A Letter to Cameron on Brexit: why Plan B=Plan A.

The Times of February 17, 2016 holds a lead article on Brexit, whose title has Cameron quoted as saying  ‘Don’t push us into Brexit’. The PM was said to be very stressed that European leaders would water down the results of his renegotiation. If the gruel was too thin, he was reported as warning, Britain was in danger of voting to leave the EU.

The signs do not look good: president of the Commission Jean-Claude Juncker, says The Times, does not like the idea of the UK government reducing child benefit payments to EU migrant workers who have children living overseas. “Some” MEPs refused to guarantee that they would  pass legislation to enact an “emergency brake” on welfare payments for migrants after the referendum.

A senior European politician is quoted by The Times as saying that Cameron fears that, in the light of  the negative reaction to his draft deal which he aired in the House of Commons a couple of weeks ago, if the deal were to be further watered down, he would be torn apart by press and party. There was a real danger, the senior politician was reported as saying, that the referendum would be lost, in other words that the Outs would win.

The Times reports that Cameron has had difficult talks with President Hollande. That should have been no surprise: the long and the short of it is that the French are opposed to giving the UK any special exemptions whatsoever: no protecting the City of London from an in-built eurozone majority; no exempting Britain from the aim of an “ever-closer union”. And Non to much else besides.

The Times indicates that insiders think the European Council this week may well fail to reach agreement. But there could be a second emergency summit at the end of March, in time for a deal that would still allow a June 23 referendum.

Whitehall is reported as concocting a Plan B, if Cameron’s renegotiation goes off the rails; Juncker, though said there is no Plan B. Plan A is the only one in town, and that is to have the UK in the EU as an active member.

A Plan where B=A.

Cameron’s renegotiation has hit the buffers. He made his Bloomberg speech without reflecting on the realities of Europe, and what his government could achieve and not achieve.

Definitely, the UK cannot “reform” the EU. The only step that is available to the PM has not been taken.  The PM could have Section 2.1. of the 1972 Act of Accession rewritten to the effect that the Crown in parliament is sovereign: the actual wording, concocted by Geoffrey Howe, states that EEC/EU law has primacy over UK law, in other words the government of the time considered that the European Court of Justice was the EU’s Supreme Court, and that the institutions of the EU were implicitly federal.

They were not, and are not. They are in the rhetoric of people like Juncker. But they are not in any treaty. The Rome Treaty gave no supranational powers to the ECJ; the judges in 1964 engaged in judicial activism to claim it. De Gaulle was in office at the time, and his Finance Minister Michel Debré, stated correctly that the ECJ had no treaty powers to justify its claim.

Nearly half a century later, this is still the case. Reference to the ECJ’s powers in the Lisbon Treaty were relegated to an annex. The legal opinion of 22 June 2007 
on which this annex to the Lisbon Treaty is based, declares: “It results from the case-law of the Court of Justice that primacy of EU law is a cornerstone principle of Union law. According to the Court, this principle is inherent to the specific nature of the European Community. At the time of the first judgment of this established case law (Costa/ENEL,15 July 1964, Case 6/641) there was no mention of primacy in the treaty. It is still the case today. The fact that the principle of primacy will not be included in the future treaty shall not in any way change the existence of the principle and the existing case-law of the Court of Justice.”

In other words, what the Court says is law, but there are no treaty powers on which its claims are based. To put it bluntly, the ECJ is just one more international court, which can opine what it wants, but the member states are not obliged by treaty, which they have not yet signed, to concur.

What does this mean for Cameron? Reword Section 2.1. of the 1972 Accession Act to recognise not the supremacy of a non existent supranational state(but a state which is most surely an ambition of “Brussels”), but the supremacy in the UK of the Crown in parliament.

What would be the likely outcome?

  1. There would be shrieks of outrage from “Brussels” that the UK was “nationalist”: the correct reply is no, the UK is intent on maintaining its constitutional democracy and the rule of law.
  2. The UK would stay in the EU, but with clear discretionary powers to analyse, amend, reject any proposal emanating from the EU institutions. This would not mean automatic rejection: but it would clearly state that the UK reserves the right to make its own laws, while listening of course to good ideas wherever they may come from.
  3. On this basis, Cameron would be likely to win a referendum on In/Out by a sweeping majority in favour of a British In. The reason for thinking so is that British voters have centuries of tradition that they vote their own laws, and since 1945 have consistently been in favour of European co operation.
  4. The UK’s European policy would now be in line with the clear preferences of its citizens in favour of a Europe of cooperating states. It would thereby end the hiatus between a Whitehall which dares not declare its implicit supranationalism and a public which is clearly very uncomfortable with supranationalism.
  5. It would also prove a major step away from the policy of the “ever closer” zealots who have pushed through policies, such as monetary union, Schengen, climate change, Ukraine, which are far too ambitious for the EU’s member states to live up to. A British position clearly in favour of a Europe of cooperating states would enable all member states to reconnect more easily with domestic opinions,  which have become increasingly hostile to the direction of policy taken by “Brussels”.
  6. Such a position in favour of a Europe of the states would in no way foreclose the SNP’s expressed desire to hold a second referendum on independence. If a majority of Scots wished to be treated like Greece, they are free to do so. The evidence suggests that Scots are far too canny for that.
  7. A newly confident UK in a newly confident EU would end Washington’s nightmare of having to deal with a truncated Europe, split east-west between poorer and wealthier; north-south, between surplus and deficit member states; ideologically between supra nationalists and nationalists, the latter finding a proper home in defence of their constitutional states; and a UK in the EU would prove a mighty relief to Germany, Washington’s de facto and principal ally in Europe.
  8. A UK in a confident Europe, dealing with realities rather than dreams, would be much more capable of standing up to President Putin, who presides over an economy in tatters, while dreaming of re-establishing Russia’s great power status by breaking European treaties in the Ukraine to which Russia is signed up, and by backing Assad in Syria. Such a Europe would welcome Russia into the wider European family on condition that Russia desisted from seeking to break up the EU.

So what’s holding you back, Mr Cameron? You are currently playing with defeat, when victory stares you in the face. Perhaps the reason is that you concur with the Brussels view that the UK is a province in a European superstate in the making? If you do, you hammer Heath’s nail in the UK coffin.

Plan B is for Cameron to champion the UK’s constitutional democracy: the beauty of it is that Plan B=Plan A, to keep the UK in the EU as the champion of Europe’s true interests.


About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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