Regardless of whether we vote to Leave or Remain in the European Union, there are many factors which make it impossible to predict outcomes for the UK. These have not only different timescales, but also different magnitudes and speeds of travel. However, it is possible to at least list some of the factors which will influence eventual outcomes over the next, say, five to ten years. They are visible now and are already influencing events.
From where we stand at the moment, there are two broad issues which are setting off on parallel tracks. One is positive in its effects and the other is negative. The first track is the idea that the EU is reformable and can be shaped to the needs and aspirations of the UK. The second track is split into multiple strands, which are all deemed negative in their effects, and often contrary to the ideas of reformability. Briefly, the first track contains two strands:
- Market reformability
- Constitutional reformability
The second track contains multiple strands which are detailed below, but are listed as:
- Club Med economic crisis.
- Immigration crisis
- Democratic deficit
- Banking (Euro) crisis
- Accession of Turkey
- Corruption
- TTIP
The First Track: The “Remain” campaign has, so far, relied upon a curious “Project Fear” – that we should vote to remain on the grounds that what is out there in the rest of the Big Wide World is far scarier than staying wrapped in the warm comfort blanket of the EU. In so doing, the Remainers have projected a message that is deliberately narrow and myopic. In essence it boils down to a rather feeble “message of hope” contained in the idea of a “Reformed EU” and that the UK staying in is the best means of achieving this putative reform.
There are two principal strands of the Reform meme: The first is that the market for British goods can be freed up with a little dose of Anglo-Saxon common sense. Thus, so we are informed, will our exports to (sometimes reluctant) partners be eased. A free market is what we all joined for in the first place; and so this is a comforting message to get across.
The second strand comprises the impression that our continued membership will help to iron some of the many injustices, corruption and human rights diktats which favour the criminal instead of the victim. We are given the impression that we can influence (=”reform”) the way that these things are done in the future, but only if we stay in.
Both of these ideas are aspirational. Many have argued that we have been trying to get this sort of thing done for the last 40 years and have, so far, signally failed to get even an acknowledgement that we might be right. Instead the efforts of the UK to get reform has been continually thwarted, mostly by the French. Nevertheless, there are serious people out there who say that the UK’s influence upon the institutions of the EU has indeed been beneficial to curbing some of the more extreme lurches of the EU élite, but from this side of La Manche, it doesn’t feel like it. On the contrary, it feels like it takes a decade of seriously hard work by UK diplomats to achieve even the tiniest concession. Our impatience with our lack of progress is now being matched by equal impatience from the French political élite who regard the Anglo-Saxon interventions as a thorough nuisance. They too, would like Brexit to happen. But for different reasons. When UK voting power is currently a mere 3.6%, these aspirations seem little more than the triumph of hope over experience.
The Second Track: The diagram below is a good assessment of some of the kinds of issues that are likely to hit us in the next few years in the event of Remain winning the day. (Many thanks to Jason Rutter):
What follows is a slightly more detailed overview of each of the strands listed above and which also can be taken to include Jason Rutter’s list:
Club Med economic crisis This means the combined Southern European countries of Portugal, Spain, Italy and Greece. To some extent we might also add Ireland, as it’s own problems have still not yet been resolved, despite considerable ECB controlled austerity. However, the main problem has been caused from two directions. First there was the accession into the EU by these countries which caused massive release of public funding (particularly for Spain) and where their economies took off on a wave of publicly funded spending. Having splurged – and then laid back bloated – their problems built up unseen. They were then increased by their adoption of the Euro. Greece, in particular, should never have been allowed in because its domestic finances were already shaky. But massaging the numbers by the big banks meant that they got in. Italy, Spain and Portugal were little better. Then the 2008 banking crash happened and all of these countries found themselves with huge unserviceable debts. The usual tools for dealing with this kind of problem is to devalue the currency (thus reducing the debt problem in real terms) and adding fiscal measures such as increasing taxation to help pay off the debt.
Because the Euro is effectively controlled by Germany, the first option of devaluation was prohibited. This has left only fiscal measures to be applied in Mediterranean countries where the paying of taxes has traditionally been viewed as optional, and where tax collectors become wealthy on the strength of turning a blind eye to big chunks of income. The result has been appalling collapse of entire economies and where youth unemployment varies between 39% (Italy) to 48% (Greece). For just one tiny facet of this increasingly complicated mess, see the incomparable John Redwood here.
This crisis is ongoing and there is no relief to be seen on the horizon. An entire generation of productive youth has been denied honest work. It will take a decade or more before these economies will recover.
Immigration Crisis Starting with the so-called Islamic State and the hijacking of the Syrian insurrection against the Assad regime, Syrians moved en-masse to get away and became a humanitarian problem. Pictures of just one dead child (out of hundreds that have actually perished at the hands of people smugglers) washed up on a beach in Greece were broadcast all over the world. Within minutes, it seemed, world leaders from Cameron to Merkel, were compelled to do something. Merkel responded by offering an open invitation for them all to come to Germany. The response was overwhelming, but mostly from North Africa rather than Syria itself. Figures vary but it looks like close on 2 million economic migrants have located to Northern Europe, bypassing the impoverished Mediterranean countries. Greece is just letting them through as it cannot afford this massive burden on already overstretched resources. With these economic migrants are a small percentage (<10%) of genuine refugees and unknown numbers of ISIS terrorists. The latter are thought to be between 3000 and 5000.
