Bruges Group exclusive
Robert Oulds
Ireland and Nice
RO Recently there have been some major developments in the European Union, most notably the vote in Ireland over the Nice Treaty?
JR I’m very disappointed that the Irish people gave into the pressure from the European Union and changed their minds. I thought the Irish people were right the first time.
Enlargement
The Treaty of Nice is not essential to the enlargement of the European Union. Most of the Treaty of Nice is about increasing the central power of the Brussels institutions over the existing member states. There is no need to do that in order to invite in new members. The two or three items that are needed are; changing the number of votes for each member state and sorting out the size of the Commission. The third really important thing that needs to be done is reform of the CAP.
The Treaty of Nice is currently silent on that crucial matter. The Treaty of Nice has been mis-sold to the British and Irish people. It is not primarily about enlargement it is about deepening and strengthening the central power.
My view is, to have a happy association of 20 or more member states you need loess power not more. More flexibility, not less. You need to respect the individual democratic choices and decisions of the member states too. I find it very worrying that they want to go ahead with more enlargement and more centralisation, when a happy Union requires much more flexible arrangements.
RO Surely enlargement should have happened 10 years ago. Margaret Thatcher called for it in 1988, when it would have really helped Eastern Europe, when the Iron Curtain came down. In that sense the EU is behind the times?
JR It would have been good to offer them membership to the emerging democracies of Eastern Europe when the Berlin Wall came down. It would have been a great prize for them and speeded up their economic progress.
The way to help them and stabilise their democracies, surely, is to help them grow their economies. The best way to allow an economy to grow is to allow it to trade more freely on fair terms with rich adjacent countries. That was the opportunity which we passed-up with decisions in the late 1980s.
It is also the case of course that the richest countries in western Europe remain Switzerland and Norway. These are countries that do not belong to the EU at all. Switzerland has quite good trading arrangements with the European Union, which shows that they can be negotiated separately.
So I do think that people abuse the language when they say this is Europe. Europe is a continent containing many states. Some are existing European Union members, some are applicant European Union members, some have no wish to belong.
So I always think that we should treat Europe as a continent of sovereign states, not as a single European Union.
RO So we must change our language when we talk about Europe?
JR Yes, I think that British people still by and large, quite a bit majority, want to believe that they are not part of it. So I find that I am in the paradoxical position that we are already part of the European Union [laughs all-round]. The issues of whether we join it or not is already decided. Britain is fully part of Europe both geographically and politically and legally as we are bound to most aspects of the European Union Treaty’s.
We have already surrendered quite a lot of our rights over self-government to the EU institutions.
I think we need to be much more precise in our use of language and recognise that we are full Europeans in virtually every sense.
The debate we need to have in Britain is can we go on accepting the current degree of European Union power over our affairs and let alone should we consider giving them more power. I fear that we are about to give them a lot more power. The British Government is about to sign away more of our rights to self-government through the emerging European Constitution. I am very pleased that I and my colleagues in Parliament opposed the Treaty of Amsterdam and the Treaty of Nice because we find that both these Treaties took away rights to govern ourselves in important areas of life that we would wish to preserve.
The Convention on the Future of Europe
RO What do you think that the future holds for Britain’s relations with the European Union. There is a convention where they are looking at ideas for a constitution?
JR I think that Britain will be very reluctant to ever fully enter into the degree of political co-operation and unity that any of our partners and Brussels Commissioner’s wishes to undertake.
It is interesting to notice that we have had more or less the same relationship with the European Union under Margaret Thatcher, John Major and Tony Blair. The language has been different. Margaret Thatcher used much stronger language than John Major, who was more moderate on most occasions. Tony Blair is always more moderate. But if you look at the actual positions these Prime Minister’s find themselves giving away some powers to the European Union but not giving away all the powers that the European Union was seeking at the time.
