British ideas of Europe. PART 2. The UK as a champion of the Europe of states

Popular UK  views on Europe locate in the upper left quadrant, sketched in the introduction in Part 1 of this series on British ideas on Europe. The “Remainers”, and their predecessors never managed to win over the British electorate to their views. There were moments when the EEC/EU was very popular, notably in the late 1980s, and in February 2016, opinion polls indicated that 60% favoured membership or considered that Remain would win in the forthcoming referendum. Indeed, Eurobarometer, the Commission polling arm since 1973, has recorded a steady 80% of the British public in favour of European co-operation. It is also true to say that UK opinion  shares much with the rest of the populations of the EU, including historical memories of the past both as sources of European antagonism and as sources of commonality. Loyalties in the UK go overwhelmingly to national or to regional institutions, as they do in the rest of Europe.

There is one major difference though. Whereas EU supranationalists-whether British or other European- consciously seek to reject the historical legacy of the European mid-seventeenth century, notably in the form of the Treaty of Westphalia, the functioning institutions of the UK are rooted in the years 1640-1707 (the years of the Civil War, of Restoration of the monarchy, of the Glorious Revolution of 1688 and the Union with Scotland). The Glorious Revolution of 1688, and the Bill of Rights of 1689, laid the foundation for the constitutional monarchy,  predicated on the idea of an executive power accountable to the electorate, and constrained by common law, trial by jury, and by habeas corpus. Many of these conventions run directly contrary to the notion of laws and directives imposed from outside the UK, over-riding UK courts and Parliament. Subordinating such a UK to a foreign court was bound to be a hazardous process, not least because this living constitution came to resonate in the hearts of an expanding electorate over the subsequent 300 years and more.

This has always been a major problem since Prime Minister Heath, in alliance with the followers of Roy Jenkins in the Labour party, and the small Liberal party, took the UK into the EEC in 1971-72. Heath was convinced that the days of the nation state were over, as Ken Clarke records in his memoirs. The incident is worth recording. Clarke met Heath in the corridors of the House of Commons:   “I had for some reason been stressing the need to explain that the European Community was not a federal organization,, but was destined to become a Union of Nation States bound together by a treaty. Ted angrily dismissed this. He brusquely said that in his opinion the age of the nation state was now over. He never gave the opportunity of undertaking himself the Herculean task of selling that proposition to the British political class and the public, and he would never have succeeded in persuading even me”.[1]

But Clarke also admits that he never managed either to win over the public to his views. Clarke’s measure for being “right wing” is hostility to the EU: he defines it as “a form of isolationist nationalism, which became known as Euroscepticism”. [2]This is a travesty: there are plenty of reasons why voters across the UK have not been enamoured of the EEC/EU. At the heart of these concerns has always been  the constitutional question: until 1972, the sovereign, in the formula of Walter Bagehot-the nineteenth century editor of The Economist-was the Crown in Parliament.That had been the basis on which the living constitution of the UK had evolved over centuries. Prior to 1972, voters in the UK assumed that their MPs would vote always in their conscience for the UK’s interests. This trust was seriously dented by EEC entry. The six day debate in October 1971 on EEC entry was hotly contested, and won by a seemingly large parliamentary majority of 364 to 244 votes.

Heath lost office in early 1974. The incoming Labour government decided to hold a referendum on membership, in direct contravention to the tradition of representative government . The Leavers lost handsomely-a 67% majority on a 64% turnout-, but the precedent was set whereby the UK’s living constitution now became bi-cephalous, with plebiscitary and representative government in contention as the court of last appeal. The result of the vote of June 23 2016 has been to precipitate the UK into a constitutional crisis, exacerbated by the mediocrity of the present leadership.

In office, the Labour governments of 1974-79 presided over a stagnant and high inflation economy, lost the general elections of May 1979, and stayed in opposition for 18 years. Margaret Thatcher entered 10 Downing Street, determined to revive the country’s fortunes. She did so by focussing on domestic reform, rather than of seeking external support-as did Heath-to resolve domestic problems.

This entailed harsh economic measures at home; she sent the British fleet 6,000 miles to the south Atlantic, ending with the return of the Falkland islands to British control. In the EEC, the Prime Minister battled to reduce the UK’s budget contribution, which was finally settled at the Fontainebleau summit of summer 1984. For her pains, she was re-elected with massive majorities in 1983 and again in 1987, as a transformed economy began to boom. A more bombastic press heralded the resurgence of a transformed and patriotic culture.[3]

In the last years of Thatcher’s reign, after the Fontainebleau settlement on the budget, public opinion turned highly favourable to the EEC/EU. The “1992 programme” was predicated on the premis, elaborated from the ECJ’s judgement on the Cassis de Dijon case, that different regulatory requirements in member states should not impede trade between them. It seemed for two euphoric years in 1987 and 1988 that the EU was becoming an effective force favouring open markets while respecting different national ways of doing things.  French policy, however, was moving in a contrary direction. As East Germany weakened, and unification hove into the realm of the possible, French policy revived Jean Monnet’s vision of an integrated Europe, . To Delors, the internal market was a step on the way to  liberalization of capital movements, while monetary union, he hoped, would end Bundesbank primacy in setting intra-European interest and exchange rates. Kohl, a committed European federalist, was ready to oblige. Much as senior Whitehall officials shared his ambitions for political union,the British public most definitely did not. Nor did their Prime Minister.

