not going to take one iota of notice in spite of his meticulous use of statistics. However, the coup de grâce may be about to come – and from an unlikely direction. The Open Europe think tank, which supports UK membership, put in a Freedom of Information request to the Treasury – Mr Alexander’s own department. The reply was most interesting. Open Europe’s blog highlighted the key statement, which was as follows:-

“As set out by the Chief Secretary to the Treasury, the Treasury estimate that 3.3 million jobs in the UK may be related to exports to other European Union countries. This figure is based on the assumption that the share of UK employment associated with UK exports to the EU is equal to the share of output that is exported to the EU, making allowance for the composition of the UK economy. It is not an estimate of the impact of EU membership on employment.”

In one sense, this isn’t anything more than Tim Congdon or many others have argued, but firstly, it is highly embarrassing for Danny Alexander to be contradicted by his own department. Secondly The Times has taken up the story. “Treasury wrecks Clegg’s EU jobs claim” it proclaimed, while the popular Huffington Post blog reported the story under the headlines “Treasury officials ruin Danny Alexander’s EU jobs warning.” (We are hoping to publish some further research on this subject on the CIB website shortly which will drive a further nail into the coffin of this unfounded allegation – watch this space!).

Of course, given the Lib Dems’ past track record it may yet be premature to write a requiem for the three million jobs myth, but surely now if they continue to peddle this nonsense they will come across as complete and utter fools. Mind you, given the party’s performances at the ballot box recently, it looks like most of the electorate already regard them as such anyway.

Photo by YanniKouts

 

Photo by YanniKouts

Photo by YanniKouts

The ECHR, prisoners’ rights and the potential for confusion all round

Strasbourg European Court of Human RIghts photoOn 12th August, the European Court of Human Rights in Strasbourg decreed that our country’s refusal to allow prisoners to vote breaches their human rights. Fortunately, there was no demand for the UK to pay any compensation. Were the judges aware of the hostility felt towards them by the UK government after the long-drawn out battle it fought with them before being able finally to extradite the extremist Moslem cleric Abu Qatada? Quite possibly.

However, even without insisting on any compensation, the Court’s ruling has led to renewed calls from senior Conservative ministers to include a commitment to withdraw our country from the European Convention for Human Rights, which the Strasbourg court attempts to enforce, in the party’s 2015 General Election manifesto. There is much to be said for this. Firstly, for some 600 years – until the run-up to our accession to the EEC, in fact – not only did foreign courts have no jurisdiction in our land, but it was illegal to appeal to them. It is only natural for a sovereign nation to resist any impositions by a foreign power on its legal system. Secondly, when the European Convention on Human Rights was first drafted in 1950, the UK did not put it onto the statute books for a further 48 years, as it was felt that its stance on human rights was inferior to our historic legislation, such as the 1689 Bill of Rights. Pressure groups such as Charter 88 accused the Strasbourg judges of abusing their power. It was the Blair government which finally incorporated the Convention into domestic law through the Human Rights act of 1998. Sections of the Conservative Party have never been comfortable with it. In 2005, Michael Howard stated that “the time has come to liberate the nation from the avalanche of political correctness, costly litigation, feeble justice, and culture of compensation running riot in Britain today.” He warned that “the politically correct regime ushered in by Labour’s enthusiastic adoption of human rights legislation has turned the age-old principle of fairness on its head.” He then went on to list a number of examples, including a schoolboy arsonist allowed back into the classroom because enforcing discipline apparently denied his right to education and a burglar given taxpayers’ money to sue the man whose house he broke into. David Cameron has been equally forthright. “It makes me physically ill even to contemplate having to give the vote to anyone who is in prison,” he said in 2010.

But would we be able to repeal the Human Rights Act? At this point, some clarification is needed. The Strasbourg-based European Court of Human Rights is not an EU institution. The European Charter of Human Rights was created by the Council of Europe, an organisation which dates from 1949. It shares the same flag as the EU – the so-called “ring of death” – and also exists to promote European integration. However, it is a separate organisation which cannot pass binding laws and does not require its member states to transfer any sovereignty. Although many nations who are not members of the EU are members of the Council of Europe, including Russia, Turkey, Switzerland and Greenland, it is something of a paper tiger. The aspirations of a number of its founders was for it to become what subsequently became the European Union, but one founding state – the UK – was none too keen on sharing its sovereignty, so apart from the ECHR, it never developed into anything more than a talking shop and was subsequently sidelined. It has been argued that if we withdrew from the ECHR, we would have to withdraw from the Council of Europe too. Shock, horror! If we did this, it would put us on a level with Belarus, which was suspended from the Council of Europe because of concerns about human rights abuses.

In reality, would this matter one iota to most of the electorate? It would be interesting to know what percentage of UK voters were even aware of the existence of the Council of Europe. Probably not many. Even fewer would probably be aware that the European Convention of Human Rights was nothing to do with the EU. The moment the average British voter sees the word “European” in the title of any institution, the instinctive assumption is that it is somehow connected to the EU.