Margaret Thatcher withheld both Currency and Social legislation, John Major retained a veto over Social legislation but gave away ground on economic management through the Treaty of Maastricht. Tony Blair then gives away the Social Chapter but is unable to deliver the currency. So we are now five years plus into a Labour Government committed to the euro principle but are more distant from the day we have a referendum [laughs all-round]that he can win than when he began. And it doesn’t look as if Mr Blair will hold a referendum because he is a good politician and he knows that it would be inviting disaster if he tabled the question. So we find ourselves in this curious position that even with a very pro-EU government that we currently have the Prime Minister still feels that the British people want to hold him back from gaining entry to all the clubs of Europe for the very good reason that the British people are far to sensible to give away all their rights to self-government.
If they wish to retain an independent democracy and the right to make their own choices they need to keep more powers from Europe and the Union rather than give them more.
Crunch time for the EU?
RO So there is going to be a crunch time when Tony Blair would be presented with the ideas for a fully centralised Europe?
JR I don’t foresee a crunch time yet, I wish I did I think that it would clear the air. I think it would be much better if the British people could have a referendum on a major aspect of our relationship with the European Union and have a good debate to get it out of the way. It would be the only way to sort it out given that the party political process has failed to highlight all the crucial issues in a way that people feel that they can make judgements about them in a general election. The problem with a general election is that there are so many other issues that matter to you – you want a good health service, a good education system. So it becomes quite difficult to pinpoint the European issue sufficiently well in a context of a general election.
So I think this is an exception that proves the rule, so I think we need a referendum in order to clear the air. After all, we had a referendum on anyway on continued membership under Harold Wilson’s Labour Government. And I think that we would need another referendum if we are to embark on a major change. I would have liked a referendum on the combined impact of Nice and Amsterdam. That would have been a very good thing to clear the air. We haven’t been granted that, if Mr Blair is proposing to make major surrenders of the right to self-government in the European Convention one would hope that he would want to test that with the electorate, there is no evidence yet that he is going to. At least he is with the currency, this means that the currency is the crucial battle and when the times comes it will be much bigger than just the currency. Many other sentiments and issues will get tied-up in that referendum, just as in the case of the Irish referendum the issue of neutrality played a very important part although wasn’t the main topic of the Treaty of Nice. So if we could get that referendum then there would be a crunch time. My worry is that the Government won’t let us get there.
Beyond debating the euro
RO You mentioned that a referendum isn’t looking ever further away so then isn’t it time that us Eurosceptics moved the debate beyond the euro and say “we have won this battle” and look at the other issues.
JR I agree with that.
RO The point is that some say we should not to be too critical of the European Union because we don’t want to alarm people on the middle ground who are undecided on the euro. But isn’t it time we pushed on the debate?
JR My belief is that you have to argue the case that is relevant to the time. The euro is not particularly relevant to this time because no referendum has been called and no date has been announced for the settling of the five tests and the Convention is becoming very topical. So I think for the coming months those who want less European Union power not more should direct much more attention to the agenda of the European Convention.
The European Convention is a form for which we should put our case and our case surely is that we would like to trade freely with other European countries, their companies and their people. We want to be friends with them and to co-operate with them where it makes sense to but we do not like the domination of the European Union institutions and the growing number of areas where we have no right to say no. And we should be making the case as to why a happier Europe would be a looser more flexible Europe of nation states based on free trade rather than by government. A Europe where we strive to reverse all the detailed areas where legislative powers have gone to Brussels because we do find the interference in the nooks and crannies of daily life increasingly vexatious.
A positive vision for Europe
RO So in terms of public communications it is time to talk about the Convention and reinforce our positive vision?
JR Yes, our positive vision of a different kind of Europe. Europe is a continent, a number of countries have come together in a closer relationship for a variety of reasons. We think it is now becoming a little claustrophobic. We think that certainly in the case of Britain we want less European Union interference not more and maybe we should set out how to achieve that. If France, Germany and the Benelux want to go all the way to political Union then that is a matter for them and I don’t think that we should stop them. But nor do I want to dragged along in their slip stream. So I think that we should use the Convention to say we are very happy to find a way that you can do this but not with our money and not with us having to make a similar surrender of sovereignty, and we want a different kind of relationship. If you do want a superstate we are not going to play Texas to your whatever. Talking to France or Germany we want to play Canada to it. We need to have that kind of argument.