Here is Sir Stephen Wall  stating in the concluding pages of his book, A Stranger in Europe, that the UK ought to be very comfortable in the EU.  “If ever there was a time when a British government could, with arguments borne out by exerpeicne, make the case for Europe, this is it. The one area which still paralyses us politically is institutional change. The one thing which all three Prime Ministers covered in this book had in common was their belief in a Europe which was primarily a Europe of governments, a Europe in which the independent authority of the supranational institutions was to be feared and, where possible, held in check. Yet, if one rattles off a list of our likely preoccupations over the next few decades (poverty, disease, migration, terrorism, energy, climate change, economic competitiveness), all of them require Britain to work with her European partners and many of them will require,  not the lengthy , lowest common denominator, approach of intergovernmental negotiations but the effective decision-making , and subsequent enforcement, which can only be achieved by the so-called Community method. Britain,  as never before, needs in her national interest the Europe of the founders: a Europe which has strong supranational institutions and which honours and advances the unique institutional framework which accounts for its success”.  [4]

Sir Stephen was writing in 2008, when the EU was celebrating the first ten years of the Euro as a “resounding success”. Here is the Commission in its document, The Euro @ 10:

“The single currency has become a symbol of Europe, considered by euro-area citizens to be amongst the most positive results of European integration together with the achievement of free movement within the EU and peace in Europe. ….The number of countries that share the euro has increased from the original eleven to fifteen at the beginning of 2008 and is set to increase further. EMU is an achievement of strategic importance for the EU, and indeed for the world at large, in which Europe has become a pole of macroeconomic stability, especially welcome in the present times of financial turbulence. While the euro is a clear success, so far it has fallen short of some initial expectations. Output and particularly productivity growth have been below those of other developed economies and concerns about the fairness of income and wealth distribution have grown. In addition, …unwinding global imbalances are putting pressure on the exchange rate of the euro and the functioning of our financial systems. At the same time, while the progressive enlargement of the euro area will add dynamism to its economy, it will also increase the diversity of EMU, making stronger demands on its adjustment capacity.”[5 ]

The Commission’s language in EMU @ 10 is apolitical, as its role specifies since the founding of the EEC/EU. This is not to say that politics is not prevalent in the EU: indeed it is closer to the truth to say that it is predominant, and that major political battles in Europe are located first and foremost within the member states, and expressed in relations between them both within and alongside the politicking that goes on within the EU institutions. Nowhere is this better illustrated than in the  rift between Commission President Delors and Prime Minister Thatcher, in the years 1988 to 1992. The battle between them was about the location of legitimacy: in the member states, said Thatcher. No said Delors, in the EU institutions. Crucially, Mitterrand and Kohl backed Delors.

When Delors forecast that within a decade, 80% of legislation would come from Brussels, Prime Minister Thatcher uttered her famous “No, no, no” in the House of Commons. Within a few days, she was politically defenestrated by a broad coalition of Delors’ supporters in London and across the EU. Conservative party unity shattered. Members of parliament hostile to the Delors’ vision formed the Bruges Group, named after Thatcher’s speech to the College d’ Europe, calling for a “Europe des patries”. The Maastricht Treaty, laying the foundations for monetary union,  spurred the creation of  UKIP.

Meanwhile, the full implications of EU membership for the UK  had become clear when the ECJ struck down an Act of Parliament, the 1988 Merchant Shipping Act, as incompatible with EEC/EU law. As Lord Denning, a former senior judge, stated:  “No longer is European law an incoming tide flowing up the estuaries of England. It is a tidal wave.”[1] Subsequent developments validated Denning’s assessment. In 1998, the Blair government incorporated the Human Rights Convention of the Council of Europe into British law. In response to Conservative party calls for the UK to withdraw, [1]Judge Dean Spielman, the President of ECtHR, warned that the UK could not withdraw from the Convention on Human Rights without jeopardising its membership of the European Union.[5]

Maastricht was the moment when UK supranationalists and constitutionalists split. The differences could no longer be disguised, and they ran through all political parties to a greater or lesser extent. Official UK had therefore to learn ventriloquy: to keep as much as possible in the EU’s inner circle of power, its representatives  sought to promote the EU on the sly. They were in good company, as the “ever closer union” brigade in the EU began to face similar problems at home. At home, their political masters, spoke out as if their every action was in defence of national interests. They were also in good company there, too, because every single member state had to address their own voters, who -as more powers migrated to the EU-became ever more concerned that their particular concerns were being neglected.

