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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.

The EU Constitution and the UK's Role in Europe and the World: International Conference 2003

Free and global future or an EU Province?


Lord Blackwell
Christopher Booker
Hynek Fajmon MP
Dr Ruth Lea CBE
Barry Legg



Hynek Fajmon, MP - Czech Republic

A view from New Europe



Ladies and gentlemen,

It is great honour for me to speak here about European integration. As a Czech MP for Civic Democratic Party and also observer in the European Parliament I will represent views of my political party and these are my personal views. It is not always the same thing in politics, but it is the case now.



20 years ago, I was a 15 year old boy living in communist Czechoslovakia behind the Iron Curtain and had no chance to visit London. 10 years ago, I was a research student at the London School of Economics in the Government Department not far away from here studying political heritage of Margaret Thatcher and writing biography of this great political personality. Now, I am a Czech MP and an observer in the EP.

What has changed over these 20 years? I think that the best description of the change is the description of one price - the price to travel from Prague to London. 20 years ago, there was no price for such travel for me. 10 years ago, the price of return bus ticket was 100 pounds and it took 20 hours to travel between Prague and London. Today, the price of return air ticket is also £100 and it takes less than 2 hours.

Why this is important for our discussion? I believe that it is very important because it demonstrates in a very simple way the victory of the market economy and defeat of communism. Remember that communists have always argued that the paradise will come on Earth once we abolish private property and abolish money and prices. My country tried to implement that kind of policy and I can tell you that it was no paradise at all. Right were the people who argued that the way to prosperity is based on private property, free market-economy and the rule of law.

Czech way to Europe

My country was part of the communist bloc until 1989 locked behind the Iron Curtain. There was very little chance for Czechs to visit the West. In fact it was a privilege given sometimes to people who were strong supporters of the communist regime and only very seldom to others. It was therefore no surprise that the main slogan of our velvet revolution was "Back to Europe".

Long decades of isolation had strong negative consequences in politics as well as in economics, education, culture and other sectors of Czech society. Western Europe was not a frozen and static society as we were and that created deep division between both sides of Iron Curtain. This division is gradually being eliminated already 13 years. We Czechs, Poles, Slovaks, Hungarians and other Central and Eastern Europeans are trying to catch up. We have privatized more than 80% of our economy over one decade. We have built all institutions of democratic society and market economy. We have also reformed social, healthcare and education systems. Simply said we have reformed almost every part of the public life and as a consequence all our citizens had to adapt themselves to new environment. These changes were inevitable but also painfull for many people.

It seems to me that Western Europeans underestimate this process. I have to exclude partly from this critique the United Kingdom. You have your own bad experience with "welfare state" and you have destroyed or reformed it under strong leadership of Margaret Thatcher during 80´s. This process however did not occur in majority of other Western European states. Especially French and German political elites are the main obstacle to such process. Both sides of their political spectrum in these states are persuaded that the solution of the welfare state crisis is "MORE EUROPE". And they constantly push forward this agenda originally under Delors and now under Giscard d´Estaign.

Both sides of their political spectrum in these states are persuaded that the solution of the welfare state crisis is "MORE EUROPE". And they constantly push forward this agenda originally under Delors and now under Giscard d´Estaign.

The core idea of "More Europe" ideology is following: "Any problem will be better solved on European level rather than on national level." This policy is good for those who are well positioned in Brussels and bad for those who have bad position there like the UK and those who have no position there like us. Our German and French partners know economics better than we think. They especially know what is "economy of scale" and how to create and implement it in favour of their producers. The most efficient way to realize "economy of scale" in European context is to implement apropriate economic, social, enviroment and other standards. These are prepared in such a way that supports economic interests of those who are the strongest in EU. They call themselves "Festkern" and you know who they are. It is natural that they do it, because they are defending their interests, but they should not try to persuade us that such policy is also good for us. It is not. That is why we want to be inside EU and have also possibility to defend our interests. We really do not like the situation when we have to adopt all EU legislation without having a possibility to take part in drafting it.

Our German and French partners know economics better than we think. They especially know what is "economy of scale" and how to create and implement it in favour of their producers. These are prepared in such a way that supports economic interests of those who are the strongest in EU.

The basis of asymetrical and unjust relationship between EU and future member states from Central and Eastern Europe is defined in association agreements and also in accession treaties. When I say that relationship between EU and future member states is "assymetrical and unjust" I mean that our markets had to be opened immediately for EU companies but not visa versa and that we will not get the same conditions in EU as current members. Our still very weak companies compete with strong Western European companies on one single market. Our still weak farmers will compete on single market and will get only 25% of CAP money with western European farmers who are receiving 100%.

Our markets had to be opened immediately for EU companies but not visa versa... Our still very weak companies compete with strong Western European companies on one single market. Our still weak farmers will compete on single market and will get only 25% of CAP money with western European farmers who are receiving 100%.

Please understand me correctly, I am not a protectionist. I do not want any economic protection for Czech people. I strongly believe that Adam Smith was right that free trade is the best way to prosperity. What we do not like is unfair competition. We want same rights and same obligations. And this will be the basis of our European policy for years to come.

European Constitution
Maastricht, Amsterdam and Nice Treaties framed the current structure of European Union. These treaties have two common features: Firtstly they created basis for further "deepening" of the EU and for more transfers of national competencies to Brussels. That happened under the umbrella of "MORE EUROPE" policy promoted by European federalists. The last move in that direction is now the draft European Constitution. I have to say that deepening of EU has always been in clear contradiction to EU enlargement.

We wanted to enter EU as soon as possible because we wanted to include our interests into European legislation process. But this was not possible because many political forces in Western Europe did not want to give up their comparative advantage of setting the rules of the game.

They knew that the final outcome of european legislative process would be different once we, Poles, Slovaks, Hungarians and others are in the club. And that is why they tried to delay enlargement process. I remember president Chirac visiting Prague in 1997 promising EU enlargement in 2000. Why this promise was not kept. I believe that the answer is very simple. European federalists wanted to deepen EU as much as possible and present that as fait accompli to newcomers. And that actually happened.

We wanted to enter EU as soon as possible because we wanted to include our interests into European legislation process. But this was not possible because many political forces in Western Europe did not want to give up their comparative advantage of setting the rules of the game.
The European Constitution is another step in the same federalist direction.

Those who rule in EU did not want to share power with newcomers. They want to create structure which will guarantee their power in the EU forever and exclude any chance to current outsiders and future members to change that.

Required solution for such objective is written in the draft European Constitution. It is especially written in decision-making rules and in transfer of further competencies from national capitals to Brussels.. Those who rule in EU did not want to share power with newcomers. They want to create structure which will guarantee their power in the EU forever and exclude any chance to current outsiders and future members to change that.