RO Do we want to allow the rest of Europe to be under EU control even if Britain is not part of a Federal Europe. It is deeply undemocratic and it would be an emerging superstate, even if we are outside it would surely threaten our sovereignty. How could we be fully independent if we are surrounded by a nation of 300 million plus citizens.
JR I don’t think that it is our job to stop France, Germany and the Benelux countries for example from going into a closer Union if that is the wish of their people and governments. And I don’t think that they have hostile intent, it is not like being surrounded by the Communist bloc in the 60s or 70s which was much more threatening – a very real threat. They are democracies and I am sure that if they go down the road to a superstate then they will want to make it more democratic. They will have to give more power either to a democratically elected European President or by giving more power to a democratic European Parliament or a combination of the two.
I think that that it is a pity they put the cart before the horse. I think if I were building a superstate I would start by creating democratic institutions. I think then you have more chance of mobilising popular support for the idea but that’s up to them. I don’t propose that for Britain because I don’t want to be part of superstate. So I am not trying to create democratic pan-European institutions because I want our prime democratic institution to be our Parliament as that makes sense for the people I represent and the people I meet in the country.
Will it all end in tears?
RO Won’t this European project eventually end in tears?
JR Well it could do. My worry about the EU is that if it proceeds in this crab like way to a very centralised state with each successive treaty taking more things away from democratic nations, if it continues to be this slow in trying to create truly democratic institutions to supersede those of the Brussels machine then this highly suggests that what will happen is a series of nationalist rebellions.
Europe has had many attempts in the past to live as one and had a lot of territories uniting but always these have broken up by one means or another. But I trust in the modern world this would be by peaceful protest or by democratic decision rather than anything worse than that. It is quite difficult to believe that Europe’s regions will take kindly in 20 years time, or sooner, to them having every decision made in Brussels.
If you’re a Catalan and you are not very keen on things being decided for you in Madrid is it better that they are decided in Brussels. Maybe when you are trying to get rid of Madrid, but when you have succeeded you might find Brussels even more annoying than you found Madrid. Or if you’re a Scottish nationalist you might think today that Brussels is better than London but if your dream came true you might decide that Brussels is every bit as annoying as London or even worse because it is trying to govern a far bigger area and its decisions may not make sense for your bit of the Union at all.
I think we are beginning to see this in the extraordinary difficulties they are encountering trying to make the euro work for western European economies particularly the German one.
The German economy clearly needs much lower interest rates than the European Central Bank currently serve up and so even a very big and powerful country like Germany becomes completely becalmed. It may even experience worse economic difficulties than low growth simply because it no longer has control to make decisions as to what interest rate to set and how much money to put into circulation in its own economy.
If that’s the problem for a relatively simple matter of the Single Currency, how vexatious could a common legal code become or a common foreign policy or common defence policy where real national sensitivities might be damaged.
RO So in that sense it is a recipe for disaster?
JR Well I can’t see the European Union being a successful supertstate in a hundred years time, put it that way.
RO So it will never surpass the USA?
JR Its totally different from the United States of America. I hope it is going to be totally different. Remember that 600,000 people were slaughtered on the battle fields of the civil war in the USA until the North gained supremacy over the South and said this is the way we are going to do things. I don’t envisage anything like that in the European Union’s evolution. But remember also that the United States of America was and still is a to some degree a new country – a place where people settled as volunteers – the indigenous people were all killed or herded into very small areas. The Indians were effectively thrown out.
