Like Greece, Spain and Germany, Britain now faces a cathartic moment when it needs to decide what price it is worth paying to stay in the European Union: coolheaded rationality must prevail over emotion
Like Greece, Spain and Germany, Britain now faces a cathartic moment when it needs to decide what price it is worth paying to stay in the European Union: coolheaded rationality must prevail over emotion.
Much has been written these days about 'Brexit' after PM David Cameron's speech last week on Europe, which was indeed a game-changing event in so far as it potentially opens up a real in or out choice for the UK to leave the EU in 2017.
Among those who find it backward looking and those who find it dangerous as the uncertainty about an exit may impact on British investments during the next five years (see here), I argue that both arguments are right - but there is a German saying that nothing is eaten as hot as it is cooked. Five years are an eternity in politics.
Obviously, with this speech, the ‘exit-camp’ among British Conservatives is riding high. But this should be the moment when counter-arguments are built up - and normally this is just a matter of time. The City will eventually wake up and realize that it may lose its standing as the most important stock market in the European time zone, if regulatory and political authorities move to the continent (Brussels, Berlin, Frankfurt) in the wake of a deeper integration of the eurozone, as Euroland pursues the path of a genuine, deep economic and monetary union. British youngsters are mostly in favour of remaining in the EU and at some point they will also voice their vision of a European future. So there is hope for the UK of a genuine and rational discussion, with facts and figures about the cost of staying and the costs of leaving, in the not too distant future.
Another key element is that very soon British industries will no longer be able to afford being in denial about the real economic situation in the UK, which is far worse than many in the UK have yet recognised. Not only has the pound dramatically lost value over the past five years, but the UK now has a deficit more than twice as high as that of Italy. In terms of GDP, the UK has not only been outperformed in recent years by Germany or the US, but did even worse than most of the Southern European crisis countries, bar Spain.
It is therefore interesting how the Daily Mail and the 'Murdoch newspapers' can knit out of these data a thesis according to which the UK (so they say) is so very much better off not being part of the eurozone – which is also the underlying assumption of Cameron’s speech. This claim is, at least, highly contentious; or at the very least, it follows that the British economy is not performing so much better than the eurozone after all as one might have expected, if we accept that the euro was such a fundamental mistake and the member countries in such bad shape as regards their competitiveness.
What is more important over the next five years is whether the UK – its media, its elites, its civil society and its citizens – will have the collective power to resist sweeping populism. It is as Voltaire famously said in Candide: 'Il faut cultiver son jardin'. You have to keep your garden in order. If not, bad and allegedly facile arguments sprout in public discourse like weed in a cottage garden. This is not to say that all arguments Cameron mobilised in his speech are bad. But reducing eg the flexibility requirement of the EU down to working hours directives for NHS doctors seems to somehow miss the point.
In politics, when facts are dismissed, overwhelmed by emotions and irrational arguments, popular sentiments such as national or regional feeling, old stereotypes and half-truths often win out. In recent years, the US Republican Party painfully experienced how a whole, respectable party could be destroyed by honing its arguments for the stomach rather than aiming for the ratio, amalgamating notions such as ‘socialism’ with health care and migration policies with ‘fascism’, losing all control of wording, framing and factual accuracy in political discourse. When rational choice becomes 'irrational choice’ and public discourse is determined by emotions and fears rather than data, clear choices and informed narratives, then a Tea Party is imminent.
The UK is neither the first nor the only country to go through a phase of dominant Eurosceptic populism. In fact, since the eruption of the euro crisis, nearly every European country has had its moment of Euro-catharsis: that is, the moment when the country needed to decide which price it was ready to pay to stay in Europe – and for most, to stay in the euro. Most, although painfully, gave a bold ‘yes’ as an answer, despite a high, sometimes very high price: Greeks are sacrificing their society as a whole and the prospects of many generations for a reform programme that might allow them to stay in the euro, just because the Greek narrative holds that this is still a better option than being left alone and risking a return to the Generals.
Similarly, in Italy, the country ousted a sluggish leader to regain the esteem a European founding member deserves. In Spain, the country – agonisingly enough to be sure – accepted its painful passage through a period of 50% youth unemployment, because the national narrative has been linked to Europe since the fall of Franco. For these countries, arguably much more negatively affected by the euro crisis than the UK, there is simply no point to give up on Europe, even if the current price for this decision is extremely high.
Finland and the Netherlands both suffered waves of populist temptation – Wilders and the True Finns - but both civil societies, after this incursion into chauvinism, had the energy to bring the public discourse on Europa back to the European mainstream. The Netherlands did this when they voted Wilders down in their last elections in September 2012, making a clear statement that the country is not willing to renounce Europe quite yet. In this context, the mainstream European discourse was not that Europe is fine as it is, but that Europe is important, and so we need to make it better.
Even Germany, which never had a populist party, had its moment of being seduced by the prospect of moving beyond Europe and 'going global alone'. Confronted with the price to pay for the various Greek bail-outs, Germany was indeed tempted to 'go BRICS', flirt with China (and Russia), and forget about Europe and its home base.