This, unfortunately, gives the Conservative Party a chance to sow more confusion. Scrapping the Human Rights Act and withdrawing from the jurisdiction of the European Court of Human Rights could be touted as a return of powers from Brussels when it is nothing of the sort. It also throws a smokescreen over the ongoing surrender of powers to the EU, including the opt-in to the European Arrest Warrant. When Theresa May, the Home Secretary, took up the cudgels earlier this week to insist that we must determine our own human rights rules, she came across as a real fighter for UK law. Can this really be the same person who began her period in office by opting in to the planned European Investigation Order – a piece of legislation which is intended to give foreign courts and prosecutors the power to order the British police to investigate, search, interrogate and gather evidence against British citizens; as well as to put us under surveillance, tap communications, monitor bank accounts and take DNA samples and other biometric data? Regrettably it is.

However, even more confusion surrounds the Conservatives’ talk of scrapping the Human Rights Act. The EU, which was given a legal personality by the Lisbon Treaty, is considering signing up to the European Convention on Human Rights in its own name. Legally, this creates a minefield, but the logical and most probable consequence is that all member states would de facto be signed up by such an action. Of course, only the UK is uncomfortable with this, although quite how uncomfortable our government feels is debatable, as accession of the EU required a unanimous decision of the European Council (Heads of Government), so David Cameron could have exercised his veto, but presumably did not. Was he asleep at the time, perhaps?

So it appears that for anyone really irritated by the political correctness of the European Charter of Human Rights, it is essential to support not just withdrawal from the Council of Europe but form the EU as well.

Photo by Mathieu Nivelles

Let’s start a real European debate

Vaclav Klaus photoBy Václav Klaus

Introduction: The difficult heritage of the past

The state of Ukraine today is a sad outcome of Stalin’s attempts to mix up nations and boundaries, disrupt natural historical ties and create a new Soviet man by turning original nations into mere ethnic residua and historical leftovers. Taking it into consideration is the starting point of our thinking, something that is sadly missing in the political debates today.

The cacophony of commentaries and statements to recent Ukrainian developments misses the point that the first and foremost contribution to the current dramatic situation there is the obvious political, economic and social failure of Ukraine as an independent state. This failure, in our view, has been caused by the following factors:

1. Ukraine as we know it today, has no historical tradition of statehood, and in over twenty years of its existence the country failed to create a state that would be accepted by the bulk of its population. The state was not born out of its people’s efforts to gain self-determination and sovereignty, it came into being through the dissolution of the Soviet Union by its political leadership, and emancipation of the artificial Soviet republics, created by Moscow in their then valid borders.

2. The largely passive population’s anti-Moscow sentiment was exacerbated by Gorbachev’s perestroika and its catastrophic results. The local Soviet party nomenklatura also feared Yeltsin’s policies aimed to crush the old system.

3. At the beginning of its independence, Ukraine functioned under the leadership of the Russian-speaking Soviet elite from the eastern part of the land as a sort of a Russian B-state, a part of the vast post Soviet space with enormous potential. At least on paper: 52 million people (second to Russia), its industrial base in the Donbas, the biggest agricultural potential on the European continent, the key ports of the Black Sea, Crimea, a relatively well educated elite and central Europe next to its door.

4. The new state emerged from an essentially artificial administrative portion of the Soviet totalitarian Union that wanted to show the world how the national issue can be resolved once and for all by replacing individual nations with the „Soviet people“. The Russian and russified areas of the east and south of Ukraine (with three hundred years of Russian history behind them) were artificially linked to the originally Polish Galicia and Subcarpathian Ruthenia acquired by Stalin after World War II, lands that had never belonged to any of the old Slav states in the East.

5. The independent Ukrainian state did not exist before 1991, unless we consider as such the brief period of civil war after the 1917 October revolution, when unsuccessful attempts at Ukrainian independence featured such controversial figures as general Skoropadsky, atamans Machno and Petljura, or Stepan Bandera in World War II. Their legacy (anti-semitism, affinity to German Nazis), is considered very controversial outside the nationalistic western Ukraine.

6. Older historical traditions speak in favor of strong ties to Russia – the Kievan Rus period, the acceptance of orthodox Christianity, or the tradition of the Zaporozhian cossacs who fought the Turks and the Poles and brought Ukraine of the time into tsarist Russia. The common Russo-Ukrainian experience of the Soviet times as well as World War II created strong human, social, economic and political bonds that cannot be easily replaced.

7. More than twenty years of Ukrainian independence that followed, were not enough to create a common Ukrainian identity and convince the people of this very heterogenous land that independent Ukraine is the right social formation, fulfilling their national aspirations. Such ambition is seen in especially among ethnic Ukrainians living in the west (Galicia, Volhynia) who accentuate the tragic experience of the Soviet era (deportations, gulags, famine), harbor anti-Russian feelings and wish to build Ukraine as a Ukrainian nation state. The position of a „second“ Russian state as sought by Presidents Kravchuk and Kuchma is unacceptable to them. It is no coincidence that this backward and weak western part of Ukraine was the moving force behind the 2004 Orange Revolution as well as the Maidan protests in 2014. By overthrowing Janukovych, the nationalist western part of the land assumed exclusive power attempting to disrupt the long, traditional Ukrainian ties to Russia, and replace it with exclusive orientation on the West, the EU and the United States. However, experience shows that western Ukraine is not strong enough to fulfill these plans – the economic weight of its eastern part so far prevailed every time.

