Voting for the status quo is not an option

We are very aware that opinion polls are consistently showing that supporters of outright withdrawal are in a minority. Of course opinion polls can be wrong, with both the UK general election in May and Greece’s bailout referendum earlier this month producing results somewhat at odds with the pollsters’ predictions. Having moved to my present home in East Sussex less than four months ago, I am still at the stage of meeting local people for the first time and being asked what I do for a job. When I mention my work for CIB, in the great majority of cases, the reaction has been along the lines of, “I think we should leave the EU too; good on you!” or similar. This in and of itself by no means proves that the pollsters are wrong, however. Rural East Sussex cannot be taken as representative of the UK as a while and even if supporters of withdrawal really are more numerous than they appear in surveys, there is no room for complacency.

Having said this, however, there is good reason to believe that quite a lot of support for “in” is actually quite soft. The more detailed analyses of UK public opinion which go beyond the simple in/out question find very little support for closer integration. A poll by Ipsos Mori back in October of last year showed that while support for remaining in the EU stood at 61% excluding “don’t knows”, only 14% supported closer economic and political union. Even though support for staying in the EU has increased still further since then, there are still only a small minority of people who want to see further powers surrendered to Brussels.

So, to put it another way, potential support for voting to leave could be as high as 86% if it were made clear that there is no status quo on offer. It is either closer political integration or withdrawal. The dream of ever closer union is still alive and kicking on the Continent, as François Hollande, the French President, made clear over the weekend. “What threatens us is the lack of Europe, not the excess of it,” he said in a speech at an event to celebrate the 90th birthday of Jacques Delors. He went on to talk of accelerating the process of integration within the Eurozone – a common budget for the single currency areas and a separate parliament too – or at least, separate sessions of the European Parliament exclusively for the MEPs whose nations use the Euro. Of course, this is only one man’s opinion – and one man who is very likely to be booted out of office in the next French presidential election, but it was sufficient to elicit a response from Magdalena Andersson, Sweden’s finance minister, who felt concerned that Sweden (and by implication, the other EU member states who still use their national currencies) could be relegated to second class members of the EU.

But is there any alternative? The concept of a “two-speed Europe” has been touted for some years and for all the competing visions of how to move forward and the lack of enthusiasm for closer integration among the populations of some Eurozone states, including France for that matter, there are enough politicians within the governments of the Eurozone countries itching to press on with the primary agenda of the EU – the creation of a federal superstate. They are not prepared to wait for Sweden to decide whether or not it ever wants to adopt the Euro and they do not wish the UK to slow down the process either.

What looks likely is that some form of “associate membership” may be offered to the UK. What it would involve is not totally clear, but it will inevitably be a far inferior relationship to the EU than the EEA/EFTA option. It could well be designed in such a way as to inculcate a sense of inferiority among the non-Euro members in the hope that it will encourage them to join the “vanguard”. It could be far closer to “government by fax” than the former Norwegian premier Jens Stoltenberg’s infamous parody of his country’s relationship with the EU.

To put it another way, “associate membership” would be rather like travelling down a slow, bumpy country lane in a clapped out old banger while the “vanguard” cruise along the autobahns in their sports cars. The duration and quality of the journey on the two roads are very different, but neither route allows you to spend long in lay-bys. You have to keep moving towards the destination whether you travel slowly or quickly (although there will be a few side-roads allowing quick access onto the autobahn from the narrow road) and more importantly, whether you switch to the fast road or continue bumping along the farm track in your banger, THE DESTINATION OF BOTH ROADS IS THE SAME. In other words, an opt-out from ever-closer union is utterly meaningless.

This is the key point – joining the EU means joining a project that has only ever had one goal. Economics comes second to the political objective of creating the United States of Europe and this is where the withdrawalist campaign can, with a good campaign, whittle away at the “soft” supporters of continuing UK membership. I have yet to see the results of any poll asking these people why they want to vote to stay in, but it would be a pretty reasonable assumption that, for many of them, the answer would most likely be, “to keep my job”, “because we need to trade with the rest of the EU”, “I’m nervous about a step into the unknown”, “I’ve been offered an Erasmus scholarship” or “I want to continue living by the Mediterranean and I’m worried I would be forced to return to cold, grey England if we left the EU.” In other words, their big concerns revolve around issues which are peripheral to the aim of the EU. Convince them that there is an “out” option that will address their concerns while at the same time allowing the country to escape from a political project which few believe in and support for staying in the EU will peel away. Or course, we must also convince voters that the idea of keeping the level of EU interference at its current level is a non-starter. It’s either more EU or goodbye EU. Those supposedly hard-won derogations are only humps in the road. They slow your progress but they don’t force you to stop, let alone turn back.