The German moment of catharsis came with Libya, when it realized how lonely it feels to be in bed with countries which do not share the same set of values; not to speak of the moment when it realised that in absolute terms (and not in terms of relative growth) German trade with China is still largely overrated, and far less than Germany's trade relations with Europe. Nevertheless, with a public discourse that had degenerated into blaming 'lazy Greeks' and fuelling inflation fears on breakfast TV shows, Germany was about to lose its destiny by a hair’s breadth to the enemies of the euro and admirers of the D-Mark, who sprouted like mushrooms all over the prime-time TV shows, spreading inflation hysteria. And it was hard to argue against them, even if the most solid data clearly spelt out how Germany benefits from the single market.
Finally, after an assessment of its policy choices, unbiased analysis of the costs and benefits of staying in the euro, and, most importantly, by re-contextualising its geostrategic, historical and political needs and its geographic situation, Germany was able to u-turn the Euro-discussion, and to come back to a reaffirmed commitment to Europe. The moment of catharsis, the moment of temptation, was over.
Two to go: one little piggy
This story might be instructive for the UK, as two of the big three European countries still have to face the moment when they define the price they are willing to pay for Europe. The new French President, François Hollande, is in the same predicament. He thought he could circumvent the price to pay, and steer Europe towards lefty economic policy. His government is just realising that their only option is probably to go for a 'Mitterrand II' scenario, implying the restructuring of the French economy to make France fit for euroland, to go with the political modernisation of France, the task in which the government is currently engaged. Tackling long-delayed structural reforms will be France’s moment of catharsis in which she re-commits herself to Europe and the euro, by paying the necessary price - as nothing is free, especially a genuine, deep economic and monetary union.
The only country that therefore actually risks missing its moment of maturity and catharsis altogether is the UK.
Not only is it hugely overestimating its bargaining chips in the 'renegotiations' of the EU treaties, but the UK is also very optimistic about its coalition-building capacity within the EU. If Britain wants to pursue a treaty change procedure following article 148 of the Maastricht Treaty, it would need thirteen equal-minded countries - and it is hard to see which countries these could be. Nobody really has any interest in opening the Pandora’s box, and Merkel, carefully choosing her words after Cameron’s speech, opened the door for ‘talks’, not 'renegotiations'. UK officials and the British press are seriously misreading German 'support', as Quentin Peel points out in the Financial Times (paywall).
If these 'renegotiations' really are only about securing a few bilateral protocols and opt-outs on some sectors of European legislation, then they might, indeed, be more of a pushover – and most EU countries might well be willing to accommodate British demands. But the heart of the matter of course lies precisely in what 'strategic topics' the British delegation dishes up: doctors’ hours? Fishery policies (as the Mayor of London mentioned in a resounding speech in November)? Assuming the EU then accepts some concessions on these items: would that be sufficient to fulfil the 'strategic conditions' for the UK to remain in the Euro? Would this truly convince the Murdoch press? Imagine the headline, 'Doctors can work 50 hours: UK can stay in EU'! It seems highly unlikely.
Interestingly enough, policy advertisers in London Whitehall do not seem to have a concrete plan at this stage for what they would like to raise for discussion (or retreat from on the European level), let alone on what method of renegotiation method they will use. This points to the fact that Cameron's speech was a speech written more by a bunch of Conservative Party people, and largely circumvented a double check by the Foreign Office or the Treasury.
To the rescue
At this stage of the debate, the real point is probably that EU countries will need to offer the UK some face-saving measures, so that the progressive descent from the insular Olympus on which the country has got itself perched can succeed. Drawing lessons from the German case, the winning strategy is to successfully broaden the discussion from Euro-bashing to international currency policy; from doctor’s working hours to single market regulations and level playing fields; from 'harmonisation ghosts' to collective strength, and from immediate price to pay to a costs-benefits analysis of where the UK stands now and where it will stand in the future.
This would suppose the UK undergoes a reality-check in the first place, and realises that the Commonwealth is gone, the Atlantic is big, and that the UK is neither as strong nor as successful as it tends to think it is. I am willing to bet, trusting the people of the United Kingdom, that these arguments will make their space and way in the next five years so that, if Cameron gets re-elected and the referendum comes, the UK will knock at Europe’s (and perhaps even at the euro-) door as if it were heaven’s door – rather than descend into a Europe-bashing hell accompanied by lashings of stereotypical Tea-party style rhetoric!
Most likely, by 2014, the Southern countries' economies will start to grow again and the structural reforms will bear fruit: the EU will have a new Parliament and Commission, a banking Union will be taking its final shape, with Poland eager to join. The UK may not dismiss a sparkling euroland in 2017. Against this backdrop, leaning back and waiting for the British moment of catharsis might be the best thing to do – and as for engineering the catharsis, Britain will take all the help from Europe that it can get!