Ukraine’s Russians – members of a great cultural nation, formerly dominant throughout the region – do not and cannot share the nationalist ambitions of western Ukrainians. The disruption of close ties with Russia, generally wealthier, more successful and orderly today, is unthinkable to them. They do not see the Soviet era as an occupation by a foreign power, they consider themselves as victors of World War II, not victims. Bandera’s sympathizers are traitors and fascists in their eyes, a state built on such legacy is unacceptable. Like Russians, they mistrust the West and do not want to be part of blocks aimed against Russia. Militant anti-russism of western-Ukrainian nationalists is insulting and threatening to them. Due to the Soviet tradition, this part of the population has long been indifferent to national issues. However, present developments make this group more aware of national feelings and the mood among them is more and more antagonistic in that respect.

After twenty years of independence, Ukraine is a divided country on the threshold of economic bankruptcy. It is home to two nations with different and probably antagonistic visions of the future, two nations growing apart every day. Both these nations look up to the world outside with unrealistic expectations – one to the West, the other to Russia.

Ukraine in its current shape could have been saved by several decades of peaceful development with a modest and sophisticated foreign policy, respecting the geopolitical position of the country and gradually improving its economy and standard of living. None of that was in the cards for Ukraine. Attempts at radical change represent a fundamental threat in such a fragile, heterogenous and politically sensitive country. Unfortunately that is what is happening in Ukraine today, with all the risks it entails for Europe and the world.

Part II: Ukraine’s failed transformation

As argued above, Ukraine was born after the downfall of Communism as an essentially non-historical state, cursed with a fundamental identity problem from day one. That has always been a serious hinderance in the country’s development, and it remains so still today.

Western Europe and The United States, or rather the politicians in that part of the world, think it is okay, all it takes is to „introduce democracy and the state of law“. Till this day they have not learned anything from the fact the repeated attempts to „export democracy“ have failed and that even two decades of massive western support to Bosnia and Herzegovina, artificially created after the disintegration of Yugoslavia bore no fruit. Not to mention the Arab Spring.

Ukraine has not implemented a consistent post-Communist transformation, the way it was carried out in other post-Communist countries. There was no political transformation. No standard system of political parties was introduced, and the Ukrainian parliament is still not a standard parliament. Repeated TV footage of fist-fighting deputies gives a good example. The „Orange Revolution“ (inspired abroad, again) took place twenty years after our „velvet“ counterpart, but even this delay did not bring about the necessary change.

There was no consistent economic transformation, although the communist system was forsaken. The outcome of that was the seizure of the economy by oligarch clans, stagnation, industrial decay, high unemployment, continued dependence on Russia, etc. The comparison with Belarus is revealing, whether we like Mr. Lukashenko or not. After the fall of communism, both countries started out with comparable results, and today the per capita GDP in Belarus is 50 percent higher. This comparison is almost a „controlled experiment“. It is also plain to see that over 5 million people or 10 percent of Ukraine’s population had left the country over the last twenty years.

The inexorable duels between Jushchenko, Tymoshenko and Yanukovych (leaving the minor players aside) led to no good. The enormous wealth of politicians and oligarchs as presented in the media is something unimaginable in Eastern Europe, much less in the Czech Republic.

The amount of frustration is high enough to see even for those who are not experts on Ukraine. At any rate, this is a fragile, unstable country easily vulnerable by outside interference. It does not have to be a military intervention, political interference is enough. All it takes is incitement of unrest, riots, plotting groups of population against one another, populist games against all local authorities, incitement of envy, mutual charges of corruption and theft, and last but not least the unleashing of nationalist conflicts or downright hatred.

We think all of the above has been going on in Ukraine. And still is.

Part III: What happened in Ukraine and around it

The Ukrainian dispute can be interpreted in a more simple and obvious way if we turn it into a model albeit schematic, where details disappear and the bare skeleton of the issue remains.

Model A: an authentic popular uprising seeking democracy, independence and association with Europe has taken place

This model is based on a probably correct thesis that Ukrainians are deeply and justifiably dissatisfied with the situation in their country. They see the reason for that in the actions of their incompetent and corrupt political representation (which they repeatedly choose in elections that have basic democratic characteristics despite all the existing problems), a government that refuses the EU association agreement instead of focusing on “bringing the country to Europe” and tough bargaining with Russia on gas prices and other things.

People stage authentic mass demonstrations in the streets. They do not mind weeks or months of freezing temperatures. When peaceful protests are not enough, the demonstrations get more intense spontaneously (although the government makes all kinds of concessions and takes no repressive action against them). The demonstrators are joined by trained and highly armed individuals as well as domestic and foreign organized groups, while Russian support to the movement is absent. There is general assumption that Russia is happy about this process of destabilization in this important neighboring country, if not directly supportive of it.

After the demonstrators score victory in the streets of Kiev, after the democratically elected president flees the country an allegedly truly popular government is created, Russia’s army intervenes and occupies Crimea, just like Hitler occupied Czechoslovakia in 1939 (its western part) or Brezhnev did in 1968 (this time entire Czechoslovakia). In 1939 and 1968 the democrats of the world did not protest strongly enough, therefore it has to be done properly now. Till the day democracy wins. The Hitler-Brezhnev-Putin line is plain to see and those who do not see it, did not see it then, either.

