What do you think Brexit means?

–The European Union has developed from a trading bloc concept post second world war to the political union institution of today. It started as a trading proposal and then developed into a political union. The treaty of Lisbon 2007 replaced the EU’s key treaties — the 1957 Treaty of Rome primarily and conceptually a trading agreement, and the treaties of Maastricht (1992), Amsterdam (1996) and Nice (2000) Each step following on from the treaty of Rome has moved closer and closer to a federal Europe. Indeed the treaty of Lisbon is the accepted foundation of a Federal European Constitution.


The idea of a political and eventually a federal Europe has above all been the most effective way of keeping the peace in Europe, and in many ways expanding the idea of democracy to former communist and totalitarian states. This has undoubtedly been an enormous boon to the peaceful advance of Europe as a whole. The other benefits are that Europe has a much stronger voice in world affairs and much more clout when it comes to both soft and hard influence.


The Lisbon treaty has laid down the primacy of the European institutions over, (though shared in some limited issues), national sovereign governments. The European Union’s exclusive decision making encompasses the customs union, competition rules, monetary policy over euro members, common fisheries policy, commercial and international policies. This effectively means that the EU centre has primacy over all things regarding the internal market including, social policy, territorial cohesion, agriculture and fisheries, environment, consumer protection, transport trans-European network energy, freedom security and justice, public health.
Individual states are left with a much modified freedom of legislation. The greatest change has been the introduction of the Euro as a common currency, a massive operation that was implemented in a political euphoria that resulted in catastrophic economic consequences for the PIGS, (Portugal, Italy, Greece and Spain). Portugal has been the first to begin recovery from this catastrophic politically motivated financial change. The desire to spread the economic unity of a single currency remains one of the most intransigent issues which the EU faces. There are eleven currencies in the EU presently and all except two, UK and Denmark are bound to accept the Euro as their currency. The European Central Bank will therefore hold sway and all the member states who will eventually have to accede to fiscal union, i.e. The ECB will have the last word on budgets and thus austerity or expansion.


There are rules which govern the translation of national currencies to the Euro. Hopefully lessons of the past (Greece et al) will be learned. This is where many Euro sceptics shy away from the Federation idea, clearly to have a currency union will require the surrender of national decision making (sovereignty).


The other argument that is a worry to some, is the overall primacy of the EU in commercial policy. In the interests of the common customs union and other trading matters, the EU is defensive as well as enterprising. The EU whilst protecting its internal market, restricts access to other external markets and insists on unity of trading principles from all its members. Membership restricts members’ ability to exploit their individual specialist skills or knowledge – another Euro sceptic objection. Defence and Food industries (agriculture and fisheries) are two which are particularly sensitive to non-European opportunity.


Whilst the Pound Sterling remains outside the Euro, and the UK dominates the defence scene in Europe (which is quickly changing), the issues of international defence relationships are also vexed questions, particularly to the UK, which with France, is a permanent member of the Security Council. . The relationships of NATO and with the United States are confused with the EU aspiring to flex its own muscles on the world stage. Good or bad? Probably the former in the longer term, but there are serious issues with some member states who seem not prepared to invest in defence but still want the collective protection.


Many of the European states are keen to accept the democratic ideal, though several still have autocratic and populist aspirations. Here membership of the EU is an undoubted force for progressive good. However, the cumbersome nature of many national ideas is also a hindrance to unity and deftness to respond speedily in a very dangerous world. The strong will need to surrender their leadership international roles and be more sensitive to consensus politics. Leadership of the EU is now vested in France and Germany, how long will that be comfortable for the smaller nations.


One of the great planks of the European idea is freedom of movement and this was one of the emotive issues when the UK held its in/out referendum. The awareness of the good of immigration, has since dawned on the British public, and perhaps this has become a lesser-issue for many, but not for all. Control of our borders is a cry not only of the UK but many EU countries in the light of mass migration from the Middle East and Africa. This issue is not going to go away and seemingly will affect all nations for the foreseeable future.


The European Court of Justice is clearly an important pillar of European integration, there is much confusion in the minds of many that the Court is involved in minor admin, (e.g. the price and shape of bananas) and whilst no doubt the Brussels community is a humungous beurocracy the Court plays an essential role in the furtherance of judicial rules across the EU.