The effect has been the transformation of social society in Germany, Sweden, Denmark and the Netherlands. Malmö in southern Sweden has acquired the accolade of the Rape Capital of Europe. Germany is busy building hundreds of refugee camps, some of which have unhelpful historical associations. Rape at public swimming pools has been widespread, as well as the better known New Years Eve rapes in Cologne. Whilst the authorities are doing their best, especially in Sweden, to hide the fact that the massive increase in crime is caused by the migrants, the truth is emerging everywhere on social media.
Democratic Deficit This is part of another problem – Ever Closer Union – see below. The deficit is caused by the EU lawmaking system only involves parliamentary debate as the last stage in lawmaking, rather than the first. Laws are originated by the EU Commission and go through the process outlined in the graphic below:
This shows what happens to a proposal to amend the EU Common Fisheries Policy, where the proposal starts off going to the Directorate responsible (in this case, the DG Mare).
This diagram is not explicit, but as I understand it, the EU Parliament is represented by the grey diamond box at the bottom left hand side, labelled “Agreement”. Note the parallel yellow boxes on the right hand side marked “No agreement” and “The Commission has to decide whether to maintain the proposal, to amend it or to withdraw it.” The system is designed to have little contact with the voter and is vulnerable to attack by lobbyists at almost any stage. This is why so much money is spent on lobbying in the EU. The system means that a proposal is almost cut and dried before it reaches the MEPs. If they get the vote “wrong” they risk having the whole lot put before them again by an obdurate Commission which is determined to get its way. This culture within the EU explains why France, Denmark and Ireland have all had to repeat their referenda, until the common voter returned the correct answer.
Not included on this diagram is the way in which both the European Court of Justice (ECJ) and the European Court of Human Rights (ECHR) are able to operate outside this system. In theory, these bodies are expected to interpret the law. However, because of the judicial activism of these courts, EU judges increasingly make the law by expanding their jurisdiction into areas not covered by the written law.
There is no way in which the EU electorate (and certainly not the British electorate) have any control over the system or the outcomes from it. This is why so many EU laws and judgements vary between irritating and expensive for British business, to downright unjust. For example there is the Iraq Historic Allegations Team within the MOD which is responsible for processing allegations against British soldiers serving in Iraq. These soldiers have done their duty by fighting for their country, but are now under the shadow of vexatious legal proceedings against them. IHAT owes its very existence to the demands of EU law. Attempts to bring this under UK Parliamentary control are likely to fail (because the ECJ can over-rule national parliaments) and have, in any case, been watered down already. Cameron’s recent Euro-shuttle agreement; where he pleaded with European leaders for permission to spend UK taxpayers’ money in way which the UK taxpayer will consent to i.e the payment of social security benefits to foreign workers, has recently had its legal enforceability questioned here. All this shows just how powerless as a nation even our own government is when faced with EU intransigence.
Ever Closer Union As Nigel Farage and Daniel Hannan have repeatedly told us, every time they sit in the Euro Parliament, they pass or reject laws which harmonise and bring ever more parts of citizens’ lives into the competences of EU law. Ever Closer Union is a daily fact of life. There is no way that it can be stopped. Attempts to do so would meet with stiff resistance, particularly from the mainstream parties in France, Belgium and Germany, because this is one of the central raisons d’être of the EU. The whole concept of the EU as a Utopia or Platonic Republic, governed by an oligarchy of wise elders, is the primary basis of the foundation of the EU.
Banking Crises Along with the Euro comes a whole lot of related problems. Italy’s banks are struggling under a debt pile of €200 Billion which are unlikely to be repaid. This debt has sprung from the economic downturn, caused at least in part by the Teutonic intransigence of the ECB. See Club Med above. For a swift summary of the economic woes of Finland read this from Ambrose Evans-Pritchard. Here he explains how the locking out of monetary tools from governmental management of a country’s economy can send even the best run country (in this case Finland) into stagnation. As Ambrose points out, there are none of the excuses which apply to lax Mediterranean economies here, as Finland is exemplary in all that it does.
The accession of Turkey into the EU This is fast developing into an issue that is likely to add quite a few percentage points to the Brexit cause. The first problem is that they have a huge population of 77 million who are, on average much poorer than us, and so the UK and other rich and highly developed EU countries like Germany, will act as a magnet for further large scale economic migration. Turkey is the source of the wholesale migration of all sorts of nationalities which are using Turkey as a portal into Europe via Greece.
The second problem is they are predominantly Muslim, and this will add to an already displaced population of people who are reluctant to integrate with their new hosts.
The third problem is that Turkey has a huge population of refugees from Syria and elsewhere in the Middle East. These too will want to move to more prosperous countries.There is now a ridiculous EU scheme whereby genuine refugees residing in Turkey are swopped (one for one) for economic migrants in Germany and elsewhere. For this, EU payments to Turkey have now reached €6 billion, of which the UK has just coughed up another €0.5 billion.
