Brexit - But what happens to Scotland?

FROM SUNDAY HERALD

It seems only yesterday that everyone was talking about a "Grexit" - the forecast, made by most of the UK press, that Greece was about to leave the European Union because of the onerous bailout terms imposed by the EU and IMF. Now, suddenly, we are talking about the "Brexit" - the possibility, indeed probability, of a British exit from Europe when the current Lisbon Treaty comes up for negotiation in 2015.

Last week, three prominent Tory grandees - the former Chancellor, Lord Lawson, the former Defence Secretary, Michael Portillo, and Boris Johnson, the Mayor of London, called for British withdrawal from the European Union. The former Tory Scottish Secretary, Sir Malcolm Rifkind said they'd "hurled a hand-grenade into a small building". It certainly put a bomb under David Cameron's policy of promising to renegotiate the terms of British membership, and then putting the result to a referendum after the next general election. Tory backbenchers, emboldened by Lord Lawson and co. are demanding a firm commitment right away. Labour says it is opposed to a referendum now, but agrees on the need for reform, and is not ruling out its own referendum on independence from Europe.

Viewed from Scotland, where opposition to Europe is muted and where we have another referendum on our minds, this all seems more than a little surprising. Most Scots still want to stay in the EU, according to the latest Ipsos Mori poll, and only a third want out. But in England - especially the south - there has been a growing frustration with Europe that finally erupted two weeks ago in the English local elections, when UKIP - the party seeking withdrawal from the EU - won up to 25% of the vote. There is little doubt that many people in England feel that Europe is a "bureaucratic monstrosity" to use Lord Lawson's description, and that their democracy is being subverted by Brussels.

But what exactly do they mean by this? When you ask eurosceptic Tory MPs they tend to reply with relatively trivial examples - compulsory seat belts for children under 12, regulations on food standards, health and hygiene. Those infamous straight bananas. But most of these relate to the terms under which the UK is a member of the Single European Market, where standardisation is necessary to ensure a level playing field for all trading nations.

Similarly, the social protections of the EU, like the working time directive, are intended to make the single market work fairly and prevent some countries seeking advantage by forcing their workers to spend longer at work. The "social Europe" as it is called is hardly onerous, and Britain anyway has an opt out from the 48hr working week.

Eurosceptics also talk of the Human Rights Act and claim that the failure to deport suspected terrorists like Abu Qatada has something to do with the European Union. This is completely wrong. The Human Rights Act is based on the European Convention on Human Rights which was set up by Winston Churchill after the Second World War to prevent totalitarianism returning to Europe.

None of these, it seems to me, are reasons to go to war with Europe, and deny the benefits of the single market which has undoubtedly boosted prosperity. Trade within Europe has doubled since 1992, thanks to the abolition of tariffs and barriers to the free movement of goods and services in Europe.

Only thing that really matters in 2013: is eurozone crisis over?

 On the morning of May 7^th 2012, Greek voters woke up to discover that they had effectively voted to leave the EU. A majority of the new  members of parliament were in parties that rejected the crippling terms of the latest EU £110bn bailout package. It looked like the beginning of the end for the 11 year old European single currency. The cracks in the European Union began to look unbridgeable

Bond investors across the world reached for their phones. Many financiers decided that the euro was finished, and they placed their massive bets accordingly. It was reported that Lord Rothshild of the banking dynasty, had personally taken out a £130m“short” position against the battered single currency. Surely, the EU could not recover from this! If Greece fell, then so would Ireland, Spain, Portugal and Italy which were all in the same deflationary boat – saddled with over-valued currencies, forced to cut spending in a recession, crippled by unsustainable interest rates on their massive debts. A new word was coined to describe the countries on their way out: “Grexit”

Europe's political leaders seemed caught in the headlights; unable to reconcile the need for fiscal discipline with the imperative of restoring economic growth. In Greece, where the economy had shrunk by 20%, violent social unrest had become an almost weekly occurrence as EU-imposed cuts made the recession even deeper. In Spain, unemployment among under 24 year olds rose to over 50%.. And the contagion began to infect the entire eurozone as France lost its triple A credit rating and Germany, the most powerful economy in the EU, plunged toward recession.

In Britain, the political classes awaited the inevitable. Most of the British media had decided long since that the euro was a dead duck and that it was only a matter of time before it collapsed. You cannot have a single currency without a central government and a central treasury, with the power to intervene in national budgets and the power to issue bonds for every member state. Surely, Greece and Spain would see sense and leave the euro, devalue their currencies, default on their debts like Argentina in 2001, and seek to recover on the basis of low wages and cheaper exports. What alternative did they have? Sticking with austerity was leading to economic depression and social unrest.

But somehow, the inevitable didn't happen. The Greek political parties couldn't agree on a government and decided to hold another election on 17^th June. This left the pro-austerity New Democracy, led by conservative Antonis Samaras,  with a reasonably firm mandate to stick with the euro, bailout and all. Greece would not default. Then, Mario Draghi, the head of the European Central Bank, announced that he would do “whatever it takes” to stop the single currency collapsing. Many believed this was just another empty promise from a bankrupt eurocrat, but Draghi proved true to his word. In September the ECB committed itself to unlimited purchasing of european government bonds, and the sovereign debt crisis began almost immediately to subside. The rate of interest on Greek, Spanish and Italian debt returned to pre-crisis levels.