My party does not like this direction of European integration. We do not want to give up more and more parts of our national sovereignty to Brussels and we do not want to be subordinated to European law which will be approved by "qualified majority" which already exists and we are not part of it. We feel very strongly that we are part of minority which will be constantly overvoted and will have only one simple right "to follow instructions". And that is something we do not like. That is why we want to keep veto right as long as possible in as many procedures as possible. We shall see what kind of text will emerge out of IGC. But we will for sure require referendum about European Constitution and if it remains as it is now we will recommend to our supporters to vote NO.

What to do?
There are many political forces in Europe which are not satisfied with current eurofederalist agenda. The problem is that they are organized well only on national level. It is no surprise because they believe in nation states and democracy. They are however badly organized on European level. That is crucial problem. If we are not well organized on European level we will certainly loose the game. The advantage of European federalists is good organization and loyal support which they give to each other. We need to adopt similar approach.

It is great problem that there is no strong antifederalist centre right political group in the European Parliament. The European Peoples Party is very federalist and the other groups are very small. We would like to see such group to emerge after 2004 European election. That is the why we have signed Prague declaration of ODS, Prawo a spravedliwosc and Conservatives. I hope that our effort will be succesful.

It is great problem that there is no strong antifederalist centre right political group in the European Parliament. The European Peoples Party is very federalist and the other groups are very small. We would like to see such group to emerge after 2004 European election. That is the why we have signed Prague declaration of ODS, Prawo a spravedliwosc and Conservatives. I hope that our effort will be succesful.
Thank you for your attention.

Lord Blackwell, Chairman, Centre for Policy Studies
The European Constitution and the Future of Europe
I am delighted to have this opportunity to speak about the proposed European Constitution and its implications. All too often serious debate about the future of Europe is clouded by misrepresentations about the true significance and motives of the proposals being put forward. I fear that has been true so far in discussions about proposed European Constitution.

And while I will speak primarily from a UK perspective, I believe the same issues arise for many other countries represented in this gathering today.

Initially we were told that the Constitution was an unimportant tidying up exercise. Now we are told that there are important issues at stake, but that the government has set out clear red lines to protect our interests. By implication, if the government claims victory on its red lines - as it inevitably will - we will be assured that the rest of the Constitution contains nothing significant. Nothing could be further from the truth.

We should be clear that there are two very different visions for the future of Europe on offer. Both are respectable views to hold, but they are not the same.

One vision of Europe, represented in this constitution, holds that common action across Europe is always a source of strength - whether in economics, foreign affairs, transport, energy or almost any other aspect of domestic policy linked to the European Union's very wide declared objectives.

The goal is to forge powerful European institutions capable of taking common action, and to legitimise that centralised power by the development of the European Parliament to be the direct and primary expression of the democratic will of the people of Europe.

For as the constitution makes clear, the EU sees itself as the successor to nation states as the democratic government of Europe - directly empowered by and answerable to its citizens.

Article 6 defines Europe for the first time as a legal entity in its own right, capable of exercising sovereign power directly rather than through the member states.

And Article 45 then sets out the basis for that sovereignty :

Citizens are directly represented at Union Level in the European Parliament.

(Whilst ) Member states are represented in the European Council and in the Council of Ministers by their governments, accountable to national parliaments.

  • in other words, member states represented in the equivalent of a senate are complimentary to the direct representation of the people in the European Parliament, but are not the primary source of legitimacy.
  • And notably, Article 25 makes clear that it is the European Parliament to whom the Commission, as the executive arm of these institutions, is responsible; and it is the parliament to whom is entrusted the ultimate democratic power of forcing the executive to resign.

Finally Article 10 sets out clearly that the Constitution and laws adopted by the European institutions shall have supremacy over the law of the member states.

This then is what this constitution seeks - a set of European governing institutions - Commission, Parliament ,Council and Court - exercising power in the name of the European people, and overriding national laws and parliaments within the areas of sovereignty ceded to them by that constitution.

This it is true is not a new vision or new goal - it has been the objective of most of our continental neighbours since the common market was first created. What is new is the clarity with which the European Constitution reveals this end point.

But before we sign up to this, we need to question whether this objective of common action across a European block is likely to benefit Britain in the world of the 21st Century. Self evidently, common action across Europe only strengthens Britain's hand if it is common action with which we agree. If it is not, it dilutes our influence and limits our freedom of action.

I for one simply do not believe that at this point in time, or the foreseeable future, that our interests are always likely to be aligned with many on the Continent - nor should they necessarily be so given our different histories and cultures. And I believe the EU model that would force us to give up our independence of action to join a stronger block -because we are too weak to stand on our own - I believe that model is old thinking, a legacy of the last century's world of superpower conflicts and trade blocks that are no longer relevant to a much more global and intertwined community of nations.

Take our economic development, for example. Europe is no longer, if it ever was, the most important trading markets for driving UK growth.

The strength of the EU may well have been useful in helping to negotiate away world trade barriers, but free trade across most of the world is now close to reality.

And in a free trade world, we have much more to gain from growing our share of the faster growing Far eastern markets - particularly China and India, which over the next century are likely to play the same role as the engine of world growth as the US did in the previous Century.

While some on the continent recognise those realities, The EU is still dominated by protectionist mentality and by the belief that can support an inflexible, high cost social market economy so long as equal costs are imposed on everyone across Europe.

So long as that mentality dominates, it cannot be in our interests to adopt policies that lock our economy into their slow growth and their uncompetitive and unfunded social costs.

Of course the government says it will fight to retain national control over tax. Yet even for those outside the Euro, this constitution provides substantial scope for the European Union to intervene in our economic management - for example in Article 14 which gives it a role in coordinating economic policy, and declares that member states shall conduct their economic policies to take account of the common interest, and also requires member states to coordinate their employment policies within the Union.

We already know to our cost the kind of costs and bureaucracy that have arisen out of existing European directives such as the working time directive, or the requirements for worker consultation. And even in tax, a paper published yesterday by the CPS shows how successive decisions by the European Court are already eroding the myth that we can maintain control of our national tax policy.

There are similar issues about the desirability of seeking common EU action in foreign affairs and defence. The EU is dominated by the desire to build a power block to rival the US. But in many ways our perspectives on the world and our interests are more closely aligned with the US than with our continental neighbours. And in a world where the threat of superpowers has been superseded by the threat from fragmented terrorist groups and weapons of mass destruction, our security depends on truly international alliances rather than focusing on common a common defence force in Europe.

Once again the Government says it will veto any further extension of EU power. But the draft constitution already gives he Union the competence to define and implement a common defence and security policy under article 11, and in article 15 declares that where the Union has agreed a common foreign and security policy, individual nation states will be required to support that policy and refrain from any action which undermines it. And while the high level policy may need unanimous approval, decisions on executing it will be taken by a majority vote.

While UK may retain fig leaf of a veto over foreign and defence policy, I would argue that forgoing any element of our freedom in order to strengthen a common European voice is unlikely to strengthen our voice in world - it is more likely to dilute our voice and constrain our ability to act.

But the constitution, of course, seeks common action well beyond those areas. Whatever Ministers in the UK may have represented, the additional powers ceded to the common European institutions are very substantial indeed - even excluding the areas bounded by the government's red lines.