The final problem is that Turkey is engaging in a long term genocidal war against the Kurds. Turkey has lots of previous on genocide, it’s most notorious being the Armenian genocide which started in 1915 and slaughtered between 800,000 and 1.5 million Armenians. Also included were Assyrians and Christian Ottoman Greeks. The Kurds, who have long wanted independence (for very good reason) have been subjected to repeated massacres by the Turks – as well as by Saddam Hussein’s Iraq. The Turks are now confusing the issue still further by fighting the Russians and servicing ISIS finances by the purchase of their oil.
Turkey has huge humanitarian and human rights issues which alone ought to eliminate it completely from EU accession. But there is an unseemly, but curious, rush to get it into the EU. David Cameron has supported Turkey’s application for a long time.
Corruption For nearly 20 years, EU auditors have refused to sign off EU accounts because of the endemic wholesale mismanagement and corruption involved in the distribution of EU funding. A recent EU report gives some idea of the problem and estimates that it costs the EU taxpayer some €120 billion every year. With the accession of Turkey, the scale of the problem will get bigger, not smaller.
Taxation is one of the areas where the EU is continually delving deeper into the heart of its Member States’ ability to govern themselves as sovereign nations. VAT is an EU tax. 2% of all money raised by this tax goes to the EU. UK Government finances are audited by the EU and we are sometimes admonished for not reporting things correctly (this from an institution whose own auditors have not signed the accounts off for 20 years because of the misspending and corruption). Our contributions to the EU are all raised through taxation. Our net contributions are currently in the order of £8 billion per year. The Greek exchequer is run by an unelected EU troika. Ireland is also under the watchful eye of the European Central Bank. The Eurozone is particularly prone to interference from the ECB. We may thank Gordon Brown for keeping us out of the Euro.
TTIP The Transatlantic Trade and Investment Policy is an ongoing set of trade talks between the European Union and the United States. They are extremely secretive, with documents not being circulated electronically or on paper. The documents are only available in certain rooms within US embassies and the EC, where only authorised people are allowed to read them, and are not allowed to carry in any mobile phones or any other recording device. The history and approximate scope of the talks are here. The implications for changes to our lives and democracy are likely to be huge, but we are being excluded from any detailed knowledge of content and progress. One of the most sensitive areas of the talks are those parts affecting healthcare and which could impact the NHS in opening it up to US healthcare providers. It is clear that this agreement will be presented to the European politicians as a fait accompli (see Democratic Deficit above) and that they will be expected to rubber stamp it.
Conclusion Three or four years ago, I gave the Euro another two years before it collapsed. I felt that Greece would be the first to leave the Euro in order to do the rational thing for their own economic survival. I assumed that they would thus devalue and then put their economy back into the realms of sanity. Varoufakis very nearly achieved this, but Greece was bullied by the EU and it did not happen. In common with many others who have watched the Greek tragedy unfold, I had underestimated the EU’s determination to keep the EU Project going, whatever the cost to the peoples of Europe. The result is a lost generation of young people – where youth unemployment in Greece, Italy, Spain and Portugal is 48%, 39%, 45% and 30% respectively. Whilst still high, the UK’s is 13%, which seems manageable by comparison. For those southern European countries, an entire generation is being lost, sacrificed upon the altar of the Eurozone.
Angela Merkel, in her anxiousness to provide Germany with a new influx of young, cheap labour, opened the floodgates and unleashed a lawless onslaught upon the entire European continent. Fences are going up; the Schengen Treaty is effectively binned; and Merkel’s CDU party has taken a hammering in state elections this last weekend. The people of Germany are fighting back against their political élite. Euroscepticism is on the rise across Europe: in France, Denmark and Finland, as well as the UK. The Greeks present a curious contradiction in that they want to hang on to the Euro because it represents a hard currency – whilst at the same time, hating the Germans and the ECB imposed austerity that is doing so much damage to their country.
In Foreign policy, the EU has been inept, incoherent and just downright incompetent. The EU attempted to intervene in the Bosnian crisis and failed miserably. In the end, as so often before, it was NATO that sorted it out. EU intervention in the Ukraine has trampled upon Russian sensitivities to such a degree, that Lord Owen has suggested that EU ham-fistedness has exacerbated the situation. Even the migrants crossing the sea between Turkey and Greece are rescued by NATO ships, rather than EU efforts. The whole thing shows a degree of ineptitude that beggars belief.
The various negative parallel strands outlined above are not even acknowledged by the Remain campaign, never mind given any indication as to how and when the difficulties should be overcome. As each day passes, the strands become ever more enmeshed and the solutions become more complex, difficult and hazardous. When we look at the European Union, what we are told is that it is static and secure. What we actually should see, were we to open our eyes wide enough, is that the whole edifice is cracking. The Soviet controlled Warsaw Pact lasted from 1945 to 1989, i.e. 44 years before breaking up. The EU and its predecessor the EEC have been around for about the same time. What we are looking at is not stability but a very dynamic political, economic and social construct which is extremely unstable.
What is really scary about the outcome of the EU referendum, is not getting out, but staying in.