Model B: Dissatisfaction in Ukraine was used for a new confrontation of the West with Russia

Model B starts the same way as Model A. The Ukrainians are deeply and justifiably dissatisfied with the situation in their country and show it in various forms. However we are talking about a country that:

– is not authentic Europe (however difficult it is to define Europe’s boundaries)

– is bordering Russia (though the actual borderline is not authentic)

– has been part of Russia or Russian dominated territory for decades

– has millions of Russians living in it (more than one third of its population) and has to find some sort of a modus vivendi with Russia and confirm it again and again.

This repeatedly surfacing crisis has been chosen as a pretext to bring about a new confrontation between the West and Russia, by all those who have a reason to despise Russia. These people have known full well that destabilization of an important (largest and most populous) neighbor is something that Russia cannot accept easily.

– that is why they have steered the existing dissatisfaction more and more towards Russia

– that is why they have backed the arguments coming from western Ukraine

– that is why they have fostered the conflict between western and eastern Ukraine, something that to a large extent amounts to a conflict between Ukrainians and Russians

– that is why they have misinterpreted real economic relations between Ukraine and Russia

– that is why they have painted the picture of Russia as an expanding superpower that is anxiously waiting for an opportunity to occupy Ukraine.

We are no passionate advocates of Russia and its leader and we know it would be naïve and absurd to be idealistic about long-term Russian interests, but we agree with the recent words of Henry Kissinger who said that “demonization of Vladimir Putin is not a policy; it is an alibi for the absence of one”. This is exactly what is happening in the United States and Western Europe.

After the Kiev putsch was carried out (unconstitutionally for legalistic purists), after all those who dared have a different opinion faced brutal violence, after the de facto expulsion of the democratically elected president who did not dare act against violent demonstrators, and after the concerns of the Russian part of Ukrainian population started increasing steadily, the most specific and geographically limited, formally autonomous part of Ukraine – the Crimea – became subject to a referendum (clearly with consent and silent joy on the Russian part), in which an overwhelming part of the population took part, and resolutely expressed the wish of the population of Crimea to cease their association with Ukraine (where they never belonged before Khrushchev’s intervention in 1954). It is obvious that these people did not feel like remaining in a vacuum and wished to return to Russia. It is equally obvious Russia can be happy about it (despite substantial short-term problems), but the sequence of events was different from what we find in mainstream media purporting that Russia annexed Crimea on its own will.

In line with its interests, the West interprets the fact that Crimea became part of Russia as an example of renewed Russian imperialism. In a recent conversation, a good friend of ours who has lived in Germany since the Russian occupation of Czechoslovakia in 1968, refused to listen to our arguments, but conceded one important fact: ever since the occupation of his homeland, his hatred towards Russia (although it should be hatred towards communism and the Soviet Union), has been so intense, that it prevents him from even reading traditional 19th century Russian literature. We consider this to be irrational, but our fear is that this is the mainstream interpretation of the Ukrainian situation and Russia’s intentions in the Czech Republic, Europe and probably America, too. That is why our polemic is not in defense of Russia and its president, but an attempt to avert risky steps towards a new cold war of which we and our freedoms would be the inevitable victims.

This “model” description of two different views of the Ukrainian crisis can be further developed, supplemented or enriched, but we are convinced that it is good for basic orientation. Let us add that it is not surprising to us, that the majority of the Crimean population (consisting largely of Russians) does not wish to remain part of a state that is facing bankruptcy, and is being controlled more and more by people and groups from the western, i.e. non-Russian part of Ukraine, people whose dominant policy is to oppose Russia and the Russians. It is no surprise that the people of Crimea want to be part of the wealthier and more successful Russia.

It is equally important to see that the Ukrainian army in the Crimea hardly put up any resistance, allowed itself to be disarmed and largely crossed over to the other side – the Russian army. That is another illustration of the Ukrainian state’s disintegration.

Part IV. Legalistic fundamentalism and “real life”

In connection with the continued disintegration of Ukraine – the separation of Crimea and its incorporation into Russia, the ongoing declarations of all kinds of separatist Russian “republics” and further demands for referenda aimed at separating other parts of eastern Ukraine – western commentators present various legal arguments asserting that such steps are in contradiction with the legal and constitutional framework of Ukraine today, and therefore illegal and unacceptable. This, too, has to be put in the appropriate context, without trying to look like experts on Ukrainian law. Because that is not the point.

These largely academic arguments may be correct when analyzing the illegality of some of the separatist moves, but that is only one half of the truth. Real life is always ahead of the law and the law adjusts to it only retroactively. The changed reality induces new laws and these are by definition only temporary, too. Real life and real needs usually find their ways, and very seldom the legislative changes that come with them manage to keep up.

In recent history, there was only one case of a truly constitutional and legally implemented division of a state, namely that of the Czechoslovak federation. The disintegration of Yugoslavia, and later Serbia as well as the Soviet Union, was chaotic by nature, often taking place in confrontation and violence with many cases of fait accompli. There is no point in analyzing that. The majority of modern countries in Europe and around the world have gained their independence as a result of a violent struggle, ignoring the law of the time. To deny the people this right by pointing out the illegality of separatism is impossible. Failing to accept that, we would have to deny the legality of the United States or indeed our own state, that was born in contradiction with the constitution of the Austro-Hungarian empire in 1918, too.

