Some ideas for improving Britain's relations with Europe. Why they may not work

By Bagehot

WEARY readers may find this hard to believe, but Bagehot tries hard to ration the amount that he writes about the European Union. After five years in Brussels from 2005 to 2010, including three writing the Charlemagne column for this newspaper, I am acutely conscious of the need not to dwell too much on one aspect of British policy.

Alas, the story of Britain's relations with Europe comes under the heading complicated but important (or even, a lot of the time, boring but important).

As patient readers may have noticed from a few columns and blog postings over the past few months, I think that Britain's relationship with the EU is in pretty ropey shape. Some of that is the fault of British politicians, quite a lot of it is not. Though accused here in London of being a hand-wringing Euro-quisling, I was taxed in Brussels with being a swivel-eyed Anglo-Saxon ultra-liberal Eurosceptic. I like to think that leaves me, in political terms, doggy-paddling somewhere in the middle of the English Channel dodging the ferries. But it's not for me to judge.

But I confess that in my reporting around Westminster and in my contacts with the government and opposition, I do try to keep an eye on what is happening with the euro-debate. It helps that the clan of people in London interested in Europe (whether pro-European or Eurosceptic) is pretty small. So like devotees of some strange cargo cult, when we meet, we do tend to exchange notes.

All in all, it struck me a few months ago that it might conceivably be of use to set down, in a longer format, what I thought was going on: to map, if you like, the current state of relations. The end result is a long (very long) 20,000 word paper for the Centre for European Reform think tank, who have kindly published the results this week (though I am, in general, a bit more sceptical about the project than the CER). The paper draws on meetings and interviews, on and off the record, with ministers, MPs, MEPs, politicians, national officials, EU officials and think-tankers, reflecting all shades of Euro-opinion, in London, Brussels, Paris and Berlin. It also offers a sort of potted history as to how we got here: why Britain is a uniquely grumpy member of the club.

The paper is called "The continent or the open sea: Does Britain have a European future?" Here is a link.

Below, for those who prefer to cut to the chase, is the ending. It involves a series of modest recommendations for things that might make relations a bit better. Of these, I think the most interesting involves setting up teams of MPs to scrutinise proposed EU laws and regulations at a much earlier stage, in a sort of system of parallel European select committees. This could achieve three things, I would argue. It could give bored and underused MPs something to do. It should improve Britain's chances of spotting bad ideas and heading them off much, much earlier, rather than triggering a fuss way too late in the process as happens now, all too often. Finally, if those same EU select committees were encouraged to travel to other national capitals and lobby fellow national parliamentarians, it would help Britain to build alliances and send a valuable signal that Britain thinks that national parliaments have a big role to play in holding the remote and technocratic European project to account. For all that British voters are sick of the House of Commons, I do still believe that national parliaments have a much stronger democratic mandate in most countries than the European Parliament, which is a navel-gazing, self-serving, smug, consensual, spendthrift, remote and barely democratic excuse of an assembly.

There are some other suggestions to do with a big decision that Britain must make soon to do with Justice and Home Affairs legislation, and whether to opt out of a huge range of EU measures in the field of police and judicial co-operation (eg, the European Arrest Warrant). I think that Britain should take the opt-out.

There is a bit on an EU referendum, and the growing pressure on all main parties to promise to hold one after the next general election.

Finally, and before I am accused of ignoring the small detail that the euro zone might be about to fall off a cliff, I do concede, absolutely, that the future of Britain's relations with Europe may well be decided by others and not by us. If I worry that Britain might walk away from Europe too soon, in a miscalculation of the costs and benefits of membership, I also admit that certain forms of euro-zone integration could amount to Europe walking away from us.

Where I part company from those columnists applauding and cheering on the idea of a bust-up is somewhere around the applause and cheering part. After five years covering the EU, reporting from almost every corner of the union, I think that British Eurosceptics are simply mistaken to think that a collapse of the EU would lead to something more to their liking. I am not about to defend the single currency project right now. I was never one to defend the Brussels establishment, nor their constant demands for new treaties and more powers for the centre. But a Europe without an EU, or with a core EU excluding Britain, is, I think, likely to be less open, less liberal and less outward-looking, and more statist, more protectionist and more prone to damaging trade fights and bidding wars over state aid and subsidies. Some British Eurosceptics dream of being Switzerland or Norway, enjoying arms-length, free-rider access to the single market. I think even that is a fantasy, but assuming we disagree, at least let Eurosceptics concede this. They want to be the Switzerland or Norway of today, with arms length, free-rider access to this single market. Take away that single market, and what does the deal look like then?

Here is the ending of my CER paper. Warning, it is quite long.

