• Politax

The UK's Last Chance?

A book review, if I may. I used to think that I really didn’t like Guy Verhofstadt. He was in charge of the Liberals and Democrats in the European Parliament, and he represented the EP in negotiations with the UK.

Brexiteers watching his recent fly-on-the-wall documentary on the Brexit negotiations won’t have been especially enamoured, nor with his recent performance at the Lib Dem conference – implying the UK should wilfully embrace being part of a European Union “Empire”.

However, if you try to apply a dispassionate perspective, pretend he’s discussing Caricom or SACU or something you have no strong view about rather than your own country and, actually, he seems a perfectly reasonable chap. He has written a book, “Europe’s Last Chance”. Not only did I find his opinions reasonable, I agreed with most of the things he says.

He says that the European Union is gradually failing. He compares the performance of the USA and elsewhere to the European Union – it’s clear the EU is lagging behind. He uses the banking crisis to explain why the USA emerged so much stronger than the EU. The USA very quickly introduced TARP, an infrastructure programme and Quantitative Easing. The EU couldn’t respond.

He compares the emergence of the US dollar as the Single Currency of the United States, and the use of US Federal Taxation to smooth disparities between States.

He addresses the United States’ criticism of the EU members who do not contribute enough of their GDP to defence spending as required by NATO.

The key constraint running through all the EU’s failings is, according to Mr Verhofstadt, is the principle of “Unanimity”. The EU couldn’t respond to the banking crisis because it has to find unanimity between 28 countries, or at least amongst the 19 states within the Eurozone.

It is abundantly clear that the Eurozone needs a massive transfer of wealth, roughly, from North to South. If you consider our own Single Currency – it is quite impossible for Wales alone to have a Sovereign debt crisis because if there are any cyclical disparities the UK will automatically subsidise Wales – and vice versa. That is, if Wales has a surge of welfare claimants, the liability will be met from the rest of the Union – funds will simply transfer. The same is true of any region, any county – the UK as a whole has the debt. We are a true political, monetary and fiscal union. The EU has to rely on bail-outs – and even these are probably illegal according to the EU’s own rules! The Eurozone will continue to fail where there has to be unanimity, and where you have no fiscal union.

On defence, he says, before we try to address some percentage of GDP target, the EU fact that the EU defence force is dysfunctional needs to be addressed first. Again, 28 sets of armed forces without unanimity is never going to be as an effective force as the USA. Regardless of the numbers involved, you’re never going to get 28 countries to agree on a strategy. You have 28 sets of bureaucracy, 28 different uniforms, 28 different strategies. Why invest more money on this when so much of it is “wasted”. Mr Verhofstadt wants one common defence – not 27 or 28 contributions to a collaborative defence, but one defence – just as the United States has.

On borders he asks, how can it be that our internal borders have free movement, but we have 28 external borders all applying different rules? The EU needs one set of rules, and one border control. Again, just as the United States has.

What Mr Verhofstadt is saying is not controversial in my view. If you want a workable political body, it cannot operate as the EU does. You would never set up a nation to operate in this way given the choice. It cannot operate as an effective fighting force, it cannot respond to crises, its Eurozone is doomed to sub-par growth and self-perpetuating disparities. The UK didn’t need the sign-off from Wales to bail out RBS, nor begin quantitative easing.

So, he says, this is Europe’s last chance. Europe needs to make a choice, it can break up, it can continue to fail, or it can reform along the lines of the USA.

The objective here has been repeated several times. The Federalists want the European Commission to be the executive, they want the European Parliament to be the legislature, with the Council as a sort of second chamber and the ECJ as the Supreme Court. This is how all decisions are made in this new nation. Provided you can persuade the citizens, I personally can’t see any reason why it won’t work. The USA works, if you form a nation along the same lines it will probably work.

Myself and Mr Verhofstadt are in complete agreement…the status quo is never going to be sustainable. I actually quite like Mr Verhofstadt. He, actually, isn’t a typical Eurocrat – we have had our figures like Leon Brittan who would only extol the virtues of the European Union as if it was fine as it was, and just needs tweaking here and there. A product of Monnet’s incrementalism.

Monnet’s idea in a nutshell is if you said to Europeans “this is what the EU is going to look like in 25 years, what do you think?”, they will almost certainly say no – no doubt the UK people would have said no 25 years ago. So you have a method of integration that achieves the same objective, but step-by-step. Every time there is a friction between member states it is resolved in the common interest from the centre with the competency for the policy area moving to the EU from the member state. Resolving issues in the “common interest” sounds so benign it is almost inarguable. The mechanism for integration is indeed an object of beauty. If you indefinitely apply the “common interest” to issues, and never the national interest, then eventually all that is left with competency is the “common”, that is the European Union.

Mr Verhofstadt, who is not a product of Monnet, basically says the EU doesn’t work and it will never work as it is, and tells us exactly what needs to be done to make it work. A full federal Europe on the same lines as the United States. He is honest and straightforward. In contrast to Monnet, he is saying this is taking too long – it is obvious the EU doesn’t work, why don’t we just go ahead and fix it.

Being in the current “European Union” is not going to do the UK any favours, but we could be quite prosperous in Mr Verhofstadt’s European Union. There’s nothing intrinsic to the EU to make it fail if the institutions are set up to succeed. People say “the Eurozone is doomed to failure”. Why? It doesn’t work as it is – it wasn’t designed to work perfectly. There are economists now claiming they had some genius insight that said the Eurozone needed a fiscal union – they said so before it was launched. Why didn’t the EU know that? Of course they knew that. The Eurozone resolves the friction of fluctuating currencies “in the common interest”. It also creates fiscal imbalances which will require fiscal transfers “in the common interest”. They won’t call it a Fiscal Union to start with – Draghi’s name for it was “common fiscal stabilisation instrument”, but a fiscal union by another name is still a fiscal union.

The European Union was designed to become a full Federal Union from which it will be impossible to secede, and it will get there step-by-step, friction-by-friction, crisis-by-crisis – that was Monnet’s vision. Verhofstadt has basically had enough of the approach – the EU is failing its citizens now and it must move forward now. Once you are reconciled to, or positively dream of, a Federal European Union, the logic is flawless.

I would recommend both leavers and remainers read his book, or at least seek some kind of synopsis thereof. He is the quintessential pro-European with credentials as good as any. Some remainers, some who abstained, and some who voted leave, may be persuaded of his positive vision. A prosperous, unified, peaceful European Union.

But we would no longer be a country. We would still be a member state, but the UK would be to Brussels what Florida is to Washington DC.

I don’t see that being a dishonourable position – you may see your, and your family’s, future being better served in such a European Union – it’s not for me or anyone else to say where the UK’s independence sits in your list of priorities. The more dishonourable position is trying to claim that the EU does work as it is, and that the status quo is an option. It doesn’t, and it isn’t. You would only argue that case from a position of ignorance or dishonesty.

Mr Verhofstadt simultaneously makes as brilliant a case as I have heard about the merits of European integration, and also the case as to why I could never support the UK being part of it.

Mr Verhofstadt’s recent intervention is a timely reminder of what’s at stake.

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