John West - Labour supporter and journalist

Currently living in Paris, I'm a Labour member, activist and freelance journalist. I'll be writing mostly about missed opportunities, as I see them, and the necessity to rebuild Labour as a cohesive movement. We mustn't lose sight of reality, but we should sometimes challenge it.

Wednesday, November 09, 2005

Was the UK to blame?

An article I had published in d'Letzebuerger Land (a Luxembourgish political and cultural weekly - 09/09/05) on the failure to set the EU budget in June under the Luxembourgish presidency. All sorts of issues involved, and - for me - a rare, if cautious, thumbs-up for Blair.
This is, perhaps, both out of date and on the ball. Some of the personnel (Merkel did edge it over Schroeder) and the circumstances (i.e. four and a bit months in and we're still waiting...) have changed, but I think the content stands up as still being the centre of the debate:

Britain’s position has been misrepresented and taking a look at their vision could offer a real chance to save the social model.

‘Blair rejected the various different compromises put to him by Jean-Claude Juncker’, wrote Le Monde. Juncker himself described the situation as a ‘profound crisis’. President Chirac, in a thinly veiled reference to the United Kingdom and the Netherlands, blamed the ‘arrogance of several rich countries’. Chancellor Schroeder put it down to the ‘totally unaccepting attitude of the UK and Netherlands.’

The failure to set the European Union budget for 2007-13 in June, under the Luxembourgish presidency, continues to cast a shadow over the future of the union and recriminations have flown back and forth. An orthodoxy has emerged blaming the UK for its obstinacy in retaining its rebate - le chèque britannique – roundly condemning the greed of a rich country never really interested in European integration and determined to create an EU centred around neo-liberal ideology, abandoning the social model.

But to accept this version of events is to ignore the interests of those who have sold it. The British people, with their love for populist Euro-bashing and fearful that the Commission will force them to warm up their beer and straighten their bananas, have a long way to go to understand the benefits of an effective EU. Despite this, the UK Government under Labour has pursued a different, pro-European, course. What leaves Blair’s government open to attack is that this course differs radically from the European vision of the 1950s to which Juncker, Chirac and Schroeder have clung.

The summit held on 16-17 June was never likely to resolve the budget. Alongside the political debate, the degree to which vanity and ego characterised this face-off cannot be underestimated. Determined to regain political kudos following the constitutional referendum defeat that further dented his domestic standing, the French President arrived in Luxembourg with an age old tactic: attack the Brits. In 1984, when the chèque had been demanded by a handbag-wielding Margaret Thatcher, Britain was relatively poor. 21 years later, following sustained economic growth since the late 1990s, the rebate was open to criticism as being an anomaly left over from a different age. To hold on to it would be greed itself, especially as part of the burden would surely fall on the accession countries least able to afford it.

The ease with which a coalition could be formed around this argument made it all the more attractive. Schroeder, in a desperate race for German popularity, was happy to show solidarity with his good friend Chirac and maintain the Franco-German alliance. Juncker, mindful of the difficulties over the constitution and keen not to have his EU presidency go down in history as the moment European integration fell apart, took the easy route in uniting governments around this attack – a strategy that would isolate those countries keen on questioning the relevance of a model developed over 50 years ago.

What these countries seem not to have expected is that Blair arrived at the summit more than willing to negotiate. The British premier also believes that the rebate is an anomaly, but casts the argument in a modern understanding of what the rebate does. Whilst the chèque was negotiated to help Britain out of its economic difficulties in the early 1980s, it continues to be valid as a result of the UK’s high payment into the EU and the folly of the Common Agricultural Policy. Blair, quoting from accurate figures, argued in Luxembourg that over ten years, the UK had paid 2.5 times more into the EU than France and that without the rebate it would have been 15 times more. Even with the rebate, in 2003, the UK paid in 0.16% of its GDP, compared with France’s 0.12%. The reason for this is that the UK does not have a large farming sector, resulting in much less benefit from the CAP. Without the rebate, Britain’s payment into the EU would be unfair in the extreme. But Blair has no ideological attachment to the rebate. Where the Conservative prime ministers Thatcher and Major saw it as non-negotiable, almost an article of faith, Blair offered the opportunity for a deal on the basis that the rebate is a symptom of the greatest anomaly of all: the CAP itself.