For the first time, a whole catalogue of policy areas not directly to do with functioning of the single market are moved into a class of so called 'shared competences'.

As well as the wide remit of the internal market, this list of areas where the European Union can legislate will now include

  • justice and home affairs, including the workings of the courts and legal system
  • economic and social cohesion
  • social policy
  • environment
  • transport
  • energy
  • and public health amongst others

And while described as 'shared competences', this is really a misnomer. For shared competence is explained in article 11 as follows: 'In an area of shared competence, the Union and Member states shall both have the power to legislate... (but) Member states shall exercise their competence (only) to the extent that the Union has not exercised its competence' - ie in each of these areas European institutions have power to legislate directly wherever they think they should have a role, and states can only legislate in those areas EU has decided to give back to them.

What is more , under article 22 , the constitution makes clear that all such decisions will be by QMV except for a few areas specifically exempted - so there would be no power of veto, if for example, EU collectively decided that it wanted to take control of North Sea Oil under common energy policy or mandate restrictions on car use as part of a common transport policy.

And under article 32, European Laws passed by the European institutions may be binding on member states in their entirety and directly applicable without ever passing through UK parliament.

This represents a huge extension of European power, moving legislative power on almost every aspect of our domestic agenda to the institutions of the European Union, where we will have just 9% of the votes.

Of course the government claims that this is counterbalanced by an increased role for national parliaments. But this amounts to no more than a weak yellow card. Under the protocol on subsidiarity, if one third of parliaments lodge a complaint that the EU action goes against the spirit of subsidiarity, the Commission is required to consider their complaint. But it then sets out that the Commission, having considered these objections, can then simply decide to press on regardless.

So it may literally be true that constitution only allows Europe to act where granted competence, but in practice scope of competences is so wide that very little is specifically exempted. As opposed to nation states controlling the agenda, nation states are left as the junior partners - only allowed to legislate in the limited areas left to them by the European Union.

And even if the government succeeded in all the red line objectives it has set out- retaining national vetoes on tax, foreign policy, defence, social security - all of the implications I have set out for other areas of sovereignty would still hold.

And I have not yet mentioned the infamous flexibility clause, Article 17, which allows the Council of Ministers to add new competences at any time without reference back to national parliaments.

Some may this is think interpreting text of constitution in most unfavourable way - but we need to recognise that this is a legal constitution we are being asked to sign up to which will represent the highest legal authority on any point of issue, not some informal rules for joining a golf club. As the constitution spells out, its laws will have supremacy in any area the European Court judges they apply. There will be no redress for not reading the fine print on the contract.

And its not only the specific competences we have to look at. We have learnt to our cost that even generalised language set out in previous treaties can be used to justify vast extensions of power. In that context need to look carefully at the Values and Objectives set out opening articles of what would become our governing constitution- include creation of social market economy, full employment, social progress, combating social exclusion, promote social justice and protection, solidarity between generations; economic, social and territorial cohesion.

When combined with Charter of Fundamental Human Rights would create unlimited scope for laws we might wish to pass to be struck down as contravening objectives of constitution to which we are party, facilitated by the role of the European Court which can be relied upon to take every opportunity to extend the limits of European power.

  • How many of key reforms of Lady Thatcher's government - denationalisation, union reforms, withdrawal of subsidies from loss making industries, sale of council houses - are likely to have passed the test of European Court's interpretation of market economy, social cohesion ?
  • How many of even this government's reform measures which built on that legacy would equally fall foul?

Again not new, but this time from a new and even more powerful legal base than that provided by previous treaties.

In many of the Capitals of Europe, this description of European goals and objectives - the creation of powerful European institutions to create and enforce common actions - would not be contested - it would be acknowledged and welcomed. That is why the Laeken declaration stated unambiguously 'The Union stands at a crossroads, a defining moment in its existence. The unification of Europe is near.'

The fact that the constitution achieves that is confirmed by the President of the EU, Romano Prodie, who has declared:

"The Constitution is a big change from the basic concept of nation states. It's a change of centuries".

And this is echoed by the Belgian Prime Minister, Mr Verhofstadt, who states:

"The Convention's draft is quite rightly accorded the title of a Constitution: it is more than a treaty-it is the capstone of a federal state".

But before we accept that as desirable for Britain, or indeed other members of the EU, we should recognise that there is another vision for Europe - and one that many find more comfortable and realistic.

That alternative vision is of a European Union of free nations, trading together, cooperating together and growing closer together in harmony and friendship - but where democratic, sovereign power remains close to the people in the Nation States, and where the institutional structures of Europe are limited to the secretarial and administrative roles needed to develop the single market and support the European Council.

Before we sign up to the proposed constitution and all it entails, I do believe we now need a serious debate about both alternatives. Both are respectable views to hold, but my own judgement is that only the second offers a viable and stable structure in the near term.

The first reason is to do with the nature of democracy. I simply do not believe one can operate democratic government with popular consent unless there is a nation that accepts they are a common people - where decisions taken by government operating under principle of majority rule are accepted as the common will by those who disagree, even if they themselves may be disadvantaged. In the UK, despite the tensions that still exist in Scotland and Wales, we do now have an electorate that accepts taxes being raised in one area to be spent somewhere else, or economic policies that have differential impacts around the United Kingdom without many people objecting that some local region is being oppressed or neglected.

But I fear that differences across Europe - and between Britain and continent - are still to great for that to be true. While we are all part of the Western cultural heritage, still have very different social attitudes - attitudes for example towards work and leisure, and the role of the state. With such differences still between nations of Europe, the danger is that a single remote government enforcing common policies and judgements will be see as operating on behalf of one nation or group at the expense of others, and its actions will exacerbate national tensions rather than reduce them.

You cannot legislate common action onto a group of people in a free society unless there is a fair level of commonality to begin with, and an acceptance of belonging to the group. Without that consent, as the experience of the Soviet Union, Yugoslavia, and many other historical precedents show, common action can only be enforced by a level of centralised control and repression that is ultimately unstable.

The second reason, from the British perspectives, is the confidence we have in what constitutional and institutional structure is most likely to defend are personal freedoms and liberties. Many of our neighbours have much less experience of democratic government, with a background of dictatorships or imperial domination within living memory. Some of these for cultural reasons are also more willing to accept a powerful state overriding rights of individual - rights that that anglo-saxon and perhaps anglo-scandanavian culture hold so dear. I am not sure that, given the choice, most people in Britain would swap the security of the laws, institutions and democratic conventions we have built up over centuries for the paper thin security of a European Constitution that will override them.

And then there are the practical economic arguments, where, as I have already noted, much of continent still embraces models of social market economics that are directly counter to the direction of enterprise economics that UK fought so hard to rediscover at the end of the last century, and that many accession countries have rightly seen as their goal.

I understand why, for some of neighbours, these arguments may seem less strong. They may feel they have less to lose by submerging their nationhood, and more to gain from common borders.