The EEA/EFTA option fits the bill precisely. It also has the advantage of being practical rather than aspirational. Not only have “aspirational” books and leaflets made unrealistic claims (for instance, “Leave the EU and we can control immigration”, or “Leave the EU and we can slash regulation”) but your aspirations – in other words, your picture of what you would like an Independent UK to look like 10 years after we leave, whether or not it is achievable – may be very different from mine. Withdrawalists are united on regaining our sovereignty and in opposing the unaccountability of the EU structure. This in itself is sufficient to provide plenty of “sunlit uplands” and avoids focussing on issues which only divide supporters of withdrawal.

There is, however, one potential pitfall. Plans for closer Eurozone integration and the alternative of “associate membership” may be developed in such a way as to replace the EEA altogether. Richard North flagged this possibility up on his blog last month. Within the EEA agreement, there is provision under Article 127 for members to withdraw on 12 months’ notice. In other words, if all 28 EU countries simultaneously gave notice to quit, there would no longer be an EEA. Whether there is some sort of cunning plan being hatched in Brussels to force Norway, Iceland and Liechtenstein into the EU by pulling the EEA rug from under their feet we cannot say as the discussions are being held behind closed doors. However, in the same article, Dr North shows that there is a way of maintaining a “shadow EEA” arrangement if this is indeed the EU’s plan which will avoid being forced into associate membership. With Iceland’s government distinctly unenthusiastic about EU membership and Norway boasting a strong and well-organised anti-EU movement, any attempt to shoehorn these countries into the EU through sheer naked coercion will be fiercely resisted and the shadow EEA idea will no doubt be widely canvassed.

All this is still speculation at the moment, but a quick move to a two-speed Europe with the UK of necessity in the slow lane must surely cause many of those who favour a status quo to realise that it isn’t going to be an option. A vote to stay in means more integration, however much David Cameron’s sham renegotiations will leave us lagging behind the federalist front-runners in the Eurozone.

What is our aim and what is our plan?

Our aim is for the UK to leave the political, judicial and monetary structure of the European Union (EU) as well as the Customs Union and other Common Policies, but the UK would stay in the Single Market by retaining its European Economic Area membership and would propose to rejoin EFTA.

What would happen?

It must be emphasised that EU membership and Single Market membership are two different matters.
In this plan, entitled FLEXCIT – the work of eureferendum.com and The Bruges Group – the UK would stay in the Single Market by retaining its European Economic Area [EEA] membership and joining EFTA. In due course, it would then make further policy changes as any normal country. Ultimately, the long term aim would be to change the UK’s relationship to the EU to ‘joint membership of a European free trade area’. This goal is within reach and will be attained more easily if the political and monetary aspects and other Common Policies of the EU are jettisoned.

In the short term the UK would be in the position of Norway or Iceland. This is not a perfect strategy, nor is it the end of a process – which will go on for many years – but it is an existent, proven platform which will secure an amicable and stable exit.

How would the UK stay involved with the EU?

a) The Four Freedoms – which are part of the EEA agreement. It should be noted that EU governments (including the UK) in reaction to the ‘sweetheart’ tax deals agreed by Juncker in Luxemburg, have actually reduced freedom of capital movement. In the case of Cyprus (and soon to be Greece?) full capital controls have been imposed by the EU Troika. It should also be noted that the provisions of the EEA agreement are more restrictive on freedom of labour movement than the EU membership and also allow further restrictions in exceptional circumstances, unlike the EU.

b) Horizontal policies associated with the Single Market, such as consumer protection, company law, environment, statistics.

c) Co-operation in development, training, culture, tourism, etc.

d) The Single Market.