International acceptance of the changing borders is not a legal issue first and foremost, it depends more on the actual balance of power in the country, region or the world. In that respect, modern times differ from ancient history only ever so slightly. Should we insist on international and legal assessment of this kind of changes, we would find ourselves in a fatal trap of double standards and contradictions.

It is clear that chaos, anarchy and economic crisis make it easy for the West as well as Russia to interfere in Ukrainian affairs. It is also not surprising that most ethnic Russians, dissatisfied with the unfavorable conditions in Ukraine and fearing the future, look up to the relatively wealthy, stable and powerful Russia. The fact that most of them have no reason for loyalty towards Ukraine, and massively speak out in favor of joining Russia in a referendum, can surprise only the most biased observer. There is therefore no reason to cast doubt over such stance by rejecting individual conditions of the respective referendum.

There is no way to maintain Ukraine’s unity through legal arguments, laws and the constitution. It is equally impossible to do so through the very democratic procedures such as the elections, whether parliamentary or presidential. Should the west overpower the east in an election or vice versa, it will not be a solution even if the winner has a democratic majority and is therefore legitimate. Ukraine’s future can only lie in the victory of a broad Ukraine-wide project satisfying both sides and that is increasingly improbable, given the escalating tensions and increasing outside pressures.

Part V. The abuse of Ukrainian developments for the acceleration of European unification (and weakening of democracy in Europe)

The Ukrainian developments will have a number of direct or indirect consequences in the short and long term, from the political as well as economic point of view.

Short-term consequences of the economic kind are obvious for the Czech Republic – a decreasing number of tourists from Russia and Ukraine, less business in spas of western Bohemia, the slowing down of certain economic and investment activities, possible complications in energy supplies from the East. That is certainly unpleasant for certain concrete Czech businesses, but probably not fatal for the country as a whole. Sooner or later activities of this kind will go back to the old levels. Again, we know it is difficult for those affected businesses who do business with Russia and Ukraine to take this relaxed position. They have to be worried and we do not expect the state to offer any compensation.

The non-economic consequences are worse and much more dangerous. International politics will be radicalized, there will be a new level of confrontation between the West and the East and the conflict between western Europe (that we will side with) and Putin’s increasingly self-confident Russia will be ever sharper. This increased international tension is a definite disadvantage for the Czech Republic, a small country in the vicinity of the symbolic borderline between the East and the West, and we will pay for it.

The European political mainstream, represented by the elites in Brussels makes a calculation that the Ukrainian crisis can be used to strengthen European centralization and unification, especially the direction of a joint foreign policy (designed to silence the still differing foreign policies of individual EU states) and the creation of a joint European army, an idea resisted by most member states so far. This further toughening of European unification and centralization, which many of us consider unacceptable even today, goes against the real interests of the Czech Republic regardless of the fact that President Zeman thinks otherwise. We fear the limitation of civil rights, especially freedom of speech, and the freedom of dissent from official opinion.

A large part of the European political mainstream (although much less in Germany and even less in the south of the EU) tries, together with the United States, to turn Russia into a “bogey man” in the East, something that is in the American strategic interest. Ukraine is only a tool in that respect. That, too, is not in our interest and there are no benefits in it for us. Maybe there are some benefits there for a small group of the little Czech “neocons” who keep propping up their careers in the belated battles against communism and Russian imperialism, careers that are only made possible by the fact that parts of our population still lend their ears to such propaganda. It is clearly a surrogate activity, manifesting an obvious absence of a positive political agenda.

Photo by DrabikPany

The battle to leave the EU

United Kingdom map photoby Anthony Scholefield
Director, FUTURUS

In major political issues there are three battles; the battle to win the contest for ideas or assertions; the battle of aims, inclusive of aspirations, and the battle of plans. The electorate is influenced by the battle of assertions but it also responds to clear aims and plans.

As pointed out by Margaret Thatcher’s policy thinker John Hoskyns, Montgomery did not simply tell British soldiers on the eve of D-Day to make their way to Berlin – an aim; or to defeat the German army – an aspiration; he had a plan.

THE EURO REFERENDUM (that never was)

There was no doubt about the aspiration of those who wanted Britain to join the euro. Tony Blair thought that offering what was a ‘modern’, ‘international’, idea would be popular and he was slapdash about his planning. It would be generous to credit Blair with an aim – after all, he never expressed any interest in the entry rate for sterling to join the euro – he only had an aspiration.

Two things stopped a euro referendum taking place. The first was Gordon Brown’s caution. But, much more important, was the fact that Blair never had a plan to get Britain into the euro.

In retrospect, from his angle, Blair should have taken Ken Clarke’s advice, and that of his own pollster, Robert Worcester. They both advocated an enabling referendum, “I would have preferred the referendum to be held on the issues of principle with the timing and details having been left to the government and Parliament to decide”, said Ken Clarke.

