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The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.
The Bruges Group spearheaded the intellectual battle to win a vote to leave the European Union and, above all, against the emergence of a centralised EU state.

Alternatives to the EU

Dr Anthony Coughlan
Professor Christie Davies
Margit Gennser
Roger Helmer MEP
Dr Brian Hindley
Dr John Hulsman
HE the Rt Hon. Don McKinnon
Professor Ivar Raig
Dr Helen Szamuely

Morning Session

Professor Christie Davies

Before coming to the theme of the conference, namely that we should be looking to a much wider world, beyond Europe, I want to look at the question of why it is that continental Europeans are unable to do so. What it is that makes us different from them? When you talk to enthusiasts for Europe, within Europe, as distinct from Britain, the first thing one notes is that they’re rather more honest.

Honest, when you point out to them that the European Union is oppressive, that Brussels is the only place in Europe where the insolence in office and the law’s delay have been turned into political principles... When you point out to them that Europe is costly, that the Common Agricultural Policy alone costs the equivalent of the Spanish gross domestic product, and is something like 85% of world agricultural subsidy... That we can see, here, that Europe is what Dr. Spooner would have called a ‘Friar Tuck robbing poor pensioners in order to enrich wealthy peasants’.

When you put this point to people who are Europhiles, in Britain, they simply go red in the face and deny it. But when you talk to Europhiles on the continent, they will cheerfully admit that all these things are true, cheerfully admit that Europe is oppressive and that Europe is expensive, and then they would say: “Ah, but we have a commitment to the European idea.” In other words, we’re prepared, to pay all this dreadful price, for some kind of mystical ideal. And I thought to myself, well how on earth could anyone go into such a delusion? It’s quite clear to me, that one wants national independence. It’s also quite clear to me that one wants a variety of attachments, that both maintain that independence, and establish mutuality with the rest of the world. Why is it not clear then to them?

Now, one of the clues as to why this is so came to me: listening to an American who had done market research, in effect. He hadn’t actually done it for the European Community, but he’d gone round asking people in various countries in Europe, not only whether they were in favour of the European Union, but why they were in favour, or why they were against. And he noted a particular contrast in this regard between the UK and Spain. As far as the UK was concerned, the majority of people were against the EU. And the key reason they gave, apart from the regulations and the economic nonsense, was: “We see it as a threat to our identity.” That was how they saw it, it was quite clear from the data he provided.

When he asked people in Spain, the majority of the people were in favour of the EU. Some of them wanted it because they wanted their snouts in the troughs, but more of them because they wanted to get away from the past. When you ask them: “Well what does Europe offer you?” They say: “Well, we had a civil war, we had Franco, we had a horrible time of isolation, we want to get away from all that.”

Now, what then is the key point here? The answer is that in Britain we wish to preserve an honourable history. Whereas they are saying: “We want to forget a tainted identity.” That was the contrast that came clearly out of asking the question.

Similarly, when I have spoken to Germans about a similar period in their history, when they seem to have had a few problems; problems that they’re often rather vague about. I could remind them about the details of 1933 - 1945 but on the whole I choose to be kind, because they’re obviously suffering from Valdheimer’s disease. So what we can see, in these cases, is a tainted identity that people want to forget. The European ideal is a place to bury tainted identities. That is what it is for, a place to bury tainted identities, a place to bury nasty memories.

Now, I can say at this point that various critical 'PC' types, the people whom the Bible in its wisdom refers to as the ‘Gadarene swine’ – presumably because they’re galloping over a European cliff – no doubt at this point they will jump up and down and squeak about racism. Not at all, what I am saying is that now is a time when it is both safe and appropriate for the Spaniards, and for the Germans, to resume a decent and normal national pride. It is now the 21st century. They should no longer feel forced to submerge themselves in a non-existent Europe. They should not feel that they are going to be crucified on the 'circle of stars' forever. Rather they should get out of as many European institutions as possible, in particular, they should have nothing to do with the Euro. ‘Deutsche mark uber alles’!. It is time for them to assert independence and particularly in the European sphere. It’s not that I am knocking these places. I’m simply saying to them: “ Look, I’m sorry about history but that is how it was. You’re not going to solve matters by burying yourself in this horrible multi-national institution. That is the message.

Now, if I turn from the countries with the tainted identification to countries that have no identity. And here I’m thinking of a remark by Italy’s most famous politician, indeed Italy’s only politician, Benito Mussolini. Mussolini said: “Italy is not a mere aggregate like Belgium.” He was wrong! Not about Belgium but about Italy. Italy is a mere aggregate. There are no Italians, there are only Venetians, people of Lombardy, people of Sicily. There are no Italians. And that is why Italian public institutions do not work, none of them. Honest and effective public institutions have to be based on patriotism. It is patriotism that is not 'the last refuge of scoundrels', but the last refuge of honesty. And I think we can see this from the Italian post office.

The Italian post office has some of the finest architecture in Europe, thanks to their greatest politician, whose name I will not repeat. It has splendid slogans outside. The sort you find in British educational institutions. But, it is also, the Italian post office that is, corrupt and inefficient, in other words, the perfect prototype for Europe. I sometimes wonder if the European ideal was not designed by the head of the Italian postal service.

At one time I remember Italian colleagues of mine telling me – and this was before the days of e-mail, which shows how old I am – that if they wanted to post letters, they would drive over the border to Switzerland; while their colleagues, in Rome, would cycle to the Vatican city to post their letters. Meanwhile, the Italian post was stuck in a railway train, in a siding, somewhere outside Palermo.

From an Italian point of view, why would it matter if Italy was ruled from Brussels? What difference would it make? From the point of view of the ordinary Italian, whose sole respect is for the local community, why should it matter if ‘alien’ rule from home was replaced by ‘alien’ rule from Brussels? This is not a dilemma we have to face, but for an Italian, it would make no difference whatsoever because there is no nation, there are no people, there is nothing to be lost. And, this is also why the Italian army has never been any good. Ever. I mean even Macchiavelli recognised that the Italian army wasn’t any good. It is not a new phenomenon. It is several hundred years old. It is one of those eternal and unchanging aspects of modern history.

But at least we can cling to the fact that the Italian army runs away. It is one of the things we can depend upon in a changing world. And it is notable in this instance that when the Americans needed allies in the recent war, I don’t think they even asked the Italians. And it’s interesting that the main critic of the American effort was someone with the unfortunate name of ‘Prodi’, which sounds like an offensive name for Ian Paisley. And, I think we can be sure, that if there were a European army, the Italians would run away again. They have nothing to be loyal to, and that’s what keeps armies together. All that would happen is, we’d have a European army in which the Germans would provide the infantry, Britain would provide the navy and Italy would provide the marching songs.

Now, the point I’m trying to make is this. That people will only fight for a secure identity. They will only fight for something they think is special. I mean, why bother otherwise? Why are people banging shrapnel at you for nothing? People would fight for a Britain or an America or an India. Or they would fight for Islam. They will never fight for the European idea, and the European army will fail because they have nothing to fight for. Europe is a vacuum. Likewise, Belgium is not a nation. Belgium consists of two hostile regions where the only powers reserved to the centre are in relation to paedophilia. Italy is many hostile regions. They all hate one another. And, in a sense, it doesn’t matter for them if Europe gets regionalised, because they are nothing but regions anyway. Whereas we can now see the creeping European attempt to regionalise Britain. We can see from these strange meetings in the South-West of England, presided over by a prelate, that there is something nasty afoot to turn us into an Italy or a Belgium, and I can’t think of anything worse.

Let me now turn to the one other significant country that we need to think about, and that is France. And I am in a sense surprised that France has been willing to go down this road. France was promised, by General de Gaulle, a ‘Europe des Patris’, that is not what they’ve got. His successors have sold out on France. And now Mr. Blair is looking to do the same. As far as the French are concerned, why on earth did they ever buy into the idea in the first place? Here we have a proud country, a country with a splendid history. Why on earth would they want it?

I can only think of two things. When you talked to them in the early stages, they saw Europe as the way of taming Germany. They saw Europe as a way of tying themselves to Germany so that they should not be threatened in the future. Their view was, ‘well at least with Europe, Germany will never start a world war again, not after last time – and the last time again.’ In fact, what settled matters was that power moved outside Europe. Both France and Germany became trivial actors in a world dominated by greater powers outside. That was what kept the peace between them. It had nothing to do with Europe whatsoever.

Let me here turn to another point. And that is that if we look outward from Britain today, we have a proud Commonwealth. Can you honestly say, after what happened in Vietnam and Algeria, that the French can take such a pride? Rather, what one can see is the French following up the humiliation of 1940, and of the operation in an attack on colonial peoples of the other side. Here you can see the horrors of the French/German conflict being inflicted in Asia and Africa. There is no Commonwealth to be proud of. All they have is a maison Francaise in Upper Valta.

We, by contrast, are in the fortunate position that we are now able to look outwards ... and I would suggest that we looked both inwards and outwards. Not just that horrible antithesis of a kind one normally associates with Tony Blair: 'Inwards and outwards', 'up and down', 'inclusion and exclusion', and here we are again, 'inward and outward'. But you’re not listening to Tony Blair, whom you can dismiss. Rather I want to urge this. The inwards part of what we should be looking at is the restoration of our independence. An independence that is for us: and that harms the independence of no-one else.

We also need to look outwards. And here today, I’m sure, we are going to be told about the places to which we can look. We can look to EFTA, to NAFTA, to the U.S. and to the Commonwealth. If we look first to the United States, I would say to the Americans this: “You have now received our full support, a support that none of the Europeans would have given you.” “What do we ask in return?” “We ask only one thing, stop pushing us towards Europe.” You now know the benefits of an independent Britain. Do not undermine it. Do not lose the best friend you have by pushing it into an unwelcome future, it will not strengthen your interests for Britain to be part of Europe, it will weaken them.

The same point might be made with regard to the Commonwealth. The Commonwealth’s very existence is threatened by Europe. There is no Dutch, or Belgian, or German Commonwealth. We can just imagine what people in Java, or the Congo, or the Bismarck Archipelago think of the people who were once there. We at least, by granting independence decently, swiftly and fairly, on the whole (though with a lot of horrendous mistakes as well) have preserved the friendship of a quarter of the world. That is what I want us to preserve. I want us to be as far as possible from Europe, and as far as possible, united in friendship with these other important forces in the world.
Thank you.

HE the Rt Hon. Don McKinnon

Thanks very much for the opportunity of being with you; principally, to talk about the Commonwealth of which, of course, I’m a great champion.

Regretfully, I don’t get into debates about ‘you’re better to be with us than someone else’, that’s for your own domestic politics. Despite the fact that I often get asked to actively intervene in other’s domestic politics in other parts of the Commonwealth – there is a line beyond which one cannot move. Certainly, you took me back in history some years, to the time Britain joined the Common Market, and we had all sorts of worries in our own country. I think I can say they’re behind us at the present time.

I read in the paper, a couple of days ago, of the young New Zealand lad, rugby league player, who came over and played a couple of rugby league games for Gloucestershire. Then he was asked to play a game of rugby union, and he played a game of rugby successfully. Now he’s playing for the England team. Well that’s not a bad payback is it, for all that land we missed out on? Anyway, I think it was Baroness Thatcher who said; “There’s no such thing as society; there are individual men, women and there are families.” Another one of your people once said that society is really made up of many platoons of people.

Well, that’s all about small groupings. And really what I’m going to talk to you about is this entity known as the ‘Commonwealth Family’, or the Commonwealth Family of nations. And in doing so, to try and paint the picture of the Commonwealth as it is today, and as we see it continuing to evolve, because it has been a continuing evolving entity.

I suppose at the time that Britain joined the Common Market the number of Commonwealth countries was probably in the high twenties or early thirties. We’re now fifty four, and I think that probably I have about half a dozen sort of vague letters of application in my desk, which tell me that it is a club a lot of people want to belong to. What we do know is that no one wants to get thrown out of it, let alone expelled, or suspended, from it.

But as an organisation we have to think about issues of globalisation ... of terrorism. What is the modern Commonwealth? What are it’s relationships with it’s Member States? Issues of trade, of poverty, of diversity, and of course, of democracy.

In recent years of course – I’m going back to about 1990 – the Commonwealth has had to adapt to this rapidly changing world, because the end of the cold war did create a vastly different political landscape. Of course, as many around the Commonwealth still wait for the great peace that was due to come at the end of the cold war. Somehow that’s disappeared as well. But, nevertheless, the challenges of the widening of the gap, between the rich and the poor in the Commonwealth, also give rise to new responsibilities. And, of course, the whole process of globalisation has had a profound impact on the way we view ourselves, and the way we view our relations with the rest of the world. Because, without a doubt – and particularly if you’re in the developed world – the advances in trade activities, communications, technology, medicine, have by and large helped everyone’s economic prospects.

The two great symbols of globalisation that often get used by those who are opposed to globalisation – that is, the international credit card and the mobile phone – are something that everyone wants, wherever they are. So whether you want to shop all day, or talk all day, depending on where you are, is entirely up to you. But the fact is that individuals, by and large, wherever they are, are pressured into globalisation by what they do, and what they want, and what they want to buy. But, of course, with these technological innovations, there are drawbacks; whether the drawbacks of the mobile phone, which gives you less privacy, or takes work home with you: or the embarrassment of when your mobile phone rings in the middle of a church service, or a meeting like this...

That reminds me of the story of Her Majesty the Queen, being briefed by a number of her officials when, of course, suddenly someone’s phone goes off. You know? No matter who’s got them in their bag, it takes more time to get that phone out of that bag than anything else. The official finally got the phone out of the bag, and quickly stopped it ringing, and Her Majesty’s comment was; “I hope it wasn’t anybody important.”

Well, September 11th changed the world; and our attitude towards many things will remain changed for some time. But it was another aspect of our increasing interdependence which really brought the focus on September 11th, because that terrorist attack wasn’t just at the World Trade Centre. It wasn’t just at the United States. It was against the whole of the democratic world, and against all of those who believe in freedom, and peace, and the respect for human life. The global implications of this event underline the need for global solutions, because what we now know is that no country, no government, no individual is immune. We are all vulnerable.

The Commonwealth Heads of Government was, of course, due to meet in Brisbane in the first week of October. And I know that those heads of government wanted to make a very strong statement conveying their concerns, their impressions, on the issue of terrorism – and, of course, to achieve a common position. Well, unfortunately, that meeting had to be postponed until March next year, and that opportunity was lost, but the heads thought the issue was so important that they still wanted to go ahead and produce a statement, and that statement we released a few days ago, on October 25th.

The statement that I don’t believe could come out of any other organisation: to bring fifty-four different viewpoints together – virtually by e-mail, by fax, by telephone and such things like that – few other organisations could contemplate doing. But, certainly, this particular statement: that suggests, of course, that any member country, which supports terrorists and violation of the fundamental values of the Commonwealth, has no place in the Commonwealth. It goes on to call for greater international co-operation, and the strengthening of national and international legal frameworks to combat terrorism.

One of the challenges for us in the Commonwealth is to help many of our smaller states adapt to this new regime that’s emerged out of the Security Council: on everyone doing their bit to try and prevent any kind of terrorism ... Facilitating these optional laws, and issues like money laundering, extradition, passport control, border control, and so it goes on. And, of course, within the Commonwealth, many of our states have been directly affected by acts of terrorism.

On September 11th, I was in Sri Lanka. Following that, I met with President Chandrika Kumratanga. She has been the subject of a terrorist attack, her husband was killed by terrorists, her father was killed by a terrorist. There are many, many people like that in the Commonwealth who know, first hand, what terrorism is all about. So, with this incredibly diverse membership – bringing together people of a variety of faiths, and cultures and backgrounds, in different parts of the globe – the Commonwealth is ideally positioned to play a significant role in the fight against intolerance and terrorist violence.

We don’t have an army, we don’t have battalions we can call upon, but the strength lies very much in the solidarity of our members, and their common commitment to democracy, the rule of law, openness and pluralism. And that example, of achieving a statement on terrorism through consensus, is very much underpinning the way Commonwealth countries, all fifty four of them (we’ve got fifty two and two with a yellow card), can work by virtue of consensus in the consultative process. A very good example that no decisions in the Commonwealth are imposed on any country or countries. They are all achieved through a consensus. An amazing organisation where all countries and leaders sit at the same table as equals, and together shape their visions of the future.

And I can say, Mr Chairman, we often get correspondence from ‘La Franca’, ‘the grouping of the Luciferne States, the grouping of the Iberian States, all wanting to know how they can create something similar. Well, the only answer I can give them is to say: “Go back to 1946 and start with a clean sheet of paper.” That might give you some starting point, but it does underpin the deep, historical and cultural institutional ties that do bind us together.

Of course, there’s also the language. And when I say we understand each other by virtue of the language, I don’t mean just English. We understand each other because we know what we are talking about, on whatever subject we’re talking about, because of that similarity behind us. As we all know, the most used form of English is not what you hear in this country, but what you hear in India. All 800 million of them. Well, as the French writer Voltaire once said: “If God didn’t exist, we’d have to invent him.”

I’m quite prepared to say that if the Commonwealth didn’t exist, I don’t think anyone would invent it, because it is such a disparate group. How would you justify 10 thousand people on the Island of Tubalu joining up with 1100 million people in India? Why would they both want to join the same club? What have they in common? As you know, as much as anyone, it did evolve out of history. It’s a living organisation, it’s a dynamic organisation. It’s not a political blue-print for anyone in particular. It just keeps on evolving.