But for UK at least they are a watershed. Future generations will not understand if we lightly discard our political freedoms and economic gains in order to gain Entry to a European Union that fails to protect those liberties or sustain our enterprise economy.

The important thing is that we do not shy away from the debate, or dismiss the arguments as unimportant. It will not be enough for the Government to claim they have defended some arbitrary red lines, and that rest of the constitution represents a British negotiating victory.

That is why I and other member so the House of Lords have made clear that if government does not itself offer a referendum on the European Constitution, we will seek - and I believe get - cross party support in the House of Lords to amend any Bill the government brings forward to ratify the Constitutional Treaty so that it requires majority support in a referendum before it becomes law.

And I hope that many people, up and down the United Kingdom, whatever vision of Europe they support, will support that call for a national debate; and that those calls will be echoed in every other current and future member of the European Union before it I too late to change direction.


Christopher Booker

The European project

If I had to choose a text for what I want to talk about today, it might be the article which last Sunday appeared on the foreign news pages of my own newspaper, the Sunday Telegraph, by one of your speakers this morning, Daniel Hannan.

Dan began his piece by saying that, in all the talk and speculation about the forthcoming European constitution, we may be forgetting to ask a very basic question: is the EU actually any good at doing what it already does?

Dan put his finger there on what is one of the three greatest assets of the whole 'European project'. That is the way, for decades now, its supporters have consistently managed to focus almost all the debate over 'Europe' on things which may or may not happen in the future, rather than on what it has already become and already is.

For years we've constantly been told that when, sometime in the future, - when we join the Common Market, when the Single Market arrives, if only we can get into the euro - all sorts of wonderful benefits will follow. By keeping attention fixed on the imaginary future in this way, this has the huge advantage that no one can ever be shown to be right or wrong, because the hard evidence is not yet there to prove it.

But if we look at how it actually operates in practice - if we look at what the CAP is doing to our farms, or at what the CFP to our fishermen, or at what all those Single Market regulations are doing to our industries - then the picture is very different. So the important thing is always to keep people's attention focussed on that 'radiant future', as we used to say in the good old days of the Soviet Union.

A second great asset of the EU was illustrated by the fact that Dan's piece last Sunday was published on the foreign news pages, as is most reporting of the EU in the British press. But the whole point about the EU and what goes on in Brussels is that it is not foreign news. It is the government of our country. President Chirac and Silvio Berlusconi and Romano Prodi are not foreign leaders. They are part of our own government, helping to shape the policies which govern our affairs and to make our laws - the kind of thing I write about in the Sunday Telegraph every week.

The third great asset of the EU, of course, is that it is incredibly boring. It is the most complex, labyrinthine, incomprehsible system of lawmaking and government ever devised by the mind of man - and the very fact that it is so stupefying tedious is one of the chief reasons why, in the past 50 years, the whole 'project' launched by M.Monnet back in 1950 has got as far as it has. Because it means that astonishingly few people not directly involved in have ever had the patience really to study it and see it for what it is.

But that is what I have been trying to do for much of the past year or two, with the invaluable assistance of my friend and colleague Dr Richard North. It may not surprise you that what I want to talk about today is the book we recently published, which in a way is the fruition of everything the two of us have been researching into and writing about the European Union over the past ten years.

Our book is called The Great Deception: The Secret History of the European Union, and I'm afraid I'm going to be quite shameless in talking about it, for three reasons. Firstly because, apart from a stupendously silly little piece in last week's Spectator, no one has yet bothered to review our book, although it has somehow managed to sell 4000 copies. Secondly, because one cannot really understand what all this debate over the constitution and enlargement is about, without understanding how we arrived at where we've got to. And thirdly because I confess that, in putting this book together, I personally learned so much that I had never known before - not least thanks to the titanic feat of research performed by my colleague - that I am fairly confident that a lot of people will find it as surprising and interesting as I did.

I wonder how many of you saw that production by the Reduced Shakespeare Company, in which a group of American actors summarised all Shakespeare's 37 plays in two hours. What I want to do in the next ten minutes or so is something similar. I want to summarise just some of the headline points in our researches into the history of the European Union which did most to change our own understanding.

What our book firstly tries to show is just how vital it is to grasp that the core idea behind the project has always been the need to set up a 'supranational' form of government for Europe, which had the power to overrule national states; and how this originated back in the years after the First World War, with a tiny group of senior officials who were working for the League of Nations in the 1920s.

One cannot properly understand the European project without understanding that this was where it all began, with the League of Nations. The first blueprint for what was to become the EU was produced in 1929 by a British civil servant, now almost forgotten, called Arthur Salter. His model was the League itself, with its four part structure - a secretariat, a Council of Ministers, an Assembly and a Court of Justice. But the one thing he and his close friend Jean Monnet, who was number two in the League hierarchy, were totally convinced of was that what made the League of Nations a failure was that it did not have the power to overrule national governments. The supreme enemy in their eyes was the national veto and what they contemptuously called 'intergovernmentalism'.

What our book then shows, much more fully than any history written before, is just how crucial Monnet's role was behind-the-scenes in masterminding every stage of the 'project', right up to the 1970s.

It shows how irrelevant to a proper historical understanding are those supposed 'Nazi links' to the 'project'. The 1939-45 period was important. But only because the war gave Monnet the chance to lobby for his supranational project, not least in America, with those, such as the Belgian politician Paul-Henri Spaak, who would subsequently play a key part in helping him to realise it.

It was also during the war that - as Lindsay Jenkins did much to bring out - that another key player entered the story, the Italian ex-Communist Altiero Spinelli, who wrote in 1941 that the post-war construction of a United States of Europe would have to take place in the shadows; and that only when it was all but complete could the project come out into the open, with the calling of a 'convention' to give it a 'Constitution'.

The book then shows how and why the first two post-war attempts to create a 'United Europe' failed. One, inspired by Churchill, led to the Council of Europe. The other was inspired by the Marshall Plan. Both of these got nowhere because they remained intergovernmental - despite attempts to hi-jack them for Monnet's 'supranational' project by his allies, notably Spaak.

The book shows the true story behind the third attempt, which succeeded, Monnet's coup d'etat in setting up the European Coal and Steel Community, intended as the template for the future 'government of Europe', based on Salter's 1920s blueprint.

It shows how Monnet stopped at nothing to ensure that Britain was kept out of his new Coal and Steel Community, for fear that, as the great champion of intergovernmental co-operation, Britain would sabotage his 'supranational' plans.

It shows how Monnet and Spaak deliberately hid their plans for a complete political union behind the pretence that its next stage was just a 'common market', again deliberately ensuring that Britain could not join.

It shows just how and why Britain decided to apply for membership in 1961, now with Monnet's full behind-the-scenes support; how a key role in getting Macmillan to apply was played by President Kennedy, under the influence of his main adviser on Europe, George Ball, who had long been one of Monnet's closest allies; and how, as Lionel Bell began to bring out a few years back, Macmillan and Heath were both made fully aware that the aim was political union, but decided for 'presentation al' reasons to hide this from the House of Commons and the British people.