It was waves and waves of settlers from European countries primarily. They came to the USA because they did not like their own countries. They were refugees, they had been hounded out. They had suffered from religious intolerance, economic depression or whatever it might be. So they were willing volunteers to try a new country. And they didn’t go to the United States of America saying, “I want to be a Little Englander or I want to be a Californian or a Texan.” They said, “I want to be an American.” This is a new society. The peoples of western Europe aren’t like that. They aren’t, on a whole, new volunteers to join a European country. Our new migrants usually arrive and say, “I want to be British.” They don’t normally turn up at Dover and say, “I want to be a citizen of the European Union.” [laughs all-round] They are associating themselves with the national identity not the supranational.
RO So in America where people came to be free, to be Americans, and to start afresh still had problems?
JR In the beginning it had very serious problems and then it settled down and the waves of migrants then cemented the success of the Union because there were all volunteers to join the united whole. Neither of those conditions apply to the EU, a group of old territories and old peoples. With some settlers, but most settlers have decided to join the nation rather than the European Union. There isn’t yet a European bond or consciousness of any great extend which attracts people and until you get that you don’t have a country.
Well, I often ask when I go into schools or universities before I have spoken, so I don’t influence them, I often ask do they regard themselves as primarily British or primarily European. And in most cases the audiences always say British, they do not see themselves as primarily European unless there are so French students there or something [laughs all round]. So I think it shows that we have a very long way to go before people are seeing themselves in the way US settlers saw themselves.
Can re-negotiation work?
RO You mentioned the kind of Europe that you would like to see or the kind of relationship Britain should have with the EU – basically a free trade area and inter-governmental co-operation from what I understood. But how are we going to arrive at that, because it is not on the table at the moment, it is not being offered.
JR I don’t know what the Government is finally going to seek from the Convention. And the Major Government and the Blair Government have both said they want Europe to do less and they value Subsiduarity as it used to be called and Devolution as it is now called. Do they mean it? If so please can we see the agenda. My view is that it is going to take a Conservative Government pledged to re-negotiation. I was one of the architects of the re-negotiation policy for William Hague on which we fought the last election. I set out in my own writings the type of re-negotiation that I would like Britain to undertake. The criticism I have had of it has always been not a criticism of my aims, because most British people agree with me – we need friendly and good relations but we don’t want to be bossed about as much as we currently are – but criticisms of its practicalities.
They say, “but John we wouldn’t get this, why should anybody re-negotiate?” Well I have two answers to that. The first is that Europe is a process of perpetual re-negotiation. So it is not as if we are asking for something that is most unusual. It is constantly re-negotiating itself and re-creating itself and we have another opportunity with this European Convention. That should be used now to table proposals that we want, if you don’t ask you don’t get.
The second point is that where the British Government is very determined I do believe that it has quite a lot of influence to get what it wants. We are offering them something as well. We are offering them a big trade deficit in their favour. We are offering a major contribution to their budget where we don’t get back anything like the money we put in and we are offering them support for their continuing progress for union.
They need our agreement if they wish to go as far in the direction of a super-state as they want. Margaret Thatcher showed that you could use your bargaining position as Britain to get something you want even when all the other Members are against you. She got a big budget rebate. In those days there were 12 Member states, she was 11 – 1 down when she began but they gave in because they appreciated that Britain was serious about wanting this and the end you need to reach a compromise when somebody is that aggrieved.
I think a present or future British Prime Minister could get much more than we currently believe possible if we were strong minded in our demands and sensible in what we offered.
If we said to them, “You must be fed up France and Germany with every major plan for more integration being slowed down or rejected by the UK.” Either the British Prime Minister, whoever that might be, will have to tell them that he is not in a position to tell the people they are just going to have to integrate because people don’t want to integrate. So let’s come to an agreement and I think that it will be much easier to get a better deal than the one we have at the moment.
RO A lot of Eurosceptic groups advocate the position of renegotiation and if that is unattainable withdrawal from the European Union. Withdrawal being the back-up threat, it that something you would find useful in a re-negotiation?
