The EU referendum in the UK (3) : The democratic “deficit”

Against EU : The EU is undemocratic in that the people of the UK do not want Brussels to control numerous policy areas and don’t understand how this happens;  also the European Commission and European Court of Justice are not appointed, yet have huge power to initiate and drive through new law and policy in ways which we cannot predict or challenge effectively.  As a result, the UK government is gradually becoming a body which only implements laws made in Brussels, and ordinary people are becoming more alienated from politics.

For EU : The EU is democratic in that its powers come from treaties which have been signed by the governments of all member states, and most important decisions continue to be made unanimously by all heads of state, including the UK Prime Minister.  Decision making power is shared by the European Parliament, whose MEPs are directly elected, and by the European Commission which can be sacked by the European Parliament.

There are never-ending, passionate debates about whether the EU acts in the interests of the voters, the weaker nations, the bigger nations, the Eurozone nations, lobby groups, big business, and even just the politicians themselves.  One thing agreed is that the democratic organisation of a group of 28 nations which differ widely in terms of culture, language political traditions, size, history, and levels of wealth was never going to be easy.

The EU is a membership organisation of 28 countries which is partly an intergovernmental organisation giving effect to the (mostly) unanimous decisions of heads of states, and partly a supranational body, with sovereign powers over subordinate member states in its areas of competence.  

The legal framework of the EU consists of: 

a) treaties signed by all national governments, 

b) regulations and directives (which implement the treaties) issued by the European Commission (like the civil service) and enacted with the input of directly-elected MEPs in the European Parliament, and 

c) binding decisions of the Court of Justice of the European Union.

Simplifying the issues massively, the EU is responsible mainly for : 

a) the running of the EU-wide single market in goods and services, 

b) setting interest rates and controlling the money supply in the 19 countries which use the euro, 

c) the common travel and asylum policy (covering the so-called “Schengen zone” which excludes the UK), 

d) environmental and consumer standards, common fisheries and agricultural policies including subsidies, and 

e) the allocation of development funds to poorer regions.

The EU treaties are widely drawn for the overall achievement of general purposes rather than tightly-drawn strictly interpreted powers, which is the norm in UK statutes. To a greater or lesser extent, the EU is also involved at the strategic and executive levels in a whole host of other policy areas, and is developing its role in defence and international relations.  

Given that the EU implements its policies and decisions through national governments across a vast array of policy areas and across 28 nations, it is genuinely hard for the average person to understand the processes of the EU, or to feel that they are engaged in them.  This sense of democratic alienation from Brussels is often intensified by a similar sense in respect of national democracies, and there is a widely-accepted mood of cynicism and “anti-politics” sweeping the “first” world.  Look no further than controversial or populist movements like Podemos (Spain), 5 Star (Italy), Law and Justice Party (Poland), UKIP, and radical figures like Donald Trump, Nigel Farage, Viktor Orban (hardline Hungarian PM), and on the left, Jeremy Corbyn and Bernie Sanders. There has been a steady rise in anti-EU sentiment in recent years, in large part related to migration.

The most frequent criticism of EU democracy from “Brexiteers” is that the European Commission, despite being unelected, has and exercises huge power to initiate legislation, which has the effect of needlessly harmonising existing legislation across EU states, thereby overriding national democratic processes.  I have seen estimates that between 15% and 60% of British laws emanate from Brussels.  Michael Gove, the Justice Secretary, who has declared for Brexit, argues that he sometimes cannot deliver manifesto commitments because his civil servants tell him that EU law won’t permit it. 

It is certainly true that the manifesto system in Westminster of spelling out specific commitments before elections, and implementing them through a clear parliamentary majority is much clearer and easier than the complexities of the EU system whose “manifesto” is effectively the widely-drawn aims of the treaties, aimed at the steady political and economic integration of all countries in Europe. 

Even though the big, strategic decisions in the EU are taken by prime ministers collectively, it’s still not surprising then that there is a collision between the ideas of many British politicians who have inherited the traditions of the absolute sovereignty of Westminster, and the radical vision of European integration, which the bulk of the political and intellectual establishments across Europe have signed up to wholeheartedly.  Something has to give and ultimately, we are faced between a choice of sharing / surrendering sovereignty for the sake of the whole of Europe, on a give-and-take basis, or going it alone. 