One form of ventriloquy was to pretend things were not as they seemed. Prime Minister Blair wanted the UK in at the launch of the Euro in 2001, but Chancellor Brown devised five tests as to whether it was in the UK’s interest to join the single currency. This presented no problem for Blair: “It remains, he said,  the government’s policy to join the euro provided that the five economic tests we have laid down are met and the British people give their consent in a referendum.” Brown ensured that the five economic tests never were met, and then went on as Prime Minister to sign the Lisbon Treaty- in effect a constitution for the EU- while indicating displeasure by turning his back to the cameras.

Another was to join the EU in producing a fait accompli, while denying that the powers surrendered by the member states represented anything other than a “tidying up exercise”. We did our best to defend the UK’s position, was the mantra, but you can’t get your way all of the time, and inevitable concessions have to be made as part of the “process”. This was the Blair government’s position during the negotiations of 2002-2004 to formulate a European Constitution. Former French President Giscard d’Estaing presided; his Secretary General was Sir John Kerr, hired for his legendary skills at draftsmanship. He excelled in Article I-6 of the European Constitution, which stated that “The Constitution and law adopted by the institutions of the Union in exercising competences conferred on it shall have primacy over the law of the Member States.” [6]The Constitution was voted down in the French and Dutch referenda of 2005, and  this key supremacy clause duly found its way into an annex of the Lisbon Treaty.

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 (my italics). 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.” [7]

In other words, judicial activism trumps Treaty law. The Court claims supremacy, but that supremacy is not recognized in any Treaty form. It has been claimed by judicial activism, and acquiesced in by member states, as a provisional convenience. For UK supra-nationalists, this provisional convenience is the country’s supreme court of appeal. There can be no better illustration of the gulf in legitimacy between the aspiration to a USE, and the reality of public opinions in the EU.

The UK, against the preference of what I call official UK, came to be located on the outer edges, within the EU, but vulnerable to bi-lateral decisions made by the Franco-German tandem, and by unilateral decisions made by Berlin from 2010 on. In sidelining the UK, Chancellor Merkel was treading in the footsteps of her predecessors. The Bundesbank had pulled the plug on sterling’s membership of the ERM in 1992, and voted with France against the UK on the EU directive on the resale rights of artists. Germany is at the forefront of opposing liberalisation of its service sector, where the UK’s comparative advantage lies. The UK stood aside from monetary union, initially from the social chapter, and from the Schengen accords on free movement of people. Berlin appreciated the UK as a pro-free trade member of the EU, but Merkel did nothing to help Prime Minister Cameron get a meaningful renegotiation, that he could credibly present to the British voters in 2016. The occasions when the UK was voted into a minority on the Council of Ministers rose sharply in the years  2009-15.[8]Both France and Germany considered that the financial crash of 2008 was Anglo-Saxon in inspiration, and that Germany’s massive trade surplus in the EU or a faulty design of the Euro currency had nothing to do with it. Blaming the UK became their default position.

In the UK, the gap between the rhetoric of a Europe of the states-the predominant image of public opinion-and the permanent pressure for “ever closer union”, under a barely concealed veneer of Realpolitik between the member states, made it much more problematical for Remainers to campaign for membership of a supranational Europe in the referendum of June 2016, when the public thought overwhelmingly national or regional. Again the UK was not alone. Indeed, the strains and stresses in the UK caused by  EU ambitions, as adumbrated by Sir Peter Wall, as opposed to European realities-the continent’s diversity-  is widely shared across the continent. I shall turn to review a few recent books to illustrate the point in the next Part 3.

[1]Ken Clarke, Kind of Blue : A Political Memoir, London, MacMillan, 2016. p.81.

[2]Ibid.p.309.

[3]Roy Greenslade, “A new Britain, a new kind of newspaper”, The Guardian, February 25, 2002.

[4]Stephen Wall, A Stranger in Europe: Britain and the EU from Thatcher to Blair, Oxford, Oxford University Press, 2008. p. 219.

[5] EMU @  10.  http://ec.europa.eu/economy_finance/publications/pages/publication12682_en.pdf

[5]« UK’s withdrawal from human rights law would be ‘political disaster’, The Guardian, June 4, 2013.

[6]http://www.cvce.eu/obj/the_treaty_establishing_a_constitution_for_europe-en-4eb2765d-720c-4358-a5fe-e318d06562f1.html)

[7]http://en.wikisource.org/wiki/Consolidated_protocols,_annexes_and_declarations_attached_to_the_treaties_of_the_European_Union/Declarations#17._Declaration_concerning_primacy

 

[8]Simon Hix, Sarah Hagemann, “Is the UK a winner or loser in the EU Council?” The Guardian, November 2, 2015.

 

 

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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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