In addition, the UK would continue to be involved with the EU in intergovernmental matters, may agree to participate in some EU programmes and, in some cases, sign up (inter-governmentally) to EU institutions where they offer better value than going it alone.

What would trigger this?

A referendum to leave the EU having a positive vote, the UK would then serve an Article 50 notice in accordance with the EU treaties, giving two years’ notice to leave the EU and start to agree the terms of departure.

What parts of the EU would the UK leave?

The UK would repatriate the ‘acquis’ (the system of EU law). Just as Ireland
and India did when they became independent, bringing the whole acquis into
British law allows a seamless transition. Once repatriated, the British parliament
would then repeal EU involvement in the following areas:
– The Common Agriculture Policy
– The Common Fisheries Policy
– The Customs Union
– The Common Trade Policy (and regain the UK’s seat at the WTO plus the ability to make its own trade agreement with other countries)
– The Common Foreign and Security Policy
– The Common Policy on Justice and Home Affairs
– The Charter of Fundamental Rights
– EU Economic and Monetary Union (the UK is signed up for Stages 1 and 2 but not Stage 3 (the euro) of EMU.)
– No involvement in direct or indirect taxation
– The EU Commission
– The EU Court of Justice
– A substantial reduction in contributions to the EU budget
– The ‘joint and several liabilities’ of all EU members for all EU debts
– Extrication from specific risk exposure to the liabilities of the EU, the ECB and the EIB as soon as possible.

In short, Britain would then be in approximately the same relationship to the EU as the EFTA/EEA countries: Norway, Iceland and Leichtenstein. Of course, it may be decided that certain functions should be ‘bought in’ from the EU and also that the UK may decide to participate in some EU programmes,
such as in Eastern Europe, on a voluntary intergovernmental basis. Clearly, there must be negotiation with the EU in certain areas and, equally, there will be transitional policies required in some areas such as extrication from debt guarantees.

The advantages of this strategy?

a) It attains the aim of leaving the political, judicial and monetary structure of the EU.
b) All those who wish to leave the EU, whatever their ultimate goal, will be able to support Flexcit and the UK staying in the Single Market as a platform to move to future long-term trading arrangements which will take a long time. These arrangements can be debated after exit.
c) Of all options, it is likely to engender the least hostility from the EU institutions since this option can be traced back to proposals fromPresidents de Gaulle and Giscard D’Estang. Indeed, de Gaulle’s press
conference in 1963 outlined a sensible free trade relationship for the UK to the then EEC.
Further, in December 2012 former head of the EU Commission and the main driver of the EU in his day, and a man highly respected in Brussels, Jacques Delors, told Handelsblatt newspaper:
“If the British cannot support the trend to more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free trade agreement.”
This correctly stated the alternatives for the UK, “Supporting the trend to more integration in Europe” or ‘friends’ on the basis of membership of the EEA.
d) Having looked at many speeches by business which purport to support the UK remaining in the EU, the only reasons given are the asserted benefits of the Single Market. There are many business speeches in favour of the Single Market but none in favour of the parts of the EU identified above where the UK will leave. No business has ever asked for EU control of justice and home affairs, an EU foreign policy,
massive financial transfers from the UK to Brussels or increased exposure to the losses of the eurozone.
Staying in the Single Market removes all business objections. At one time it is true that many businessmen and business organisations pressed the British government to join the euro. It is now
realised that this would have been a disaster on a grand scale.
e) By staying in the Single Market and reassuring business, the electorate is also reassured that there will be no economic change. The electorate will be comfortable that jobs, investment and trade will be
unaffected and business will continue exactly the same as before.
f) Once a referendum is won this plan sets out a clear and simple plan for action on Referendum Day +1. There can be no doubt about what ‘leaving the EU’ actually means. It is a clear instruction from the
electorate and a clear plan for action. It is not an expression of wish which the Executive can implement in the way it chooses.
g) In the 1975 referendum, a number of outside leaders in the Commonwealth were quoted by the pro-EU leaflet circulated to the electorate as stating they wanted the UK to remain in the EU. This
pattern of outside advice was repeated in the recent Scottish referendum. As the move from EU membership to EFTA/EEA membership is less dramatic, there is little reason for outside leaders to comment or to parse the exact differences between EEA and EU membership.
h) To win a referendum with a cacophony of options is unrealistic and, even if won, would simply hand the initiative to the ‘more integration’ forces in Westminster who would negotiate as they saw fit. In 1975, the pro-EU literature devoted a great deal of space to describing and disparaging the great variety of alternatives to the EU offered by the anti-EU side.

