Eu Bureaucracy versus Democracy – Diplomat Magazine | Diplomat Magazine
To understand what the UK will do as the euro crisis develops, never forget the reasons for which the UK did not join the European Communities at the outset or the kind of assurances that were made when we did join. We have a global outlook. In the 1950s, 60s and 70s, it may have been historically retrospective, but in today’s ‘network’ world, in which the engines of economic growth and power are shifting from west to east, the UK’s global outlook is forward-looking. The UK has always rejected the concept of European political integration. The Prime Minister who took the UK into the EEC in 1973 won only a hairline majority in the House of Commons for entry. This was on the back of the assurance that the other Member States would ‘forgo their federal desires’. The maintenance of ‘the veto’ was central to the UK’s 1975 referendum decision to remain in the EU. Since then, the UK has always been the EU’s anti-federalist advocate, from Margaret Thatcher’s Bruges speech and John Major’s insistence that ‘the nation state is here to stay’, to today’s David Cameron calling for a ‘decentralised Europe’.
It is therefore shocking that the Coalition government has suddenly committed the UK to ‘fiscal union’ in the eurozone, which the UK Chancellor urges with astonishing fervour, as the ‘remorseless logic’ which follows monetary union. Instead of foot-dragging, the UK is now (apparently) the foremost advocate of political union, albeit excluding us. It is hard to grasp the enormity of this volte-face, which has been made without a vote or even a proper debate in our national Parliament. But does he really mean it? Or does he only demand it, safe in the knowledge that no fiscal union cobbled together by the EU’s byzantine decision-making structures could possibly succeed.
At this stage, there is no consensus about what anyone means by ‘fiscal union’. For it to succeed, Germany would have to stand her national wealth behind it (doubtful), the European Central Bank would have to become a fully-fledged sovereign central bank, and the euro states would have to form a euro-Treasury to directly control the state spending, taxation and borrowing of the euro member states. All this seems most unlikely.
Many, including the markets, are in no doubt: the euro will unravel. Margaret Thatcher’s former Chancellor Lord Lawson pointed out on BBC Radio 4 on 14 September: ‘This disaster was predictable and it was predicted…this was just a political venture of no economic merit and it was bound to fail…You cannot have a monetary union without a fiscal union and a budgetary union. And in a democracy, which we cherish and we will maintain, you cannot have that without a full political union – the United States of Europe. And the countries of Europe, the people of Europe don’t want that. This is what the euro-fanatics have never understood…If you can’t have the political integration, you won’t have the fiscal integration and therefore the monetary union collapses’. He was explicit: ‘The orderly dissolution of the eurozone is the only sensible way ahead.’ He said that those who promoted the euro ‘ought to be ashamed of themselves’ and ‘we want to make sure that their thinking changes radically so we need not merely to address this crisis, but we need to address the whole shape and future of the European Union.’
Most of the Conservative Party in Parliament would agree with this. In an ideal world, the euro would be stable, without sovereign defaults. It’s what the US Treasury Secretary Timothy Geithner says he wants, demanding rapid action to increase capacity to bail out national governments and European banks, but he does not understand what European governments also fail to understand: there is no credible or sustainable basis for accumulating so much centralised power in the EU. This is what so many Americans have never understood. Ever since Henry Kissinger pleaded, ‘Who do I call if I want to call Europe?’ the US establishment seemed to regard the emergence of a ‘United States of Europe’ as the obvious, inevitable and desirable development – an image of their own country. They have regarded this as intrinsically in the US national interest. They could not be more wrong, and as the euro totters towards its dissolution, Tim Geithner will have to face the consequences of this wrong vision of the world. And so will all of us.
The EU is made up of democracies, but it is not itself a democracy. It is bureaucracy. When power is taken from its member states, it is isolated from democratic control. The European Parliament may be elected, but it is far removed from the real democratic politics of European nations. Most MEPs are just another branch of the European political elite. There is no possibility that they or any EU institution could introduce EU taxation, or determine that taxes will be collected more effectively in Greece, or public spending in Italy will be cut, or that the Spanish or French governments should recapitalise their banks. It’s time to get real.
In any case, George Osborne has made clear that the UK will have serious concerns about the consequences of fiscal union on the political dynamics of decision-making in the EU, even if it has not had a direct effect on the non-euro states. There would be two Europes in the EU, but still only one treaty, one legal framework under one European Court of Justice, under a single set of institutions. This would be unacceptable to the UK in the long term, which is why the UK will press for a substantial renegotiation as a quid pro quo for allowing fiscal union. At the moment, even the UK FCO will deny this. The FCO is ill-prepared for this crisis, and restrained by the Coalition agreement, but this renegotiation will be pressed by Parliament.
Such a renegotiation will be subject to a long denied referendum in the UK. The EU will be paralysed by a no-vote, unless concessions to the UK are substantial, and politically and legally sustainable.