And the modern Commonwealth has certainly developed over many years without any particular written constitution or central plan. In fact, only at the Heads of Government meeting at Durban two years ago, they decided to produce a chairperson of the Commonwealth. This was quite unheard of for a long time. But by the very nature of what does the organisation require, it was said, well: “Why do you have a chairperson?” The simple thing is that the Secretary General can never speak at the United Nations, because he’s the Secretary General. How do you want us to have the voice of the Commonwealth at the United Nations? You create a chairperson – and low and behold, he can speak at the United Nations. So, we are very adaptable. The modern Commonwealth has developed over these years and certainly as a product of discussions. And decision by the Heads of Government is the sharp edge of that direction.

The Commonwealth is very much representative of the modern world. Fifty four countries, 1.7 billion people, on every continent, in every ocean, covering probably the smallest country in the world to, certainly, the second largest country in the world ... India ... and every major religion, most cultural groups, and a range of levels of development from, probably, some of the poorest countries in the world to some of the very wealthiest in the world. And what makes this organisation unique is very much our sheer sense of identity. We kind of know who we are. We kind of know about one another, and it’s as much about what we have in common rather than what makes us different. It is about that language, that history, the political institutions, the legal systems, the teaching systems, the taxation systems, the custom systems ... and most of us with the exception of Canada, understand cricket. That is a test for anyone.

You can always tell a non-Commonwealth person. Mention cricket and the eyes glaze over. But the sense of identity is particularly relevant in the world we live in today. It is inclusive. It’s based on that diversity, and it is that diversity that brings us together, as long as we respect each other. The differences should not be a source of division, but a source of enrichment. And I guess diversity is what makes the Commonwealth quite relevant to Britain today, because British society today is incredibly diverse. And I think it owes it’s diversity very much to the Commonwealth. There are some 4 million people in this country, some 8% of your population, whose families came from other countries in the Commonwealth.

And, of course, this diversity will be celebrated in the coming Jubilee year. It‘ll be at the centre of the Commonwealth Games and Art Festival in Manchester, in July next year, and that will be the biggest multi-sport event ever hosted in Britain. And that is still the biggest outward manifestation of the Commonwealth, that is the Commonwealth Games.

When I was asked on one of the radio stations here one morning by a very sharp interviewer: “Would we in Britain notice if the Commonwealth disappeared?” I said: “Well, sure as hell the people of Manchester would be up the creek because they would have a whole stadium with no games to have.” But that games next year will bring in a TV audience of probably a billion people around the world. And, of course, there wouldn’t have been a Commonwealth without Britain, because for the United Kingdom, obviously, the Commonwealth is a natural constituency.

Is Britain making full use of the Commonwealth? Well there’s a very good report by the Foreign Affairs Committee of the House of Commons a few years ago, which said that the British Government should take the Commonwealth more seriously. The Commonwealth network can be used to reinforce Britain’s influence in the world. There are very close economic ties between the United Kingdom and the Commonwealth. And, of course, business people, who are always going to concerned about the bottom line, can acknowledge that Commonwealth countries share very much the same business culture. And it’s interesting to note that those common factors, whether they be administrative, legal, customs systems, etc., all do facilitate trade amongst Commonwealth countries, and can give any business person anything from a 15%-20% cost advantage. That’s significant, and a very powerful reason for trading and investing within the Commonwealth Family.

Some 23% of global trade takes place amongst Commonwealth countries, so does about 20% of world investment. The Commonwealth is growing rapidly as an instrument of economic and commercial co-operation. Commonwealth countries are also bound by that set of common values, the values of sustainable development, the values of promotion of democracy, promotion of the rule of law and, of course, the respect for human rights.

One of the central commitments that we in the Commonwealth have made, of course, is the fight against poverty. Because of our 1.7 billion people, there are about 600 million living in poverty. And that is across all Commonwealth countries. And that has to be a real affront to our common humanity. If there’s one figure I’d like you to take with you beyond this meeting ... 10% of the world holds 50% of the world’s income, and that 50% is increasing. And the bottom 10% of the world has less than ½ %, and that figure is decreasing. So that gap is getting wider, and it is not helped by many, many trade practices, even by Commonwealth countries. This is not just a moral problem, because poverty does represent a threat to civil order and world civility. I know globalisation has been blamed for increasing the gap between rich and poor, but globalisation has many positives. If it is well managed it can be the solution to world poverty. And, obviously, within the Commonwealth we’ve got to ensure that the fruits of globalisation are distributed fairly. If globalisation is to fulfil it’s promise, we must make sure that it works for the benefit of the many, not the few; and that the countries who are prepared to create that freedom of trade, of investment of ideas, of people, are the truly open societies of today.

But even though many countries have moved rapidly in terms of opening up their trade – and this has created an enormous amount of wealth and wealth distribution throughout the world – the greatest penalty is on the country that produces agricultural goods. I’m not just using this as a New Zealander, but if you’re a farmer in any part of the world, the developing world, when you have a distinct advantage over what you are producing, unless you have access into Europe, the United States or Japan you are dead in the water. You’ve got to have access to one of those big three, if not to all three. We’ve got to ensure that those bricks of globalisation are more widely spread, even to the agriculture producers of most of Africa or South Asia. And it’s our responsibility to prevent people getting left behind. Those 10% of the world’s population sharing less than ½% of the world’s wealth – and that portion is decreasing daily.

The process of globalisation, the gains from technological advances, from the opening up of markets, must be more equally distributed. Before the G8s had a meeting in Genoa I wrote to the G8 leader, on behalf of the Commonwealth, encouraging them to embrace a vision of generous globalisation. Not the kind of globalisation that says “This will be good for me, I’ll keep you out”, but globalisation that says, “I’m prepared to share things a little more widely.” To take a flexible approach to countries deep in debt; also to reverse the decline in aid from industrialised countries; to make the markets of industrialised countries accessible to exports from developing countries. In line with this approach within the Commonwealth, we’ve taken some very strong steps to assist the highly indebted poor countries. The Commonwealth Finance Minister started that whole process back in 1994.

The world cannot be stable in its current position because those disparities of wealth are far too great, and affect far too many people. I read an article last week written by Peggy Noonan, one time George Bush’s speech-writer. She wrote this in 1998, she said, “the prosperity we’ve had for the last 40 years, suggests we might just be sitting in the state room on the Titanic”. Forty years of peace and tranquillity, has left us very comfortable, very wealthy but there’s a very, very poor world beyond our borders. The Commonwealth continues to do what we can. Getting computers to small islands states in the Pacific, so they can hook into modern day medicine. A small matter in this city: a major event in a small island state. The Commonwealth does recognise that small countries are particularly vulnerable to rapid change brought about by globalisation, that’s why we started up a whole programme on small states in the Commonwealth that no-one else has emulated; but everyone else wants to benefit from the thinking that we have created. We’ve also been involved, in our own way, in fighting AIDS: The Young Ambassadors Programme. This is where you get a H.I.V. positive 16 year old to go to school to talk to H.I.V. positive 12 year olds to tell them that life isn’t as bad as they think it is. And that is really saying something for those 16 year olds.

Of course, underpinning all this is our constant commitment towards the democratic principle, the rule of law, respect for human rights – all the things we try and do to extol the people, via the 1991 Harare Declaration. And, of course, despite the fact that they are pursuing these actively, we don’t always get a pass mark, but we don’t always get a fail mark; but we continue to remain engaged. I’ve had many people say to me: “Throw Zimbabwe out of the Commonwealth.” Well, leaders might wish to do that, but once we do that we lose all engagements. So we hang on there and do what we can. And I remember the words of Jim Wolfenton of the World Bank who said: “More people in the world have died from bad governance than have died through most wars.”

So we continue to work. We continue to work in Sierra Leone, in the Gambia. We continue to work ... currently I’ve got good officers, missions in about nine Commonwealth countries. Hopefully, in all cases, wishing to prevent them drifting away from what we consider the ‘ultimate ideal’. We continue to work in Fiji. My envoy there, Mr Justice Langer, has been there continuously in order to keep them in the family. So, one African leader said to me: “Well, you know Don, you can’t eat democracy.” I know you can’t eat democracy, and certainly to people who are starving, democracy doesn’t mean too much. But if you don’t have adequate shelter, or health care, or education, or access to clean drinking water ... if you’re hungry, you will lose faith in democracy. That is why there is a real investment for us, not only in promoting democratic ideals, but in making sure that people are getting fed. If they are not fed, we will pay for it more expensively later. So democracy is good for growth. Growth is good for democracy. They do go hand in hand. And remember this, as one Nobel laureate once said: “No substantial famine ever occurred in a democracy.” So these things do go hand in hand. They do go together.

In conclusion, let me say, I’ve tried to paint the Commonwealth family as it is today. A family of nations of Commonwealth countries that have the shared memories, the shared experiences. We all do deal with problems in a similar way, and we do find solutions to the challenges faced. As in every family, there will always be disagreement, but the great thing about the Commonwealth is that those disagreements are going to be settled through negotiation, discussion and consensus.

And even if nations hold out from what one can describe as that consensus within the Commonwealth, also ... as Britain has found ... it doesn’t reach the end of the wall. What holds it together is the belief that the strength of one member is good for the organisation as a whole; and conversely, the influence of the Commonwealth, and the impact it has on the international scene, is good for our members. Every time more countries seize the Commonwealth differently, use it differently, contribute to it differently, and would describe it differently ... that is one of its major strengths.

Roger Helmer MEP

When I arrived here this morning one of the first people I saw was my friend and colleague David Wilkinson. He frequently happens by in my office in Brussels, in the heart of darkness, and it’s nice to see an old friend in a new location. Here he is now in London.

Now, as many of you will know, he is the editor and, I believe, the publisher – and for all I know, perhaps even the financier – of a publication called, ‘These Tides’. You’ll have seen a notice in the subscriptions, and I’m putting in a bit of a plug for him. But I would particularly like to draw your attention to the strap line under the title of ‘These Tides’ ... ‘For all those working for the post­-EU Europe’. Isn’t there something about that phrase, ‘the post EU Europe’ that warms the cockles of your heart?

Now, of course, I am a good Conservative, and we Conservatives are ‘in Europe’ not ‘run by Europe’. Indeed, the question was put to the former shadow cabinet: “What are these benefits of being in Europe?” “Why is it such a good thing for us?” And do you know what the reply was? Well, of course, the benefits of our membership of the European Union are self-evident, he said. Well, they may be self evident to him, but I have to tell you, ladies and gentlemen, they are not self evident to me.

Before I joined the European parliament in 1999, I spent over 30 years as a manager in various international businesses – in the UK, in Europe and also in Asia. And, since I joined the European parliament, I’ve spent a lot of time in my East Midlands constituency, visiting companies, and I must have visited hundreds of companies over the last 2 ½ years. And I have to tell you, almost invariably the first issue they want to raise with me is the European regulation, and the damage European legislation is doing to companies. That is something that has been of enormous concern to me during the time I have spent in the European parliament, and continues to be a very great concern. I would even go so far as to say, leaving aside the issue of terrorism, that our membership of the European Union represents the greatest threat to our country’s prosperity, to our democracy, and now, with the advent of the European army, even to our security.

But, as I say, as a Conservative, we are not in favour of control, are we? So I have to say to you that I am happy for Britain to remain a member of the European Union, provided we can renegotiate – and I make no apology for using the ‘R’ word – provided we can renegotiate the terms of our membership. And the terms on which I would accept our membership is if it was based on ‘free trade’, and on intergovernmental co-operation, then I think it would be acceptable ... provided no-one calls me a ‘European citizen’. Because I was born a subject of the King, I remain a subject of the Queen, and I intend to die a subject of the Crown!

But if we wish to pursue this course of renegotiation, what do we have to look at specifically? What is our shopping list when a future government goes to Brussels to discuss the change in our relationship?

I’ve made a list here of some of the points I think we need to address. First of all, the Common Agricultural policy and the Common Fisheries policy. I scarcely need to bore this audience to go into any detail of this question at all, but on the question of Common Fisheries policy, for example, it has proved to be a disaster for the fishermen, it has been a disaster for the environment and the fish stocks in the North Sea, and it has been a disaster for the housewife ... if you look at the price of a pound of cod! And I promise you I don’t look at the price of a 'kilo' of cod.

The Common Fisheries Policy has been an absolute disaster but, like so many things in the EU, it is one of those projects that nobody can defend, that no sensible person can speak up for, and yet that nobody can change. It’s time it was changed. It’s time we took back control of our fisheries. It is time we established control over our British waters as established under international law.

What is the second thing we need to get rid of? It is the European constitution. Now you’ll say to me: “there is no European constitution.” I will tell you, there will be one soon, because the plan now is to have a thing called a Convention. And the Convention will discuss the groundwork for the Intergovernmental Conference of 2004. And one of the primary objectives of that Intergovernmental Conference is to create an European constitution. This will be a wonderful thing. It will allocate responsibilities at the European level, the national level, and the regional level. It will clarify the Treaties and all will be well. We will have a Europe with a constitution. It wont be a ‘state’, it wont be a ‘superstate’, Europe will tell you. But we will have a Europe with a constitution. Not for us, ladies and gentlemen. We do not want this, nor do we want the ‘so called’ Charter of Fundamental Rights.

I don’t need, with this audience, to go into the details, but we all know that these ‘charters of rights’ result in the transfer of power from ‘elected’ parliamentarians to unelected and unaccountable judges. And, indeed, it is amusing and ironical to see how this Labour government has been foist on the ‘pitard’ of the European Convention of Human Rights, and is now itself going round saying that it must reverse key elements of its flagship policy of enacting the European Convention of Human Rights, because it is actually seeing what the courts do with that convention.

The next thing on my shopping list, of European projects and policies to get rid of, is of course the Common Foreign Security policy and the European Army. And we have already heard this morning, very eloquently, why a European army won't work, because it has nothing to fight for, but it will do worse than that. It’s not only that it won't work. The whole idea of a European army will actually undermine NATO, it will undermine our transatlantic relationship and, therefore, as I said earlier, it will damage our security. A European army will not make us ‘more secure’ it will make us ‘less secure’. And we must stop it from happening.

And the next point on my shopping list, ladies and gentlemen, is the ‘corpus juris’, the European prosecutor, and particularly the European arrest warrants. Now, I can remember, 2 or 3 years ago, I stood in front of audiences, typically conservative audiences, and I said: “if we’re not careful, the day will come when you can be arrested on the streets of your home town, and be sent abroad to a foreign country to face justice in a foreign court, with no appeal in a British court”. And do you know? They thought, if I wasn’t actually taking leave of my senses, I was at least exaggerating. Well, it is happening now, and it’s not just terrorist offences. It’s a whole range of offences for which you can be arrested and shipped abroad, without appeal to your own court. And I suggest to you that the very meaning of the terms ‘nation state’ and ‘national sovereignty’ cease to have a meaning, if a citizen of that country cannot appeal to justice of that country’s force, and seek the protection of that country’s force ... and yet that is what’s happening now.

The next point on my shopping list for Brussels is of course, economic and monetary union, the euro. Now, I could talk for 40 minutes – but I know the chairman won't allow me 40 minutes – telling you why the euro is bad for us economically, and disastrous for us politically. But again, you know the arguments, I won't rehearse them, I will make the point that if we were to join the euro, then common taxation, of course, would follow very quickly, and that too would be extremely damaging for the British economy and for our competitiveness in a global economy.

I have spent quite a lot of the last two years sitting on the Employment and Social Affairs Committee in the European parliament, and I have seen the sort of damaging legislation that goes through at that committee, and that ends up with the companies that I’ve talked about across Britain. So we want ‘out’ of the Social Chapter, we want an end to this damaging and dangerous European Social and Employment Regulation.

Just briefly, some of you may have reading the paper about the ‘so called’ Physical Agents Vibration Directive. The result of that may be that the drivers of heavy goods vehicles might only be allowed to drive for 6 hours at a time; tractor drivers may only be allowed to drive for 2 hours at a time; and if you operate a brush cutter, I’m afraid that’s only 15 minutes! It’s lunatic, but I’m afraid these are the kinds of things that are going through. That particular one went through the European parliament in Strasbourg only last week, and please don’t ask if I voted for it, because you know the answer.

If we could get rid of these items, and perhaps you would have additional items to put on the shopping list ... and in addition, I have to say, I’d be quite glad if we could get rid of the flag, passport and the anthem ... If we were left with free trade and intergovernmental co-operation, then I think we could live with it. And I would point out that free trade and intergovernmental co-operation are not an exclusive relationship. If we could establish that our relationship with continental Europe was based on free trade and intergovernmental co-operation, then that is a model we can apply to the rest of the world. And if we’re looking across the Atlantic at NAFTA, for example, in those circumstances we could be a member, under this more limited membership of this European Union, and perhaps a member of NAFTA as well.