Blair never seemed to understand that getting Britain into the euro was a complicated matter. Winning a referendum did not mean British entry into the euro. To enter, Britain had to re-enter the ERM, decide in conjunction with all the other EU governments, EU Parliament and the EU Commission what the entry rate would be: get the pound to that rate and keep it there; get a recommendation from the EU Commission that Britain had passed its convergence tests; change the Bank of England’s mandate and give the electorate their promised ‘final say’.

In short, Blair never realised he needed a plan and never planned.

As Roger Bootle wrote (Sunday Telegraph, 10th June 2001):
“Now consider what has to be done. First, the British authorities have to decide what an acceptable rate is and from the history showing the chart, you can see this is no easy task. Then they have to agree a rate within that range with our European partners. Then they have to get the pound to that level – and keep it there. And then they have to win a referendum.”

By contrast, while they had to fight the battle of ideas and assertions, the supporters of the pound had a very simple aim and a simple plan – to keep sterling.

THE SCOTTISH INDEPENDENCE REFERENDUM

There was always some doubt about what were the aims of the Scottish Nationalist Party, in particular whether Alex Salmond really wanted independence as opposed to greater devolution.

However, the SNP aim now is, supposedly, for independence and they have made numerous assertions about the benefits to Scotland. Like Blair, they are strong on aspiration but their aim is hazy.

Yet whenever the consequences of independence are discussed it is clear that the SNP rely on assertions and lack a plan. There is evidently no plan concerning the question of a separate currency, border controls on movement of people, entry and the terms of entry into the EU and many other issues. The SNP has acted as though their proposals will, and must, be accepted by others, psychologically revealing that it does not understand what independence really means.

Alex Salmond has proceeded on the basis that winning an enabling referendum will solve all his problems. But his lack of a plan will not only crucify the Scottish economy, especially the financial sector, if Scotland votes for independence, the same lack of a plan will reflect back to the electorate and undermine the argument he puts to the Scottish people so as to diminish his chances of winning.

So I confidently predict that, if Scotland votes for independence, that independence will not take place or, if persisted in, will lead to a Darien-type chaos.

There is no SNP plan for EU membership, no plan for defence links with NATO, no plans to take on debt or divide up oil revenues and, above all, no plan for a currency. In truth, the SNP has made various currency offers, a Scottish currency, joining the euro, and its current offer, often misunderstood, is:-
staying with sterling for the time being
(in itself a destabilising proposition for any depositor or investor)

The fact is that Scotland has a proportionately huge financial sector which is overwhelmingly dependent on English bank deposits, English pension funds and English investors. It is absolutely absurd, and would indeed breach their fiduciary duty, for any entity in England to keep its assets in another jurisdiction from where its liabilities are. The examples of sovereign default in Iceland and Cyprus are in front of them. Despite sharing a single currency, no German or French pension fund, Council, university or company, keeps its investment or cash in Portugal or Slovakia.

Of course, the idea of Scottish independence is doing damage to the Scottish financial sector already. Think of any English person considering a pension or long-term investment for many years. Offered a choice of an English or Scottish provider, the choice is obvious, and for directors and funds there is the fiduciary duty as well.

The supporters of the union have a clear and simple plan – to keep the union. The main fear of union supporters in England is that Westminster politicians will, in fact, agree to Scotland having, in some way, the benefits of independence without the responsibilities or rush forward with a ‘rescue plan’ for an independent Scotland at the expense of British taxpayers – as they have done for Ireland,

THE PROPOSED REFERENDUM OF 2017

With Cameron, his aims and aspirations seem to be purely political in the sense of domestic politics and party politics. He also wishes to be at the ‘top-table’. His remarks about “not banging on about Europe” show a remarkable ignorance of the power politics surrounding him as well as a deep reluctance to reflect on political realities. He lags far behind the electorate in understanding the importance of the EU and its growing power.

David Cameron has repeatedly said he has a plan. He does not have a plan. All he wants to do is to give the impression of some renegotiation. Rather he has an aspiration. His aspiration is to renegotiate and then present the results to the electorate and then get a YES vote to stay in a renegotiated EU.

WHAT IS THE ASPIRATION, THE AIM AND THE PLAN FOR WITHDRAWALISTS?

1) What are the possible exit strategies?
– UKIP wins a Westminster majority.
– A major Party converts to a withdrawal policy.
– A referendum is held on whether or not to remain in the UK.
– Britain is asked to leave by mutual agreement.
– Other countries decide to leave.
– ANOther.
Quite clearly the most likely and most immediate trigger is an in-out referendum.
2) To lose an in-out referendum would be catastrophic for the time being. To have such a referendum, unless the out vote is well ahead in the polls, would lead to such a loss, because of the status quo effect, whereby voters prefer not to risk change.
3) To win an in-out referendum, it is essential to present a simple, clear plan of exit which will work and can be demonstrated to work and which all withdrawalists can subscribe to. This would enhance a polling trend in favour of withdrawal.
4) Further, winning an in-out referendum will still leave us with a pro-EU Executive. The only way to compel such an Executive to actually work for withdrawal is to have a clear simple plan presented and endorsed in the referendum.
5) Without a clear plan presented at the referendum, the initiative will be handed to a pro-EU Executive which can be counted on to prevaricate and re-negotiate, working for a further referendum in due course.
6) The EFTA/EEA arrangement with some modifications for free movement has to be the way forward.
– Britain is itself already a sovereign signatory to the EEA agreement.
– It is on the shelf. The outline and details are already known.
– It is in accordance with the EU’s own procedures.
– It can be negotiated quickly.
– It takes all the business anti-withdrawal arguments out of the debate since Britain would stay in the Single Market.
– It does not disturb overseas investors and creditors.
– The safeguarding clauses (Articles 112 and 113) can be used to implement restrictions on immigration as Leichtenstein has done.
– It attains the objectives of sovereignty and takes us off the integration path, plus massively reduces costs.
– EEA countries are not bound to accept EU regulations and sit ‘upstream’ of EU decisions as sovereign negotiators at the WTO and other international bodies.