In this blog I have tried to draw attention to some of the pros and cons of the European dilemma. Not the British dilemma, which courts division, the breakup of the union, and much risk besides. One thing is for certain that if the UK leaves the EU it will have a detrimental effect both in the UK and the EU. There will be a shrinkage of the EU economy, and the UK which currently makes up 17% of the EU economy,will certainly find, at least in the short term, some very difficult issues in the financial services and agricultural industries in particular.


The possibility of the reunification of Ireland is a problem that nobody wants to face, yet it may be the only answer to the Irish problem. That would prove a detrimental financial blow to the Republic of Ireland and there is no real support there for such a move. The UK on the other hand, could foresee the unification of Ireland as a boon, since Northern Ireland has a substantial fiscal deficit running into billions of pounds/euros.

Scotland also may opt to have another vote for cessation from the Union, which if granted in the earlier days of withdrawal from the EU, could swing away and cause a huge uproar in constitutional and legal affairs in the UK. The Welsh who have the greatest fiscal deficit (per head of population) may well agitate for independence, but reality makes such an aspiration unlikely to succeed.


So there are great risks on both the EU and UK sides. Whist there have been many divisive shrieks from both sides of the Brexit arguments, no one can prophesy the future with any certainty.


In sketching the threats and opportunities that face us all, I hope some will be given food for thought.

Liberalism is dead? says,- Vladimir Putin!

Mr. Putin, a man we all know for his sense of fair play, tolerance, and generosity of spirit has pronounced that liberalism is dead.   Well, what do you know,  are we surprised? Is he right?  It’s this last question that bothers me.

Messrs Putin, Xi, Erdogan, Trump, and several others form a very powerful axis, none of them are remotely liberal.   Between them, they carry more influence than the European block, Canada, Australia, and New Zealand combined.  Between these two groups of authoritarian and liberal regimes stand those who grapple with extreme problems of fundamentalism (e.g.Iran), extreme corrupt socialism (e.g. Venezuela) or radical revisionism.  India and South Africa, who both grapple with monumental change.

All nations it seems, follow strong leaders.  In the UK recently we have had a conspicuous absence of leadership which has led us to the edge of chaos.  The nation is about to appoint a chaotic leader whose key attributes are charisma and a bad haircut.  Despite all the negatives, the UK will appoint a Bullingdon Club boor as its next prime minister simply because he has charisma.   Johnson is a populist in the Trump mold, who will, if allowed, enjoy an authoritarian role focused solely on the Brexit question where charisma outshines the policies for the common good.

Will the UK allow Boris Johnson to lead it out of the EU in an impossible time scale?  Will this ‘no deal’ action result in the breakup of the UK?  Will a general election that follows destroy the center ground of British politics?  Will the liberal majority bring Johnson down, with what consequence?

Was Putin right?  Is liberalism dead?

Boris for a day – it’s dark out there!

Telling the future is always hazardous, but I am prepared to bet that Boris the boorish philanderer will be come Prime Minister of UK. Happily though, it will only be for a day or two at the most. Surely, if Boris gets in, and the blue rinse Tories are daft enough to get him there, there will be a vote of no confidence and a general election will follow.

The bad news is the chaos that will follow that. It is hard to imagine, but the options are not pretty. A hot bed of Lib Dems, the Brexit party run by Nigel Farage, the tail end of Labour, or maybe the resurgence of a more moderate Labour, an active and insurgent SNP and a minority of Tories of whatever hue. It seems most likely that the mother of parliaments will become the home of a huge mix of political variations with a coalition being paramount. The key issue of ‘Brexit’ will remain the elephant in the chamber, it depends if the Brexit alliance can hold the rest at bay.

The numbers, that’s the issue. Despite the apparent huge changes the UK will be in the same boat. The one item/personality that can change all this is not Boris but Nigel Farage.

The next general election will be fought as another referendum on Brexit, like it or not! Let us hope the electorate vote decisively one way or another. This is where my future prophesying lapses.

The prospect of Nigel Farage is one I might contemplate down in the Pub, but not for more than a millisecond, who else do I see on the horizon. It’s dark out there.

 

Brexit, failure or ambition.