Why do the Tories hate Europe so much?

How ironic it would be if the Tories were to fall apart again over Europe, just as David Cameron is entering the home straight for Number Ten.  Almost as ironic as Tony Blair becoming president of the EU, just as Gordon Brown loses the next general election.  Some people are just born lucky. But is David Cameron one of them?

   Surely you say, the Tories couldn’t be so stupid to have a row about Lisbon. Surely they realise that this is no time for division; no time for a lapse into xenophobia, just when he voters were thinking the Conservatives had put all that anti-foreigner stuff behind them. Well, no one ever lost money by overestimating the stupidity of political parties.  A majority of Tory supporters, according to the website Conservativehome, would be happy to leave the EU altogether.  It’s not just the Lisbon Treaty, with its qualified majority voting and common foreign policy, they want to dump.  

   But their bottom line is a referendum on Lisbon and the are pressing David Cameron to give them what they want, even if - as everyone expects after the decisive Irish vote - the treaty is ratified by the two remaining doubters, Poland and the Czech Republic. Tory eurosceptics have already forced Cameron to join forces in the European parliament with right wing loonies like the Latvian For Freedom and Fatherland, which honours the Waffen SS. Europe has already eclipsed most of Cameron’s pre-conference policy proposals on elderly care, welfare reform and public spending. 

   What is it about Europe that really gets the Tory goat?  The European Union is not a federal superstate, but a fairly loose confederation of sovereign nations who unite to meet specific economic objectives.  It is exactly what David Cameron said he wanted the EU to be in his Andrew Marr interview yesterday:”an association of states not a country”.  But suspicion of Europe, and of Germany in particular, is deeply rooted in the Tory psyche. We learned recently that, in 1989, Margaret Thatcher was so worried about the possibility of a united Germany dominating Europe that she asked the soviet leader, Mikhail Gorbachev, to stop civil rights demonstrators tearing down the Berlin Wall

    This kind of paranoia clearly dies hard. We are dealing with something that isn’t entirely rational - it is about a pervasive sense of national insecurity in middle England - you just don’t get it up here -; a fear that somehow Britain will wake up one day and find that it is no longer run from Westminster but from Brussels. Many eurosceptics think we already are.   Perhaps it is something to do with the legacy of British imperialism - an inability to accept the reality that Britain is now just another country in Europe and not a regional superpower.   

   But there is a new generation of voters today who are used to travelling around Europe, don’t believe that it is a threat to Britain, and really don’t like having to change their money at the border.  Don’t the Tories listen to their pals in industry and commerce who are fed up with currency fluctuations that make a lottery of their investment decisions?  Not even the Icelanders are anti-European nowadays.  Only Britain remains fearful of contamination from the ‘continent’. 

   The EU has been astonishingly successful, not just in promoting prosperity  but in promoting peaceful coexistence between nations. Tories scorn this idea, claiming that peace in Europe has nothing to do with Brussels and a lot to do with globalisation.  True, the internationalisation of economic life has made the idea of war between France and Germany seem ridiculous. But look at Central and Eastern Europe and it isn’t, and the prospect of joining the EU has been a powerful and genuine force for peace.  It is not inconceivable that there could have been war or communal unrest in the Baltic states, for example, had they not been so desperate to join the EU.  The Balkans too are learning to live together since they too want to be part of the European club, and that means no ethnic cleansing,  no funny business about borders and no goose-stepping military parades.  

  The EU has created an entirely new kind of international political entity: a country without a state.  Speaking personally, I could do with a little more state - a more democratic one. The European parliament has very limited power. Under Lisbon, the first ever president will be chosen by the heads of the member states rather than by the people - which helps explain why Tony Blair is likely to win when he wouldn’t have had a cat in hell’s chance of winning an election because of Iraq.   

   The euro, introduced simultaneously in 16 states in January 2002 amid scorn from eurosceptics in Britain. It is now the second largest reserve currently in the world used daily by 327 million Europeans. We’ve just been through the worst financial crisis in sixty years, and the euro has thrived.  The main reason why Ireland voted so decisively for the Lisbon Treaty was because the credit crunch has reminded them just reliant they are now on the European Central Bank . 

  

  Precisely! say the eurosceptics - the German bundesbankers have little Ireland under their heel, just as they always planned.  Britain never, never, never will be a slave to the ECB.   Really, there is no arguing with Conservative anti-Europeans, which is why David Cameron gave into them in 2005 and promised them a referendum on Lisbon.  Without that pledge he would not be leader today, and they are now calling it in. On TV yesterday, Cameron sounded deeply unconvincing when he said that he didn’t want to talk about holding a referendum if Lisbon is ratified - which after Ireland it almost certainly will be - because it might “undermine or prejudice” the debates taking place in member states.  But that’s precisely what the eurosceptics want him to do: provide a beacon to those few remaining free peoples of Europe.  Take on the Brussels beast single-handed if necessary.  

    But the voters of Britain are watching very carefully.  If the Manchester conference turns into a rabble of foam flecked anti-Europeans, dictating terms to Cameron, then the people might decide that, after all, the Tories aren’t quite ready for power. The next forty eight hours will be crucial.