You may be surprised to learn, if you don’t know already, that Mexico, which is a member of NAFTA, is actually engaged in establishing a free trade relationship with the EU. And you will say: “Why can’t Britain therefore, as a member of the EU, establish a free trade relationship with NAFTA?” And the answer is very simple, but slightly technical, and that is that NAFTA is a free trade area, whereas the EU is a customs union, and it is impossible for one member of a customs union to have an independent free trade agreement with another free trade area. Now, it is often helpful, and salutary, to consider what your opponents would say in response to your arguments. If we had some of the euro quizzlings here, if we had Ken Clarke or Michael Hesseltine or indeed Peter Hain ... I’m looking round, and I don’t think they’re here. I’ll tell you what they’d say.

They’d listen to what I’d say and they’d say three things: They’d say, firstly: “Helmer, you don’t mean renegotiation, this is merely a code for withdrawal.” The second thing they would say: “If you tried to go to Brussels with that shopping list you would find it was not achievable under the Treaties – you need unanimity, you would not find one of the other member states who would agree with you.” And finally they would say: “even if, against all the odds, you finally managed to negotiate what you were asking for, then Britain would be isolated and damaged”. That is what they would say. That is what they do say frequently. So let’s address those three points very quickly.

Is renegotiation a code for withdrawal? Now, I’m interested in the substance, not the cementing. So providing we can negotiate the kind of relationship that I have described, I don’t mind whether we continue to call ourselves members of the EU, or we're under a new and more loosely associated membership. I don’t mind if we decide to call it a withdrawal. The word doesn’t matter, the substance matters. That is what we want to achieve.

Secondly, they say, it will not be achievable. Well, of course, that’s exactly what they said to Maggie Thatcher when she went for her rebate, and it proved to be achievable. But I don’t imagine that we simply ask for it, and they say: “yes”. If you’re in negotiation you have to have a fallback position, and you have to have some kind of leverage and, of course, the leverage would have to be – and I say it openly – it must be: “we will have membership on our terms or not at all”. And I envisage a future British government saying to the powers that be in Brussels: “either we get the terms that we are requesting, or we go back to the people in Britain and ask them if they want to continue as members of this EU”. And I believe, given that threat, that the European institutions would roll over and give us what we wanted. Because I do not think they could stand the humiliation of having a country so large as the UK leaving the EU, and being seen to leave.

Thirdly, would we be isolated? We are always told: if we leave Europe we would be isolated. Now let me remind you, we are permanent members of the UN Security Council, we are members of the World Bank, the OECD, the G7, or is it the G8 these days? We are a leading member of NATO. And I am delighted to see John McKinnon here and to remind you all that we are a leading member of the Commonwealth. And can I add? I’m sick to death of seeing media comment relegating the Commonwealth to a sort of ‘nostalgia trip’. I believe the Commonwealth is what we choose to make of it, and I think we should make a great deal more of it. But we are members of all those organisations, those international organisations. We are also the fourth largest economy in the world. We are the second largest global investor. Indeed, in the year of 1999 we were the world’s largest investor ahead of the US. We are a leading trading nation. As a colleague of mine, John Bercow, loves to say: “For Britain, the future’s bright, the future’s global.” And the idea that we can somehow be isolated is, frankly, absurd. So that is how I see the future of Britain, in a loose relationship with the EU based on free trade and intergovernmental co-operation, but extending that same relationship – first of all across the Atlantic, perhaps through the Commonwealth, perhaps to the rest of the world – because I believe that global, free trade is a way forward.

Now, ladies and gentlemen, what I would like to do is to raise with you one issue, which is not in the main theme of my discourse today, but which I think you will find very interesting and, I hope, convince you is relevant. And it’s based on a very new piece of research, which I think is sufficiently newsworthy to draw to your attention. And it has to do with what might seem to be a parochial matter, and that is the relationship of Conservative members of the European parliament to the parliamentary group with which we are associated in Brussels. And that is the EPP, the European Peoples’ Party Group.

There’s something about that phrase, the European Peoples’ Party, that’s rather ‘Stalinist’ in character. And they tell us that the European Peoples’ Party – the German Christian Democrats – are centre-right in Europe; they’re a large block and therefore we benefit by being members of them. What I have to tell you is: the EPP is not centre-right, it is certainly to the left of the Conservative Party, and if you look at their attitude to the European Social model, I think we’re entitled to say it’s to the left of New Labour as well. It is also passionately, and excessively, federalist. It actually claims, and takes pride in the claim, that it is the motor of European integration. Now, this parliamentary group, EPP, has a stranglehold on our staffing in the European parliament. They have a stranglehold on our finances; and I’ve published figures in the European Journal to show that we would be about ½ million pounds better off, as a parliamentary group, if we were not members. But the key question is the politics, never mind the staffing and the finances. Are we together on politics or not?

There’s been a study done, by Dr Simon Hicks of the London School of Economics, who has analysed some 2000 recorded votes in the European parliament. And he’s analysed them by whether individual MEPs voted in a leftward, or a rightward direction, in political terms. And he has also analysed whether they were federalists, or anti-federalists. On the chart, federalists are at the top, and anti-federalists are at the bottom. If you look at the scatter chart you will see that the hard left are at about 9 o’clock on the left of the chart, and the cluster around 11 o’clock (a tightly packed blob) are the European socialists ... very federalist and a bit left of centre. Around 12 o’clock, we have a slightly smaller blob, which is the European Liberals, and they are very federalist and very centrist. Slightly to the right, and only slightly there, is that big thing that looks a bit like a puppy. That is, at 1 o’clock, the European Peoples’ Party – also federalist, extremely federalist – up there close to the socialists and the liberals, and very slightly right of centre, but only very slightly. But then, at the bottom right hand corner, within a curvy line, is another little blob and, guess what? That turns out to be the Conservatives, and the Conservatives are distinctly less federalist, thank heavens, and also somewhat to the right.

Now, what is very interesting about this is that all the other major groups in the European parliament, and particularly the socialists and the liberals, form their own individual, coherent blocks on this chart, voting together. The only group which splits into two clear and distinct sub groups, is actually this EPP group; and surprise, surprise, it splits into Conservative, and quite separately, the rest of the EPP. So here we have an independent, academic study showing that the Conservatives are miles apart from the EPP. And, if I might suggest, you write a letter to your Conservative MP if you have one, and if you don’t to Ian Duncan Smith, and point out to him that it’s about time the Conservatives left this federalist, and not very centre-right, group. It would be a good thing.

So, in conclusion, I would like to say that I think the next thing on the agenda, in my view, is for the Tories in Europe to set ourselves up as a separate and anti-integrationist voice in the European parliament. But, for Britain, the task is perhaps a little more difficult; and that is to get a government in Westminster which is going to go back to Brussels, and say: “enough is enough, we would like to have our country back”.

Afternoon Session

Dr Helen Szamuely

I also would like to point out, with respect to our Chairman, that anything that the Russian ambassador says is to be taken with a huge dose of salt. I’ll come to Russia and Chechnya later on.

Now, the paper I have been working on started as an analysis of the Common Foreign Security Policy, which has now developed into a European Defence policy and, nevertheless, I don’t think it can be understood without the background to the Foreign and Security policy. The question that has always arisen is, where did this idea of a Common, Foreign Security policy come from? It has no visible purpose. Its one purpose is to exist. It has always been clear that the one reason the EU must have a foreign policy is because it is a state and therefore a state must have a foreign policy. Normally foreign policy carries out an interest. We can’t actually see how there is a European policy and in fact, the person who has most recently agreed with me is Salana, and I am delighted to have Salana agreeing with me. In an article in the European Voice, he started off by saying; “the Common European Security policy is part of the wider project of building Europe’s wider political identity", and that’s what it’s all about.

Now, going back to a brief historical outline of this. The idea of a nation state being of some importance, of course, goes back to the 19th century. And when one reads an analysis of it, one of the interesting things one has is the number of people who say: ‘we want a nation state,’ and the sort of broken up bits of Germany and Italy and so on, ‘is to make a larger unit, to make our voice heard.’ Now some of it must sound extremely familiar. We want a larger unit. That sounds very odd to us, because for us, a nation state is a smaller unit. But when you think of the broken states of Germany and Italy, and other countries like Poland that were divided, their agreement was very simple. While we are divided into these little states, some independent some not so independent, we cannot make ourselves heard, we need to be united, partly because it’s morally right, but also because that way we become a power in the land.

Whether that is actually true is a matter for debate, as the polls found out in 1939. All that argument collapsed with the 1st World War. And many of the roots of the EU, ... we are actually accustomed to saying it lies in the post ’45 Europe ... it actually lies in the post 1918 Europe. And, like Michael, I have occasionally been to military cemeteries. In particular, I visited Vermeer Ridge on my way back from Strasbourg, where I was seeing various people in the European parliament. And as you go round Vermeer Ridge, you do see a direct link between something like Vermeer Ridge and Strasbourg. That monstrosity. Several monstrosities in Strasbourg!

So the outcome of the 1st World War, which was catastrophic for Europe, not for Britain specifically, but for Europe, was a double one. One is that there was general decision that we must now; strangely enough people said; “Ah yes, 1st World War, grew out of nationalism, this that and the other.” In actual fact, the decision in 1918 was to break up the existing empires into their nation states. But the other part of it was, more and more people saying that we’ve really got to do something about this Franco-German enmity, it’s destroying Europe, it’s laying waste to everything, it’s destroying the great European culture, it’s effectively losing European hegemony and the only way to do it is to unite us. Create a basic, common defence, a Common Foreign policy. Now that obviously came to absolutely nothing, and after the 2nd World War it was revised. By that time, Europe was completely destroyed, not just partly destroyed, but completely destroyed. It was just flat, and those parts that weren’t flat were just intellectually and morally destroyed. But once again out came this idea, this war between France and Germany has been going on for a long time, it’s got to stop and the only way we can stop it is by uniting, or at least by integrating parts of it. The only problem is, by the time you get to the 2nd World War, that is no longer a problem. The enemy was somewhere else, and the world was divided into two large camps and in many ways Europe became irrelevant. There was a civic union on one side and the US – and, of course, nuclear war has made the old idea of Foreign and Security policy completely out of date. This was not entirely recognised by Monet and Schumann. And this is part of what we’ve got here: that the European Union – even in its days of the European Coal and Steel Commission, the Common Market, this and that – from the very beginning it was just completely out of date. There was no relevance to the modern world, which was really the Soviet Union and the US and their allies, forced or free. Nevertheless they were assisting in this, and the idea of a Common Security policy grew out of that particular issue – of what to do with Germany. What do we do with Germany after 1945? And there were two possible solutions. One was to create a sort of Franco–German force in which the other countries will join in, but that will actually control Germany because the French will be in charge, OR, what the Americans were pushing for, and eventually was created in the form of NATO: a general Western alliance, which acknowledged by about ’49 that the enemy was not Germany but the Soviet Union. It was taking over eastern Europe, there was the Berlin blockade, and of course in 1950 there was the outbreak of the Korean war, which showed that there was a need for a ‘general western alliance’ which included West Germany on equal terms. The French were not happy with this and persisted with their idea of creating a Franco–German force, and that was the 1st European defence identity. It was actually voted out by the French because in the end they decided that even controlling the Germans was not sufficient for handing over sovereignty over their own troops. The French probably still think that, and there’s a delightful story of when de Gaulle was voted out of the Assembly, he jumped up and sang the Marseilles, and I always envisage it as that wonderful scene from Casablanca, and I’d just like to see one representative after the other standing up and joining in the Marseilles until the whole building resounds with this wonderful tune. But it’s just one of these lovely stories.

So then the creators of the EU went off on another tack, we all know, I’m not going to run through that because I think it’s all so very well known – the economic thing – until we get to the Single Market. But even before that there was another aspect added, because although the EU was a slightly outdated idea, it wasn’t recognised that European power didn’t count for anything until it became glaringly obvious, in 1956. Now, just to remind you, it’s quite curious that there was a parallel in what was happening in Eastern Europe, where two of the colonies rose against the Soviet invader and were crushed, and on a slightly lower scale, what was happening in Western Europe, or in the Suez, where Britain and France found themselves, not out-gunned exactly, but they found themselves on the other side from the US. There was, 10 years after, an analysis, a recounting of what actually happened in 1956, and there were some people who thought, 'this was it – this was the end of Europe', because they’d shown that Europe was of no importance; the only important states were the US and the Soviet Union. That actually assumed that Eastern Europe would always be full of Soviet colonies. So, as I said in my paper: “What goes around comes around.” And Eastern Europe is no longer there. It is now, here, if you see what I mean. And that actually revived the other aspect of European integration, and that is that we want to get back to a position that we can rival the two ‘superpowers’. And the idea that it wasn’t until the collapse of the Soviet Union that the European Community thought in terms of rivalling the ‘one’ super power is just not correct. At all times it was a question of rivalling the two superpowers.

Now, I don’t want to go into whether or not that was ever a possibility, it never really was seriously on the cards, nevertheless, that was important and if you’re going to rival the superpowers, you must have a Foreign policy. And if you’re going to have a Foreign policy, you must back it up by force if need be. And who’s force are we going to use to back it up? The Americans. Which is the way it’s worked. It wasn’t until the Maastricht Treaty that we actually had the idea of a ‘union’. Until then we had all sorts of ‘motherhood’ and ‘apple pie’ clauses in Treaties, saying that the various Member States are going to come to each other's help, etc. It’s actually not much more and a lot less in practical terms than NATO saying: “and we’ll come to each others help.” But, as we get to the Maastricht Treaty we get a slightly different formation. The idea of a ‘union’, the interest of a ‘union’, the integrity of a ‘union’, must be protected. We must have this policy to protect the integrity of the Union. Now, it isn’t exactly clear who was menacing the integrity of the Union, and against whom we are protecting ourselves. And that is a problem that runs right through this discussion of European Foreign and Security policy. Who is the enemy? As far as the French are concerned, we know who is the enemy. It’s the US. But it is rather questionable whether the rest of us consider the US the enemy, and it is very questionable whether Europe, Western Europe, or the EU as a whole has an enemy. Who are we directing this Foreign and Security policy against? Now this didn’t stop people from creating endless structures, and in some ways the problem we had in the last 10 years, say from the collapse of the Soviet Union right up to September 11th, is that we’ve paid more attention to structures than content and the idea of who are we fighting. Well, maybe we’re fighting the terrorists or maybe we’re fighting Iraq. Well, sometimes we do fight Iraq, but is Iraq seriously as menacing as the Soviet Union was? Probably not, certainly not to Western Europe, it might be to Kuwait and other countries. So, therefore, what the EU concentrated on is creating structures. It’s created a Political Committee, a Military Committee, a Military Staff College, but the one thing it hasn’t got is troops. And that is quite interesting because one of the arguments for the CFSP is that NATO, by which we mean the Americans, has always wanted a greater West European input into NATO. Well it has, because in fact, what we have done for 50 years is hidden behind American’s backs and one reason why we’ve managed to build up the Welfare State and Western European advances is because we haven’t had to spend so much on defence. And we haven’t, none of us. Post ’56, Britain spent less, and less, and less; and Britain still spends more than other Western European countries, and it’s still pathetically low. And, incidentally, they won't have Tornadoes to support them anyway, because those Tornadoes aren’t really good enough, so there you are! So, it is quite true that NATO did want a greater West European input, but later, even in the Washington Conference (the 50 year anniversary conference) in which it said: “Yes, NATO resources will be available to the EU even if Americans aren’t involved in a particular strategy or undertaking.” At that time it was repeated again, what we would like, said the Americans, is for Western Europe to provide more troops, but what we would not like is for Western Europe to create alternative structures, alternative intelligence, rival security structures. What NATO did get was no troops and rival security structures. So it’s very questionable. I have to say that it was at that point the US started waking up on a large scale that maybe the EU is not such a wonderful idea, because it may just have some ideas to be anti-American. Until then, and throughout the Cold War, the accepted American policy was, with some exceptions, obviously, that close integration into Western Europe is a very good idea, because it will give us a stronger ally against Communism. The Soviet Union has more or less disappeared and EU has arrived.

Now, instead of working out exactly who we are fighting against, we have decided to have a security policy that is a ‘nice’ security policy. We are going to go around and be nice to people and we’re going to call it the Petersburg Task. And the Petersburg Tasks, which are the main tasks of the ‘rapid reaction force’, do vary. They start off with rescuing personnel from difficult situations, which is fair enough, if your personnel are caught up somewhere, then you have to rescue them. Whether you need 60,000 people to do it is a different matter. But it then goes on creating civil society, helping democratic institutions, which is a questionable idea – the EU helping anybody to build up a democratic institution. And indeed whose democratic institutions are we going to help to build up? Is it necessarily right that our particular democratic institutions will work anywhere? Even assuming that the EU had any. And it then goes on to peace keeping and peace-enforcing. Now, by anybody’s standards, peace enforcing, peace making is fighting. And if we are going to fight we really ought to have a proper command structure. We do not have a command structure for the ‘rapid reaction force’. We think it might be part of NATO, on the other hand, we also think it might be part of the EU foreign policy. We think the orders may go out in English, on the other hand, the orders might go out in French. Then again, seeing as the chief at present is Finnish, they might go out in Finnish. I’m not actually passing comment on the Finns, I think they make very good soldiers, that isn’t the point. The point is, you do actually have this extraordinary notion that we are creating a Rapid Reaction Force that isn’t an army, heaven forbid, but we just don’t know who’s going to order it into battle. I mean, in what language? And how are the orders going to be passed down? So we go back to making up structures.