David Cameron has tucked his £800,000 advance up his shirt and walked away from the biggest political upheaval the UK has ever seen. I sincerely hope that as few as possible buy his book which no doubt will point to his genius and integrity in creating this major cock up. Whilst not mentioning Libya (another huge mess) he will no doubt point to his achievements as he sees them. How anybody can be remotely interested in this failed ‘has been’ is beyond me.

Nevertheless, President Macron’s impassioned plea for the goodness intrinsic to the idea of the EU is a compelling one. He does not labour on the failures such as the PIGS bankruptcy and unemployment, but he does claim the Euro has been a success with which I heartily disagree.

What went wrong then? Now we have no end of dissent about both the purpose and the practice of the European idea. The Brits are clearly fed up, many for the wrong reasons. The Austrians, Hungarians and Poles have perniciously right wing governments and dissatisfaction with the EU is widely the rule.

There is a clear disconnect between the ‘man in the street’ and the European Union as a consciousness of belonging to something of worth. Brussels appears as a nightmarish bureaucracy populated by greedy politicians who are profligate in the extreme. Easily dis-likeable and easily pilloried.

Cameron recognised the dis-like and the dissent but he washed his hands of the whole affair and committed to a referendum nobody (except perhaps Nigel Farage. ) wanted. He presumed, I think, that remain would win and all would be well. That they did not, came, I’m sure, as a a complete surprise, and off marched DC the victim of his own innocence and naivety.

Is it too late to turn back the clock? Since the referendum no one has a solution to a problem nobody wanted. Impasse!,

Please will somebody – anybody – attempt to clarify what is good about the EU and what is bad about the EU, and what would be needed to improve the institution. The idea of the EU – unity, peace and concord, – good. Practice – graft, gravy train, issues with borders, law and order, defence, unification of standards – vary from very good to very bad.

Why is the reversion to so called sovereign status good, why is nationalism bad?

All I know is faffing about doing nothing is bad.

It all boils down to this.

In or out? That is the question. Should it be that simple? Probably not, but ordinary people persist in seeing the issues as a binary choice. The Politicians do not share this view, because (they think)they know better. Sadly David Cameron seemed not to know better when he posed the choice.

Like it or not, the binary choice storks the national psyche, despite all the infighting about backstops, common standards, customs unions and associate membership, they matter not a jot.

Come the European elections, people will vote in or out and it will be interesting to see if the Brexit Party sweep the board. They will surely win the most votes for an individual party, they may even win an absolute majority of votes cast! What then?

Firstly it will be their worst nightmare come true for the EU. Their parliament, if the UK does not find a parliamentary solution to exit the EU, will be invaded by a large number of Euro-phobes who will do all they can to wreck EU plans. The outcome of the European elections matters as much to the EU as it does to us, so there is an additional motive for the Euro-sceptics to turn out next week.

This would under ordinary circumstances gee up those in power to get a result, but with Mrs. May in charge it seems unlikely.

The consequence may well be that there will be a vote of no-confidence in Mrs. May which could well bring down the Government and hasten in a general election. Farage and co could well form a coalition with the Euro-sceptic side of the conservative party and -yes- daft as it sounds, form the next government.

This European Parliamentary election is much more important than it seems, if the Brexiteers turn out in force, then bye-bye Politics as we have known it. Hello, populism, perhaps a lurch to the right, all the things that reasonable Brexiteers hoped to avoid.

In the last resort, it’s the will of the people, at least of most of the people. It is imperative that we all use our vote. I will vote, I hope you will too.

Mayday! May day, may be.

Teresa May survived her vote of confidence last night, largely because it was a pointless exercise and no one else would want her job anyway.  How those post Cameron candidates must be chuckling.  So did the pantomime prove anything one way or the other?

Not much that we didn’t know before, namely the majority of Parliament are set against the backstop and that Mrs. May has proved inept at rallying support as she persists in trying to do the impossible on her own.  Someone must tell her that she is not a modern day Joan of Arc equivalent.  The idea of parliamentary democracy is about listening to the representatives of the ‘people’ and sharing collective cabinet responsibility.  In this, it is fair to say, Mrs. May has been hopeless.