JR I don’t believe in threatening people with a nuclear weapon before you have engaged in diplomacy, tough negotiation and maybe a little conventional warfare. I think you would get a long way with a sensible tone of voice.
I think because Britain has been the reluctant and difficult integrationist over the years the sort of deal I am suggesting might be quite attractive to countries that are in a hurry to integrate, “we will get off your back if you get off ours.”
There are other things you could do if it got difficult. You could start querying the legitimacy of all the payments and the expense system in the European Union. There is plenty of evidence of difficulties in the budgets and we might say “do we have to put all this money in every month if it is not being spent properly?” If you go into those sort of areas where some pressure might be applied, but I’m not sure you would even have to do that.
RO So it might be quite simple for a tough minded Government?
JR It’s just a question of political will and the last time we had any political will in this country to get something back for Britain was when Margaret Thatcher re-negotiated the rebate. Since then we have not made a single issue and stuck at it for long enough to test the proposition.
RO The EU can be quite bloody-minded, if I may, they have had a bullying approach to countries in Eastern Europe where they haven’t allowed full free trade. The EU has been rather threatening, leaving them in the position where they feel they have to join the European Union. Could the EU threaten some sort of trade tariffs against us?
JR Well if I were a European country’s senior politician I think I would be saying hang tough. Joining the European Union is a good idea but there is a price beyond where it is not a good idea. I think Eastern European countries get more out of joining NATO than they do out of joining the EU. I think they should be much more insistent on fairer trade arrangements above all else because that is the main thing they can benefit from. But I don’t think we should be disheartened or disillusioned because some of the countries for understandable reasons have given in. Britain is in a very different position.
She is the fourth largest economy in the world, she is the second largest NETT contributor to the EU’s budget. She has plenty of other options. She has a very big overseas trade with the America’s and Asia and a very strong English speaking relationship with the old and new Commonwealth members. So I think Britain can negotiate much more toughly because she is in a stronger position.
The Euroland economies
RO You mentioned the Eurozone economy how do you see that evolving? You said that the UK is doing rather well at the moment – the fourth largest economy in the world?
JR Well I am gloomy about the European Union euro based economy. I think they have plunged into Monetary Union without thinking through all the complexities. Again I think they have put the cart before the horse.
I think if you want a Single Currency area you first need a single finance minister. You do need to run a single budget. The danger in a currency unit in different countries with national budgets is that some countries can free ride. They can use the lower average common interest rate to borrow more than their fair share of money on the world markets. So they can free ride at the expense of the more prudent countries.
The Euroland countries understood that danger that is why Germany invented the Growth and Stability Pact with the European Commission at the beginning. Which said that there would be a limit on how much any country can borrow so it doesn’t free ride. We now find ourselves in the ridiculous position where Germany is one of the countries most likely to break the Pact. And where Signor Prodi the most senior European official has openly said this pact is a nonsense and really ought to be scrapped – very destabilising.
I can see why Signor Prodi said that, because undoubtedly the German and other European economies are struggling and it would be easier for them to borrow a bit more rather than having to cut back when they are already going into recession.
But if Signor Prodi wishes to be more than a commentator, and he is meant to be the senior figure in this Government of the European Union, surely he should be proposing an alternative. Putting that forward rather than criticising the current scheme that his Government is running. And I think that his alternative has to have more central control than they currently enjoy, which is a very good reason why Britain shouldn’t go near this euro scheme. Because if you wish to be fair with member states you have to control their borrowing and inn the end the easiest way of doing this is to actually run the main parts of their budget. That is the way I think it will move.
What next?
RO So tax harmonisation will follow?
JR Oh god, yes, there will be moves towards tax harmonisation starting will more company tax, special taxes on energy and travel and those sorts of things. Income tax will be the last one they will move in on. But that also makes sense because if your going if your going to have a common currency area there needs to be a central economic authority. In time they are rightly worried because Germany desperately needs lower interest rates to try and stimulate its economy but Germany no longer has the power to give herself lower interest rates.