We now have Monsieur Salana/Senor Salana, who is the High Representative of the EU. We also have a Commissioner, our own Chris Patten, who deals with foreign affairs. In fact, those two do know who the enemy is. It’s the other one! We talk about foreign office fighting with others, but it’s nothing like the Salana and Chris Patten fight. And at that point it became clear that the most serious danger of the Common Foreign Security policy is that, because it has no purpose, it will be very pro-active. By which I mean it will interfere in all sorts of places, all parts of the world. In fact, there was the most ridiculous suggestion that the RRF should go and sort Central Africa out. Well, why should a European force, for no apparent reason, just go off and sort out Central Africa? Given how badly the UN forces did there.

Nevertheless, this hasn’t stopped anyone. And at the 1999 Helsinki Summit, it was decided to go ahead and create this RRF to go ahead with the Committees, with a Staff College, with our own intelligence, and this RRF is going to be of 60,000 people, raised at 60 days notice to go, wherever. It was completely left to one side. They thought, in order to have 60,000 people under arms, for 60 days you need a force of about 200,000, at least. That’s a very conservative estimate. Where are we going to get a force of 200,000 people, not to mention the ships and the planes as well? The Germans who were supposed to provide the gunboats have already said they can’t, their defence budget is in deficit. The British defence budget may or may not be in deficit, we’re never quite clear where our defence budget is, I’m sorry to say. I think Gordon Brown is particularly good at smokescreens. The French defence budget is going down. That was a bit of a fight between Chirac and Jospin, and I think Jospin won that one. Although they may have another fight because there’s a Presidential election coming up, so it’s all right. And we cannot provide any of this. We just haven’t got the forces. And it showed very much in the Balkans, when it was the Americans fighting/bombing in Kosovo. Further back in Bosnia it was the Serbians and the Croats fighting, but that’s all right, it’s their country, they should be fighting. So there matters stood on September 10th. By the evening of September 11th things had changed a little bit. On the 12th September NATO met, and for the first time in its entire history, activated Article 5, which is the ‘one for all and all for one’ Article: any country that’s attacked, the other countries come to their help, assuming the country under attack calls for help. And there’s been some discussion whether or not America called for help. Maybe they looked at our forces and said: “No thank you, very nice but could you take them somewhere else?” And there is a certain irony about this because Article 5 was written into NATO in order to keep the Americans in Europe. There was a very well justified fear in the late 40s that the US, having ‘won the war’, well, being one of the winners, would now go back home as they did in 1918. And there would be a lot of feeling in America saying, ‘well it’s over, why can’t we bring the boys back home?’ So, that is the main point, Article 5 was there to make sure that if the Europeans were attacked, and remember, the enemy was the Soviet Union, it would most probably be West Germany, possibly Norway, possibly Turkey, the Americans will be there to help and so there is something deeply ironic that when it was finally, invoked, it was invoked to help America. It also made life very difficult for everyone else because, if America is there to help everyone else, who is there to help the Americans?

The immediate response was terrific, every single country came out and Le Monde published that marvellous ‘Nous sans tous Americaine’ and actually had articles in English. Le Monde, in English? My God, never mind the World Trade Centre, I still haven’t recovered from that one! But as the tide receded and as it became obvious that this was going to be a long drawn out war, against, and I have to again disagree with Michael, against an enemy who is very hard to define, it could be Afghanistan, it could be Iraq, it could be a lot of places. Then enthusiasm for it began to disappear and then you got the Belgian Foreign Minister saying; “Well actually let’s not be in such a rush we probably really don’t want to go to war with anybody.” And the most extraordinary thing is that about a week later the Belgian newspapers complained about the fact that the Americans weren’t sharing ideas with their NATO allies. And in the end, as has already outlined, a certain number of troops, I mean the French are actually involved, the British are involved, Australia, New Zealand, Canada, it is mostly the Commonwealth, apart from the French. The Germans have sent over a certain amount of help and Turkey recently become involved in a very important way. They are sending people over to train the Northern Alliance, and it must not be underestimated, Turkey’s involvement, because it is the only Islamic country that has come out and it is a largely secular country but it is still Islamic, that has come out, unequivocally against terrorism and said; “Yes, we will help.” And that is one in the eye for the EU, that has always been very contentious about Turkey.

The other countries, now what we have seen is the slightly un-edifying spectacle, though I’m told the Americans are very pleased about it, of the British Prime Minister running around being given the brush off by all sorts of countries, as a kind of slightly unsuccessful ambassador of the US. One could argue that this is better than being Rupert Murdoch’s ‘gopher’, which he has also done in his time, but all the same it would be quite helpful if he would just come back and take time to think about what is happening in this country. I can only echo what is in the Alistair Campbell briefing in the column in the Daily Telegraph, is that, given that we are changing our immigration laws if he stays away much longer, he will have to take an English test before he comes back. Now, my view, I think, if the UK did have the kind of influence that Michael assures us it does have, with the US I think it might have been quite helpful if at some point, somebody, either the Americans or the British, had made some comment about exactly ‘what is the Coalition for?’ And we’re back to the same problem. Just like we don’t know what the European Security policy is for, we don’t know what the Coalition is for. We know what the Americans are fighting for, we know, I hope, what we’re fighting for, do we actually know what the Coalition that involves Syria, Pakistan, the PLO and various other countries of that kind are for. They’re fighting terrorism. They are the people who have trained the terrorists. There would be no Taleban if they had not been trained in Pakistan. There would be no Hammas, there would be no Hesbullah. None of these people would exist if these countries hadn’t trained them. So what is this Coalition for? And I have to say that the main thing that our Prime Minister has done is run around and try to create this almost incomprehensible coalition, which included going off and being ever so nice to Mr Putin who said: “well we wont actually do anything to help you but in the mean time, please would you stop saying anything nasty about what we’re doing in Chechnya?” Which I actually think is a slightly different issue from terrorism, because it has been going on since the beginning of the 19th century. “And whilst we’re at it, we are going to keep on selling arms to Iran but, yes you’ve still got to go on being nice to us haven’t you?” And we all go running around saying; “Gosh isn’t it wonderful, the Russians are on our side.” And they haven’t given anything, but we’ve given them everything and, oh good, they’re on our side. Well I bet they are.

So, there we are, we’ve got this enormous coalition going on and that’s what our Prime Minister is doing and he hasn’t actually stopped to think, as far as I know he hasn’t stopped to think, he isn’t somebody I actually talk to, I’m glad to say. Has he stopped to think how is he’s going to square the idea of being the US’s favourite ambassador with being part of the EU? If you remember that speech in Brighton, he started off by saying: “the Taleban were absolute scum, we’re going to defeat them, anyone who’s against me is just like the Taleban and oh, by the way, we’ll probably go into the single currency.” And the idea that you can go around being the closest tie of the US and be in the single currency is a difficult one. Nor has he really explained how he’s going to square the fact that, on 20th November, there is a meeting of the European Defence Ministers who are going to decide how far we have got with the RRF and Britain hasn’t raised an issue.

Now, the one thing the EU has done very well, and that is, realised long before anyone else that the difference between the outside enemy and the inside enemy has been eroded. And they got ahead there. The French government is only just beginning to talk about it, the American government is only beginning to talk about it, the EU has promptly passed a number of legislative measures and, incidentally, the British government is trying to as well, using this as an excuse and we are now going into a completely different mode, with a number of security policies being passed, on the back of terrorism. And the last question I would like to leave with people is, we’ve gone through all these different impossibilities but in order for us to decide what we don’t; well we know what it is we don’t want; but I think it’s about time we started thinking about what our own foreign policy should be. Can we have an independent foreign policy? What our interests are and what, in the words of the EU, good governance is.

Dr John Hulsman

The Global Free Trade Association: Preserving and Expanding the Special Relationship in the Twenty-first Century

Introduction: The real lesson of September 11

I cannot begin to talk of preserving and expanding the special relationship in the new era without describing the tragedy that ushered in this new epoch, the events of 11th September. I was sitting in a Heritage Foundation strategy meeting, discussing the upcoming Doha global trade round on the top floor of our building, at the base of Capital Hill. As I looked out that day, across a clear blue Washington autumn sky, I saw a sight that has not been seen in 187 years – smoke billowing over Capital Hill.

That first shocking day, the bloodiest in American history since the Wilderness Campaign of Grant and Lee in 1864, I received a spontaneous, universal outpouring of support from almost every British organization and person that I know well. To a man, the response was the same: as during every crisis, we stand with you, we support you, and together we will defeat evil. This has been the overwhelming lesson of the old era: that, as Baroness Thatcher told me, whatever good has occurred in the world you will find our two countries at the base of it. This remains the seminal message of the new era as well.

Our arguments (and they are real) are intense, yet family quarrels. They should not obscure the hard, pragmatic reality that about the third reaction of every American President in crisis, after ‘Good Grief’ and ‘What is the press reporting?’, is to say, “We had better talk to London.” This mutuality of political and economic interests (as well as all the cultural affinities) is so commonplace as to often escape remark. And it is precisely what the US will lose if the UK is subsumed into the EU.

For not all responses to the tragedy of September 11 were as unambiguously supportive. Romano Prodi, addressing the European Trade Union Confederation, detected one positive consequence of the September 11 attacks. “The school of thought which defends unbridled liberalism will no longer be able to be taken as gospel”, because the world had seen the damage caused by capital movements to finance terrorism.1 Likewise Louis Michel, the Belgian Foreign Minister, who speaks for the whole of the EU as his country holds the rotating presidency at present said there were, “limits to solidarity” with the US and gave warning that Europe would not be “blindfolded” into support for the Anglo-American coalition leading the fight against terrorism.2 This less than unambiguous support is just a foretaste of what will follow if the EU’s Common Foreign and Security Policy (CFSP) becomes genuinely effective.

The events of September 11, far from proving that closer EU integration is the way forward for the UK, seem to suggest that the UK follow an entirely different direction. This crisis illustrates that within Nato, only the US and the UK can act globally and genuinely in concert in terms of military, economic, and diplomatic strategies relating to crises. Given the rest of the Nato members’ attitude to defense spending, they can presently do little more than cheer from the sidelines. If the UK joins the euro, some sort of confederal Europe becomes a reality. If CFSP as part of this begins to function, however badly, then Belgium, Greece, Luxembourg (or any of the smaller EU states) could, given the Gaullism inherent in the EU, veto Britain acting in the current magnificent manner that it has done. The days of the UK being Sundance to America’s Butch Cassidy, and the concomitant genuine influence that this brings, will be a relic of the past. This is the strategic argument that Prime Minister Blair is incapable of seeing. He has been magnificent during the early phases of the war against terror, as have been the whole of the British people. It is to preserve the special relationship that we Americans who value it must vehemently oppose the Prime Minister’s ambitions to join the euro. Such a policy is not in America’s interests; it is not in Britain’s interests. Surely the lesson of the tragedy of September 11 is that the Special Relationship is all that is standing between much of the world and chaos and barbarism. 57% of the British people, in a current ICM poll, think that the case for keeping the pound is stronger after the terrorist attacks.3 We must save the Prime Minister from misjudging this fundamental lesson of history. The consequences of failing to do so would simply be too great.

A real alternative

That the British people are looking for alternatives to the EU can be in little doubt. In a May 2001 MORI poll, 73% of those polled were against Britain adopting the euro, with only 27% in favor. Only a bare majority of those asked (51-49%), were for staying in the EU at all.4 Nor is there much doubt as to the obvious geopolitical alternative to closer ties with the EU. When asked in a November 1999 Economist poll who was the UK’s most reliable ally in a crisis, 59% of those polled said the US, with only 16% paying Europe that compliment. People in the UK remain profoundly skeptical of Europe and the euro; this dissatisfaction will lead them, sooner or later, to cast about for a viable alternative to being swallowed by the EU. Thus, British public opinion is clearly ready to entertain a discussion of American alternatives to the UK being subsumed into the EU.

This debate cannot begin a moment too soon. For the Special Relationship is now being called into question. A seminal decision regarding its future awaits Britain early in the new century. A referendum on Britain’s entry into the euro-zone may occur as early as this parliament. A 'yes' vote would irrevocably merge British sovereignty into a larger European supranational construct, if the rhetoric of the current Euro-zone members is to be believed. This is, quite simply, the last real chance for Britain to choose an alternate future path, one that recognizes that its natural economic and political partner remains the United States and not the European Union.

Assuming the Conservatives campaign for a 'no' vote in a euro referendum, however well they put their argument, however skillfully they deconstruct the 'yes' case, their task is an essentially destructive rather than a creative one. This is a charge that has dogged conservatism in both the US and UK since the glory days of Ronald Reagan and Baroness Thatcher; one knows what conservatives are against, but what are they for? This damning question is invariably what Labour is bound to ask in the upcoming British referendum. Silence is not an effective answer, either politically or intellectually.

My proposal is that, as an alternative to Prime Minister Blair’s ‘third way’ push for ever closer integration with Europe, we should rally round a rival standard: Britain’s entry into a Global Free Trade Association (GFTA), with the US and the UK as charter members. Such a plan requires the UK to shift its politico-economic focus from Europe and instead return its gaze to what is clearly the most successful partnership of the twentieth century. A Global Free Trade Association represents the kind of international institution conservatives ought to favor; a coalition of the willing determined to maximize trade liberalization throughout our member states.

What I want to focus on tonight is delineating the American case for the UK keeping the pound and establishing an even closer relationship with the US. This argument is critical to make; the development of any British alternative to euro membership must involve a confluence of interests between the US and the UK. While the British case for keeping the pound is well-known, thanks to many of the people in this room, the twin American argument has been seldom remarked on, and it is critical. For if the US cannot be convinced to join with the UK in some sort of closer relationship, alternatives to euro membership mean little. The case for an even closer Special Relationship, which can be made economically, culturally, politically, and geopolitically, is an essential part of the anti-euro dialogue. The good news is such a case can be made; indeed it must be made.

The Economic Argument

First, the US is already deeply commercially enmeshed with Britain; further trade liberalization would result in immediate and significant benefits for the American economy. The US accounts for around 50% of foreign direct investment (FDI) in Britain, with Germany and Japan, the next largest source of FDI, accounting for only around 8% of the UK’s total.5 40% of all American investment in Europe is in the UK. A GFTA would be building upon business networks that already exist and would enhance this already incredibly lucrative relationship. For instance, a GFTA that is dedicated to the freer movement of capital between its members and is determined to abolish hidden tariffs would prove an economic bulwark for both the US and the UK.

Besides there being advantages to joining a GFTA with the US, there are significant economic dangers to the UK adopting the euro. Due to the Thatcher revolution, Britain remains the largest recipient of foreign direct investment (FDI) in the European Union. In 1999, it absorbed 39% of the EU total, more than France and Germany combined.6 The US and the UK are the two largest recipients of FDI in the world. This privileged economic position would be imperiled by euro membership. There can be little doubt that if the UK joins the euro, further economic harmonization with the rest of the union is inevitable. As Chancellor Schroeder put it, “An internal market and a single currency demand more energetic harmonization of fiscal policy, especially with regard to taxes on business, the taxation of capital gains, the taxation of energy and the organization of VAT.”7 Given the social democratic nature of most of the member states comprising the EU, and of Brussels itself, there can be no doubt such harmonization would be upwards. In essence, in joining the euro, the UK is being asked to give up the competitive advantage it has won as a result of the Thatcher revolution. If Britain joins the euro, it loses all the economic advantages that are the reason American businesses invest in the UK in the first place.

The changed nature of the post-Cold War era itself has made a significant US–UK economic link possible. Being close, as the UK is to the continent, no longer translates into greater volume of financial interactions compared with trade with a country far away, as it has done throughout history. In the new era, the concept of location has been transformed as the result of the telecommunications revolution that is such a salient characteristic of the age of globalization. To some extent the Internet has epitomized this death of distance. The centrality of a US–UK trade link would not have worked nearly as well in the age of the sailing ship, or even when the Treaty of Rome was signed in 1957. But globalization has made such a link very possible as the above economic figures indicate.

Sharing a common politico-economic culture

Second, the US and the UK share a common politico-economic culture; this makes a trade combination between them far more likely to prove economically successful. In the era of globalization, the world can best be divided into three camps, exhibiting markedly different strains of capitalism: Statists, Reaganite/Thatcherites, with advocates of the third way vainly trying to square the circle of finding a coherent middle way between the two. Germany and France, with their reliance on a massive role for the state in their economies, lavish tax and benefits systems, structurally high unemployment (the US unemployment rate is roughly half that of France, Italy, Spain, and Germany) and greater tendency toward protectionism, are clearly statist in politico-economic culture. A most curious phenomenon is that the statist model has been dominant on the continent; all the major parties in both France and Germany share a common antipathy to the Reaganite/Thatcherite model.

This is not yet the case in the UK; Prime Minister Tony Blair has yet to fully overturn the effects of the Thatcher revolution relating to privatization, deregulation, and a more market-oriented approach. It is simply a fact of life that continental Europe is largely statist and that this politico-economic orientation is increasingly incompatible with the Anglo–Saxon form of capitalism. In no other two countries has that culture flourished for so long and so successfully as it has in the United States and the United Kingdom.