The book then shows the real underlying reason why de Gaulle needed to veto British entry in the 1960s, until he had finally secured a Common Agricultural Policy which he was convinced was the only way to save France from a massive flight from the land, social chaos and a Communist takeover.

It shows why, in 1969, France then needed Britain to join, as part of its grand plan - to help fund a CAP which had been specifically designed to benefit French farmers, and to provide a market for France's food surpluses.

We then come to the sorry inside story of how Heath deliberately deceived the British people in the lead-up to taking Britain into the Common Market in the early 1970s, when he was well aware that preparations were already being made for economic and monetary union and political union. This also includes the first fully-documented account of how Heath and his ministers were first ambushed into giving away Britain's fishing waters, then lied about it.

This leads on to the story of how Wilson lied about the 'sham' renegotiations which led up to his referendum in 1975, and how his deceit played a key part in winning such a huge majority for staying in.

The book then shows how, in the late 1970s, Jim Callaghan was already seriously at odds with his Common Market partners, not least because of Britain's grotesquely disproportionate budget contribution, which resulted directly from the stitching-up of the CAP in favour of France and against Britain - the battle eventually won by Mrs Thatcher in 1984, but only at very heavy cost. The story continues with how the Foreign Office and Geoffrey Howe concealed from Mrs Thatcher the fact that, in the early 1980s, plans were already afoot - led by our old friend Spinelli, now an MEP - for a further giant leap forward in integration, intended to turn the Common Market into a 'European Union'. By 1984 this project was already so far advanced that, on the initiative of Mitterrand, it was decided behind the scenes that it would need not one but two new treaties to achieve, five years apart. One would become known as the Single European Act, the other would be the Treaty on European Union, eventually signed at 'Maastricht'.

Following the famous 'Milan ambush' of 1985, leading to the Single Act (which Mrs Thatcher, having been outmanoeuvred, continued to pretend was only about the Single Market), Delors then pulled off another major coup, with his policy for a 'Europe of the Regions', building on a suggestion first put forward in 1972 by Edward Heath.

The books then shows how, as Mrs Thatcher belatedly woke up to just how far she had been deceived and tricked, her downfall was deliberately engineered by a covert alliance between Delors, other EC leaders and Europhiles in her own party, led by Heseltine and Howe. This was because she was threatening to become a major obstacle to their next treaty and the proposed Single Currency.

We reconstruct the familiar story of how the conspiracy between Nigel Lawson and Geoffrey How to get Britain into the ERM nearly brought Britain to economic disaster, and the Tory Party to electoral meltdown.

We trace the dismal story of how John Major consistently lied to Parliament about how far he was being outmanoeuvred by his EU colleagues, until in 1996 he was being openly and repeatedly humiliated by them.

We show Tony Blair, right from the start, was completely out of his depth in 'Europe', showing even less understanding of how it worked than Major, and being shut out of the Franco-German 'inner ring' just as firmly, not least for his failure to join the euro.

We show how in 1998-9 moves got under way for another major leap forward in integration, coinciding with the launch of the euro and the corruption scandals which brought down the Commission. But we analyse how, by 2000, it was already clear that a fundamental three-way split was opening up over the form a politically united Europe should take.

Prodi wanted the Commission in charge, along classic Monnet supranational lines. Chirac wanted the so-called 'directoire' model, a form of intergovernmentalism, effectively run through the European Council by France and Germany. The Germans wanted a fully-fledged 'federal' Europe, on the German model, with its own elected President and government. And it was to achieve this that Germany in 2000 proposed the drafting of a 'Constitution'.

We then show how Giscard's draft constitution (drafted in those two vast buildings in Brussels which are named after Spaak and Spinelli, is a hopelessly botched compromise between all these three 'Europes', which is why it will almost certainly never be agreed or ratified in its current form And we finally show how three things have now coincided, all of which together are likely in the next 18 months to begin the unravelling of the 'European project' as it has developed over the past 50 years. The first is that muddled and highly unpopular constitution, which may well not be ratified. The second is the increasingly obvious failure of the eurozone. The third is the threatened disaster of an 'enlargement' which has been imposed on the new member states on such one-sided and grotesquely unfair terms that it is going to create all sorts of problems which the EU is wholly incapable of solving.

If Monnet's dream is about to come to an end, how prepared are Europe's politicians to react to the new situation which will result? Certainly in Britain, the answer is, not at all, because for 40 years our politicians have, like true 'little Englanders', consistently failed to understand or face up to the real nature and purpose of the 'project', and have therefore concealed it from the British people.

In particular they have totally failed to explain to the British people just how much of the government of their country is now in the hands of this new supranational system of government in Brussels. Probably not more than one MP in 100 could even define the term 'supranational'. But the British people are gradually waking up, as reflected in the 90 percent who believe, according to some opinion polls, that we must join all those other countries which intend to put the constitution to a referendum.

That is the story our book tries to tell. I hope some of you will find it useful in the battle which lies ahead, because that is the reason why we have written it. When I say that we are fighting a battle for the truth and for democracy, that is just as true for the people of Poland - and for all the peoples of Europe - as it is for us here in Britain.

We have described what has happened over the past 50 years as a slow-motion coup d'etat - the most bizarre and far-reaching coup d'etat in history. By stealth, by deception and through that ordeal by boredom, the peoples of Europe have had gradually taken away from them something which our political class had no right to steal. The moment has arrived when we must start to take it back.


Ruth Lea

The EU Constitution. The economic, business & political implications

1. Introduction

I'm delighted to be here today. I would like to talk about some of the implications of the Constitutional Treaty, concentrating on the economic & business implications. I would like to do this in 2 parts.

  • Firstly, to mention the new powers that the EU will have under the Constitution, emphasising the economic & business implication. [Section 2]
  • Secondly, to make some very general comments about the overall direction of the Constitution & its impact on business & the economy. [Section 3]

2.1 Extensions of power: introduction
Firstly, the new powers that the EU will have under the Constitution. The EU's institutions' law-making powers, including those relevant to business and the economy, are to be substantially increased under the Constitution. [There is, moreover, no repatriation of policies and the subsidiarity principle has effectively been gutted.] The proposed new powers (or "competences") represent, therefore, a huge extension of the Union's overall power. This is all the more true because the Constitution has been deliberately engineered as an "enabling" constitution and the powers of the member states are not always strictly specified. In other words, the Constitution does not set limits to Union power. Its powers, therefore, will be effectively limitless. When people say that it is a good idea to have a Constitution because it lays down the precise limits of the EU's powers, I reach for the smelling salts.