However, despite these lamentable failings, the one quality of the PM that has shone through  has been her heroic doggedness.  A quality much admired by the Brits. She has managed to press on firmly convinced that she is right and everyone else except possibly Michel Barnier is wrong. She wears her responsibility for the nation as a crown of thorns and parades her pain for all to see. The loan hero walking the lonely road.  Hoorah!

If at the end of this campaign when and if  Brexit is completed, she knows she will be discarded, cast aside.  In the best traditions of national sacrifice she knows she will be thrown on the pyre of a ‘has been and nearly was’, national treasure.

Mrs. May’s outstanding achievement has been that she has increased the leave brigade by a very substantial number, as those of a compassionate nature rush to her defence against the bullies of Brussels.  There may be an artist somewhere putting paint to canvass showing the ‘Maid May’ looking to heaven as she is tortured by the slings and arrows of outrageous Europeans, and the perfidious forces of Rees-Mogg and co.

As dramas go this is pretty melodramatic stuff.  Time for Brussels to give the Brits something to cheer about.  Will they perhaps see that this poor sacrificial lamb of a Prime Minister is a Trojan Horse who”s really working for Rees-Mogg?  Or will she procrastinate yet a while and almost inevitably lead the late Great Britain into a ‘No  Brexit at all, or maybe a ‘no deal’ Brexit’.

Maybe she will, Maybe she won’t, maybe!

Brexit – we arrived exactly as this blog predicted.

The chaos that passes for our parliamentary democracy is the direct result of the dreadful political error in allowing a binary choice in a grossly over simplified referendum.  This has been compounding by the dogged but narrow minded Prime Minister May mismanaging the consequent negotiations to leave the European Union.

I wrote about what to expect back in May 2016 see my blog “Cameron – democracy what a chancer”  I then prophesied what was to happen and by and large I was almost precisely correct.

What I could not prophesy was that Mrs. May would call a disastrous election and then personally manage the negotiations with the EU from the view point of the vicar’s daughter she is.  That is to say, she set off by seeking to agree to what the EU wanted because she was sorry we were to leave.  Perhaps, it would have been better to have set out by adopting the stance that the UK was leaving and this is what the UK expected to happen.  I am not suggesting that the difference in the two approaches are apocalyptic but the nuance and difference has proved to be crucial.  She has allowed the EU to turn the screw and now we find ourselves with a deal that nobody except the PM finds palatable.

I have a feeling that many people will want to see the ‘May’ proposal rejected by Parliament and negotiations reopened after an extension to the article 50 period.

The EU will say no, of course, as they will try to press their advantage, but they may be chastened by the closeness of opinion and the growth in the likelyhood of the ‘no deal’ option.

If the PM prevails then we can only hope that in the fulness of time things will move on to new ideas and new partnerships. This is a big ‘what if’ issue the preliminary agreement is seeded very much in the EU’s favour. The current negotiations are preliminary but the EU has seeded them with one sided options which are the main object of disdain and revolt that has emboldened the Euro-sceptics. If these one-sided issues could be made less one sided and more equal then there would be far fewer opposition to the May proposals.  This may force the UK governments of the future to be in permanent state of angst against the EU.  Not an attractive proposition.

If it is not too late, Mrs. May has to be more assertive and go back to the table and negotiate away these one-sided  EU impositions, then she may became the saviour of the piece.

In the meantime the EU has plenty of problems of its own. Brexit will hurt both the departing and the depleted. Many feel the Euro and all that that implies will tumble and that the Brexit question will become in theory and practice much less crucial in the great scheme of things.

Brexit – stepping into the unknown.

 

Trying to persuade 32 million people (the British electorate) into leaving Europe was easy. It was also easy to project one liners about immigration, extra cash back et al. It was all about what could happen – freedom, border control etc., we know the story well.

There was something about that message that resonated with the Brits. In fact it is clear that we’ve never really been all that comfortable with the idea of anything that surpasses the idea of free trade with our European partners. The Europeans were never that comfortable with the British Government always seeking a playing field that resisted unified currencies and laws.

Breaking up after 45 years is painful, it was always going to be painful, but maybe that concept was never flagged up by either side of the argument. Anyway here we are. As I said in my last blog, it’s an argument of the optimistic innovators against the status quo, the let’s not change brigade.