It is no accident that the freest economies in the world have generally adopted the Anglo–American capitalist model of development, with its openness to foreign trade and investment. According to The Heritage Foundation’s 2001 Index of Economic Freedom, 7 of the 10 freest countries are former colonies of an 8th, the United Kingdom (Bahrain, the United States, Australia, New Zealand, Hong Kong, Singapore, and Ireland).8 Switzerland also ranks highly partly due to an Anglo–American link; the Swiss adopted their own variant of federalism and individual freedom when they modeled their Constitution after that of the United States. This degree of economic freedom which characterizes the Anglo–Saxon model, compared with statist Europe, has real world ramifications. For example the United States, easily the largest market of these freest economies, has significantly increased its potential growth rate in the 1990s - that is, the extent to which it can grow without triggering inflation. The OECD estimates the US can grow at a rate of 4% per annum without inflaming inflationary pressures; the comparable figure in the euro-zone is only 2.5%.9 Thus, these freest economies tend to do the best.

The Anglo–American anti-statist politico-economic cultural model is the principal reason that, according to the OECD, since 1970 America has created an additional 50 million jobs while Europe has not created any net private sector jobs in the last 30 years.10 This is due to the EU’s more corporatist approach, as statism advocates a larger role for the government in the marketplace, a padded safety net and, correspondingly, espouses a greater advocacy of protectionist doctrines to shield these inefficient practices. This has led to European-wide economic stagnation, as the euro-zone has found it more and more difficult to compete worldwide. Also, unemployment in the euro-zone is double that of America, and is largely structural in nature. Some 40-50% of the unemployed in Western Europe have been jobless for more than a year, in contrast to only about 10% in the US.11 A lack of faith in Europe’s ability to overcome its structural inefficiencies is a primary reason the euro-zone has experienced massive capital flight since the new currency’s inception, dramatically driving its value downwards. The choice for the British public seems to be clear; either closer economic ties with the museum of socialism, or closer links with the US, which has proven over time that it stands in the vanguard of globalization.

Excessive regulation is the second mortal blow to statism; as former US Treasury Secretary, Larry Summers, notes, “it takes 12 times longer to set up a new business in Europe than in the US, and 4 times the cost.”12 The EU has become a statist bureaucratic monster since its inception. The total number of regulations, directives and legal acts in force has climbed from 73 in 1957 to 23,027 in 1996.13 Nor is this forest of regulation readily comprehensible. As Bill Jamieson points out, “The Lord's Prayer runs to 56 words, the Ten Commandments to 297, the American Declaration of Independence to 300. The EU Directive on the export of duck eggs to 26,911.”14 The price of such excessive regulation is the stifling of economic growth.

Nor should the European Union as an institution be looked to as a harbinger of economic reform, and as a reason why Britain should shun a closer trading link with the US. While there are undoubtedly some aspects of Brussels that trend in the direction of a more open economy, the majority of the characteristics of the EU pull in the opposite, statist direction. The EU’s Common Agricultural Policy (CAP), which consumes around half of the entire EU budget, accounts for 85% of global agricultural subsidies.15 The average family in the Eurpoean Union is thought to pay around $1,200 extra each year for food as a result of the EU’s farm policies.16

The very institutional structure of the EU illustrates that the more integrated Europe is, the more protectionist its leanings become. The external activity in which the Union is most perfectly integrated is regarding trade policy, where, for all practical purposes, Europe behaves as if it were a sovereign state. It is also the area in which the EU and America disagree most fiercely. From an American point of view, this is not an encouraging advertisement for further European integration.17 For it is almost beyond question that stormy times lie ahead for the US–EU relationship. This is largely because they espouse differing and often competing forms of capitalism. As Hindley notes, trade policy is a reflection of the polity deploying it.18 I quite agree with Pascal Lamy, the EU’s Trade Representative, that trade disputes, such as the current row over genetically modified foods, stem from deep moral and cultural differences between the US and the EU.19 This is precisely why it is highly unlikely that Europe will embark upon fundamental economic reform. Given the popularity of Europe’s statist welfare state arrangements, it is difficult for governments to tinker with these arrangements without risking the wrath of their voters. The statist politico-economic culture of Europe is the direct cause of the EU’s economic sclerosis and also explains why the current stagnant European economic system is unlikely to fundamentally change.

There are myriad examples of protectionism being used to shield this failing statist system. Patrick Messerlin, a leading French economist, calculated that trade protectionism costs the EU between 6% and 7% of its GDP per annum, some $600 billion, or equal to the annual economic output of Spain.20 This protectionism ranges far beyond merely agriculture, proving just as prevalent in the manufacturing, textiles, and clothing sectors. Structural and regional funds for the less developed members of the Union have proven to be national feeding troughs, thinly disguised forms of excessive subsidization of national economies. The Social Chapter, and generally attempts at harmonization, have been used as tools to protect over-generous French and German labor legislation against the competitive pressures from smaller, poorer European countries that may have initially had an economic advantage in that they had less regulated labor markets. Given the inefficiencies inherent in the EU's statist politico-economic model, Europe will find it increasingly hard to compete in the era of globalization. Protectionism is the most obvious answer to the EU's economic dilemma; such a policy is obviously not in American interests.

European protectionism, embedded in its inefficient statist politico-economic culture, is a bottleneck to free trade at both the global and regional levels – a meaningful new trade round at Doha is impossible to initiate without CAP reform, as is a Trans-Atlantic Free Trade Area (TAFTA). The Bush administration, rather than giving up in disgust in the face of the EU’s protectionist leanings, should instead advocate GFTA as a way around the EU’s protectionist-induced logjam.

The geopolitical argument

Third, from an American point of view, the Anglo–American grouping will also geopolitically protect the US from whatever the outcome of the European experiment in supranationalism. We need to be as clear-eyed about this as the French and Germans are. They have no trouble reconciling the ambiguity that the US is both an ally and a rival of theirs; such are the complexities of the world. A poll conducted in France by CSA in April 1999 showed that 68% of the French said they were worried about America’s status as a superpower. Only 30% said there was anything to admire across the Atlantic.21

Nor is there a genuine teleological argument here; there is no doubt that a major strain of Euro-federalism is anti-American in its thrust. We need to stop thinking that French rhetoric is not serious, that it is just a cultural eccentricity. Rather, it reflects the honest beliefs of a people who have a very different political and economic agenda from that of the United States. As Pascal Lamy, the EU’s Trade Commissioner has observed, “I know the easiest way to get a cheer in Brussels is to stand up in the European Parliament and denounce America.”22 There is a danger for the US if the EU proves to be too successful in its attempts at centralization. If it succeeds in becoming some sort of coherent federal structure, it may well try to sever the transatlantic link. As Henry Kissinger has suggested, European identity is now defined largely in terms of an “almost congenital opposition to the United States.”23 The EU may even attempt to become a rival hegemon in the long-term. This is fundamentally not in America’s interests. There is little doubt that such a goal is the object of many European centralizers. Georges-Marc Benamou, in Le Dernier Mitterand, has the elderly French President saying,

‘France does not know it, but we are at war with America. Yes, a permanent war, a vital war, a war without death. Yes, they are very hard the Americans, they are voracious, they want undivided power over the world.’24

Likewise Gerhard Schröeder, in a television interview December 28, 1999, said, ‘Whineing about US dominance does not help, we have to act.’ He then went on to advocate that Europe must act more like a single country if it wants to challenge the US economic and political dominance.25 Dr. Kissinger noted that, as the preponderant power in the world, it is precisely such a challenge, from however seemingly benign a source, that America must be prepared to counter.26

In many ways then, the current increasingly rocky relationship between the US and the EU signals the final failure of America’s 45-year-old policy toward Brussels. It is not that the UK and the US are not as close as they once were, as some suggest, its just that the US insists on giving the UK such bad geopolitical advice. America has continued to endorse the long-held false vision that a Britain at the center of increased European integration (symbolized at the moment by adoption of the euro) will somehow tame the Franco–German axis by transforming it over time into a more pro-free market, pro-trade, pro-American entity. Instead, if anything, the reverse has held true. Brussels has obliged Britain to support policies that are less pro-free trade, less pro-free market, less pro-American. What America should now say is that the UK will not play a decisive role in what becomes of the EU (as always that will be left to Germany and France) but it can play a critical role in assuring an American-led bloc will maintain its dominance by a wide margin over an integrated statist European rival. As such, Britain remains absolutely central to long-term American geopolitical calculations.

The Way Ahead

So there is a clear and compelling American case for Britain staying out of the euro-zone and instead entering into a GFTA with the US. The political way ahead for this revolutionary new trade nexus is straightforward. After campaigning for the euro option in the context of an EMU referendum and losing, the Blair government will either fall or be gravely weakened, as it is so closely associated with entry into the euro-zone. Either with a desperately weakened Blair or a Tory government, flush with triumph after winning the referendum, Britain’s entry into a Global Free Trade Association with the US becomes the logical policy alternative. If the Prime Minister sensibly decides not to call a referendum he is unlikely to win, we should advocate the establishment of a GFTA as a policy initiative, nonetheless, building on the bilateral trade deals currently being negotiated between the US and Australia, Singapore, and Chile, all of whom qualify for membership in the GFTA.

Such a strategy will pressure both the Prime Minister and Brussels to explain why they are against closer ties between the US and the UK. Britain should attempt to renegotiate the Treaty of Rome, allowing it opt-outs over all pieces of legislation relating to further losses of sovereignty. In order to participate in both an EU-led trading bloc and a Global Free Trade Association (GFTA) with the US, the UK would need to relax its EU harmonized rules in the case of goods and services (which are almost always statist) when required to do so by the GFTA. Being able to derogate from EU rules in the case of internally traded goods and services from non-EU countries would be similar to obtaining an opt-out. This would empower the UK with the ability to enter into bilateral trade negotiations with the US to join such a GFTA.

I believe such talks are certainly desirable from a British point of view. I want to make this very clear; there is no objective reason why the UK’s entry into a GFTA should be an either/or proposition regarding its continued membership within the EU. If the Union really is the benign organization it claims to be, it should welcome the further global trade liberalization and pro-American stance such a new organization would profess. It is only if Brussels has a hidden anti-American, protectionist agenda that it ought to object to such an initiative. Given what the EU has been telling us all along, surely this cannot be possible?

Of course EU intransigence is not only possible; it is downright likely. But here the EU runs into a legal problem of its own. Senator Phil Gramm has observed that two provisions of the Treaty of Rome limiting Britain’s ability to enter into other trade expansion agreements (such as a GFTA arrangement with the US) violate the General Agreements on Tariffs and Trade (GATT) rules. GATT trade ministers said in 1994 that, “A regional arrangement must facilitate trade among its members, and not raise trade barriers between its members and other nations.” Surely the EU has not met this requirement; the Common Agricultural Policy leaps to mind. It would seem that the European Union is undermining the letter and spirit of the GATT, and must therefore modify Treaty of Rome Articles 133 and 310, which limit the sovereign powers of its members to negotiate trade agreements with non-EU countries, as they are inconsistent with Article 24 of the GATT. If this is so, ‘the customs union problem,’ part of the mortar around the protectionist EU wall, ought to come down with a crash.

It is a fact that in order to join a GFTA with the US, the UK will have to legally recalibrate its trading regime with the EU. In my opinion, it should do so anyway, regardless of the GFTA opportunity. Such an approach is at odds with the EU’s notion of constantly expanding its competencies, as it sees itself destined to forever increase the scope of its powers. This entrenched concept will need to be politically overcome. But again, this reality needs to be dealt with anyway.

Even if such negotiations, as is likely, fail, Britain should attempt to retain the obvious benefits of belonging to the Single Market. It should then re-enter EFTA, joining the European Economic Area (EEA) along with Norway, Iceland, and Liechtenstein, which is the linking of the single markets of the EU and willing EFTA members, excepting matters relating to the Common Agricultural Policy and fisheries.27 Such a link would preserve British sovereignty (a vital political concern), keep the UK for all intents and purposes in the Single Market, while allowing it to negotiate a closer trading status with the US. EEA membership entails no transfer of legislative power from the parliaments of contracting parties to EEA institutions. Decisions by the EEA joint committee (composed of EU and EEA members) in principle need to be transposed into national legislation to be binding in each EFTA country. Again, only if the other member states of the EU refuse to allow Britain to make its own sovereign decision regarding initiating closer US–UK trade links, does a fundamental choice need to be made. I believe the facts in this speech point out that this fateful choice should be fairly simple.

This approach dovetails nicely with the Bush administration’s trade strategy of favoring free trade by any means. Such a policy will benefit the US by continuing to expand its economic opportunities, while at the same time making it clear to the EU that it will not be allowed to become an obstacle to further efforts at free trade around the world – its protectionist policies will only restrict European economic opportunities. As such, the administration should lobby Congress to secure trade promotion authority (TPA), while finalizing bilateral trade agreements with countries such as Chile, Singapore, and Australia. At the same time the White House should pursue regional free trade initiatives in the Western Hemisphere by making the Free Trade Agreement of the Americas (FTAA) a more substantial part of overall American foreign policy. Lastly, the US should establish a GFTA in which countries genuinely committed to free trade group together to further liberalize their comparatively free markets for mutual benefit. Such an all-encompassing strategy will force the EU to think again about its foot-dragging on market liberalization, while conclusively pyschologically changing the global free trade dynamic by making free trade be seen as a reward, rather than as a political concession.

The GFTA will be founded on a genuine shared commitment to increasing trade between its member states and at a global level. It will serve as a practical advertisement for the enduring global benefits of free trade as the advantages of such an association become apparent; an example all the more precious in the wake of the Seattle WTO debacle. It would presently encompass New Zealand, Hong Kong, Ireland, Chile, Singapore, Denmark, Luxembourg, Estonia, Australia, Finland, Iceland, the UK and the US. The GFTA will be a voluntary and inclusive grouping, whose expanded membership should be based solely on a policy commitment by its member states to a genuinely liberal global trading order. The plan embraces a commitment to a state’s sovereignty. Its economic policies (and the choices they represent) will determine whether or not it qualifies for the grouping. This commitment will be characterized by a state’s meeting certain numerical targets (such as those used in the methodology employed in The Heritage Foundation and The Wall Street Journals’ 2001 Index of Economic Freedom) regarding a country’s openness, relating to its trade policy, capital flows and investment, property rights and low level of regulation (for details of the plan, see appendix.)

Members will thus select themselves based on their genuine commitment to a liberal trading order. It is hoped that membership will quickly grow, as a further 19 countries are within sight of the numerical target for accession (including Bahrain, Canada, El Salvador, the Czech Republic, Italy, Spain, Poland, Hungary, Switzerland, Thailand, and the UAE.) Given my firm belief in the economic superiority of the Anglo–American economic model, such an organization will have a disproportionate number of English-speaking members, certainly in the short- and medium-term. However, the numerical target methodology allows for self-selection, giving the whole project an inclusivity it would otherwise lack, while advancing our common desire to strengthen the ties that bind the English-speaking world together. The Global Free Trade Association’s internal initiatives will include: freer movement of capital within the new grouping; establishing common accounting standards; setting uniform numerically-driven very low rates of subsidy, as well as diminishing overt and hidden tariffs.

And what of the NAFTA option that a number of my anti-euro allies advocate? I favor free trade by any means. As such, I would welcome the UK being asked to join NAFTA, as some have proposed. It is not that I am against this, I just do not believe it will work politically in the US. Currently in the US, NAFTA is wrongly viewed in an unfavorable light. The establishment of NAFTA was such a fraught process that there are examples of congressmen on both sides of the aisle who lost their jobs over this one issue. There is a misplaced public perception that banding together with Mexico and Canada has led to the loss of American jobs, so an extension of this unpopular agreement is unlikely to find support within the government. Witness Chile’s futile attempts to join the organization. Blessed with a far more vigorous economy than Mexico’s, Chile has all but given up on NAFTA accession after waiting years to join. The politics of NAFTA are simply toxic, even when dealing with a staunch ally such as the UK.

However, a GFTA encompassing deserving Central and Eastern European states, the US, the UK, and our Asian allies will force the EU core clustered around France and Germany to at last face up to its statist flaws. The GFTA approach reinforces positive behavior while being seen as fair. The numerical target that determines membership in the GFTA allows for self-selection, giving the whole project an inclusivity the NAFTA alternative lacks. Advocates for the GFTA want to form an association with countries that share a common politico-economic culture pertaining to trade; the process is not an example of American fiat. Unlike the NAFTA proposal, it is neither Euro-centric nor dominated by American desires. These facts can only increase its attractiveness around the globe.


Based on the American interests I have outlined, I firmly believe the GFTA is an idea whose time is rapidly coming. I fervently hope the GFTA proposal will continue the process of disarming British concern about the UK being isolated if it refuses to accept the euro; there is a realistic alternative out there.

This new Anglo–American economic tie will simply build upon the older links that have made this relationship one of the most fruitful and enduring in history. This plan exemplifies conservatism at its Burkean best, proposing policies based on conditions that already exist rather than, as with the EU, trying to legislate sand castles into reality. For as the great parliamentarian realized, “politics is philosophy in action”. We conservatives know what our first principles are – know instinctively the enduring value of the Special Relationship. Now is the time to turn that philosophical knowledge into practical policy action.


(Sudabeh Koochekzadeh was instrumental in both conceptualizing and helping prepare this speech.)