THOUGH watchful waiting is not a very stirring British strategy amidst the deepest crisis in EU history, the government does not have many alternatives. As long as Britain is not prepared to sign up to the eurozone's fiscal and economic rules and monitoring mechanisms, and is not willing to pay into eurozone bail-out funds, Cameron is hardly in a realistic position to dictate terms to France, Germany and other members of the single currency club.

A non-exhaustive list

If a true economic or fiscal union is established inside the eurozone, then a two-speed EU will exist, and Britain will be in an outer core. That does not mean there is nothing that Britain can or should do.Watchfulness is not the same as passivity.

★ Collect Lufthansa frequent flyer miles

Negotiating blunders revealed at the December 2011 summit are being examined within the British government machine, and rightly so. Perhaps the biggest mistake involved a misreading of Merkel's position. British ministers, diplomats and the permanent secretaries of Whitehall departments need to become better informed about German thinking. As a senior figure acerbically notes, it is never hard to persuade British civil servants to pop over to Paris for talks with the French (ideally over lunch). It should be just as routine to fly to Berlin for consultations, yet somehow there are always fewer volunteers.

★ Play at enhanced co-operation

The December summit revealed that there is no club of ten countries outside the euro, waiting for British leadership. But that does not mean that Britain cannot take any sort of a lead at all. It can speak up on behalf of the club of 27 (soon to be 28), urging the 17 core nations that use the single currency not to caucus among themselves and stitch up policies that effect the single market. If the future of Europe is one in which groups of vanguard nations integrate more closely, there may come a moment when Britain should play that game too. There is surely nothing to stop a group of like-minded nations agreeing among themselves to pursue deeper liberalisation of digital services, say, under the banner of “variable geometry”.

★ Throw red meat to the backbenches

At Westminster, it is welcome that a growing number of MPs are waking up to the reality that turmoil in the single currency is not a ‘golden opportunity' for Britain to stage a dawn raid on Brussels, returning with armfuls of repatriated powers. But the patience of such MPs is not infinite. To give eurosceptics a concession, the British government should take the 2014 JHA opt-out. The European Arrest Warrant is popular with the police, and has led to some bad men (and women) being extradited with greater ease than before. But along with other planks of European judicial and police co-operation, it rests on the problematic principle of mutual recognition – that is, the belief that a Greek or Bulgarian judge is just as trustworthy and professional as a Swedish or British one. The problem is that almost nobody believes that to be true. The EU always ends up in its most painful difficulties when the gap between what is written in the treaties and what voters believe deep down grows too wide. Mutual recognition between European justice systems is a fine idea that has come too soon.

The catch is that it may prove hard, having exercised the optout, to opt back into aspects of co-operation that make it easier to fight crime, notably membership of Europol and Eurojust.

★ Provide work for idle hands

The government should also put bored, under-used MPs to work. At the moment, EU legislation is examined by the fulltime European Scrutiny Committee, and – once it has been transposed into a draft piece of legislation – by ad-hoc European committees filled with (often unwilling) conscripts. The system should be expanded and enhanced, perhaps by forming standing European sub-committees for each of the parliamentary select committees that monitors the work of the government, department by department. That sounds dry, but so did the creation of departmental select committees three decades ago, and they now represent an increasingly powerful means of holding the British executive to account, as well as an alternative career path for ambitious, hard-working (and sometimes even talented) MPs who are not called to become ministers. Far too much EU-derived business currently passes through Parliament with only minimal scrutiny, so that problems are often identified only when it is too late. Open debate of European policies at Westminster would also offer a first, partial solution to the EU's problems of democratic legitimacy. National parliaments are not very popular right now, but they still enjoy more of a direct democratic connection with voters than the remote and selfserving European Parliament, a body that has failed to solve Europe's democratic deficit.

The Danes have the best known system, with ministers travelling to Brussels councils bearing a rather strict mandate from the EU committee of their national parliament. The Swedes have a similar system, with the added wrinkle that their prime minister appears before the EU committee of his parliament a day ahead of all EU summits, for a discussion of Swedish interests and plans, that is carried on television. In the British context, sending ministers or the prime minister to the House of Commons before European councils would probably turn into a circus.

More promising is the idea of tasking members of the British Parliament to track EU legislation from much earlier on, while it is still in the legislative pipeline. Those Westminster EU committees could be encouraged to lobby counterparts in other national parliaments, to help sniff out alliances and promote the idea that Britain's national parliament is an active EU player.

A referendum on EU membership?

