Brexit and the US connection

The US-UK special relationship since the European Communities Act of 1972 has been predicated on the UK as de facto champion of a supranational EEC/EU. This may seem counter-intuitive in view of the UK’s reputation as an “awkward” partner in the EU.  But the reality is that the UK is the US’ Trojan Horse for an integrated Europe.

The polls give Leave near a 10 point lead over Remain in the run up to the referendum of June 23, when the British electorate will vote about whether to remain or leave the EU. Despite the interventions in favour of Remain by the US President, former US Secretaries of State, and Defence, and members of our own security services, the public remains unconvinced of the benefits of membership in the EU.

Leave is taking the lead.

The reason why momentum favours Leave is that Remain has no answer to the question why the British electorate should not be the ultimate arbiter over which laws prevail in the UK. Remainers argue the economic advantage of the UK being in the Single Market, but Leave wins plaudits when stating that the UK should be self governing.

There is a simple solution to Remain’s dilemma: the dilemma is, to stylise, economic security versus self government. Of course, staying in an EU in the state it is in is far from secure. There are powerful forces at work along the Euroland member states to move as soon as possible to a United States of Europe. But that is no assurance that the difficulties of creating a single state out of such diverse member states, will go away soon.

Nor is achieving self governance going to necessarily be welcomed by multinational corporate managers, or the powers that be in Washington D.C., Berlin or Paris, or indeed Beijing or Tokyo. There could well be a run on sterling, while international investors in the UK economy charge a higher price for lending.

There are unquantifiable risks both ways. My suggestion is that the government re writes Section 2.1. of the European Communities Act(ECA) 1972, which stipulates in so many words that EU law has primacy over UK law in all matters relating to the treaties. Since those matters have expanded enormously since the early 1970s, EU initiatives, regulations, directives and court rulings impinge on an ever wider range of policy areas, with direct bearing on the lives of UK citizens.

I suggest that the UK just states simply by whatever suitable legal instrument that its own law prevail over EU law. Doing so thereby makes life so much simpler for itself and for the EU. By ending the self-imposed muting of UK sovereignty, the government makes quite clear that it retains discretion to reject and amend regulations, directives and judgements emanating from the EU bureaucratic machine.

Clearly reasserting the primacy of UK law ends  the situation whereby the UK meekly sits by as one EU proposal after another goes through, despite UK objections. It also sends a very clear signal that policies that have long inflicted serious damage on UK interests will inevitably be reversed.

Not least, it brings the UK into line with German and French practice. The most important statement about the EU as it is defined in the Lisbon Treaty, which broadly defines the powers, values  and institutional set up of the EU is the German Constitutional Court judgement on the subject. Lisbon Treaty, the judges say, does not convert the EU into anything resembling a federal state. It simply confirms the EU as an alliance of sovereign and constitutional states, no more and no less.  https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2009/06/es20090630_2bve000208.html

The UK as a proponent of a Europe of co-operating states.

Why, then, has Prime Minister Cameron not taken this simple step? Boris Johnson reportedly suggested that the Prime Minister, following the meagre results achieved in his “re-negotiation” with the EU, go to the country on such a re-definition by the UK of the terms of its membership in the club.

The referendum would then be on whether the UK wished to Remain on its own terms or Leave. With a unified government, and all major political figures lined up for Remain, it is reasonable to have expected that the Prime Minister would have won a massive mandate for the UK to champion a thorough remake of European arrangements.

Given the realities of Europe, and its present political condition, that could be no other than  the formalisation of a European alliance of sovereign and constitutional states, and the whittling down of supranational pretensions by the Commission, the European Court of Justice(ECJ), the European Parliament, and the European Council. At the heart of this alliance would be a recognition that  one-size-fits-all policies are not appropriate for such a diverse region as Europe, where loyalties remain overwhelmingly attached to the regions and nations of Europe, rather than to the EU itself.

Such an alliance would aim to create as open markets as possible, but if member states chose to keep procurement national, thereby considerably raising costs, or protect one sector over another, then they could do so. Those member states who chose open market policies would very soon draw ahead as local costs fell and competitive pressures promoted a resilient tissue of companies.

This is the only Europe, the UK government can credibly argue, with which the UK public is at ease, and definitely the only realistic Europe, with which the peoples of Europe feel comfortable.