7) David Cameron on the Andrew Marr programme 11th May 2014 kept saying he had ‘a plan’ and only the Tories had ‘a plan’. This seems to me a sensible move by him (from his point of view) and could be a possible road testing of his next argument: “We have a plan and the eusceptics do not have one.”

8) In the 1975 referendum a whole page of the short ‘Yes’ leaflet was devoted to listing the various alternatives offered by the ‘No’ side to EU membership and ridiculing their contradictions. (see Appendix)

9) Some questions need answering:

a. It is asserted that the UK is a separate signatory to the EEA and thus would automatically stay in this if it left the EU. Is this watertight? Research indicates that this is an issue never considered by the EEA signatories.

b. Would the EFTA countries welcome UK membership?

c. What exactly is the position in the future with EU migrant workers in the UK? Is it suggested (as I would recommend) that work rights should be gradually withdrawn? Otherwise, as these migrants settle and acquire families, the capital cost of importing low income workers via the welfare state will be enormous and there will be diversions of our already meager capital investment to providing all the capital costs of migrants, massive house buildings, etc. (some of this has already happened of course).

d. We need a list of exactly what areas of policy determined by the EU will be returned to national control under EEA and what remains with the EU. To start with, the EEA membership removes a member from justice and home affairs, the common foreign policy, economic and monetary union, the customs union, the CAP, the CFP, regains control of trade policy with a seat at the WTO.

10) Gladstone: In one of his most famous speeches, on 10th August 1870, Gladstone laid down what needs to be done. This speech related to Britain’s position in the Franco-Prussian war of 1870 and extracts were quoted extensively by Sir Edward Grey in his speech of 3rd August 1914. It was cited by Asquith as determining Britain’s position on the Belgian Treaty in a letter to Bonar Law on 2nd August 1914, a day before Britain declared war:
“It brings the object in view within the sphere of the practicable and attainable instead of leaving it within the sphere of what might be desirable, but which might have been most difficult, under all the circumstances, to have realized.”

11) We are trying to win a referendum and win a referendum in such a way that a pro-EU executive must carry out the result. We are fighting the referendum with a plan with an instruction to the Executive. We are not in a competition for establishing the very best theoretical basis for Britain in a post-EU world, we are establishing a clear, tested, business-friendly plan which should take on the aura of ‘inevitability’, such as preceded the establishment of American and Indian Independence.

Indeed, if Britain indicated in a referendum that it wished to join the EFTA/EEA arrangements, it is highly likely that the EU institutions would regard this with some favour. It keeps Britain linked to the EU but removes it from all the political integration process and, therefore, enables the EU countries to proceed with ever-closer unions.

12) In 1975, the referendum leaflets put out by the pro-EU side also featured many comments by Commonwealth leaders supporting Britain’s entry into the EU. Some of these, especially in Australia, bitterly regret this.

We must be prepared, however, for intervention such as by the Pope and President Obama in the Scottish referendum campaign. These will be considerably muffled and ineffective if Britain proposes to stay in the EEA. It is doubtful if either of these two gentlemen would get involved in parsing the differences between the EU and the EEA.

13) The removal of the economic arguments will allow concentration on the sole issue: ‘Do we take back the right to rule ourselves which we have enjoyed for centuries?’ This was the call in the NO Campaign in 1975

View a copy of the 1975 leaflet here: Britain’s choice the alternatives (Ref Leaflet 1975)

Boris, Brexit and the City

Boris Johnson photoBoris Johnson, the Mayor of London, has recently made some upbeat statements about the prospects for the UK outside the EU. As with the statements of many senior Conservative politicians, there is the inevitable caveat. His preference is still for the UK to renegotiate its membership terms and remain a member of the EU. If such a renegotiation were to be successful, Johnson would be campaigning for us to stay in. However, if not, then, we would be better off out. In his words, “we have nothing to be afraid of in going for an alternative future, a Britain open not just to the rest of Europe but to the world, where we have historic ties and markets with vast potential.”

It would be easy to dismiss these words as posturing, but there is some substance behind the Mayor’s remarks. His senior economics advisor, Gerard Lyons, has just produced a report evaluating the prospects of different political scenarios for the City of London and its conclusions are most interesting.