The FLEXCIT plan, taking up approximately the position of Norway, is available, off the shelf, and is a proven and existing solution while long term trading arrangements are debated and implemented over several years.

Some Restriction on free movement of people is possible within the EEA agreement

Remaining in the single market as an interim option after leaving the EU does allow a country to place restrictions on immigration. The so-called “Norway Option” is being widely debated at the moment, but it has received a good deal of criticism from those whose prime reason for supporting withdrawal from the EU is their desire to see immigration reduced. Nevertheless, although this arrangement may not satisfy everyone seeking an “out” vote, not only it is the best way of ensuring we win a sufficient number of votes to leave the EU, but it does at least allow some restrictions on immigration, as Robert Oulds from the Bruges Group explains:-

It is possible to impose restrictions on immigration whilst remaining in the European Economic Area. Liechtenstein, an EEA member with less potential influence than Britain, continues to use clauses in the EEA agreement to restrict the movement of persons. Article 112(1) of the EEA Agreement reads: ‘If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures under the conditions and procedures laid down in Article 113.’ The restrictions used by Liechtenstein are further reinforced by Protocol 15 (Article 5 – 7) of the EEA agreement. This allows Liechtenstein to keep specific restrictions on the free movement of people. These have been kept in place by what is known as the EEA Council.[1]

There will also be greater latitude to restrict non-British EU citizen’s access to benefits and to deny residency to those who are deemed to not have sufficient resources to support themselves. The current debate in Britain on immigration largely ignores the role of the European Court of Human Rights and the European Convention. Article 3 of the Convention (inhuman or degrading treatment or punishment) and Article 8 (private and family life, his home and his correspondence) would also be relevant to the issue of immigration. These two article are often taken together; especially in cases of repatriation.

EEA/EFTA states are outside of Article 6 of the EU’s Treaty on European Union which states; 2. The Union shall accede to the European Convention for the Protection of Human Rights and Fundamental Freedoms. Such accession shall not affect the Union’s competences as defined in the Treaties 3. Fundamental rights, as guaranteed by the European Convention for the Protection of Human Rights and Fundamental Freedoms and as they result from the constitutional traditions common to the Member States, shall constitute general principles of the Union’s law.

 There is already a great deal of flexibility in the EEA agreement. This goes beyond the ability to restrict immigration and opt-out of areas of EEA rules. Iceland even unilaterally imposed capital controls after its financial crash in 2008. This is permitted within the EEA safeguards Article 112.[2] There is also no enforcement mechanism to prevent this from happening even if such flexibility was not contained within the EEA. Whist this paper does not advocate such a policy it shows that radical steps that run contrary, even to the four freedoms of the EEA, can be implemented.

The EEA relevant rule relating to freedom of movement, Directive 2004/38, has qualifications, conditions and limitation. (10) Persons exercising their right of residence should not, however, become an unreasonable burden on the social assistance system of the host Member State during an initial period of residence. Therefore, the right of residence for Union citizens and their family members for periods in excess of three months should be subject to conditions. (12) For periods of residence of longer than three months, Member States should have the possibility to require Union citizens to register with the competent authorities in the place of residence, attested by a registration certificate issued to that effect. (22)

The Treaty allows restrictions to be placed on the right of free movement and residence on grounds of public policy, public security or public health. Article 7, 1 b) (b) have sufficient resources for themselves and their family members not to become a burden on the social assistance system of the host Member State during their period of residence and have comprehensive sickness insurance cover in the host Member State.[3] No right is absolute, and neither is freedom of movement within the EEA. What is more, EEA rules only apply to EFTA nations after they have assessed the relevant legislation and applied it according to their own interpretation of what freedom of movement means.