If you were sitting around the table of the European Central Bank you would have to conclude, as they have done, that whilst Germany needs lower Iberia does not and so on balance why not keep them as they are. So you will have a slightly inflationary Iberia and a deflationary Germany and there is absolutely nothing you can do about it because you have imposed a Single Currency before you have imposed a harmonised single economic area. So it will be really quite damaging.
The Applicant Countries
RO So this is something the candidate countries want to avoid surely?
JR Well again if I were involved in one of the candidate countries I would not want to go anywhere near the euro because the gap between the economic performance of most of the candidate countries and the performance of the richest countries in Euroland is very great. The last thing an applicant country should want to do is to hitch itself to all the costs and fixed exchange rate with the clear dangers before they have caught up with the living standards. There is absolutely no way they are hamonised.
If they are not harmonised then it will be a very bumpy ride should they decide to join the currency. Similarly Britain shouldn’t join the currency for economic reasons as well as the political reasons. Because Britain has an overseas trading economy much more based on the Dollar than on the old Deutchmark and it would be very fateful for Britain if we started to enjoy the volatility against the Dollar as the euro. The Pound is much more stable against the Dollar and that is very good news for us because we do so much of our business in and through the Dollar.
RO So Britain and the applicant countries are in a similar position, in one sense we all need to avoid the euro?
JR Yes, we haven’t harmonised with the Euroland economies. For different reasons Britain is not likely to because of the pattern of her trade and the service sector activities. If you want to run one of the world largest financial markets the last thing you want to do is join the euro and try and harmonise with Frankfurt, because Frankfurt hasn’t been very successful at running a global market. Its been quite successful at running a national sub-regional market but not at running a global market. And London has got some things right and it would be very damaging to switch the Pound/Dollar which drives the London market, particularly the Dollar, for the euro.
RO How would you see the European Union evolving after enlargement, if it does take place, when ten new countries do join, would Britain have a allies or would it mean just more centralisation?
JR I think it will be more of the same. I think that it will continue to advance towards more control by the European Union institutions and it will do that in fits and starts, by treaties and conventions and revisions to its constitution. I think that it will increasingly concentrate on taking power over the major areas and may occasionally give away one of the minor areas its already got as a token but the central drive will be on towards more and more central control. I think they will want to make more of a single foreign policy and a single defence policy as they gradually build the European defence force.
I think they will take over even more power over the environment and general planning area and I think they will complete their control over commerce, trade, industry which is almost there already. So it will be a very powerful government over the former European nations. I think that it will find it quite difficult to challenge the United States in the way that it wishes because it will never be anything as like as powerful as the USA either in terms of diplomatic might or military muscle.
The Conservative Party and enlargement
RO I think Conservative Party policy at the moment is to support enlargement, I think they feel that it will help us by giving us friends in the EU but from what you are saying that will not actually work, it will not create decentralisation?
JR No it will not, I support the Conservative position on supporting enlargement on the grounds that I do think I do think that better trade in particular for the Eastern European economies is what they need and I would like them to be more prosperous and they are well disposed to joining so I don’t want to get in their way. But I also think that we need to very strongly assert that enlargement with centralisation, which is what we are getting, is quite wrong. And we must be very vigorous in opposing centralisation.
The Conservative Party did vote against Nice even though it was said to be the treaty for enlargement and we made the case that it was largely not about enlargement it was about centralisation. I think we can make an equally strong or more powerful case even in the European Convention where we should be saying the sort of things I have been saying – that we need a looser association with more trust for national democracies and that would apply to the applicant states as well as the existing states. But I am not sanguine, I am not one of those that thinks because we have suddenly got half a dozen new states joining us we can call all the shots. I still think that it is going to be very difficult winning votes in the enlarged Union and there are even more things that are going to go through on majority votes which is ten times more difficult to stop them going through where you have a veto.
The only sure way in the European Union to prevent things happening that you don’t like is to have a veto, and I regret that so many vetos have been surrendered.
John Redwood, thank you.