Two former Foreign Secretaries, Lord Hague, and Lord Owen, emphasise in speeches on either side of the campaign-Lord Hague for Remain, and Lord Owen for Leave, that that is the Europe of their preference. In his recent speech to Chatham House, the foreign policy think-tank in London, Lord Hague reports that he spent years seeking to promote such a concept among his partners on the continent. See Lord Hague, Why a Eurosceptic Should Vote to Remain: Chatham House.

In his speech for Vote Leave, former UK Foreign Secretary , Lord Owen,,  Vote Leave – Lord Owen Gives Speech On BREXIT – YouTube, reports that in the late 1970s as Prime Minister Callaghan’s Foreign Secretary, he drew up a position paper on the UK in the EEC to the effect that the government of the day favoured a Europe of the states, not a federalizing entity. That was definitely reflective of public opinion in the UK in the late 1970s.

It remains overwhelmingly the case today. What is also relatively new is that public opinions across Europe are tilting the UK way, as opposition to the idea of “ever closer union” gathers support.

http://www.pewglobal.org/files/2016/06/Pew-Research-Center-Brexit-Report-FINAL-June-7-2016.pdf.

The problem is that a Europe of co-operating states is not the official position of the UK, which remains that laid down in ECA Section 2.1. The ECA is still on the books, and still lays out the fundamental assumption of British EU policy.  The details can be seen on this blog:  https://storybookreview.wordpress.com/2016/03/31/the-uk-referendum-brexit-and-article-50-of-the-libson-treaty;  https://storybookreview.wordpress.com/2014/11/28/the-uks-supranationalism-is-at-the-root-of-its-eu-difficulties/

Whitehall supports the EU as a supranationalist entity

Why, then, does Prime Minister Cameron cling to his increasingly unpopular Remain platform? He talks about the benefits of the single market, but the EU is in such serious straits that America’s leading historian of the organisation, John Gillingham, publishes a highly readable book, The EU: an Obituary, London, Verso 2016.

Cameron talks eloquently about the risk of being outside of the EU, with the UK nose -a favourite image of his- figuratively pressed to the panel in a vain attempt to guess what “Brussels” is up to. But he does not grasp the nettle and explain why the economic benefits of Remain outweigh the benefits of accountable government, ie. that UK voters can hold their governors to account in elections.

He does not do so, presumably because he considers that admitting the UK is a semi-province in an expanding EU empire is not a vote winner. If this is his reason, he may well be on to something.

Were he to change his mind, Cameron would spike the guns of Leave; win a landslide victory; place the UK centre field as champion of a Europe of cooperating states, with less ideologically driven policies; and keep the UK’s position as a key player in  the US global alliance system.

By clinging to the UK’s official position that the UK’s future is as a province, or semi sovereign entity in an EU centred in Brussels, Cameron is setting himself up for a resounding defeat. This is a very curious position for a such a reputedly pragmatic Prime Minister to take.

The US alliance.

So back to the question: why not espouse a cause that he can win hands down? There may be plenty of reasons: he agrees with the supranational agenda; he considers that the supranational agenda is  all continental froth, the UK can sign up, and harvest the advantages; or it may be, as some commentators allege, that he has just stumbled into his predicament in his attempt to win office, keep on top of the Conservatives, and keep the “populists” at bay.

My contention is that he should be given the benefit of the doubt. I contend that he does not do so because  the deal between the US and the UK since the Heath government of the early 1970s, is that the UK enter the EU as the Anglo-Saxon Trojan Horse. But not a Trojan Horse to divide the EU, and to keep it as an alliance of sovereign and constitutional states-the definition of the EU given by the German Constitutional Court in its judgement on the Lisbon Treaty, quoted above.

Rather, the UK-US solution for the European problem, which has seen both countries drawn into Europe’s conflicts from Sarajevo to Sarajevo, so to speak, is to create a supranational United States of Europe(USE). The logic behind this strategy is that the USE remains one of the two pillars of the Atlantic alliance, and a USE, cooperating with the US on global affairs, takes over a number of the burdens of ensuring its own security that has been shouldered by the US since 1945.

To explain how we got to this situation, a little history is required.

When the  1972 ECA was drawn up by the Heath government , President Pompidou was in power in France, with a large Gaullist majority in the National Assembly. De Gaulle, the inveterate enemy of any form of supranational Europe, whether German, European or American,  had died in 1970, but his immense shadow still hung over French politics. There was no question of France in 1972 renouncing his inheritance. France was still a clear champion of a Europe of the states (For  excellent contemporary essays on France, Stanley Hoffman, Partie Quatre: La France dans le Monde, Essais Sur la France, Seuil, 1974)

At the time, Germany under Chancellor Willi Brandt gave priority to the national programme of “detente”, at the end of which the hope was abroad in some sections of German public opinion, for eventual reunification. Pompidou’s fear was that reunification would come with a Soviet offer of neutrality, leading eventually to a pro-Russian Germany, as a dominant power in central Europe.