It is not surprising that both sides are polarising so dramatically. This breakup is widely regarded as the biggest issue to face the UK government since the Second World War. But is it really? After all there was life before the UK joined the EU and the EEU. What about WTO rules and the Most Favoured Nation clauses, Canada E U Trade Agreement and all that?

To put it simply, an MFN clause is a non-discrimination requirement. It means that if you give a favour to one trading partner, you have to give it to all partners who benefit from an MFN clause. The principle is central to the World Trade Organization (WTO) which requires a member to give equal access to its home market to all members of the WTO. An MFN clause applies both to trade in goods and services.

What matters for present purposes, however, is not an MFN clause under the WTO Agreements but an MFN clause under the EU’s trade agreements with non-EU countries. The EU’s FTAs also contain an Most Favoured Nation clause which means that the EU must provide equal treatment to those trading partners who benefit from an MFN clause under their FTAs with the EU. What the EU offers to the UK must, then, be offered to Canada, Korea, Singapore and  other partners with whom the EU has negotiated an MFN clause.

Why does the EU not agree to this is one of the fundamental issues which supports the argument that the EU is a protectionist organisation which looks primarily inwards. Some even claim that the EU is a negative influence to free trade especially to developing economies.

There are, however, important exceptions to a Most Favoured Nations clause under these new Free Trade Agreements. Under Canadian deal an MFN obligation does not apply to cross-border trade in services and investment which covers provision of services through commercial presence, but it can be done with an element of goodwill. By allowing British banks and financial institutions to establish in EU countries and agreeing to recognise professional qualifications as it does now. So called Passporting rights may be covered by this exception because they allow free access to financial services market without imposing further regulatory requirements (i.e. local authorizations), thus constituting recognition of UK home state regulations.

This is tangential to the issue of allowing access to qualified persons of the enterprise working in EU countries and the employment of EU nationals in those enterprises. Again this seems an issue where a sensible compromise should be easily facilitated. However the EU does have and has consistently argued that right to free movement of labour and capital is a redline which cannot be compromised. Furthermore, Annex II of CETA establishes additional reservations (i.e. exceptions) applicable in the EU. One of the listed reservations to an MFN obligation in trade in services provides that the EU reserves the right to adopt an agreement with a third country (i.e. UK in case of an EU-UK deal) which (a) creates an internal market in services and investment; (b) grants rights of establishment; or (c) requires the approximation of legislation in one or more economic sectors (i.e. alignment or incorporation of laws between the parties). While the first two options seem unlikely given the UK government’s current red lines, but need it? It seems that passporting rights will require some form of approximation of legislation.

Of course the harmonisation of rules will necessitate the UK adopting EU rules for their operations abroad and for those regulations to be harmonised with the UK operations. But it would seem common sense anyway. This is surely a question of give and take, which has so far been eliminated by the time wasting posturing of both the UK and The EU.

Other services industries merely have to accede to EU standards where they are already established, i.e. air safety which is subject to world-wide agreed standards anyway. What’s the problem? There isn’t one really

In other words, these exceptions mean that the MFN principle must not be a barrier to a future EU-UK trade deal including financial services.

In the event, it remains to be seen whether the EU’s trading partners would find it practical to challenge larger benefits under a future EU-UK deal. On the one hand, it is probable that they would seek to secure passporting rights under their FTAs with the EU if such were given to the UK.

On the other hand, UK’s passporting rights allow non-EU firms properly established in the UK to get automatic access to sell financial services across the EU. Non-EU firms, including Canadian ones, have been using this route extensively. Whether the EU will agree to continue this scheme post-Brexit is yet to be seen. It is though a key issue.

These issues are complex and there is bound to be adverse consequences in the short term, many possibilities of the negative effects have been postulated by the institutions such as the World Bank who got it wrong at the outset and those who have most to gain from seeing the UK remaining in the EU. Those who threw out the optimistic one liners during the referendum debate have been firmly put back in their box.

It is important to note the things which influence both sides of the argument. The EU is a conglomerate of countries with many different cultural mores, however they are all bonded because of their experience of the World Wars. They were all one way or another, occupied, fought over blitzed or wrecked. The UK however was never invaded, it still sees itself the victorious leader and the defender of democracy.