2.2 The proposed powers
The proposed powers to be bestowed on the EU by the Constitution, which include:

  • The creation of exclusive competences, including the ability to negotiate and sign all international agreements and treaties.
  • Major extensions of powers in many economic and social areas through a new "shared competences" facility, where member states will only be able to legislate provided the Union chooses not to. The areas include:
  • The internal market (apparently little change but, crucially, increased powers over aspects of corporate taxes. If agreed by unanimity, measures on company taxation relating to administrative cooperation or combating fraud & tax evasion can be adopted by QMV);
  • All of the "freedom, security and justice" area (formerly Justice and Home Affairs, Maastricht's 3rd pillar) is transferred to the main body of the EU and becomes a Union competence. There are proposals for: the development of a common asylum policy and of a common immigration policy; the development of judicial cooperation in civil and criminal matters; the "approximation" of laws; the provision of a European Public Prosecutor.
  • Agriculture and fisheries (little change) - already disaster areas;
  • Transport and trans-European networks (increased powers);
  • Energy (a completely new competence, so far there have only been some piecemeal initiatives), with an emphasis on "renewable" energy. This is perhaps one of the most worrying of all, given the importance of our oil & gas industries. A recent article in the Business quoted Sir Ian Wood (chairman of John Wood Group, the oil services company) as saying "the EU energy chapter will introduce a whole range of new uncertainties and delays which will definitely damage our ability to attract investment" - thus damaging North Sea prospects & jobs. I was, moreover, delighted to see the CBI laying in over this one as well saying that the Constitution could be interpreted as allowing the EU to "pool energy resources" in an energy crisis.
  • Social policy (increased powers) - though there would still be some vetoes, for example, concerning social security & the social protection of workers (but, if agreed by unanimity, these could be changed to QMV). But note that Article III/103 introduces the possibility of EU legislation by QMV setting "minimum standards" for social security & the social protection of workers, for the protection of workers where their employment contract is terminated & for the collective representation & defence of the interests of workers & employers, including co-determination.
  • Economic, social and territorial cohesion (as discharged through various structural funds, little change);
  • Environment (increased powers) - and environmental regulations are rapidly rising up the list of concerns of business;
  • Public health (increased powers);
  • Consumer protection (increased powers).
  • There will be a new competence to promote and coordinate the economic and employment policies of the member states, whether in the euro or not. This will surely cover the overall level of taxation, interest rates and public expenditure, as well as pensions policy and employment policies. Social policies are also included. We have major concerns about this competence - not least of all because of its wide-ranging ambitions. But take one example: the EU has an ageing and shrinking population and this has major implications for pensions. If economic coordination accelerates, as is likely, these problems will increasingly be subject to common action, under the requirements of solidarity and burden-sharing in the European Constitution. And this could mean British taxpayers ending up supporting pensioners in EU states that have a worse demographic situation and large unfunded pension liabilities.
  • Add a note on taxation. One of the Government's "red lines" is to keep the national veto over taxation. The Constitution [Article III/62 & III/63] says that QMV can apply if the Council agrees unanimously that measures relating to indirect or company taxation relate to administrative cooperation or combating tax fraud or tax evasion. Thin end of the wedge. But more to the point more tax harmonisation (especially company taxation) is coming in through the "back door" of ECJ rulings. In yesterday's FT there was a report of the latest paper from the CPS which claimed that "the government stands to lose £10bn as a result of company tax cases going through the ECJ...Companies have been winning cases against national authorities on the grounds that advantages available only to domestic businesses discriminate against those from other EU countries."
  • Finally, in this context it is worth quoting the Treasury, in its recent assessment of the single currency: "many of the issues being considered in the EU Convention could have far-reaching consequences for the future performance of EU economies whether they are part of the euro area or not."
  • The Charter of Fundamental Rights which, famously, Keith Vaz (ex-Minister for Europe) claimed would "have no more legal standing than the Beano". [Part II of the Treaty.] The rights include:
  • Workers' right to information and consultation within the undertaking.
  • Right of collective bargaining (including the right to take collective action to defend their interests, including strike action).
  • Fair and just working conditions (covering health and safety, restrictions on hours worked etc).
  • The "Charter's" provisions that deal with the labour market are extensive & vague. And they have the potential to be expanded to an almost unlimited extent, given an activist ECJ. They could, in other words, be a major influence on employment & industrial relations issues. For instance, providing "fair and just" working conditions that "protect dignity" would allow "activist" courts to impose almost any amount of obligations on employers. The Charter also says that workers, trade unions and big business will have "the right to negotiate and conclude collective agreements at the appropriate levels and, in the cases of conflicts of interest, to take collective action to defend their interests, including strike action". The ECJ could well use this right and make adjudications that would be against British business interests. Again much would depend on how "activist" the ECJ was prepared to be. [Perhaps one ought to add that the Charter would initially fully apply to only the Union and its agencies and would apply to member states only when they are implementing Union law - but, given EU competence creep and the integrationist forces at work within the EU, this isn't really much of a consolation.]
  • Finally, of less obvious relevance to business, the Common Foreign and Security Policy (CFSP), including the Common Security and Defence Policy (CSDP) (formerly the ESDP), is transferred to the main body of the EU and becomes a Union competence (formerly Maastricht's 2nd pillar). Under the CFSP, the Constitution proposes an ever-increasing degree of convergence of member states' actions in this area and a very general solidarity clause. Member states are to make military and civilian capabilities available to the CSDP. There will be a permanent Foreign Minister.

3.1 Overall impact on business & the economy: the Social Market Model
Turning from the Constitution's specific new powers to the general overall impact on business & the economy, there is no simple and clear-cut answer to this, given that we do not know how the new enabling powers will be used. We cannot, for example, say that there will many new Directives or so many new regulations. We cannot say how many jobs may be lost or specify in detailed quantitative terms the impact on GDP. But we can say:

  • Firstly, that the new powers will be used (surely) - though we don't know exactly how and/or when and;
  • Secondly, the powers will be used by reinforcing the over-regulated, internationally uncompetitive & failing Social Market Model. No one should doubt the EU's continued and unflinching attachment to the Social Market Model with its recipe for economic decline. It is explicitly enshrined in Article 3, Part I of the Constitution. The exact words are "The Union shall work for the sustainable development of Europe based on balanced economic growth, a social market economy, highly competitive and aiming at full employment...". Can they be serious? Add to this the need for the "EU's co-ordination of economic & employment policies of the member states", as I've already mentioned. If the Constitution is agreed and ratified by all member states, it will be increasingly impossible for any member state to pursue policies other than those of the failing Social Market Economy/Model. The Constitution, blinkered and inward-looking, will "lock in" international uncompetitiveness.
  • May I finally add that the Anglo-Saxon entrepreneurial model has no place in the EU for all the Government's talk of the EU's "going Britain's way" . The EU is, most decidedly, not going Britain's way.

Let us remind ourselves how the Social Market model drives EU policy. For example, at the Lisbon Summit (March 2000), the Social Policy Agenda's main objective was defined as "for the EU to become the most competitive & dynamic knowledge-based economy, capable of sustainable economic growth with more and better jobs and greater social cohesion by 2010 - along with greater job protection". In other words, the EU wants competitiveness & dynamism but shows no understanding of what must lie behind them - i.e. more freedom & less regulation. The Social Market Model cannot deliver competitiveness & dynamisms.

