The EU Project is not grounded in reality and does not serve the people. The latter point is clear to those willing to look at what is happening to citizens in many of the nations supposed to be converging on a prosperous future together. For more than half its existence the EU has been falling back in its importance relative to the rest of the world.
Although the origin of the EU-idea is French, the greatest beneficiary is Germany (see Working Together?). The two countries combine their preferences – ideas and outcomes – to provide the necessary leadership. However, neither the founding idea nor the biased outcome is clearly relevant to any other member state.
A victory for Marine Le Pen in the French presidential election would see France withdraw from the eurozone and return to its own currency. The French electorate would also be invited to say whether they wish France to stay in the EU. Then the driving partnership will break up, and possibly the EU with it. But that is reckoned to be an unlikely outcome (see French Election, Part 1).
On the other hand President Macron’s plan would be to get Germany to underwrite the debts of other Eurozone members rather than simply lending them more money. He underestimates the resistance of German citizens and the barriers in their constitution to changing the treaties to make this legal – or more likely he is fooling his own electorate; the German people won’t accept taking on the debts of their neighbours, near or far. Macron also promises to be a leader of the Rosbif’s punishment brigade, which goes down pretty well with many of his voters.
Lords of Misrule
Even noble Remainers would accept that the EU isn’t perfect but what are the major things that must change and how likely is it that will happen? We believe the EU is institutionally incapable of adequate change to sustain the Project. Do the enthusiasts think the current arrangements are good enough if we have to accept them?
Economic and Monetary Union, and the single currency that is its standard bearer, are the main means by which the federal agenda is to be achieved. Once every member state is in the eurozone (19 out of 27 are currently) then all preliminary objectives will have been achieved and all that will remain will be to complete political union (see the Five Presidents Report for our evaluation of this agenda).
Reverse the sequence; if the eurozone fails then EMU is struck dead and there remain neither the means nor the rationale for completing the project. In short, the EU as currently defined will also have failed, not because it has achieved nothing but because it cannot achieve its main – but disguised – aim.
The EU is a great idea, stolen by elite politicians as their project for ruling the Continent, placing this above the concerns and interests of citizens. The new ‘lords of misrule’ have inflicted worse depressions on Greece, Italy and Spain than America experienced during the 1930s. For several decades, since the 1980s, EU growth has been lower than any other developed or developing trading region.
Can’t Get No Satisfaction
Dissatisfaction is increasing in almost every country, with the chance that fairly nasty governments could be installed in some of them. France and Germany are facing similar challenges and these were founding members and bastions of support for the Union. The EU cannot survive without major reform but its leaders cannot believe this, unless it means accelerated federal integration, against the wishes of the people. Effective reform would involve tearing up the Union by its roots, which the mandarins are unlikely to accept, given the strength of their commitment to ‘ever closer union’ and the status and benefits the EU provides for many at the centre and top. It may whither or crash before effective reform happens.
The draft guidelines for the EU’s Brexit negotiators were published last month (see Divorce Guidelines). They were tweaked a little in readiness for the ‘Brexit summit’ of EU leaders to review them on Saturday 29th April (we haven’t seen the outcome yet but will review it in due course). We concluded that the main objective of the draft guidelines was to punish the UK for having the temerity to leave the Union. That was clear from the contents of the guidelines and was put beyond doubt by Jean-Claude Juncker, who said, “Britain’s example will make everyone realise that it’s not worth leaving” (see “All you need is love”). One tweak to the guidelines, reported by Reuters, will be to exclude financial services from any future free trade agreement unless Britain agrees to continue to respect the EU’s regulatory and supervisory standards. To agree to this would tie the UK into the EU’s legal system in perpetuity, to avoid which is one principal reason for Brexit. France and Germany wish to attract as many finance companies, and their financiers, to Paris and Frankfurt, so we can label this move as ‘economic piracy’.
It seems to us that if the main agenda for the EU’s negotiators is to punish the UK and steal the highlight of its economy then there is no reason to believe that a mutually satisfactory trade agreement can be reached. If this is the case then the UK government should open negotiations with NAFTA and its constituent governments sooner rather than later (see A Clean Brexit, above). Although both EU and UK leaders declare that they are eager to reach a settlement that preserves as much as possible of current trade arrangements, the most likely effect of a negotiation based on punishment and theft will be to increase the proportion of British voters who wish for a hard Brexit and agree that no deal is better than such a deal.