This conditions the attitudes that prevail at local and government level. The Continent see the virtue of mutual support as Britain sees the future in terms of its individual and positive past.

Where there’s a will there’s a way. Or so the saying goes, but maybe there are two ‘will- sets’ here. Safety in numbers, a desire to be the leader. Two entirely different points of view. It maybe that the British aspiration to go back to its past is unattainable, but so maybe the dream of a Europe united in multi cultured harmony.

 

 

Imagination vs Fear of the unknown. Brexit is certainly unknown.

There we have it, stay in Europe or strike out on our own.  So far we’ve had umpteen warnings of the catastrophes that will beset the UK if we come out of the EU, so far they haven’t happened.

I wrote two years ago that what has come to pass has indeed happened, quelle surprize! However the lack of leadership from all political parties has added immensely to the conundrum.  “He who tells the future tells lies.” (old Arab proverb) Bare it in mind and accept that we have no idea of what is going to happen.  Absolutely no idea.

There are some out there who feel that launching into the unknown is a crazy thing to do.  They have a point.  There are others who argue that independently the UK will be better off, controlling our trade, taxes, laws and borders.

The worst offenders in irrational arguments are the regional players in Scotland, Wales and Northern Ireland who keep barking on about the financial support they’ve received from the EU ignoring the fact that the UK as a whole is a net contributor.  The aggregate of their argument is that they get a better deal regionally from Brussels than they would from Westminster.  This is a curious argument from those who seek more local power and yet want to bow the knee to an unelected European commission.

The other great argument is about the motives of the Brits to leave the EU.  It is argued, probably authentically, that the great majority of voters voted for Brexit based on their xenophobic attitude toward immigration.  This sad but reflects the oversimplification of a yes/no referendum.  It also reflects poorly on the British sense of values.

We would all do well to go back to the core of the argument, i.e. Do we want to be ruled by an unelected council of ministers whose credo is ever more integration into their idea of a United States of Europe.

Me, no!  That’s it, you may want that, OK if the majority want that, that’s OK with me too.

Just keep in mind that if we leave we have to stride out and do our best to thrive. I hope in so doing we continue to welcome friends of every colour and creed.  I want to see my country thrive as an example of skill and adventure for the good not only of the UK but the world at large.  I just happen to believe that we will do this best as we Brits have done over the centuries.

 

Left, Right or Centre, it’s a new day.

Many countries including the UK, maybe especially the UK, are running out of money.  From Local Authorities to all the great departments of state.  Whether it is the National Health Service, Education, Justice, even the Ministry of Defence.

The UK exemplifies the mature western democracy where capitalism is approaching the zenith of its life.  The rich are getting richer, the middle classes managing (just) and everyone below struggling in a low growth economy.

The key, the economists tell us is a lack of real growth and stagnant productivity, we have got to a stage where we find it hard to get even more bang for our bucks. So what to do?

Maybe, just maybe, crashing out of the EU will create such short-term distress that there will be a surge in enterprise to make up for the change of circumstances.  I don’t mean simply selling to non-EU countries, I mean a resurgence of creativity particularly, as seems likely, if the UK is cast adrift from Galileo and other scientific projects of pan European nature.

The future might see the UK, at last, recognizing that it is no longer a world leader either economically or militarily.  Consequently, the powers, at last, abandon wild armament programs such as Trident.  That does not mean shutting up the shop, all these fantastic skills and knowledge can be applied to so many applications from nuclear power to electric cars or hydrogen combustion engines.

Perhaps too, we could see the UK pick up and run with its education system which is currently squeezed so that many educational standards are losing ground and education itself, in all its form, is being devalued.

Most of all The UK could take a leaf out of The Donald’s book, put Britain first, not by protectionism but by creative power. By concentrating on making the UK a better and richer place where the riches are built on a vibrant education system, a competitive industrial base of a highly skilled workforce, and transport and infrastructure at least equal to our European competitors.

In Justice, we need a court that stands for freedom of anyone who makes their home in the UK and respects the rights of all men.  We need to care for all our folk, old and young alike.

To accomplish these things we need a centrist philosophy that balances the meritocracy and the social responsibilities.   Taxation needs to reflect the realities of the British aspiration, a good or bad Brexit, is still a new start for British values to stand and to be built upon.