As has been noted earlier, eurosceptic outfits from the People' Pledge to the ConservativeHome website have long called for an inout referendum on EU membership. In his May 2012 Hands Lecture at Oxford University, Lord Mandelson, the former Labour cabinet minister, co-architect of Blairism and ex-European Union trade commissioner, joined those calls. Voices on the Tory right reacted with enthusiasm, arguing that Cameron should follow Mandelson's lead and announce an in-out referendum so as to neutralise the threat from UKIP. A few days after Mandelson's speech, the Spectator magazine's well-connected political editor, James Forsyth, quoted a source “intimately involved in Tory electoral strategy” who stated that it was “basically a certainty” that the next Conservative general election manifesto would contain a promise to hold an EU referendum.

One favoured option would be to propose a renegotiation of Britain's terms of membership after the election, to be followed within 18 months by a referendum on the results of those negotiations, the Spectator reported. Though this is expressed less loudly, the implicit appeal of an in-out referendum for many on the Tory right is also that they want to leave the EU. Nobody could accuse Mandelson of being motivated by euroscepticism. Instead, he offered an analysis of Europe's democratic deficit that is hard to fault. Drawing on polling commissioned by Policy Network, the left of centre think-tank of which he is president, Mandelson notes that 56 per cent of respondents want a referendum on British membership. He also notes that the UK's first referendum on Europe, in 1975, “belongs to another time and another generation”. An in-out referendum would not be relevant until the future shape of eurozone integration became clearer, Mandelson argues. But if the eurozone takes anything like a great leap towards fiscal and political union, he argues that this will pose a deeply uncomfortable choice that successive British governments had striven to avoid: whether to take part in greater integration, or face an uncertain future outside the core of the club.

Yet a clean, in-out referendum would be hard to achieve. The central problem with British public opinion on Europe is that, when asked, most people want something that is not on offer. The new Policy Network polling falls squarely into this camp. As the thinktank reports:

“36 per cent of people think Britain should stay in the EU but only as a member of a free trade area, 18 per cent as we currently are but with no further integration, and 14 per cent of people say the UK should stay in the EU and play a full role in any further integration. A third think Britain should leave.”

Policy Network interprets these numbers as meaning that 67 per cent of voters want to stay in the EU, but that is a stretch. It really shows that two thirds of people either want to leave or achieve a pure free trade relationship (which means leaving, in truth), plus another 18 per cent wanting something that is not going to happen (no further integration). That adds up to 87 per cent or so being unhappy with the current arrangements.

Will a referendum be organised, and if so, would it be a good idea?

An optimistic view is that an in-out referendum would force Britain to have an honest debate about the fundamental costs and benefits of membership, moving away from tabloid populism to core economic issues. A more pessimistic view is that it is already too late to have a cool, rational debate on EU membership, as British hostility to Europe is now so well entrenched. There are many rational reasons for Cameron to fear any sort of referendum pledge. Most simply, such a vote might easily lead to Britain's departure. Though he finds the EU exasperating, the prime minister's allies insist that he does not actually want to leave the EU.

If his promise was for a referendum 18 months or two years after the next election, arguments about Europe risk “overshadowing half his second term”, says a close ally. If the referendum was not a straight in-out vote, but a vote asking the public to endorse the results of a negotiation with Europe, Cameron would face the risk of humiliation, in the event that other EU countries declined to give him the concessions he sought.

Reflecting such concerns, the Conservative foreign secretary and former party leader, William Hague, who stood on a fiercely eurosceptic platform when he led the Tories into the 2001 election, seems to be trying to dampen down speculation about an in-out referendum in the next general election manifesto. In an interview with the Sunday Telegraph on May 13th 2012, Hague praised the idea of holding referendums before any transfers of power from Britain to Europe, but described an in-out vote as the: “wrong question at the wrong time – partly because we don't know how Europe will develop over the next few years.” He added: “For us, Europe is not the euro. Europe is the single market, which is there, irrespective of the euro. It's the positive effect that it has on countries that want to join it, and it's still having that positive effect in the countries of the Western Balkans. So, it's very important to make a success of those things.” Yet Cameron could end up being forced into promising a referendum, concedes a senior Tory source, either because of a surge by UKIP in the run up to the next general election, or because the Labour Party promised an EU referendum of their own.

Might Labour promise an EU referendum in its next manifesto, knowing that such a pledge would act as a wedge to split the Conservative Party? If Ed Balls, the shadow chancellor and longtime sceptic of the euro, were the party leader, he would be tempted. At a seminar organised by the Centre for European Reform on May 14th 2012, Balls suggested that there might be a case for holding a referendum on Britain's membership of the EU. In contrast, the Labour leader, Ed Miliband, is instinctively pro-European. He fears that a referendum promise would create substantial economic uncertainty for Britain, in such fields as foreign inward investment. He also believes that Labour burned its fingers in the past by promising a referendum on the abortive EU Constitutional treaty, only to renege on that promise when the Constitution was voted down in France and the Netherlands, and was subsequently turned into the Lisbon treaty.

