European Union: Recent Developments

Lord Hannay of Chiswick Excerpts

Monday 17th December 2012 Lords Chamber

[Lord Hannay of Chiswick]

My Lords, 2012 has not been a good year for the European Union and it has not been a good year either for Britain in Europe. To deny either of those two pretty evident propositions is to delude oneself and to make the search for remedies even more difficult than it already is. The members of the eurozone have remained locked in an existential crisis from which they have yet to find a safe way forward. Even if they have made some progress and have managed to avoid some of the traps into which they might have fallen—most obviously the contagion that would almost certainly have followed a Greek exit from the euro—this crisis has diverted the energy and the attention of leaders away from a whole range of other challenges, such as completing the single market, continuing to give a firm lead on climate change and facing up to the difficult foreign policy choices in places such as Syria and over Palestine, for example. At the same time, Britain has slipped into its own, quite separate, existential crisis over its membership.

The coincidence of these two existential crises is in itself a negative factor, characterised by a sharp reduction in the sense of mutual solidarity that is needed if neither is to end in disaster. Even when a piece of good news comes along—such as the award to the European Union of the Nobel Peace Prize in recognition of its major contribution to peace and prosperity in the period after the Second World War, by anchoring the former dictatorships in southern Europe and the countries of central and eastern Europe, liberated from Soviet domination, to democracy and market economies, and by stabilising the Balkans after the tragic experiences of the 1990s—that good news is rapidly discounted or, in this country, derided by those whose narrative it simply does not fit. The Prime Minister’s absence from the Nobel awards ceremony in Oslo left me feeling ashamed. How petty we have become.

What are the main choices for this country and the European Union for the period ahead? I suggest three main lines of policy. First, we should continue to be supportive of the eurozone countries as they struggle to shape a more integrated economic policy structure within which to secure the future of the euro. Their success is as much in our interest as it is in theirs. Anyone who believes that the single market could survive unscathed a break-up of the eurozone is not awfully good at risk assessment. So we should eschew any further completely unnecessary and counterproductive confrontations, such as occurred over the fiscal union treaty last December.

We should work constructively and pragmatically to develop a system of variable geometry, a concept that has worked well in the EU since the end of the 1980s. We should look at the euro, look at Schengen and look at the way in which we handle justice and home affairs legislation to encompass also now the relationship between the euro ins and outs in the fields to be covered by the new eurozone steps towards economic integration, while safeguarding the integrity of the single market for all 27—soon to be 28—member states. Both these objectives seem to me to have been advanced modestly by last week’s European Council decisions on the first steps towards a eurozone banking union. This means rejecting the siren voices of those advocating a two-speed, two-tier European Union, which I believe is neither negotiable, sustainable nor in Britain’s interest. It means ceasing to chase the will-o’-the-wisp of repatriation.

Secondly, we should work flexibly and in partnership with the other EU member states that favour a rigorous approach to EU spending to secure agreement on a multi-annual financial framework for the seven years ahead when the European Council next meets, in February, to discuss this. That group of countries has already achieved considerable success in shrinking the excessive spending bids of the Commission and the European Parliament. There could and should be more progress in that direction before a deal is struck. However, we need to avoid snatching defeat from the jaws of victory by pushing the EU back into relying solely on annual budgets, which would likely be higher and less sensibly distributed than the multi-annual framework. This will require the Government to be bold enough to ignore the quixotic and opportunistic urgings of the House of Commons a couple of months ago at an earlier stage in the negotiating process.

Thirdly, we urgently need to develop a positive agenda for ourselves and for the European Union that reaches beyond the traditional fixed points of Britain’s EU positions on completion of the single priorities, completion of the single market and further enlargement, valid though those priorities remain and welcome though the recent agreement on the European patent is—a clear case, by the way, of more Europe being good for Britain and good for the EU. Should we not be working with the new French Government to respond to the pressure being put on our defence budgets by the policies of austerity? Should we not give a lead, as only our two countries can in this sector, to a more effective European defence and security policy that reflects the realities of the US Administration’s pivot towards Asia and its insistence that Europe needs to do more in its own back yard? I draw some encouragement from the wording of the European Council’s conclusions, which seem to provide a perfect framework within which we could give a lead, with the French, in the year leading up to the discussion that is to take place in December 2013.

Should we not, too, be working with our fellow EU partners in the G8 and in the G20 to ensure that Europe’s shared objectives of freer and fairer world trade and of more effective policies to combat climate change are properly reflected in the outcomes of the two summit meetings to be held in 2013? If Europe cannot get its act together, we can be sure that those two gatherings will be dominated by the relationship between the US and Russia and the US and China respectively. The Europeans, ourselves included, will be sidelined and marginalised. Both the World Trade Organisation talks and the UN-led negotiations on climate change desperately need new momentum from outside their overlarge and unwieldy negotiating processes. There is an opportunity to provide that and to check the tendency to turn away from international co-operation, which could be so damaging for middle-ranking powers with global interests such as ourselves.

None of these three lines of policy will be easy to achieve, nor will they be supported by the noisy band of Europhobic activists both outside and inside the Government’s own ranks, whose sole objective and priority is to propel the United Kingdom towards an early exit from the European Union; nor will they be achieved if the leadership of all three main parties, which continue to support Britain’s membership, do not put a lot more effort than they have in recent years into setting out, in compelling and persuasive terms, why it is in Britain’s interest to remain an active participant in EU policy formulation, and one with plenty of positive and appealing ideas. In the past four weeks there have been the first tentative signs of a response to that imperative. The speeches of the leader of the Opposition and of its own chair at the CBI conference and the speech of the Foreign Secretary in Berlin were such straws in the wind. However, much more will need to be done if the tide of Euroscepticism by default and by meretricious assertion is to be stemmed and reversed.

I shall conclude with a few words about the two European Bills to which we are being asked to give a Second Reading today. The Bill to enable the UK to ratify Croatia’s accession should be strongly supported. It represents another building block in the EU’s response to the sanguinary break-up of the former Yugoslavia, which is still work in progress with a long way to go. The aspirations of Montenegro, Macedonia, Serbia, Kosovo and Bosnia and Herzegovina must not be overlooked. Much has changed in Croatia for the better since it first applied. I was able to see some of that when I visited Zagreb in May to celebrate the 20th anniversary of Croatia’s joining the UN. The EU institutions and the people of Croatia will need to be vigilant to ensure that the ground gained in the approach to membership does not slip away after it is achieved, but there is no reason to hesitate now.

The second Bill, which enshrines the political deal to set aside the original intention of the Lisbon treaty to limit the continuing expansion of the European Commission and to ensure that the system of appointing one Commissioner for each member state remains in force, I support, too, but, I fear, only while holding my nose. The Commission is already too numerous and is unable to give all its members worthwhile jobs, a problem that will only get worse with enlargement, which I happen to support very strongly. While I accept the present provision as necessary, it is a necessary evil. This area will need to be revisited in the years ahead.

I am sure that 2013 will be another turbulent and difficult year for the EU, but it could also be the year in which a turning point is reached in those two existential crises that I have identified. I hope that all those who support an EU with Britain as a full and active member of it will join forces to make it so.