A United States of Europe is the official position of the US State Department since the time of President Truman, if not earlier. My argument is that this position was adopted hook, line and sinker by the Heath government, given the centrality of the US position in Europe. Quite simply, the US could only be kept engaged in Europe if the EU member states took serious steps to being a USE, which could relieve thereby the US of some of its burden as policeman of European security.

In October 1972, Heath, Pompidou and Brandt met in Paris and set the most ambitious supranational objective for the EU which it has ever adopted. By 1980, the EEC/EU would have a single market, a common currency, a common political identity, and a common security policy. Hardly was the ink dried on the Paris agreements than the project was overwhelmed by the multiple complex realities of the continent.

The EU supranational objective was reborn in the 1980s, resulting this time in the creation of the so called 1992 programme, resulting not so much in Single Market as in an increasingly hegemonic Single Regulatory Regime for farm and manufactured products circulating across the incomplete single market.

Incomplete because, there is no single services market for the UK to supply, as there is a single farm and manufacturing market to be supplied by France and Germany. The UK may benefit by access to this market; but the fact of the matter is that producer groups in France and Germany are the prime beneficiaries. Some people go so far as to call the whole contraption a Franco-German stitch-up.

In 1990, Germany reunited in NATO. But that was because of US policy to ensure a westwards oriented Germany, supplemented by a French policy, with significant Italian support, to bind Germany into a supranational currency, which, Chancellor Kohl hoped, would be the engine driving the EU towards a fully fledged federal United States of Europe. The Lisbon treaty may be seen as Kohl’s step-child, inadequate to the task. The EU remains no more than an alliance of constitutional states, with pretensions but without the legitimacy to become a federal USE.

Where does this leave UK-US relations?

Whitehall, the US State Department, the 5 President’s Report of the EU all call for further progress to a supranational/federal EU.  But there is a problem, and it is becoming a very urgent problem. Public opinions across the western world have lived happily with leadership by élites, as long as broadly a large enough number have prospered to continue support for western liberal market politics. They no longer do.

The presidential campaign of Donald Trump shows quite clearly that public support for the thrust of US foreign external policies since the late 1940s has been evaporating. For the first time since 1940 a serious contender to the Presidency is campaigning on an America First Platform. Were this policy to be enacted it would pull the rug out from under all UK foreign policy since the late 1940s and the times of the great Ernie Bevin, and his presence at the creation, with Dean Acheson, of the foundation institutions of the western world.

Similarly, in the UK, the Leave campaign is gaining in traction. A very wide swathe of UK citizenry do not consider that the benefits of access to the EU market are worth the continued muting of the UK’s hard won constitutional democracy. Politics weighs, and will weigh, much more in the results of this referendum than the various economic claims being bandied about by all sides.

The conclusion is as clear as a bell. This referendum is Cameron’s to lose. My solution is the ONLY one left for the Remain camp. Reaffirm the primacy of UK law, stay in the EU, militate hard for its reform, stay in with the US, but keep your options open in case the US opts for America First.

This will involve a head on conflict with entrenched interests in the EU. Too bad. We are now in very troubled international waters. The troubles have been created by dystopian EU policies. They have to be challenged. So here’s an opening suggestion:

Take the Commission to the ECJ for breaking its commitment to create conditions for high employment in the EU. State publicly the truth that the ECJ has no treaty powers whatsoever to its pretence as the EU’s supreme court.

The gloves have to come off, Mr Cameron. The EU is in what the Germans called Vertragsbruch, breach of contract, rupture de contrat. Europe cannot carry on along this unwordly path of “ever closer union”.

The UK public, I believe, instinctively know this. They will vote accordingly.

 

 

 

 

 

Advertisements

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.
This entry was posted in France and Germany, The Euro and the EU, Uncategorized, United Kingdom, World politics, business and economics and tagged , , , , , , . Bookmark the permalink.

One Response to Brexit and the US connection

  1. Pingback: The UK should lead rather than leave, says the FT’s Phil Stephens | Writing about history, politics & economics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s