The EU nightmare returns: Or could this be the Conservatives’ best chance for victory?

Foreign Affairs & Security
Tuesday, October 9, 2012
Bernard Jenkin MP

Twenty years ago this year, the Conference was reeling from the shock of ejection from the Exchange Rate Mechanism, and teetering on the abyss of the splits over the ratification of the Maastricht Treaty. Are we about to find out that the Conservatives are in a similar place today? If so, can we shake off the EU trauma of 20 years ago? Can we turn this to the advantage of the UK and to our own political advantage, or will the paralysis of coalition mean the UK also remains paralysed at this extraordinary moment of decision for the whole of Europe? For the EU is once again approaching a decisive moment.

The UK’s economic recovery has been retarded by the progressive failure of the Euro and the ongoing Eurozone debt crisis. Just as in the case of the crisis with the Exchange Rate Mechanism (where Germany would not alter its interest rate policy to accommodate her ERM partners), so the recent judgment delivered by the German supreme court showed that Germany will pursue her own economic national interest, rather than compromise for the sake of the Eurozone as a whole. The Court accepted that Germany could agree the European Stability Mechanism and the EU Fiscal Compact, but imposed strict limits on any future German contributions to bailouts.

At the same time, Chancellor Merkel is clear. The solution to the crisis is “more Europe, not less Europe”. Germany is determined the Euro will survive, not least because of the huge advantage it gives to German exporters, who are able to enjoy a Euro exchange rate 30-40 per cent below where the Deutschmark would be, even though the vast trade imbalances in the Eurozone make the Euro’s survival less and less likely in the long term. Mrs Merkel believes not only that the centre requires more power to grip the financial crisis, but because of the crisis of legitimacy in the EU. Centralised power without democratic accountability also drives political union.

So Jose Manuel Barroso’s ‘State of the Union’ speech on 12th September called for “deep and genuine economic and monetary union, a political union, with a coherent foreign and defence policy… a federation of nation states.” He continued; “Creating this federation of nation states will ultimately require a new Treaty,” and promised that “the outline for the shape of the future European Union” will be presented before the next European elections in 2014.

What we opponents of Maastricht predicted has come to pass: a disastrous monetary union and the imposition of a federal EU on the peoples of Europe which they do not want (and on which they are unlikely to be consulted). The EU summit in December, one year on from David Cameron’s veto last year, is likely to be where all the member states including the UK will be asked to set up a new Intergovernmental Conference to draft the new Treaty. By hugging the Conservatives close, and by submitting to their embrace, a Conservative Prime Minister could unwittingly deliver the federal EU which the LibDem elite (not their voters) have always wanted.

This time, our EU partners will be better prepared to avoid being surprised by the UK. Firstly, the EU member states will not propose any treaty amendments that would explicitly transfer new powers from the UK to the EU, to avoid triggering a referendum in the UK. Second, if we threaten to call a referendum anyway, or attempt to veto the new treaty, the Commission and our EU partners will use last year’s veto as a useful precedent. Last year, 25 of the other member states set out to bypass the UK (27 minus the UK and the Czech Republic) and signed their own Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (Fiscal Compact). This was plainly illegal. A non-EU treaty cannot give the EU institutions – such as the Commission and the Court of Justice – new powers and functions. That would require the consent of all 27 member states. However, the UK failed to challenge the new treaty in the Courts and the Coalition merely “reserved its position”. Third, if this Parliament does run until 2015 with no change in government policy, the new treaty will be done and dusted by the time we are unveiling our 2015 manifesto. That will be too late. The very idea that any Prime Minister could waive through the most fundamental change in very nature of the EU – the political equivalent of economic and monetary union – and then, long after the UK’s consent, tacit or otherwise, has been taken for granted, that he could reverse his policy and demand renegotiation is not credible.

The EU, as a federation of states (the term “nation states” in this context is deceitful), would leave the UK in an even more invidious position than now. Without a renegotiation of the present terms of our EU membership, the UK would be attached to the federal EU, but with less and less control over our own laws, as the federal core drives the EU’s policies and legal integration. EU regulation, which already wrecks business competiveness, would continue to increase. By then, the City of London, which represents over 4 per cent of our GDP and generates 11 per cent of tax revenues in the UK, would be subject to the 50 or so new directives and regulations, which the Prime Minister sought to block by threatening his veto last year.

We cannot protect our marine environment against the damage done by the Common Fisheries Policy. We have no control over immigration to the UK through the EU. We have no veto over an inflation-protected EU budget. Tony Blair’s surrender of Mrs Thatcher’s rebate is raising our net contribution from £3-4 billion per year during the last decade to over £9 billion per year by 2014 (nearly as much as we spend on overseas aid, and six times more than the average annual cost of maintaining the Trident nuclear deterrent with four new submarines until 2050). All matters which are currently decided by qualified majority voting (QMV) would remain subject to QMV. The European Court of Justice would continue to push the envelope of EU powers and to widen the scope of matters subject to QMV. As well as the proposed EU Financial Transactions Tax, there are still those in the EU who want to push forward tax harmonisation. The federal core of the EU would always command the necessary votes to outvote the UK periphery.

We Conservatives have long promised ourselves that the final leap towards federal union will be our last best chance to extricate the UK from a relationship with our EU partners that has transferred far more power to the EU than the British people were either led to expect, or wanted. A majority of voters want either simply trade and cooperation in the EU, or out altogether. By 2015 there is every prospect that we would face a new status quo: in Europe and run by Europe. Our election manifesto would effectively have to say, “Yes, we promised a referendum in 2010 and then blocked it, but trust us!

Give us another chance!” The electoral prospects would not be enticing. How will we fight the EU elections in 2014 from this position of paralysis? Or the local elections next year? I very much hope that David Cameron will promote a vigorous and urgent discussion about how we should head off this impending disaster for our country and for our party, at the EU summit in three months’ time. Every crisis is an opportunity. We must be bold for our country and our party, and there will be no prizes for timidity.

Bernard Jenkin is the Member of Parliament for Harwich and North Essex and the Chairman of the Public Administration Select Committee