3.2 Overall impact on business: the changing world
Clearly, I'm not a supporter of the Social Market Model - and all the other regulations coming out of the EU (including the heavy environmental regulations). There is much evidence to show that economies that are less heavily regulated & have a lower tax burden are, on the whole, out-performing those with heavy regulation & high taxes. In a world of vicious competitiveness, where China has established itself as the "workshop of the world", where more British firms are looking to outsource to India in order to maintain competitiveness and where the US, for all its structural imbalances, shows the energy & dynamism to grow, the EU with its heavy regulations looks increasingly out of kilter with the age. The European Social market Model is old-fashioned, discredited & fading.

There is no doubt that we are living at a time when the tectonic plates of the global economy are shifting. India and China are re-establishing themselves as major economic heavyweights - after a gap of a few centuries. It's increasingly clear that China's economic rise will be as significant as the arrival of the US on the global scene in the 19th century. We may complain as jobs are "exported" to these emerging colossi but, whether we complain or not, this seismic shift is occurring and we cannot ignore it. But the EU's attitude is "head in sand". Stick to the past and the future will take care of itself the EU seems to say. We should all be very concerned. They're wrong.

It is interesting to note that we are not alone in our concerns about the economic consequences of Constitution. Georges de Menil (Professor of Economics, École des Hautes Études en Sciences Sociales, quoted in the FT) has written:

"The European Constitution has profound implications for Europe's economy and for the euro...Part II of the Constitution presents a serious step backwards for competitiveness and flexibility. It creates a bill of social rights, enforceable by the ECJ. Article 34, for instance, recognises an entitlement to a cornucopia of social benefits, without regard to cost, in a long list of circumstances including old age and loss of employment. The drafters of the constitution contend that enforcement of these social rights will be restricted to actions resulting from EU law. But that is cold comfort. In time, the reach of those laws will inevitably expand and reforming the welfare state will become a much more arduous task."

3.3 The future of Europe
Indeed what is the economic future of Europe, unless there is major change of mindset in both the EU and in the member states? I will quote two sources:

The first source is the British Minister for 'Europe', Denis MacShane. In the course of an interview with Le Figaro Magazine Mr MacShane was quoted as saying:

" the European [EU 15] economy produces 20% less than the US economy...according to economists at the Foreign Office. By 2010 the European economy will produce 40% less than the US economy..."

At the same rate of underperformance, by 2020 the US economy would be well over twice as big as that of the EU, and, by 2050, almost four times as big. And, please note, the 10 new counties (by 2004, 12 by 2007) will not bring much by way of GDP to the EU. It is estimated that the total GDP of the 10 new members is barely that of the Netherlands. And they're all too obsessed with the US - they don't even mention China & India. Wake up.

The second source is Institut Français des Relations Internationales (Ifri, a prestigious French think-tank), concluded that, unless it changes its policies, the EU will fail totally to rival the US and will soon enter a downward spiral of relative economic decline. Ifri's report "World Trade in the 21st century" concluded that:

"The enlargement of the EU won't suffice to guarantee parity with the US. The EU will weigh less heavily on the process of globalisation and a slow but inexorable movement onto 'history's exit ramp' is foreseeable."

4 Conclusion
In conclusion, the Constitution is bad news. It is not a "tidying up" exercise. It significantly extends powers of the EU - to limitlessness. As I've said, some British politicians claim the EU is "moving our way". This is simply not true. The EU is not moving Britain's way; it never has done and never will. The EU is quintessentially a European construction, run by anti-democratic political and bureaucratic élites who are working for European political integration. Moreover, right from early days the Founding Fathers (especially Jean Monnet) were working for the "ever closer union of the peoples of Europe". It never was intended to be "just a free trade area". And with the Constitution, a true United States of Europe will be created.

The EU is, moreover and as I've just discussed, heavily influenced by the anti-competitive European Social Market model, which is emphatically not moving towards the Anglo-Saxon entrepreneurial model. On the contrary, the Constitution enshrines & extends the Social Market model. This can only continue to be a drag on all the economies of the EU - including the UK. It's one thing to give control of your country & its economy to others. It's another thing when you know they've got their heads in the sand and have no understanding of the changing world economy.

The political and economic implications of the Constitution are so profound that the British people must be given a referendum on it. To refuse a referendum would be a travesty of justice.

Barry Legg

An End to Illusions?

Mr Chairman, Ladies and Gentlemen. This is the first time that I have been asked to speak at a Bruges Group Conference and I have been most impressed with the standard of debate, the perceptive speeches we have heard from the platform and the incisive questions that have been put forward from the audience. Indeed in some ways the conclusions of our discussions are so obvious it is difficult to understand why the elite in this country are so vehemently opposed to accepting that the EU causes damage to our country and that a European constitution will have harmful consequences for the way in which this country is governed and its` business life is conducted. We heard earlier this afternoon from Christopher Booker an excellent speech setting out much of the motivation behind the establishment of the European Union. I think that we need to appreciate that the development of the European Project is not just the work of bureaucrats who want to extend their empire but that some sort of philosophy is also a driving force. Many of the disastrous projects of the 20th century I believe, were sustained for so long because their adherents clung to some ill conceived philosophy. Much of the philosophical outlook of the drivers of the European Union I think lies with the philosophical and cultural attitudes that prevailed in immediately post-war France. There is a strong Marxist and anti-capitalist element that believes that free enterprise must be fettered and that greater state regulation and integration will bring forward untold benefits. Coupled with this there is a strong element of anti-Americanism. It should be remembered that when de Gaulle vetoed British membership in the 1960's he put forward as the main reason for that 'the community was a purely European construction'. An Atlanticist approach was an anathema to him.

Much of the philosophical outlook of the drivers of the European Union I think lies with the philosophical and cultural attitudes that prevailed in immediately post-war France. There is a strong Marxist and anti-capitalist element that believes that free enterprise must be fettered and that greater state regulation and integration will bring forward untold benefits. Coupled with this there is a strong element of anti-Americanism.

As far as the United Kingdom is concerned many of those who support the European Union most strongly are opponents of liberal market economics and regret many of the economic reforms that took place when Margaret Thatcher was Prime Minister. This is not altogether surprising as throughout the 1960s and early 1970s there was a dominant Marxist theme propagated at many of our universities. Consequently, many of our present day opinion formers were educated in this environment.

Indeed there is a strong anti-free market element even within the Conservative Party. I well remember asking Kenneth Clarke when I was Chairman of the House of Commons Treasury Select Committee whether we could learn anything from some of the social security reforms that had taken place in the United States. I was struck by the vehemence of his reply when he said that we could learn nothing from the United States in this matter since it was 'red in tooth and claw' and that we needed to go in a European direction when considering such policies. Many of the elite in the UK also feel that the statist and highly regulatory approach of the European Union is a better guarantee of the sort of society that they want in the United Kingdom, rather than risking a reformist government being elected at a General Election which would follow a determined free market philosophy.