Footnotes:-
[1] EEA Council Decision No. 1/95, Official Journal of the European Communities, 20th April 1995, pages L 86/58 and 86/80
[2] Official Journal of the European Communities, 3rd January 1994, pages L/28, 176-8 and 562
[3] DIRECTIVE 2004/38/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2004

Robert Oulds: Independent from the EU

Last October, Robert Oulds of the Bruges Group delivered a presentation entitled “Independent from the EU and into the wider world” at a CIB-hosted meeting at Chelwood House, Somerset. Robert explained how we could exit seamlessly from the EU by invoking Article 50 of the Lisbon Treaty and negotiating to re-join EFTA. No other exit option is viable for, if we left the European Economic Area (which we would not under this secenario), the barriers to trade with the EU would take years to address, thus putting many UK businesses at risk.

Although much has happened since Robert gave this presentation, the arguments he set out last year still form the basis of the EU exit strategy most likely to command sufficient popular support to secure the all-important “out” vote in the forthcoming referendum and the only one which can answer all the concerns of the business community. The video can be accessed here.

 

What planet is he on?

As Greece prepares for a referendum which could determine whether it leaves the single currency or not, Sir Richard Branson, well known for his enthusiastic support for our membership of the EU, said that he was “not particularly” happy that we were out of the single currency. “I think that if we were part of the euro right now our currency would be a lot cheaper,” he told the Andrew Marr show. “Great Britain would be doing that much better in trading in Europe because the pound is a lot stronger than the euro, it makes it more difficult for us.”

Here, Branson once again proved the point that for business, the only real issue as far as our EU membership is concerned is trade. He also revealed his ignorance of the flawed nature of the single currency project. Had we been part of the single currency, we could not have cut interest rates to rock bottom at the height of the Great Recession allowing our currency to depreciate in value in relation to those of other nations. That is how things work with a “fiat currency” – i.e., where there is no peg to an asset such as gold. Countries in financial difficulty are encouraged to rely on exports (which will become cheaper with a weaker currency) as a way of rebuilding their economy. It is the textbook approach of the International Monetary Fund. Unfortunately, it is not an option available to Greece at the present time because it does not have control of the interest rates set for its currency – the Euro. If we had been part of the single currency, we would not have had that option either during that critical period five years ago.

So while UK goods might indeed be a bit cheaper now if they were denominated in the euro, which has fallen in value against a number of other major currencies recently, they would have been too expensive during the critical period when the recession was at its worst and a boost to our exports was desperately needed. We would have been entirely at the mercy of the European Central Bank. In other words, the exchange rate for the currency we would have been using would have been ultimately determined by decisions made in a foreign country and not therefore seeking the optimal rate for UK business. Perhaps the pound may be overvalued at the present as far as Branson’s business empire is concerned, but this is a price worth paying to preserve the freedom to control interest rates and thus – to a degree, at least – exchange rates. The terrible recession in Greece is an object lesson to the tiny handful of influential people who bemoan our absence from the single currency. Branson, however, is not alone. Martin Sandbu, an economics writer for the Financial Times, maintained that Greece would not have suffered its current crisis had we joined the Eurozone, as we would have ensured that the financial discipline written into the Maastricht treaty and thus prevented earlier Greek governments from over-borrowing when money was cheap. A rebuttal to this rather fanciful idea was provided by Raoul Ruparel of Open Europe. Even this pro-EU think tank has sufficient wisdom to see the lack of substance to Sandbu’s argument. With the UK experiencing economic difficulties some time before the Eurozone, “the UK would have found itself in a similar position to Ireland, with the rest of the eurozone (which had yet to be hit by the sovereign crisis) lecturing it on economic and financial policy”, said Ruparel. “The fallout would probably have been the UK leaving the euro and possibly the EU, precipitating a potentially even deeper crisis for all involved. In the end the fundamental flaws in the Eurozone, clear for all now to see, would probably have been exacerbated by having another large country with different needs inside the single currency.”

