Further info and resources from my website

Saturday, December 10, 2011

Sailing away: Time for Britain to leave the European Union

PARIS
I haven't read the British press following last week's milestone decision by European Union (EU) leaders to move towards a more federal system with financial and budgetary convergence between their countries in order to solve the debt-induced crisis, but I wouldn't be surprised to see the following headline: "Europe isolated as Britain votes NO to treaty changes." Once again, and probably more radically than ever, Britain stands alone with 26 countries (using the euro and outside the eurozone) forging ahead on a new pact, and she standing in splendid isolation, the cornerstone of her policy towards Europe for a couple of centuries. Except, of course, that as a middle-sized power Britain cannot afford it any longer

To understand the current situation, just imagine that your friends have recommended you to the neighborhood club and upon joining it you requested a few privileges. First, that you be allowed to bring not only one guest but two. Then, that your dues should be only half of what other members pay. Plus a couple of other such exemptions which, considering how important you are to your friends, they all accepted to get you in. Then, as time goes by, you start making more and more demands, for instance that the club be open longer hours to accommodate your personal schedule; that you be allowed to bring your own caterer as the food served does not please your palate and a couple more requests of the same ilk. At that point, the other members rightly fed up join in unison with a rude expletive, the meaning of which is that everybody would be better off with you outside the club than inside.

This is exactly where Britain and the European Union find themselves now. Facing the admittedly worst crisis the Union has had since its inception 60 years ago, when all bandied together to come up with a solution, Britain said, "If I don't get my own, deal I won't sign to this one." The answer from the rest of the Club was to politely ignore Britain and move ahead with their agreement, anyway.

Are we surprised? Not really. Ever since the European Union was born, Britain had pooh-poohed it, when not tried outright sabotage. First, when it was set up (as the European Community) in the 1950's, Britain refused to join. Then, when it saw how successful the club was, it begged to join and did so in 1973 as a beggar,  rather than a founder, which meant it had to accept less good terms. Throughout the following decades, Britain kept on behaving in a most un-European way: Thatcher asked for a contribution rebate (the famous "I want my money back"); then they got exemptions on social issues; and, more pointedly when the single currency was formed, they refused to join. And last week, they asked for the unacceptable: exemption from financial rules. Considering that the current crisis is the consequence of lax regulations of financial institutions, this demand is completely crazy. Cameron claims that he wants to maintain the preeminent status of the City (London's financial district) which under the new rules might lose out to Frankfurt and Paris. This is a lot of hogwash: since Paris and Frankfurt will be subjected to the same rules as London, then we are talking about a level playing field. If London loses, then it means it wasn't competitive to start with, something the Tories, super-champion of competition should accept - but as we know they only accept competition when they are guaranteed to win. Also, last time I checked I thought Europe was operating as part of a single market (which the British always defend.) Now, Let David Cameron explain how we can have a single market without a single set of rules (never mind a single currency.) The truth of the matter is that the Tories are nothing more than the bankers' party and are determined to fight tooth and nail to protect the interest of their (pay)masters, even at a high cost to their own people and the rest of Europe.

With this latest rejection, the British have reached a crossroads. Their position will soon be untenable since at every EU summit, you'll have one set of meetings with 26 members making decisions and then calling the other EU member who will have little choice but accept, especially when it is about decisions where unanimity is no longer the rule. Britain's worst nightmare will become reality: there will be a two-tier Europe, a Tier 1 with all other EU members and a Tier 2 with Britain (unless in their self-delusion the British think that on their own they can be Tier 1, and all the rest Tier 2!) Permanently isolated an outvoted, Britain will find itself having to comply with rules it has had no say in their creation. How long will she put up with it?

I lived in Britain in the 1980s and since then have been a frequent visitor either on business or vacation and can claim to know the country pretty well. And one thing that still has not changed is their island mentality. I still hear many Britons when crossing the Channel saying "We're going to Europe," or "We in the UK do it this way, but in Europe they do it that way." The British have clearly psychologically never felt European. Will they ever?

So it is time the British (or, to be more accurate, the English) made up they mind. They have played obstructionist in Europe for too long, which is fine, if they have such a radically different view from Europe from all other 26 countries. I'm not saying their views are better or worse, right or wrong, but different. Then, David Cameron should do something that the so-called mother of democracies hates to do, ask the British people, in a referendum, what they want: be part and parcel of the European Union, not a mere free-trade area, with all that that implies, or keep their own views, maintain their sovereignty (or what remains of it) and therefore leave and make other arrangements.

These arrangements could entail:

- Negotiating a free-trade or special-partnership pact with the European Union (maybe like what is being offered to Turkey)

- Move closer to the US and Canada (maybe in a North Atlantic free-trade area) since they feel so much in sync with their "cousins" from across the pond

- Decide to focus on what Britain does best (media, culture) and become  a high-value-add export oriented country which will allow it to survive alone outside the European Union.

Of course, there are risks involved. Britain trades more with the EU than any other country or bloc, so a realignment is not easy to achieve. At home, if the UK leaves the EU, it is almost certain that Scotland will split and apply for readmission as an independent nation, which would mean the end of the United Kingdom. The EU will also suffer a bit, as it loses an important economy and important population, but considering it has 500 million people, a 12% loss and corresponding reduction in GDP will not be insurmountable and anyway will be replaced by the arrival of new countries such as Croatia in 2013 and subsequent ones. An EU-less Britain is likely to suffer way more than a Britain-less EU.

Whatever the solution, it is crunch time for the British. Since EU rules do not consider ejection, please do us and yourself a favor and make up your mind, which you seem to have already done, and leave. It is always sad when a marriage comes to an end, but it is always preferable to end it sooner, and on amicable terms, than later and bitterly, especially when the house is on fire.  

3 comments:

  1. I agree

    Britain should leave the EU. Britain is part of Europe but has never accepted political or federalistic integration.

    I believe Britain (England) would be better off joining the NAFTA.

    NAFTA works as a free trade area, not one of political integration. NAFTA follows more or less the Anglo/American way of business and shares the same language.
    All this is something that is more suited to the U.K.

    NAFTA itself could evolve eventually by including/welcoming the commonwealth and all other English speaking nations that have a similar political and trading mindset.

    This concenpt could develop into a huge economic trading block, that would dwarf the EU many times.

    ReplyDelete
  2. Clear and fair, Ahmed. I agree very much with your point of view. Nobody know who is right, pro or anti-Europeans, time will say. But if we go together in the same ship, I want to know who is with me and wants to follow the same rules than me. We still have boats to choose to go in and try to survive. In the future maybe not, so let's clarify all now, no more waste of time.
    Kind regards.
    Jesus

    ReplyDelete
  3. some great posts on the Economists Ahmed.

    ReplyDelete