Yet, as with Cameron, the decision could be taken out of Miliband's hands by a surge in support for UKIP. If UKIP wins the 2014 European elections, “all parties would come under really intense pressure to hold an EU referendum,” says a senior Labour MP. “It would be pretty hard to resist at that stage.” As to whether an in-out referendum would be winnable, few British politicians are willing to bet on that any more, given the breakneck pace of events in the eurozone. “We've a better chance of winning a referendum if Labour is in power,” says the MP.

Conclusion

The current British government has no intention of walking out of the EU. No political party that supports withdrawal has won even a single seat in the House of Commons. There is nothing new about Britain being a grumpy, foot-dragging member of the club, while quietly following EU directives with more diligence than many supposedly ‘good European' neighbours. Senior British officials report that business leaders, even in the City of London, remain largely committed to making EU membership work. And yet, and yet… It would be a mistake to assume, complacently, that sullen British acceptance of the status quo will continue indefinitely. Within the government apparatus, senior figures committed to remaining inside the Union do not make that mistake.

To a striking and novel degree, when senior officials hold policy seminars or forward-looking strategy debates, it is no longer seen as outlandish or naïve to suggest that, if eurozone integration leads to grave clashes with British domestic priorities, Britain might end up better off out. As an idea, the possibility of British withdrawal is becoming normalised.

The author can list any number of soothing, cautious reasons why Britain will not leave. But taking a few paces back, two bigger points stand out: the relationship already looks much less stable than it has for a long time, and it is hard to see any way in which British public and political opinion will become more favourable over the coming years.

In politics, it is always dangerous when emotion collides with policy. Though British Conservatives are less gleeful about the eurozone crisis than they were a year ago, a sense of vindication informs talk of European irrelevance. That threatens their sense of perspective. Europe may be in relative decline, but Britain could double its trade with China and still not match its current exports to France.

Germany – bound by the same EU employment, social and environmental rules that supposedly hold Britain back – is a champion at selling to China. More pragmatic than his party, Cameron is committed to reforming the single market. Comparing the previous Labour government to Cameron's administration, one senior British official says that the Blair and Brown governments were too quick to see foreign policy as an ‘either/or' endeavour. The charge is that the previous Labour government privileged a handful of relationships (with the US and the EU, for instance) while ignoring longstanding allies such as the Gulf Arab states, Singapore and Japan. Similarly, Labour
downplayed Britain's traditional heritage in its excitement at selling ‘Cool Britannia'. In contrast, Cameron sees foreign policy as requiring a ‘yes, and' approach – maintaining core relationships while reviving neglected alliances and seeking new trading partners. When it comes to the hunt for new sources of economic growth and investment, that pragmatic approach sets Cameron apart from Conservative MPs who long to ditch tired Europe in favour of new markets.

Visiting the United States in March 2012, Cameron urged President Barack Obama to consider the advantages of an EU-US free-trade area. Though the British government has no illusions about the political difficulties of forging a transatlantic trade pact, diplomats have been struck by rising enthusiasm for such a deal from traditionally trade-sceptic EU member-states. With all of Europe desperate for new sources of growth, and given the vast scale of transatlantic trade flows, even modest liberalising measures would have a large impact, it is argued.

Speaking to students in New York during his visit, Mr Cameron made a striking case for remembering the importance of mature markets, and not being distracted by the excitement of the new. He said:

“…in an interconnected world, and a world in which China may not grow as fast as people previously expected, actually the fact that half of the world's trade crosses the Atlantic says to me that we should do even more to try and trade more with our traditional partners as well as trading out into the south-eastern parts of our world. Often in business, you find that you get the best by going after your oldest customer and trying to sell more.”

He could have been talking about the European Union.

General de Gaulle was not wrong about the British propensity to dream of the open sea. A powerful new theme in British euroscepticism involves dreams of the country roaming the world as a swashbuckling, globalised, stand-alone trade power, untethered from the rotting hulk of a continent in decline. But such visions are just that, a dream. Several European economies are in better shape than Britain. Nor can Britain roam the world's oceans: the country will always lie 21 miles off the coast of France, profoundly affected by European rules. Getting those rules right is the hard work of all EU governments.

Cameron accepts that, just as every British prime minister has since Thatcher. But Cameron's government operates under important new constraints, as will all British governments for the foreseeable future. A combination of the ‘referendum lock' enshrined in the EU Act of 2011, together with pressure from public opinion, the press and Parliament, makes it hard to see the country signing up to any further transfers of powers from Britain to the EU.

Yet at the same time, if eurozone integration proceeds without Britain, and so deeply that the single market starts to fragment into inner and outer cores, the strongest argument for British membership will be undermined. The situation is stable and unstable, familiar and unfamiliar. How this ends is unknowable, and is only partly in Britain's hands.