    Financial Times (FT), “Prodi urges acceleration of EU integration,” October 12, 2001.
    Ambrose Evans-Pritchard, “Blair overacting, says EU envoy,” The Daily Telegraph, October 16, 2001., October 5-October 11, 2001.
    Peter Riddell, “Record lead for Labour,” The Times (London), May 24, 2001.
    Kevin Brown, “US slowdown brings fall in investment inquiries,” FT, March 23, 2001.
    Martin Wolf, “Closing in on the euro zone,” FT, February 20, 2001.
    Andrew Haldenby, “Schröeder: euro means tax harmonization and ‘European government’,”, May 3, 2001.
    See 2001 Index of Economic Freedom, Gerald P. O’Driscoll, Jr., Kim R. Holmes, and Melanie Kirkpatrick, eds (Washington: The Heritage Foundation and Dow Jones and Company, Inc., 2001).
    “Working wonders,” The Economist, November 25, 2000.
    “New studies highlight higher taxation and unemployment in Eurozone,” Business for Sterling Bulletin, no.49, June 29, 2000.
    Assar Lindbeck, “Problems of Unemployment in Europe and the US,” United States Information Service, June 18, 1998, p.2.
    Wolf, “Europe’s Growth Opportunity,” FT, September 10, 1999.
    Bill Jamieson, Britain: Free to choose, (London: Style Publishing, 1998), p.19.
    Ibid Jamieson, p.75.
    Adam Entous, “Labor Groups Challenge WTO on Trade Round,” Reuters, November 29, 1999.
    “From bad to worse, down on the farm,” The Economist, March 3, 2001.
    Robert Cottrell, “Here’s the Beef,” The Economist, October 23, 1999.
    Brian Hindley, “Liberalism and Illiberalism in the New Era,” European Integration and American Interests, Jeffrey Gedmin, ed., (Washington: The AEI Press, 1997), p.21.
    Guy de Jonquieres, “Liberal with a Social Mission,” interview with Pascal Lamy, FT, October 21, 1999.
    de Jonquieres, “Protectionism is Costing EU 6% of GDP,” FT, November 10, 1999.
    Suzanne Daley, “Europe’s Dim View of US is Evolving into Frank Hostility,” The New York Times, April 9, 2000.
    Charlemagne, “Pascal Lamy,” The Economist, July 7, 2001.
    John J. Mearsheimer, “Kissinger’s Wisdom…and Advice,” The National Interest, no.65, (Fall 2001), p.124.
    Conrad Black, “Britain’s Atlantic Option-And America’s Stake,” The National Interest, no.55, (Spring 1999), pp. 21-22.
    Associated Press, “Schröeder to Europe: Unite Vs. US,” December 28, 1999.
    Henry Kissinger, Diplomacy, (New York: Simon and Schuster, 1994), p.813.
    Ibid Black, p.18.


Proposed Criteria for becoming a member of The Global Free Trade Association – Compiled with Aaron Schavey, Economic Policy Analyst, The Heritage Foundation

Membership in the Global Free Trade Association (GFTA) is entirely voluntary and is not an abridgement of sovereignty in any way; members can choose to withdraw from the trading regime freely. The only other way to be removed from the regime is to cease to meet the numerical standards that, unlike those relating to euro membership, cannot be finessed. The GFTA will be founded around a genuine commitment to increasing free trade between its member states and at the global level. This commitment will be characterised by a state’s meeting certain numerical targets regarding a country’s openness relating to its trade policy, capital flows and investment, property rights, and low level of regulation. These categories fall into four broad areas that characterise a country’s commitment to a genuinely liberal trading order: a) freedom to trade, b) freedom to invest, c) freedom to operate a business without excessive burdens, d) and security in the investment.

To ensure that GFTA members are genuinely committed to free trade and that expanding trade with countries in the trading regime can realistically be achieved, the following criteria based on the 2001 Index of Economic Freedom are proposed.

Countries seeking GFTA membership status should:

Freedom to Trade
Receive a score of either 1 or 2 on trade policy. Countries with a score of 1 or 2 maintain average tariff rates below 9% and have low non-tariff barriers. For example, countries with low non-tariff barriers generally do not use import quotas or licensing requirements to restrict trade.

Freedom to Invest
Receive a score of either 1 or 2 on capital flows and investment, which is equivalent to countries possessing an accessible foreign investment code, treating foreign investment openly and impartially, and maintaining an efficient approval process. The only investment restrictions permitted for GFTA membership status are some restrictions on investments in utilities, companies vital to national security and natural resources.

Freedom to Operate a Business
Receive a score of either 1 or 2 on regulation. A country that has excessively burdensome regulations could deter trade. Investors may choose not to invest in a country because of the problems of opening a business or the high cost of doing business in a country. Countries that score either a 1 or a 2 on regulation maintain simple licensing procedures and apply regulations uniformly.

Secure Property Rights
Receive a score of either 1 or 2 on property rights. A country with well-established rule of law protects private property and provides an environment where business transactions can take place with a degree of certainty. Investors are more likely to engage in economic transactions when they know the judicial system protects private property and is not subject to outside influence.

Countries that generally set low tariff barriers and do not use excessive non-tariff barriers and do not put serious impediments in the way of foreign investment exhibit a fundamental commitment to free trade. It is important for countries to secure property rights and desist from excessively burdensome regulations as this ensures that expanding trade with such a country within the GFTA trading regime can be realistically achieved. Countries that maintain an adequate rule of law that protects private property encourage trade and investment. Investors are more likely to put their money in a country where the judicial system is transparent and enforces contracts. In addition, businesses are more likely to invest their money where regulations are not burdensome and where they are applied uniformly.

Based on the above mentioned criteria, 12 countries in addition to the United States presently qualify for the GFTA member status: Australia, Chile, Denmark, Estonia, Finland, Hong Kong, Iceland, Ireland, Luxembourg, New Zealand, Singapore, and the United Kingdom.

Twenty-four further countries are within one point (using the Heritage scoring system) of reaching the GFTA standards. If they choose to do so and follow slightly more liberal trade policies, such countries ought to be able to join the GFTA in the near future. They are: Austria, Bahrain, Belgium, Canada, the Czech Republic, Cyprus, El Salvador, Germany, Greece, Hungary, Israel, Italy, Japan, Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, and Uruguay.

Evening Session

Professor Ivar Raig

Mr. Chairman, Ladies and Gentlemen!

I am honored and privileged to deliver this speech in this time and place. I am not speaking as an official, and my remarks to you should not be taken as representing Estonia in any way. I am speaking to you as a private academician, former politician, and true believer in democratic nation-states, as someone who is deeply concerned by the problems Europe faces.

Throughout its history, the Bruges Group has provided a forum for the development of ideas regarding the liberal economic policies and future of Europe.

Since the end of the Second World War, and Sir Winston Churchill’s famous speech in Geneva in 1946, there has never been a time when the generation of new ideas on the future of the Europe has been more urgently required. What we face today is a crises of trust in the Western values. A new cold war between Western and certain Eastern values has emerged.

The political, military and social challenges from the tragedies in New York and Washington, to the economic recession, are as immediate as everyday news. They give an added urgency to the questions one must answer about the future of Europe and the whole democratic world.

Ladies and Gentlemen!

Let us recognize, as Sir Winston Churchill did, that relations between big nations in the Europe are the cornerstones of cooperation in the world, and the key to its future development. A confident and outward-looking Europe is vital for the stability of the world - and of Europe itself. This must be a Europe which is more open and cooperative, a Europe whose openness to global change and its strategic global partners is made possible by the assurance that comes from making its own policies and inspirations more open, more responsive and more credible to its own citizens.

To see Europe’s future more clearly it is necessary to lift our gaze well beyond its geographical borders. There is no possibility of ”opting out” from the world outside. Today all Europe’s hopes for its future developments depend upon recognition and positive response to the currents of global change – and no European State, even the most powerful, can by itself mount an effective response to the unprecedented threats and challenges that face us.

Today’s leaders of European States are debating about the future of the European Union. German foreign minister, Joschka Fischer, proposed for us Europe as a centralised Federal State - United States of Europe – led by strong Brussels-based government; an idea, which was earlier proposed already, by Saint Simon and Karl Marx.

Chancellor Gerhard Schröeder argued in favor of German-type Federal State with bicameral parliament and relatively independent regions. French leaders Lionel Jospin and Jaques Chirac have proposed a Federation of Nation states.

Tony Blair sees the future of Europe as Superpower but not as a super state.

In principle, today’s leaders participate, on the eve of the final stage of the European Monetary Union, in a new round of discussion over the old federalist ideas created by Jacques Delors; to which Margaret Thatcher already perfectly answered by her glorious and celebrated Bruges speech.

But, from the other hand, so far its difficult to pronounce the name of today’s prominent European politician, or scientist, who can propose and successfully argue in favor of a realistic intergovernmental model for more democratic and credible cooperation in Europe, which will also guarantee a solution to nowadays problems in Europe.

In reality Europe is relatively small by territory, and is becoming smaller as a share in the world population and economy. Now only cooperation with other parts of the world gives to Europe opportunity for successful further developments.

We know from history that American support for Europe, after World War II, was also influenced by the belief that a more prosperous and free Europe created a secure bulwark against the advance of communism. Superficially, with the removal of this threat, it might be argued that one important reason for developing North Atlantic security cooperation no longer existed. On the contrary, today’s political situation creates even more compelling reasons for transatlantic cooperation, and not only in the security field but also in economy, environment and other global issues.

Today, Europe and the United States are the largest trading partners in the world and largest investors into each other’s economies. But more than half of the growth in global economy already comes from East, and South-East, Asia. East Asia is, since 1993, Europe’s fastest-growing export market. Japan and China are already among six biggest economies in the world. Recognition of these facts should be a good basis for further cooperation and harmonization of trade and economic policies between European Union and United States. In this context, former EU commissioner, Sir Leon Brittan, has called EU and US to work closer together to liberalize international trade and investments already many years ago.

Today, big European nations, as Great Britain, should take once again the initiative for closer cooperation between European and American nations, with the aim of creating a North-Atlantic Trade Area (NATA), where EU, NAFTA and EFTA countries should agree on free trade agreement, and should afterwards work together in many other fields on the basis of intergovernmental cooperation, multilateral systems, and mutual respect for creating the North-Atlantic Security and Economic Area (NASEA).

British–American cooperation should become the driving force for North–Atlantic economic cooperation, as Franco–German reconciliation played a crucial role for European integration.

And London should be the center for North–Atlantic economic cooperation. Hopefully, the United Kingdom will have soon a leader who can play for the whole of Europe a similar role like Sir Winston Churchill, in the end of forties, and Baroness Margaret Thatcher in the eighties.

But a lot of problems and questions are still not solved on the way to closer North–Atlantic economic cooperation. New changes in technology have been developed in America faster than in Europe, and Europe needs to increase capacity to change and adapt to these new trends. Otherwise Europe risks being left behind. Too often European trade and some sector policies (especially European Common agricultural policy) are influenced by special lobbying from narrow interest groups, which resist the actions necessary to become more competitive. A big question is also how some European nations can overcome their traditional anti–Americanism? Can Europe avoid national and religious conflicts, like in Bosnia, or Kosovo and Northern Ireland? How far should European Union enlarge to the East? What will be the nature of cooperation with Russia, Ukraine and other nations in the former Soviet Union? What kind of role will Turkey play between Western and Eastern World, between Christian and Islamic values?

At the same time, Europe as well as America needs to understand better the roots of violent and terrorist expressions of Islamic fundamentalism. Economic developments in the Islamic countries are closely linked to the concerns of North–Atlantic countries on migration.

Ladies and gentleman!

One can ask how tiny Estonia is related to the debate over the future of Europe? What kind of role Estonia can play in finding solutions for European and North–Atlantic economic cooperation? I want to explain to you that Estonia’s role might be very important for finding solutions for Europe, and for defending Anglo-American ideas of democracy, economic freedoms, and liberal market economy; the economic thoughts of Adam Smith, John Stuart Mill, Milton Friedman, Friedrich von Hayek and others.

Estonia has been closely tied to the economy of Western Europe as far back as the days of the Hanseatic League. Involvement in the Hansa increased also the political and military power of its member towns. In the Hanseatic times the capital of Estonia, Tallinn, was even more important as a trade center than Stockholm, not to mention Turku and Viipuri, Finland’s leading towns of these days. Since the restoration of its independence, and the collapse of the Iron Curtain in 1991, Estonia has actively strengthened the economic, political, social and cultural ties with the Western Europe – particularly with Scandinavian countries, the United Kingdom and Germany.

The quick improvement in carrying out political and economic reforms was the main reason for inviting Estonia, with four Central European countries and Cyprus, to begin the accession negotiations with the European Union in December 1997. After Estonia’s Europe Agreement came into force on February 1998, only two months later the Estonia–EU Accession Conference was opened.

The accession to the EU is the top priority of the current foreign policy of Estonia. The future membership of Estonia in the EU has fundamental significance for this country: the nature of Estonian statehood and the trends of its economic development are going to be established for the decades ahead, and serve as a conclusive step of Estonian political developments. At the same time the young Estonian statehood, and its legislative activities, do not have long traditions of meaningful analyses of its own course. But, anyway, accession into the EU integration has been recognized as a problem for Estonian sovereignty.

Today, around half of the Estonian population is against giving up some sovereign rights of its nation state to the supranational body based in Brussels. But I‘m very much afraid that public opinion, especially before elections and referendums, is very much subjected to manipulations by superpowers. In this relation, I want to remind you how public support for joining the EU was reached in Sweden during the referendum week, while all the times before and after the referendum very skeptical views had been dominating. Just enormous money and effective referendum campaign during one week made the trick. I guess the same will be initiated also in Estonia before the referendum on accession treaty questions.

Ladies and Gentlemen!

Open economy, liberal trade policy, stable currency, low taxes and balanced budget have become the main cornerstones of Estonian economic strategy since 1992. Estonia has favorable free trade agreements with the EU, EFTA, and most of Central and East European countries. Good geopolitical situation, closeness to big markets, cost-effective labor and economic growth has contributed to the promotion of Estonia as one of the business hubs of the region. Estonia is one of these few counties that do not have practically any import-export tariffs. The share of EU and EFTA countries has reached the level of over 70 % of Estonia’s trade partners. Already, for many years, Finland and Sweden hold the leading positions among Estonia’s trade partners. Great Britain, Germany and Denmark are also among the ten most significant trade partners. Estonia has a negative trade balance with the EU countries and a positive one with Switzerland, Ukraine, Latvia and Lithuania.

Heritage Foundation’s report “2001 Index of Economic Freedom” credits Estonia with having the 14th freest economy in the world, belonging to the category of "mostly free" economies. Estonia shared the 14th place with Austria, Canada, Denmark, Japan and United Arab Emirates, ahead of Belgium, Germany, Finland and Sweden. World Economic Forum (Davos) and The World Competitiveness Yearbook 2001 placed Estonia the 22nd on the Economic Competitiveness ranking list.

Estonia offers one of the most liberated economies not only in East Europe but of all Europe, improving its position due to stable currency, low tax burden and relatively low inflation rate. Estonia’s budget balance is guaranteed by law, and carries relatively small national debt. The World Bank considers Estonia among their most trustworthy partners in Central and Eastern Europe.

Estonia has a flat 26% personal income tax, and 18% VAT. In 2000, Estonian tax reform abolished corporate income tax. Estonia will most likely have serious problems to defend low or no taxes during accession negotiations with EU. Not all of the EU member countries share the logic that low excise and other taxes are needed for the attraction of foreign capital and keeping high growth rates.

Estonia is among the leaders in Central and Eastern Europe with regard to per capita foreign direct investment in the country. The privatization of retail trade, industry, agriculture and services is almost complete. Even some important state infrastructures (railways, ports and electric power stations) have been partially sold to international or domestic private investors. According to The Economist Intelligence Unit, under The Economist group, the investment risk into Estonia has significantly decreased within the last years. Following the Czech Republic, Estonia is a country with the next smallest investment risk among the former Eastern block countries.

The development of information technology has been outstanding over the recent years in Estonia. The development of IT can be seen in the very rapidly increasing number of cellular phones (the number of cell-phone subscribers per 100 inhabitants has reached the level of over 30 in 2001), personal computers and connections to the Internet (nearly 40 % of Estonian families have access to Internet at home in 2001).

Estonia’s goal is to become an incubator of economic growth for the region and to contribute to greater stability in the Baltic Sea region and the whole of Europe. Today, Estonia still has one of the highest economic growths among the countries negotiating accession to the EU. Estonia believes that its rapidly developing economy, and small dynamic society, will contribute positively towards increasing Europe’s global competitiveness. For example, Estonia can play a role in helping EU member states to find new markets in North–West Russia and in other CIS countries, and facilitate economic cooperation and trade between Eastern and Western Europe and Northern and Southern Europe.

Considering the European integration, three main types of convergence can be distinguished: institutional, price and income convergence. Institutional convergence means primarily harmonization and implementation of laws. These processes are very costly, and therefore put an upward pressure on prices. According to the IMF, the GDP of Estonia per capita was 3585 dollars in 2000, and remains the lowest among the first group of countries who started the EU accession negotiations in 1998 (in 1999, it was around 38% in per capita terms, compared to EU average income level). At the same time, price levels in Estonia reached already much higher convergence. Calculated on a parity basis of the purchasing power, the GDP of Estonia per capita was 8223 dollars against the average of 8638 dollars of the 10 countries that have started the accession negotiations. In Estonia, the private sector has a large share (75%) in the GDP, and is ranked third by this indicator after the Czech Republic and Hungary. In Estonia, the agriculture sector constituted only 6% of the value added in 1999, the share of industry was 27%, and the service sector constituted 67%.