Swallowing 46% of the current EU budget, the CAP has been disproportionately allocating money to a sector accounting for roughly 5% of the European economy. Under the supervision of former UK Trade and Industry minister Patricia Hewitt, the Labour Government’s opposition to the CAP became hardened and clear: agricultural subsidy is hampering the opportunity to fulfil the Lisbon agenda of increased funding for higher education, research and development that will keep Europe competitive in a global market geared towards information and technology. Moreover, the course set by finance minister Gordon Brown on cutting debt owed by developing countries would be aided greatly by abolishing the worst aspects of the CAP that flood their markets with subsidised goods and make export trade almost impossible.

It is in this context, then, that the British stance in Luxembourg should be understood. In spite of the political self-interest of Chirac and Schroeder, in spite of the conservatism of Juncker in defending the 1950s model, in spite of the harsh words exchanged behind closed doors between the fiery Brown and the Luxembourgish premier and in spite of press coverage before and since, the rebate was up for negotiation – so long as the CAP was on the table too. Blair wanted an open debate on the budget as a whole and did not regard a deal sewn up in 2002 to safeguard the CAP as helpful when trying to equip the EU to tackle the challenges facing it in the future.

What happened in Luxembourg, then, deserves a closer look. On the face of it, so long as money was being invested in improving Europe’s competitiveness and not subsidising farms disproportionately to the detriment of developing countries, the UK was prepared to renounce the rebate and pay more into the EU.

Whatever opinions may exist on whether that is the right or wrong path for the EU, it is certainly not ‘arrogant’, as Chirac suggested, or ‘totally unaccepting’, as Schroeder saw it. Moreover Juncker, confusing Franco-German goals with a predetermined course for Europe, participated in the distasteful spectacle of accession countries being offered financial packages to come on side as part of a budget deal that saw the rebate either removed or frozen at its current level – a deal he must have known Britain would not accept without the CAP having been negotiated first. One unnamed British diplomat, quoted in the Sunday Times, described Juncker’s backroom dealing as akin to the accession countries being offered a series of ‘brown envelopes’, making Juncker’s subsequent claim to journalists that he had been ‘ashamed’ by the offer of poorer EU countries to give up their financial demands in the ‘interest of reaching an agreement’ seem disingenuous.

In reality, Blair will hardly have taken much notice of an accusation of arrogance from Chirac, who has made no effort to construct an adequate response to the voice of the French people in rejecting the constitutional treaty. As for Schroeder, it is in no-one’s interest to debate the future of the union, with a view to striking a new deal for a budget for 2007-13, with a leader who will in all likelihood be rejected in the polls very soon. In any case, the rebate remains the best bargaining chip to bring the issue of the CAP to the table.

As misleading as the coverage of the conference has been in misrepresenting the nuances of the British position is the notion that the UK stands entirely alone in wanting a debate about the budget with everything on the table. Sweden, Spain, Italy and the Netherlands want an end to the chèque, but they have all made noises about the need to restructure a budget reflecting the political and economic aims of an aged orthodoxy.

Neither is the Labour government interested in tearing apart the notion of Europe as a political entity with a strong social core, as Blair made clear in his speech of 23 June to the European Parliament. Dispelling the notion of the UK as in thrall to a neo-liberal dogma, he pointed to the policies of his government in eliminating long term youth unemployment, increasing investment in public services, introducing the minimum wage, tackling poverty amongst both young and old and increasing parental rights. This is in stark contrast to a social model that has 20 million unemployed in Europe.

An EU better responsive to its citizens, better at consulting them, better at delivering for them would certainly be true to the ideal of European integration as set out in the first Treaty of Rome. An EU that focuses on the economic challenges of the future is vital to ensure that Europe remains a powerful political voice on issues of global importance such as climate change, poverty and human rights. The EU’s work in negotiating with Iran looks a lot less clumsy, and much less bloodthirsty, than Bush and Blair’s war in Iraq.

The UK inherited the rolling EU presidency from Luxembourg on 1 July. It would be mistaken to say that there are not problems with Blair’s vision. It is right for those of us on the left to be cautious of Blair when we look to his allies: the former Spanish premier Aznar, and the rising stars of Merkel and Sarkozy. And, of course, he has singularly failed to sell the EU to his own people. But it would be wrong of us to ignore that there is a cogent argument for a social Europe that delivers and does not, for its own sake, stick to the past.


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