Currently, London’s economy is worth £350 billion per year. If Brexit were handles badly, the report suggests the London economy would only grow to £430 billion by 2034, a tiny increase over 20 years, and see a shedding of about 1.2 million jobs. If we left on amicable terms with outward-looking policies, then the London economy would grow to £615 billion and see an additional 900,000 jobs created over the next 20 years. Dr Lyons suggests membership of EFTA as a possible option, but his calculations are based on the assumption that’s we will be outside the EEA – i.e., he is not proposing we take the “Norway Option”. Staying in on the present terms would, according to the report, be better than a bungled exit as an extra 200,000 jobs wold be created but the preferred scenario would be for the UK to remain in a reformed EU, which would see London’s economy grow to £640 billion with one million jobs being created.

So the difference for London between a well-handled Brexit and the UK remaining within a reformed EU amounts to 10% of the projected job growth and about 9% of GDP growth. This, of course, assumes that the EU will reform, which looks to be a bit of a long shot. The report also only considers London, which is only one part of the UK economy albeit a very important one. In 2011, the financial services industry, which is largely situated in the City of London, amounted to 9.6% of UK GDP.

However, even if Mr Lyons’ predictions are correct, there are plenty of other factors which would tip the balance in favour of withdrawal. Staying within a reformed EU would still leave us forced to accept free movement of people, the jurisdiction of the European Court of Justice and the impotence of our Parliament to have the ultimate say in matters of legislation, Even if the regulatory burden were to be reduced, the direct costs of EU membership are unlikely to fall below £10 billion per year. Multiply this conservative estimate by 20 to reflect the timescale envisaged in Mr. Lyons’ report and the resulting savings for the UK as a whole from withdrawal would be eight times the supposed reduction income growth for London resulting from withdrawal rather than staying in a reformed EU, and this is without taking other drains on the economy such as the CAP and the CFP into account.

So if we can believe Dr Lyons, Boris Johnson is quite right to say that we have nothing to be afraid of life outside the EU. Indeed, the economic prospects look pretty rosy.

Photo by BackBoris2012

The Commonwealth – more than just trading partners

Commonwealth photoA few days ago, we published an article discussing the development of a Commonwealth Free Trade area However, the links with these nations goes deeper than just trade.

There is a common language which binds the 53 Commonwealth nations together – English. With few exceptions, their legal systems are based on the bottom-up principles of English Common Law rather than the top-down Continental Corpus Juris. At a personal level, we are more likely to have relations living in a Commonwealth country than in an EU member state. As one Labour MP recently expressed it, “Everyone has relatives in…Canada. Most have no one in Europe except the dead of the two wars.” Only the USA and the Irish Republic have any historical or emotional ties to the UK comparable with those of the Commonwealth countries.

For white British people, the first nations that are likely to come to mind when we think of the Commonwealth would be Australia, Canada or New Zealand, but the links between the UK and other Commonwealth countries also run pretty deep. When the first Jamaican immigrants arrived in the UK on board the Emperor Windrush in 1948, one passenger, a Calypso singer called Aldwyn Roberts, spoke for many of his compatriots when he said, “The feeling I had to know that I’m going to touch the soil of the mother country; that was the feeling I had.” Until the eastward enlargement of the EU in 2004, seven of the ten largest foreign-born communities in the UK came from Commonwealth countries – India, Pakistan, Bangladesh, South Africa, Jamaica, Australia and Kenya. These ties go back a long way. During the two World Wars, soldiers from what are now Commonwealth nations fought alongside their British compatriots. The Commonwealth War Graves committee has details of no fewer than 1.7 million Commonwealth servicemen who were killed in these two conflicts, along with 67,000 Commonwealth civilians “killed by enemy action.”

Of course, the relationship between our country and its colonies was not always harmonious. The Amritsar Massacre of 1919 and the strong-arm tactics used in Kenya against the Mau Mau movement in the 1950s ate two of the less savoury incidents in the history of the British Empire. Nor have immigrants from our former colonies necessarily always been welcomed in the UK. Nonetheless, the passage of time has healed many of these wounds and there remains much goodwill towards s from our former colonies. Even in 2014, the disparate nations of the Commonwealth remain a far more natural “family” than the artificial construct of the EU, as the recent Commonwealth Games have illustrated.

And it is a voluntary family from which departure is pretty easy should a nation so desire, but so far, very few countries have chosen to do. The Irish Republic took no further part in meetings of heads of state after 1932 and more recently, Zimbabwe and the Gambia have left. On the other hand, Rwanda and Mozambique, former colonies of Belgium and Portugal respectively, have become members in spite of the lack of any historical ties to the UK. Joining the Commonwealth does not involve surrendering or pooling sovereignty. You do not have to submit to the Queen as head of State and you are not bossed around by faceless bureaucrats. The Commonwealth Secretariat has only 300 staff, less than 2% of the 23,615 employees of its nearest equivalent – the European Commission.

The Commonwealth epitomises how good we are in the UK at creating multi-national institutions which work well and do not run out of control. Ironically, what could have been another UK success in this field, the European Free Trade Association (EFTA), designed as an alternative to the EU which preserved national sovereignty, suffered a blow when we withdrew to join the EEC in 1973. This does beg the question as to why we are bothering to be involved with a multinational institution which is so inferior to anything we would have designed and which forces us to prefer nations with whom we have very little in common to our real friends in the world. We can only hope that we can correct our misalignment soon and that our commonwealth friends will forgive us this wrong.

Photo by Foreign and Commonwealth Office