It is expected that the integration will increase Estonian average income levels close towards the average income level of the EU. At the same time, the rapid price increases due to institutional convergence and implementation of EU customs, agricultural and other policies, will make consumers worse off, and lower the competitiveness of Estonian economy. Hence there is a threat that institutional convergence will restrain the real income convergence and it is expected to lead to many social problems (unemployment, big regional income disparities, crime etc.) in Estonia.

Therefore, Estonian society faces a very complex task to find the balance between institutional and real convergence. If Estonia will keep a 5% average GDP growth rate, then it will inevitably take more than 30 years of time to raise Estonia’s GNP and standard of living to the level of West European countries – to where they were in the years before the Second World War. Quicker changes are possible only if Estonia will grow faster and finds a new model of development. In other words: only economic growth that is more rapid than that of Europe may bring us to the European level. Estonia’s present model of economic development is close to that of Singapore, and in many ways, also, to the Ireland development model. So, today, Estonia still has alternatives - to build up a North–European Singapore or East–European Ireland, or to become boring grey and a second or even third-rate Baltic state in EU. The two first options are not possible after the implementation of thousands of EU regulations and directives. However, if some political and economic forces are interested, then Estonia can continue with its present liberal-democratic policies, and even become a model for Europe, at least for East and Central Europe.

Let me explain this idea!

What kind of capitalism is needed for the future Europe? Social scientists and politicians have once again started talks about the third way, where the liberal market economy is somehow combined with the social market economy and with proper respect for the environment. Implementation of these ideas depends upon the political options of each state; on the form of society it is aimed to build up.

As Estonia is in the stage of transition, the discussions on the possible ways of development are still going on. Although many essential, but at the same time contradictory, resolutions have been already made. On the one hand, the decision-makers have tried to ground on the idea of the Anglo–American liberal free-market economy, but on the other hand, a lot of legislation and methods are taken from the models of the so-called “social market-economy”, and the social-democratic welfare society spread in Germany, France, and Scandinavian countries. At present, Estonian society can be characterized as the combination of different models of capitalism, where the formation of the more permanent trends of development is still ahead. And Estonia’s model of the market economy might become as a link between European and American models of capitalism.

The question of the relation between harmonization and sovereignty, in the EU accession context, falls back to the application for certain transition periods and exceptions given in the framework of the accession negotiations, which would enable Estonia to sustain more freedom of resolution and latitude, in some fields, than provided by the legal acts of the European Law. Estonia has requested transitional periods in the energy, transport, taxation, environment and free movement of services chapters. But to keep a relatively liberal economic policy, Estonia should apply for comprehensive exceptions and longer transition periods to form and keep the entrepreneurial environment, and also in the agricultural, transport and regional policies, in such a way that it can stimulate higher competitiveness of the Estonian economy in the world.

By today, the Estonian–EU negotiations have reached the point where Estonia has to put forward ideas regarding the future transitional periods in the course of complete integration, and propose permanent exceptions to some EU regulations and requirements, or to say “no” to the EU and try to continue with liberal policies. Joining EU means giving up most of Estonia’s present economic achievements, and one of the most competitive new economies in Europe will fall apart.

Against her own will Estonia did suffer a totalitarian socialistic experiment for 50 years of Soviet rule. And we do not have either will, nor time and resources, to go ahead with socialist experiments undertaken by the EU.

During EU accession negotiations Estonia gives up its vital national interests not only in the areas of lesser importance (so called “loose-loose” situation) but also in crucial sovereignty of state areas. The political motivations of the initiation of the EU-talks (EU as an additional security guarantee for Estonia against Russia) have withered away the economic dimensions of the accession. Actually, there are no answers to the questions of what will be the results of the implementation of EU trade, agricultural and regional policies, and harmonization of EU taxation, environmental, social and some other policies in Estonia. It is not clear how these changes will influence economic growth and the standard of living in Estonia.

Very often information that has been distributed on behalf of EU has been neither convincing, or accurate. Estonian economic policies, and even our Europe Agreement, are quite different from other candidate states. Today, some of Estonia’s policies are even very much different from EU policies, and many entrepreneurs and consumers are not ready for quick changes in these fields. Deeper integration with the EU has the tendency to eliminate the factors of Estonia’s competitive advantages: a relatively cheap, and highly professional, labour force, free trade agreements with Ukraine and some other countries, low taxes etc.

However, the influence on the Estonian economy of changing the economic policy, accompanied by a possible fast EU accession, has not yet found a complex and systematic study. Simple government officials and leading politicians are not interested in it. This might slow down accession and decrease their chances to get highly paid job in Brussels.

Honourable members of Bruges Group!

My last proposal to you tonight is to establish an international London based team - a policy oriented research institute for studying the impact of Estonia’s accession to the EU, and the challenges for Estonia if it stays out of EU. Economists, politologists, lawyers and sociologists have to be included in the international interdisciplinary research group that will deal with the impact of “yes” and “no “ votes on the accession referendum for Estonia.

As a sample list of more important topics for these impact studies is the following: the fundamental implications of the accession to the EU for the Estonian legal system (EU membership and Estonian Constitution, the issues of statehood and sovereignty); the administrative capacity of Estonian executive branch and EU bureaucracy; the effects of the introduction of the tariffs between Estonia and the non EU states (the US and CIS included); the energy and fuel policy implications of the accession to the EU; cost analyses and the risks of the environmental situation in Estonia.

In conclusion, as Estonia’s accession to the EU is in many aspects unique, international cooperation of politicians and social scientists might bring very interesting results, not only for Estonia, but also for the whole of Europe, in terms of finding new models for building up modern societies, more effective ways of integrating Central and East European countries into the Western World, and increasing the competitiveness of European economies.

I believe that this Conference in King’s College is also a good opportunity for further development of cooperation between the Bruges Group and Research Center Free Europe, University Nord in Tallinn. Our research center is ready to become a subdivision of Bruges Group in Estonia.

Thank you very much for interest and kind attention!

Dr Brian Hindley

I want to talk about the constitutional issue. I want to talk about the Charter of Fundamental Rights, which many of its proponents regard as the basis for an EU constitution.

Ladies and Gentlemen, Britain’s future will be crucially affected by the events of the next three years. An EU Constitutional Conference is mandated for 2004. Admission of new members of the EU is scheduled to start at the same time. These events are not independent of one another. When the candidate countries become members, they will have votes and they will be able to resist pressure to shuffle them along the path towards a federal European destiny. They probably will resist such pressure. For European federalists that is a major problem. If they wait until after enlargement to complete the journey to federation, it may never be completed. From their point of view, therefore, it must be completed, or as much of the journey as possible, before enlargement. So the next three years are likely to see battles whose outcomes will fundamentally influence the form and shape of the EU.

In this context, the most important things discussed at Nice, last December, were the Charter of Fundamental Rights and the Common Defence and Security policy. Helen gave us an excellent discussion of the Common Defence policy, earlier today. I want to talk to you about the Charter of Fundamental Rights.

It’s a common misapprehension that a failure of the Treaty of Nice to be ratified would destroy the Charter of Fundamental Rights (CFR). That isn’t so. So far as the CFR is concerned everything is still to play for on all sides... The CFR is a German initiative that has much support elsewhere in the EU. Lionel Jospin, for example, the Prime Minister of France, expressed the hope that the Common Defence and Security Policy and the CFR would be, I’m quoting: “An integral part of the pact uniting the nations of Europe.” The Charter is the product of the convention, established at the 1999, Cologne Summit, of the EU and chaired by Roman Hertzog, a former President of Germany. It had 61 other members, one representative of each head of a Member State, 16 from the European Parliament, and 2 from each of the 15 national parliaments. In the view of the EU powers that be, the convention worked well and a similar structure will probably be adopted at Laeken, in December, to propose constitutional changes for the consideration of the 2004 IGC.

Supporters of the Charter expected it to be annexed to the Nice Treaty. That, however, proved to be an annex too far, at least at Nice. Instead, the presidency conclusions of the IGC note that the presidency would like to see the CFR disseminated as widely as possible amongst the Union citizens. The question of the Charter’s force will be considered later. That this will happen is certain. A document that is annexed to the Treaty of Nice, the Declaration on the Future of the EU, firmly places the CFR on the agenda of the next IGC, to be held in 2004.

The British government opposed inclusion of the Charter in the Nice Treaty. That might have been for reasons of principle, or it may have been that Mr Blair didn’t want it hanging around his neck during an election. In any event, the British government will be under heavy pressure to give the Charter formal standing in the 2004 IGC. Proponents attach great importance to the Charter, the EU Commissioner for Justice and Home Affairs, Antonio Vitterino for example, has said that:

“The Charter, if brought off successfully, would mark a definitive change in the Community.”

He says that the Charter would:

“move the Community away from the essentially economic raison d’être of its origins to be a full political Union”.

Inspection of the Charter however, does little to explain these hopes and enthusiasms. Viewed as a constitutional document the Charter lacks clarity, fails to inspire and frequently trembles on the brink of the banal. Sometimes it is banal. Article 29, for example, gives: “everyone the right of access to a free placement service”, perhaps though, this is the central message that the Charter carries for the future of the EU. Not life, liberty and the pursuit of human happiness; not liberty, fraternity and equality, but the right to a placement service, paid for by someone else.

The warmth towards the Charter of Monsieur Jospin, or Commissioner Vitterino’s views on its impact on the character of the EU, give rise to an expectation of a document that breaks new ground. The authors of the Charter though, assure their audience that its intention is merely to make existing rights more visible. The preamble says:

it is necessary to strengthen the protection of fundamental rights in the light of changes in society, social progress and scientific and technological developments by making those rights more visible in a charter.

This position is given substance by an express rejection of the idea that the Charter creates any new rights. Article 51.2 of the Charter says: “this charter does not establish any new power or task for the Community or the Union or modify powers or tasks defined by the Treaties.” Despite those words, however, it is not credible that the Charter has, as its purpose, merely an enhancement of the visibility of already existing legislation. Were that the aim, it would be better achieved by a series of handbooks setting out particular classes of existing rights. A mere publicity exercise could hardly explain the enthusiasm of the German government, Monsieur Jospin, and Commissioner Vittorino, or all the pressures to include the Charter in the Treaty (major governments surely wouldn’t insist) four years ahead of time, that the agenda of the 2004 IGC should include discussion of a simple publicity exercise. Of course, publicity may be part of the purpose of the Charter. It cannot though be its sole purpose.

Before going to the substance of the Charter, I should mention Article 54. I’ll read it slowly. You may have trouble believing it:

Nothing in this charter shall be interpreted as implying any rights to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms recognised in this charter or at their limitation to a greater extent than is provided for herein.

I can’t see any ambiguity in this. If you don’t have a right do something, somebody else, probably a government, has the right to penalise you if you do it. What penalty will arguing against the provisions of the Charter carry? Reasonable persons might believe for example that a particular crime should be punished with the death sentence, which is prohibited by Article 2.2, or that persons fleeing to Europe after committing multiple murders in the US should be extradited to the US, which is prohibited by Article 19.2 of the Charter. They might even want to suggest that the case for positive discrimination in favour of the ‘under represented sex’ (I quote the words of the Charter) as authorised by Article 23, is less than overwhelming. But if they express such views, the rights ostensibly granted by the Charter will not apply. In particular, the right to freedom of expression and the freedom to hold opinions and to receive and impart information and ideas without interference by public authority, and regardless of frontier, as given by Article 11, apparently do not extend to such harasses as disputing the case for positive discrimination in favour of the under represented sex. The Charter of Fundamental Rights is an attempt to lock into constitutional form a soft, social democratic view of the world. Constitutions are difficult to change. Article 54 is an attempt to make it harder for right wing curmudgeons, and in this context you do not have to be very right wing, or very much of a curmudgeon, to try to change it. The EU is a strange creature. Article 54 comes from that part of the EU’s inheritance that stems from mediaeval authoritarianism and suspicion. It is deeply illiberal, whatever the character of the rest of the Charter. Article 54 is a sufficient ground for Britain to veto the annexation of the Charter as it stands to the Treaty. The content of the Charter reflects social democratic orthodoxy. That is, of course, the current political complexion of the governments of most Member States.

I don’t have time here to go through the whole document, and I would bore you if I did. I’ll illustrate that social democratic caste by looking at the many rights set forth for workers, and comparing them with the one heavily circumscribed Article dealing with the protection of property.

Thus, everyone has the right:

to peaceful assembly and to freedom of association at all levels, in particular in political trade unions and civic matters;

... which implies the right of everyone to form and to join trade unions for the protection of his or her interests. You would need a lawyer; perhaps Michael [Shrimpton] would give an opinion on it; as to whether that allows workers, in fact, to sign arrangements that prohibit unions, which has been a popular arrangement in this country.

Everyone has the right:

to education and to have access to vocational and continuing training,

... but with no definition of how extensive the right is. Workers or their representatives must, at the appropriate levels, be guaranteed information and consultation in good time in the cases and under the conditions provided for by Community law and National laws and practices.

Workers and employers or their respective organisations have in accordance with Community law and National laws and practices the right to negotiate and conclude collective agreements and in case of conflict, to take collective action to defend their interests, including strike action.

Every worker has the right to protection against unjustified dismissal.

Every worker has the right to working conditions that respect his/her health, safety and dignity. Every worker has the right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave,

... every worker, part time workers too?
Article 34, moreover, recognises and respects the entitlement to social security benefit and social services, providing protection in cases such as maternity, illness, industrial accidents, dependency and old age and in the case of loss of employment.

By comparison, Article 17, dealing with property rights, is anaemic. I quote:

Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No-one may be deprived of his or her possessions, except in the public interest. And in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.

In the provisions dealing with the labour market, the flexible words, “unjustified dismissal”, for example, or the “provisions of working conditions that protect dignity”, are open to interpretations that expand the protection offered ... have the potential, indeed, to expand them to almost unlimited extent. In Article 17, interpretation of the flexible words, “the public interest”, or “the general interest”, is likely to contract the protection that is ostensibly offered.

Annexing the Charter to the Treaty would have the effect of locking in the provisions of the Charter. Perhaps these provisions are, as the Charter says, already embodied in other legislation. But an annex to the Treaty is more difficult to change than other legislation; and Article 54, taking away the right to argue against the provisions of the Charter, may make it impossible short of revolution. This is the real intention of the Charter.

The left leaning, social democratic orthodoxy that informs the Charter is, of course, the current political complexion of most of the governments of the Member States. It is perfectly proper that day-to-day Community legislation should be based on such a view. All democratic states are subject to the political roundabout. Governments to the left naturally propose left-wing legislation, and those of the right propose right-wing legislation, that’s the democratic process. But if one side uses a constitution in an effort to lock in its view of the world, and make it more difficult, or even impossible, for the other side to pursue its alternative legislative ends, different issues arise. An effective constitution gains its force by expressing principles that are widely accepted and non-partisan. The Charter does not follow that principle, and therefore risks placing the Constitution itself at the centre of partisan strife.

Britain should have truck with this document. We should veto its inclusion in any EU Treaty.

Thank you, Ladies and Gentlemen.

Margit Gennser, MP

A glance at the map of Europe makes an enlargement of EU towards the East interesting from the Swedish point of view. In fact, the Swedish state started off from the territory around its great lakes in the central part of the country; and long before the southern and northern areas were incorporated in the Sweden of today, Finland and the Baltic region played important roles in trade and politics. The Vikings opened up the trade with Russia, and Finland was part of Sweden for more than 500 years.

During the 16th and 17th centuries, which were the politically expansive period of Sweden, the cultural backbone of the Swedish community was running in a West - East direction, so first, when Napoleon’s field marshal, Carl-Johan Bernadotte, was appointed to succeed the old childless king in 1809, the traditional Swedish foreign policy and trade policy changed completely.

Finland was of little interest to a French field marshal, who saw a union with Norway as an excellent compensation for the loss of Finland. This idea was implemented and worked well for 100 years. During this period Sweden changed its trade patterns in many respects. Mainly because of the growth of the British and later the German markets, Sweden was transformed to a free trade country with a market economy.

The Swedish emigration to USA was considerable in the late 19th and early 20th century, and our trade across the Atlantic grew as well. However, the trading with eastern Europe was still important - for instance, the Swedish industrialist Alfred Nobel made his fortune in Russia. The Russian Revolution and the Second World War later caused great changes: Sweden lost the ancient markets in the Baltic and in Russia.

The Nobel prize-winner Gunnar Myrdal, minister of trade in the Swedish cabinet from 1945-47, explains the Swedish trade policy after the war in one of his books. His account also facilitates the understanding of the Swedish tactics concerning the “enlargement” of the Common European Market.

Already the coalition government in Sweden during WWII had negotiated with the Soviet Union about trade and credit agreements. The Swedish industry was expecting a recession after the war of the same kind as in the 1920s, and the Swedes were therefore keen on a trade agreement with Russia. These negotiations were, however, according to Myrdal, not only a matter of markets and money, also humanitarian and moral motives were important. “We had already been supporting our Nordic neighbours,” stated Myrdal, “and as Russia was almost a neighbour, we hoped to be able to build good relations with this huge nation. We also felt deeply grateful for the Russian war efforts which had helped to conquer Hitler.”