Yes, the single currency is a flawed project. Professor Tim Congdon highlighted the vulnerability of European monetary union to depositor runs on the banking system (such as we have seen recently in Greece) over 25 years ago. “When I spoke to them at conferences, dinners and such like, the euro’s architects….. dismissed my concerns as of no importance”, he wrote recently. Branson and his ilk regrettably remain as blind to these flaws as ever. Indeed, his blindness to the nature of the whole European project is quite staggering. During the same interview with the Andrew Marr show, he also said, “If we go back to being Great Britain again we will have our hands tied behind our back and I think Europeans will rightly punish us and we’ll be back to where we were fifty years ago.” Branson clearly has no concept of the EEA/EFTA exit route – the so-called “Norway Option”, which, far from tying our hands behind our backs, would be a benefit to our trade in the longer term. He then repeated a really basic howler in claiming the EU had helped preserve relative peace in Europe. Oh really? What has it done to preserve peace in Ukraine? It has in many ways fermented the conflict. What about Serbia? What did it do to end the conflicts with ETA or the IRA? The credit for over seventy years of peace within Europe belongs to NATO, not the EU.

Branson then claimed it would be “catastrophic” if we left. Nonsense; it would be catastrophic if we didn’t leave. It would be the end of our great country. It would be the final nail in our Common Law legal system and the sovereignty of our Parliament. Deceived by our political leaders, we made a wrong turning over forty years ago and locked ourselves into a project which we have never really supported. The referendum offers us a chance to right a great wrong.

Branson is no politician and should keep his big mouth shut over issues about which he is plainly pig-ignorant. He should instead stick to being an entrepreneur, which he clearly does very well. After all, his Virgin empire even includes a commercial space travel programme, Virgin Galactic. While it appears on the surface to be a long way from offering space travel for tourists, judging by the silly words he spoke to Andrew Marr about the EU, which seem so far removed from reality, one is tempted to wonder whether Branson does already inhabit another planet, if not some parallel universe.

Yes we can – sell your country, know your history!

On Tuesday, I had the privilege of presenting CIB’s latest booklet, Generations Betrayed, to the Better Off Out group – a meeting of MPs, Lords, think tanks and eurosceptic campaign groups. This excellent booklet, written by Chris McGovern, Chairman of the Campaign for Real Education, illustrates how history teaching has been dumbed down in British schools, producing a generation who have left school with a severe lack of knowledge about our past. Those who do not know the history of our country with its great distinctives, says Chris, are harder to win round to supporting withdrawal from the EU.

The presentation led to an interesting discussion and some helpful conversations afterwards. One theme to emerge is that we who are campaigning for “Out” must be unashamed to tell our country’s history to those who don’t know it. “In” supporters are belittling the country that has nurtured them. “Poor little England can’t stand up on its own in the 21st Century. We have to be part of the European project.” What nonsense! (I could use a stronger word, but don’t want to offend my readers’ sensibilities!) A nation with such a great past can look forward to what Owen Paterson described as a “spectacular” future outside the EU. It is so unfortunate that, in an age which is seeing a growing national self-awareness among, for example, the Flemings in Belgium or the Catalans in Spain that patriotism in this country is frowned upon and history is taught from a curriculum devised by people consumed with national self-loathing. As I mentioned to the group yesterday, our history does contain a few blemishes, but the balance overall is of a very positive story. We have far, far less of which to be ashamed in our past than not just (obviously) Germany but also France, Spain and Russia, to name a few others.

Much of the debate in recent weeks has revolved around economic issues and CIB fully recognises the need for an exit strategy which is feasible, watertight and at least economically neutral. The “out” campaign must be realistic, rather than aspirational when it comes to the nitty gritty of the withdrawal process. However, this needs to be set to some very optimistic mood music. It is the supporters of “in” who are the Little Englanders – belittling our abilities, decrying our history, undermining our confidence. Barack Obama may now appear a lame duck president, but he won the 2009 US Presidential election by setting a positive note – “Yes we can.” If we can sell an equally positive vision for the UK on independence as well as convincing the electorate that the sky will not fall in economically, it will be greatly to our advantage. This year is particularly rich in anniversaries – Magna Carta 1215, Agincourt 1415, Waterloo 1815. Has there ever been a better opportunity to harness our past successes to the service of selling our future success to a public who must surely be receptive to a positive vision for our great country?

(Copies of Generations Betrayed can be obtained by contacting CIB at the address on the home page of the website or by e-mailing [email protected]. Price is £2 per copy plus postage & packing)

Photo by David Jones