EU: Recent Developments

Lord Jay of Ewelme Excerpts

Thursday 16th February 2012 Lords Chamber

[Lord Jay of Ewelme]

My Lords, last week was the 20th anniversary of the signing of the Maastricht treaty, which came shortly after the negotiations in Maastricht in December 1991. I had the honour of attending those negotiations with, among others, my noble friend Lord Kerr and the noble Lord, Lord Lamont. The day after those negotiations in Maastricht, an editorial in the Daily Telegraph lauded the Prime Minister, John Major, and had a few words of compliment for the Foreign Office—which I have treasured because it was, I think, unique.

I was reminded of this when the Prime Minister returned from Brussels just before Christmas and again faced a laudatory and rather triumphalist press. However, it was the start of rather a painful reappraisal, which draws me to the conclusion that there are no easy wins for the United Kingdom in the European Union, any more than there are in other areas of policy. EU negotiations are a hard slog to protect and advance British interests, faced with often intransigent member states and an often sceptical British public.

There is much emphasis on the eurozone at the moment, but that is not the whole European Union. It is worth remembering that the European Union has had two real achievements over the years, both of which are very much in the United Kingdom’s interest. First, there was the coming together of western Europe after the Second World War and after the end of fascism in Spain, Portugal and Greece. Secondly, there was the provision of a democratic, liberal market home for the countries of eastern and central Europe and the Baltic states after the collapse of communism.

It is worth remembering, too, the advantages that the European Union brings to Britain today. First, as the noble Lord, Lord Howell, mentioned, it provides a single-market economic zone, which is substantial although not yet complete, with a total GDP of around €11 trillion—larger than those of the USA and Japan combined—and which takes more than 50 per cent of British exports in goods and services. We export those goods and services to a zone with a common set of rules so that business does not have to comply with 27 different sets of regulations.

Secondly, the EU provides a developing and increasingly flexible common foreign and security policy that can give Britain greater clout; for example, as part of the group that keeps constant pressure on Iran over its nuclear ambitions, and as part of the response to what is going on in Syria. Then there is Britain’s part in Operation Atalanta to counter piracy off the coast of Somalia, which threatens sea routes across the Indian Ocean and into the Red Sea. I also mention, since it has not been mentioned so far, an economic aid programme of some €12 billion—larger than that of the World Bank—which operates in parts of the world such as west Africa, where needs are huge and DfID barely operates. Thanks to constant British pressure from Governments of all parties, the quality of that aid is far better now than it was before.

There are other areas, too. In the absence of the noble Lord, Lord Lawson, perhaps I can mention climate change as being one where EU policy, influenced by UK policy, enhances our own influence around the world and advances our national interest. I mention all this because there is often rather a British tendency to focus on only those things that go wrong, and not on those from which we profit. Of course there are things that go wrong. In retrospect, the eurozone was a flawed and risky project. Britain was absolutely right to stay out of it and it is extremely hard to see circumstances in which the United Kingdom—or, topically, Scotland—would sensibly want to join.

The concept of using economic and monetary union as a means of creating political union, rather than seeing them as an expression of political union once created, was risky, as we now see. I also have serious doubts about the viability of the fiscal compact, with its legal obligation, among other things, to keep budgets to a certain level. Nor do I know whether Greece will ultimately default or leave the eurozone and, if it does, whether that will have a knock-on effect on other eurozone economies. However, we should not underestimate the determination of the eurozone countries to keep it together. Nor should we regard its breaking up as having anything other than a profoundly disruptive effect on our own economy at a very difficult time.

Therefore, the United Kingdom’s aim must surely be to work with our EU partners, in and out of the eurozone, to keep it together and, crucially, to ensure that measures taken to achieve this do not adversely affect the single market of all 27 EU countries. To go back to where I started, that is surely where the hard-headed British interest lies. Nothing in that approach prevents, at the same time, our doing all we can and should to expand our trading relations with the fast-growing economies of China, India, Brazil, Indonesia and others; or strengthening the Commonwealth, which is rightly dear to the heart of the noble Lord, Lord Howell. That approach, of being engaged with both the European Union and the world’s fast-growing economies, will surely be appreciated by the United States. With its focus increasingly on its west and its south, it will want its strongest European relationships to be with those countries that have the strongest European influence. I hope that that will continue to include the United Kingdom.

I conclude by saying that, despite the difficulties, a full engagement with the European Union and its development is fully in Britain’s economic and political interest.