The efforts to draw up a bilateral trade agreement with Russia created problems with USA. Sweden was still not a member of the United Nations and did not take part in the endeavours to create an international trade organisation, GATT. USA therefore warned Sweden not to conclude bilateral trade agreements, especially not with the Soviet Union.

The cold war substantially changed the prevailing trade policy. Sweden decided to take part in the trade blockade against the Soviet and other Eastern European countries. The prevailing opinion within the Swedish industry, which first had been in favour of the Russian trade agrement changed, partly due to Swedish financial problems caused by slack economic policy and a fixed currency. This caused Sweden to reintroduce the earlier abolished war regulations in 1947. (This sounds strangely similar to the happenings 1990-92, when Sweden eventually was forced out of the ERM.)

Already, in the late 1940s, a political division between left and right became evident. Myrdal was a socialist, negative to US policy, and originally sympathetic to the Soviet Union. The business community and the average consumers were, of old, suspicious towards the Soviet Union. However, after the fall of the Iron Curtain in 1989, the majority of the Swedish people wanted to open up the borders and enter into trade with Eastern Europe.

The political goal for the Swedish government during the EU chairmanship has been enlargement... The motives for this are manifold; not only trade, markets and the global economy, but also cultural and historical traditions. The states around the Baltic Sea are supposed to have strong economic and cultural bonds. If one reads some of the speeches by Prime Minister Goran Persson, they give evidence that the cultural and historical dimensions are of great significance to him and the Swedish policy of enlargement. - I shall quote from one of his addresses (October 5th 2000):

“The discussion of the future of EU is very important. You are asking me about my opinion on federalism and which role the Nordic countries will have. I tell you that the way we organize our institutions is not the most important. . . The question of enlargement belongs to the really large questions. . . I point out that even if Sweden is a small country, we are not going to be silent, we will contribute with new dimensions.

“With Sweden and Finland as new members EU got a new geography and new neighbours.”

“EU got 14 million new inhabitants and 790,000 square kilometres of territory. The average GDP/head rose. New relations developed: Russia became a neighbour of EU. The changes of development of the old republics in the Soviet Union around the Baltic became in a way a local question. The enlargement of EU - to integrate Eastern Europe into the community and to end the partition in East and West - is a historical task. The possibilities of our region are great. The Baltic Region is an old dream. With enlargement EU will grow east and north. The Northern questions will be more important. In a time, when the contacts between EU and Russia must be more frequent, we who have been neighbours of Russia have relations which are lacking in Southern Europe. We are building bridges between Russia, when it comes to environment, energy, aid, migration, transports and industry. And we have a task.”

“When I went home from Russia, I passed St Petersburg. . . . I think a link Stockholm - Helsinki and St Petersburg is very interesting. S:t Petersburg and its region has a population nearly as big as that of Sweden. St Petersburg has a beauty you can compare with that of Paris, Vienna or Rome. . . . . We will visit St Petersburg in the future as we did in the 19th century. We will do business, create political alliances and develop personal relations. It is important that Finland and Sweden are working for deeper relations between Russia and EU and support the democratic development, the democratic forces and the security of Northern Europe...”

“In Gothenburg in June 2001 a new report of the Northern Dimension will be published. The Baltic is not any longer a dividing sea. It is a natural hub for trade, relations, and cooperation in Northern Europe.”

From these quotations you can deduce one thing: our government and also the main opposition parties in Sweden have a vision about enlargement. But it is a vision. You must be able to tell how a vision can be transformed into a practical solution.

The address of Goran Persson was 18 pages long. Only two of these were about practical questions, the development of EU and the institutions of EU. He said no to a federal EU, and he was relatively positive to flexible integration.

The debate of future reforms of EU can proceed in parallel with the process of enlargement, but there is no hurry. We must have time for national discussions and reflection. Has the debate started ? The answer is no. The business community is concerned.

In the Financial Times in June 7th, 2001, Percy Barnevik, of ASEA Brown Boveri, expressed it like this: “When the Berlin Wall fell in 1989, the European Union enlargement seemed just five years away. Today it still feels five years away. The business community sees enlargement as paramount to securing a stronger and more competitive Europe in the global economy.”

Percy Barnevik wants action. Goran Persson has only visions. In his speech he points out that he is not in favour of a federal solution. A flexible integration is perhaps possible. But what kind of a flexible solution? In the government's Bill of the Nice Treaty there are no answers. The arguments for accepting the treaty are very weak. The main argument is enlargement and the unification of Europe. The parallelism between the unification of Germany and “Europe” is treated as self-evident. But is it ? Of course, not. The differences are very great. The German Democratic Republic and the Federal Republic of Germany were both founded in 1949. The constitutions of the two states declared that German national unity was the ultimate aim; unification would take place in the future, when the terms were right. The integration of the Eastern European countries is something quite different and much more difficult, although the unification of the two Germanies was far from easy. In Eastern Europe, national self-determination has often led to a fragmentation of states. Only in the case of Germany did the dual process of self-government and self-determination lead to the abolition of one state and the absorption of another. But it was not a restoration of a previous normality - it was another upheaval in German history... This problem seems to be ignored by the Swedish government.

My view is that we in Sweden must ask ourselves: ”What kind of enlargement do we wish? Free trade? Free movements? A union? Identical laws?”

What are the alternatives?

Free trade between nations, without government intervention or regulation, leads to lower prices and greater overall efficiency, but the removal of trade barriers between two countries will also cause local disadvantages. If we want free trade, we have to accept these disadvantages. However, then we cannot accept CAP and regional funds. If we accept the principles of GATT and WTO, there would be no need for trade blocks. The free movements of capital, goods and services would be self-evident.

The regional blocs are erected to allow free movement of people within the bloc, but trade blocs impose new barriers at the frontiers. And these barriers are “heavier”; the boundary between e.g. Germany and Poland or between Greece and Turkey, is not only a boundary between two countries, but between markets of many hundred millions of inhabitants.

In customs unions you harmonise the customs barriers to countries outside the union. A common market has no internal barriers and the same external customs. Do you have to have the same regulations, standards, business conditions, weight and measures in a common, single market? No - you can choose institutional competition, and abolish bureaucratic harmonisation. The deregulation of EU is necessary before any enlargement. If we want to help the eastern countries in their development, EU must deregulate. EU must abolish CAP and the “acquis communautairé”. It is a tremendous task.

Let us look the other way round: from the point of view of Estonia. This country presently has no customs. As a member of EU it will have to introduce more than 15,000 new rules. It will have to pay for a huge new bureaucracy, much more expensive than the old Soviet bureaucracy.

The EU way of enlargement will curtail growth in the new member countries. Regulations and barriers work that way. If the Swedish dream of enlargement, benefiting all of us with higher growth and better quality of life - if this is to come true, then we have to work for deregulation and stop the ever-growing bureaucratic 'so-called' harmonisation of the nations of Europe.

The European “Miracle” may be explained by our geography. It was not suited for building empires like in Asia. A lower population density may have helped to avoid the distortions of political centralism. The great differences of Europe created important consequences, which stemmed from extensive trade.

Today we have been discussing “Alternatives to EU”. I do not know the answers - but I have one advice: Take care of the European differences!

Dr Anthony Coughlan

Ladies and gentlemen, I’m very honoured to have the opportunity to speak at this conference organised by the Bruges Group. I’m a board member of the Team Co-ordination, the European alliance of EU critical movements, which links together some 40 or so groupings throughout Europe – some in Eastern Europe, some in Western Europe – in opposition to some or other aspect of the EU, and the Bruges Group is one of the affiliates. And so too was a ‘No to EU’ movement in Estonia. So that’s one reason I’m happy to be here. And the other reason is that a number of individual members of the Bruges Group were good enough to give donations to our campaign – when we were having the Nice Treaty referendum last May and June – and we’re very grateful for that.

I’m a long term Euro critic. I remember speaking here in London at the ‘Belvoir Hall’, which I think is somewhere over in the East End, away back in 1975 – with Tony Benn on one side, and Sir Richard Body on the other – at the time of the British referendum against continuing in the EU, and as an expression of solidarity with British democrats. Because, of course, there is an international movement of which the Team Grouping is an expression; an international movement in defence of international democracy, which exists in Estonia, in Britain, in Ireland, in France, and every other country. It’s a growing international movement against the pretensions of Brussels to set up some kind of ‘quasi superstate’ onto the brimming hegemony of Germany and France.

A few words about Ireland: Ireland has long had that extraordinary Europhile political class, yet at the same time public opinion has been growing more and more Euro-critical with the years, particularly with the last 10 or 15 ... 10 years anyway. And so there’s a gap between the political class and the population, which of course the Nice Treaty referendum result showed: with 54% of those voting, voting ‘NO’, and 46% of those voting, voting ‘YES’. But the same thing is evident in other countries. It was evident, obviously, in the Danish referendum on the Euro, in September last year.

Historically, we’ve been 30 years nearly in the EEC, with Britain and Denmark, and we always regarded Brussels as a source of money – because, of course, Ireland sells most of its agricultural output and therefore gets a lot of money from the Agricultural Policy; whereas you buy your food and you have to pay out money to the Agricultural Policy, so there’s a clear difference of orientation there. And, over the years, Ireland has got a lot of money, mainly through the Agricultural Policy, but that’s ceasing now. It’s expected that Ireland will become a net contributor to the Brussels Fund for the next 3 or 4 years; and there was no money in the Treaty of Nice, which is one reason why there was no particular enthusiasm for it. In fact, there was a decline of influence, less voting, because, of course, the voting arrangements had been rearranged to reduce the influence of the smaller states. So there’s loss of influence, no money, and one's clearly moving into the situation where the EU becomes, you know ... there’s a fundamental loss of democracy. So there’s nobody relevant in the background. But, remember in Amsterdam – the Amsterdam Treaty 3 years ago – we got 40% ‘NO’: so Euro-scepticism has been growing.

The political class: yes, they were so enthused, so incredibly ‘europhiled’, that 3 years ago the Governor of the Republic of Ireland, supported by all of them ... most of the politicians ... agreed to join the Euro Zone. 160 out of the 166 members of the Irish parliament voted to join the Euro Zone: on the assumption the UK would be in it in a couple of years. And this is the paradox, because we only do 1/3 of our trade with the rest of the Euro Zone. We do 1/3 of our trade – trade being imports and exports together – with the other 11 Euro Zone countries; we do broadly 1/3 of our trade with the UK; and we do another 1/3 with America, and the rest of the world. Our two principal single export markets, and the ones that have been growing and booming in recent years, have been the USA and Great Britain ... our two principal markets outside the Euro zone, yet the rest of the politicians signed up.

And there is now growing disquiet because we have had extra inflation; due to the fact that the interest rate regime is quite unsuitable to us we have had a boom in Ireland. In recent years we have halved interest rates. This has led to a rise in inflation, a doubling of house prices on average over the last four or five years, and so on. Which has been aggravated by the interest rate regime, the cut in interest rates following our joining of the Euro Zone; which, of course, suits Germany which is in recession, but doesn’t suit Ireland which has had a boom. So we have a clear example of the unsuitability of the ‘one size fits all’ interest rate regime, which the membership of the Euro Zone entails. And there is real disquiet now growing among our political class at the prospect of being in the Euro Zone without the UK, and without America, of course ... we do most of our trade outside it. Most Irish economists were against this step, but the politicians went ahead, and that’s an example of their Europhilia. In thirty years that Ireland has been a member of the EU, I can’t think of a single example of an Irish politician among the main parties either openly dissenting from, not to mind resigning from, their party on an EU issue. That’s a comment on the sociology of Irish political parties and their uncritical attitude. But Irish public opinion has been getting more and more worried that the thing has gone too far, and that was very much expressed in the Treaty of Nice referendum.

There were many issues that induced Irish people to vote ‘no’, many issues. There’s quite a lot of concern about the militarisation of the EU because the Irish state has always been a neutral state, and was not involved in World War 2, as you know. That is one important issue. A substantial body of traditional catholic opinion was concerned about the implications of adopting the Human Rights charter (the EU Charter of Rights, which our previous speaker spoke about) as part of an EU constitution down the road: giving the European Court of Justice, that ‘court with a mission’ as one of its judges once said, ultimate decision-making power over the vast area of human rights, which impinges upon everybody, as against national supreme courts with national constitutions, not to mind the European Court of Human Rights in Strasbourg. So there’s quite a bit of concern about that issue.

An issue which our group, my own group, particularly brought to the fore, or sought to bring to the fore, was to appeal to traditional ‘YES’ voters by pointing out that the Treaty of Nice divides the EU, or opens a legal path to the division of the EU, into two parts. An upper tier and a lower tier, or an inner club and an outer club, because it allows an inner group of 8 states to do their own thing: to adopt an EU constitution, to set up a quasi-EU federation, to harmonise indirect taxes, or to do whatever else they like – even if the rest disagree. Up to now, insofar as you could speak of the EU as being a kind of a partnership of equals, that has rested on the principle that every state had a veto on fundamental change. Nothing fundamentally new could be done without everyone agreeing. But the Treaty of Nice breaks away from that, by allowing an inner group of 8 to do whatever they like, even if the rest disagree. That’s the necessary legal path to allowing Germany, France and the rest to set up a quasi-federation for an inner core. And that’s the political response of Germany and France to the possible enlargement of the EU; or a major enlargement – because a few extra states could be got in under the Treaty of Amsterdam so, in that sense, the Treaty of Nice is not legally necessary for enlargement. But as Romano Prodi said in Ireland, when he came to visit Dublin a week after our referendum: “It’s politically necessary.” Politically necessary for whom? For Germany and France, to allow this inner group to be set up: to use the EU institutions for their own special purposes, and to confront the rest, either the existing 15 aided against 7, possibly, or 8 out of 20 if the EU ever got to that size. To confront the rest with continual, political, economic faites accomplis. So we highlighted that in our campaign. We had ‘Vote NO to hold the EU together’, that was the kind of slogan we put, or our own particular group put, and I think it had an effect in appealing to middle ground opinion, and swinging a significant block of people to the ‘NO’ side in addition to the interests I mentioned earlier – and that brought us up to the 54%.

The Irish government was shocked. It went around like a decapitated hen, it didn’t know what had happened, it didn’t expect to lose the referendum. Of course, it should have said to the other EU states: “We’re sorry about it, we regret this decision of the Irish people to refuse to ratify the Nice Treaty, and therefore the Irish State doesn’t intend to ratify the Treaty, and therefore it cannot come into force, and therefore you have to start a de-ratification process.” Instead, within an hour of the referendum vote, the Irish prime-minister, Mr. Ahern was on the phone to Mr Chirac and the others saying: “Don’t take any notice of this, you go ahead, you ratify the Treaty and we’ll put it to the Irish people down the road and get them to change their mind.” And that’s the present position; and so they’re going to re-run the Nice referendum in the Republic of Ireland, in probably about a year’s time. I would say October, or November next year, when all the other EU states, including your own, will have already ratified the Treaty – and that fact will, of course, be used to put pressure on Irish voters. ‘Are you going to hold everyone up, every-one else has ratified it, are you going to refuse?’ ‘You’ll be thrown out of the EU’, and messages of that kind will be put.

On the other hand, it’s by no means certain that this ploy will succeed, one can’t be sure. There has to be a general election in the Republic of Ireland in a few months, there’ll be a new government in office next year, and we’ll have joined the ‘euro’, God save the ‘mark’! And we’ll have had experience of the delights of the Euro Zone. Whether that will make people more Europhile or Euro-critical, it’s impossible to say, but it’s certainly going to have an affect on opinion by this time next year. And, of course, the key issue in the ‘Nice Mk. II’ referendum in the Republic of Ireland will be not so much the nitty gritty of the Treaty of Nice, which has been extensively examined in the referendum of last May/June, but the integrity of the Irish constitution. Do you respect the referendum process? Do you respect the right of the Irish people to say ‘NO’ to an EU treaty? Do you have self-respect, and not have to play to the previous ‘YES’ voters, as well as the ‘NO’ voters to stand by their previous decisions?

So the politicians are very concerned about the situation, and a reversal of the Irish ‘NO to Nice’ is by no means certain in the second round, which will be in about a year’s time. We will be fighting, of course, we will be looking for international solidarity in it, in relation to it; there’ll be a huge international interest in it, because there’s no doubt that, if the Irish say ‘NO’ a second time, it will be the end of the Treaty of Nice. But the present ploy is that all the other states ratify the Treaty, and then use that fact to put pressure on the Irish voters. But whether that pressure will work or not, only time will tell. All these other considerations will come into play.

So those are some points relevant to the Irish situation, and again, I’m very happy to have the opportunity of putting them before you, and to thank you for the support and solidarity that you have shown us in the past. And when you have your [euro] referendum, if you do have ... I heard this morning from somebody who is quite close to senior Labour party circles that they’ve pencilled in March as your possible date for a referendum in Britain; whether that’s true or not I don’t know, but it tends to be postponed ... we’ll be very happy in Ireland to come along and say, in democratic solidarity, ‘keep out of the ‘Euro’ in your own interest, in our interest, and in the interest of all democrats everywhere.'

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