In countries where the state is smaller greater prosperity is achieved and more is spent on services such as health and education. Indeed in the United States where about 30% of GDP is consumed by the state not only is much more spent on health than in the United Kingdom but even state spending on health in the United States is greater per head of the population than here in the United Kingdom.

In recent weeks questions have been raised as to whether Mr Blair really wants to continue much longer as Prime Minister. If he succeeds in agreeing to a European Constitution, quite frankly what would the point be of him continuing as Prime Minister. He would be Prime Minister of what? Why would anyone want to be subjected to all of the criticism that goes with that office if power had passed to the European Union and its institutions to take so many vital decisions concerning the direction of this country.

It must be clear from the discussions that we have had today that this draft European Constitution is not capable of amendment. The Conservative Party must call for its rejection. One thing that we should have learnt from the events of the last 40 years is that neither the United States nor any other country is likely to save the United Kingdom from the consequences of ever deeper integration with Europe. We can only stop this Constitution through our own individual efforts. Some speakers today have suggested that the Liberal Democrats in the House of Lords will join with the Conservatives and force a referendum upon Mr Blair. The government will never concede a referendum because they know that they will be defeated. Personally, I have little faith in the House of Lords since I remember that during the Maastricht legislation they behaved like complete poodles. I know that its composition has changed somewhat since that time but I would place little faith in Shirley Williams and her colleagues. Indeed the Liberal Democrats have already been tested on this issue in the Scottish Parliament and have voted with the Labour Party to prevent a referendum taking place in Scotland. All those who are genuinely opposed to the European Constitution must individually make every effort to prevent its adoption.

I have little faith in the House of Lords since I remember that during the Maastricht legislation they behaved like complete poodles. I know that its composition has changed somewhat since that time but I would place little faith in Shirley Williams and her colleagues.

Indeed the draft European Constitution shatters a number of illusions that have been used to advance the cause of the European Union. It shatters the illusion that it is about trade which led Margaret Thatcher to advance the Single European Act The breadth of activities and functions that it takes upon itself goes far beyond any needed to regulate trade. The powers that it takes upon itself in respect of criminal justice shows that it wishes to control the basic relationships that the individual has with the state.

It shatters the illusion of subsidiarity, which John Major used to advocate the adoption of the Maastricht Treaty. The notion of subsidiarity even led him to claim at one stage that 25% of EU legislation could be repealed. Indeed not one comma has been changed as a result of subsidiarity. The European Constitution is not about the repatriation of powers to member states but is about, as we learnt this morning from Daniel Hannan, the granting of more powers to the European Union. Some of these powers are exclusive and some of them are misleadingly described as shared, provided that the Union does not choose to act in those areas, and include energy transport, social policy, environment, justice and security.

The Constitution ends the illusion that the European Union is not a state. The motive of the draftsmen is to make the EU a state and strip away the ambiguities. The constitution attributes to the European Union the powers which are fundamental to a state. It runs its own foreign policy, its own defence forces and its own economy. A state would also want to make sure that it controlled justice within its own area - controlled the relationships between one citizen and another. The constitution provides for its combined institutions and the judiciaries of the member states to transfer power over the criminal law from the member states to the central authorities and thereby help to establish those central authorities as the primary state.

Fundamental to this constitution is the granting of a legal personality to the European Union. This would turn the Union from a creature of the member states into their master. Giving a legal personality to the European Union will mean that the British judiciary will have to uphold the European Constitution. In any future conflict between the British Parliament and the European Union, British judges would have to be on the side of the European Union. The primacy of European law would destroy the sovereignty of Parliament. Currently we could terminate the enforceability of Community law in the British courts. That would come to an end. The supremacy of European law is a founding principle. The limits of its jurisdiction are defined by the European Court of Justice. Effectively, it would become a law unto itself. The decisions of the European Court of Justice would become more important to the British people than the outcome of a General Election. It would have the ability to affect the everyday lives of all our citizens. Granting the EU a legal personality would give the Union exclusive power to sign international agreements. In future, for instance, the United Kingdom would not be able to enter into an international agreement with the United States.

The Constitution also ends the illusion that the Charter of Fundamental Rights is not legally binding. The European Commission has already stated that 'it is reasonable to assume that the Charter will produce all its effects, legal and other'. The Constitution puts that beyond doubt. We have heard this afternoon from Ruth Lea how wide ranging those provisions are, covering the rights to strike, working conditions, social security, loss of employment and consumer protection. There are provisions for derogations but in future these will be the responsibility of the European Court of Justice in Luxembourg and not the Council of Ministers.

The illusion that the European Union brings greater prosperity and jobs to the United Kingdom should also be at an end. The Faustian pact that we should surrender self-government in exchange for greater prosperity and jobs should no longer carry any credibility. In 1996 Brian Hindley and Martin Howe produced a pamphlet entitled Better off out? Their conclusion then was that the economic case for membership was marginal and developments in the subsequent seven years have certainly weakened the economic arguments in favour of EU membership. The high regulation, high tax and high social cohesion economic model has led to low growth, low productivity and uncompetitiveness. Rising transfer payments, demographic problems and the risk that the worst aspects of continental employments practices and inflexibility will be imported into the UK will have further adverse implications for our competitiveness in the global economy. In future, the reverse of Mr Blair`s claim that the EU creates jobs and prosperity for the United Kingdom is more likely to be truth. A cool and objective analysis is needed of the economic case for membership. Some of those who were so anxious to impose the Constitution may well feel that time is running out for them to be able to make a coherent economic case for the European Union.

...The economic case for membership was marginal and developments in the subsequent seven years have certainly weakened the economic arguments in favour of EU membership. The high regulation, high tax and high social cohesion economic model has led to low growth, low productivity and uncompetitiveness. Rising transfer payments, demographic problems and the risk that the worst aspects of continental employments practices and inflexibility will be imported into the UK will have further adverse implications for our competitiveness in the global economy.

The Constitution also brings an end to the case for 'the variable geometry'. Indeed, it provides the structure whereby member states not only adopt this constitution but can engage in enhanced co-operation, which will enable to co-ordinate their policies to an even further degree. Furthermore, under Article 17, the European Council is given the opportunity to extend further its powers to achieve the European Union's widely drawn objectives.

The belief that enlargement will be good for British interests is yet another illusion. The Constitution sweeps away the possibility that a number of states in an enlarged EU could halt the predetermined objectives of the Union.

At the core of the Constitution lie the matters of self-government and democracy, which have been at the heart of the great political issues that have faced this country and the rest of the world for hundreds of years. The fact that power is being transferred to institutions beyond the democratic control of the British people by stealth, does not detract from the seriousness of what is happening. The government's so called 'red lines' are nothing but red herrings. A distraction from the consequences of the Constitution. Specific amendments will not prevent the activist European Supreme Court from using the general language of the Constitution to extend its control and direction over the lives and activities of the British people. This Constitution, whatever its final form, will affect the everyday lives of the British people for the worst. We have to explain how it will affect their lives and harness the determination and will of the British people not to subjugate themselves to it.

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