After 40 years of breakneck political integration and the rapid expansion of the EU in size and policy scope, the decision to leave the EU is now as radical as that of staying. Those who would like a middle way of friendly intergovernmental co-operation, mostly in the area of free trade, will find that this option has never existed. The EU’s radical integrating nature, and its enduring support among the European political establishment (including the UK’s) means that staying and leaving are both radical decisions which will shape our national destiny massively.  

There is however a third way which is to sign up to the EU on paper yet always aim to get “the best deal” for the UK from the EU through opt-outs from specific policy areas which ruling Conservative governments object to; this is seen elsewhere in the EU as the UK’s persistent and selfish obstruction of the aims of political and economic integration, and I will come on to this in more detail when discussing David Cameron’s deal in the last article of this series.  I’ll leave you to chew on the consequences of this possible approach till then!

Verdict

There is universal agreement that the democratic structures of the EU need reform, which in the case of EU-philes means “more EU”, and in the case of Brexiteers, means “less EU”.  Ultimately, the democratic issue is about the big picture vision – what kind of nation and continent do we want? Do we want to muck in and put our efforts into the EU project – which is the only serious European cooperation project in town – and try to make it work for the whole continent? Are we willing to accept that, for this to happen, the UK may eventually become a region, albeit a powerful one, of a United States of Europe?  Or is this too hard to stomach, we should leave the EU to its fate now, and recover our national sovereignty on 23 June before it’s too late? 

The choice is yours but I do recommend a close inspection of the politicians who will lead us down either path at this fork in our national history. And on 24 June 2016, once we know which path we have chosen to follow, we shouldn’t look back.

Week 4: The EU budget

For the EU: the UK’s contribution to the EU budget represents fantastic value for money given that it “buys” access to the biggest single market in the world; money spent on developing the infrastructure of poorer EU regions and nations shows our solidarity and long-term interest in maintaining the political and economic security of the EU.

Against the EU: for every £2 we pay the EU, we receive £1 back. Much of the EU budget is spent on food production subsidies which unfairly penalise British farmers, fishermen and consumers. Structural development funds are spent on projects in countries which we have no natural affinity with, fraud is a significant.

EU Referendum in the UK : (2) Free trade and economic benefits

For EU : The EU facilitates free trade and free movement of money, goods and services across Europe.  The UK would have a much worse deal on these issues post-Brexit and suffer huge damage to its economy.

Against EU : Because of the huge volume of exports to the UK from many EU countries, there is every reason to believe that the UK would continue to have free trade and movement of money, goods and services across Europe post-Brexit, just like Norway, Switzerland and Iceland do.  The UK’s economy would continue to thrive, perhaps even more so.

As a result of EU policy, there is a single market across all EU countries with no tariffs on imports or exports and so there is no doubt that trading barriers have come down hugely as a result of the work of the EU.  This enables European access to UK manufacturers in particular, though access to services is not as free because of long-standing traditions of professional regulation on a national level, e.g. of the legal and accountancy professions.

The UK runs a huge trade deficit (we import much more than we export) with EU countries, especially France, Spain, Italy and Germany, mainly because our economy relies much more heavily on services than theirs.  Conversely, we run a healthy trade surplus with the rest of the world, particularly, US, Can. Aus. and NZ though there is no reason to suggest that this surplus will grow purely by leaving the EU.  Brexit supporters emphasise the fact that the UK’s overall trade with the EU is declining year-on-year (currently around 40% of all exports).

However, the UK probably does gain in some respects from the open EU market as our status as an English-speaking country with global connections, good access to finance, and a stable legal and administrative system means that the UK is an attractive place for multinationals to locate their European operations.  Major political change is always a headache for business, and big business in the UK is mostly in favour of EU membership; this should worry us as they have the resources to relocate. 

On the other hand, many smaller manufacturers complain that the EU generates a huge amount of red tape, which is even more unnecessary if you consider that most small businesses in the UK have mostly UK customers.  They also say that the practical reality is that British companies don’t stand a chance of winning big contracts in other EU countries and beating off local rivals, whereas the reverse is much more likely.  Support for Brexit in the business world mostly comes from smaller businesses, with some big-name exceptions like James Dyson (vacuum cleaners) who started small.

Outside the EU, we would want a free trade deal with the EU.  Interestingly, Switzerland, Norway and Iceland have free trade by virtue of their membership of EFTA.  EFTA and the EU make up the European Economic Area, which the EU runs.   EFTA members contribute to the EU’s costs of running the EEA and EU supporters say that we would therefore not save much of our current contribution if we left, and also lose any influence over the making of the rules of the EEA.  EU supporters also say that it is hard to imagine that, after Brexit, we would get as favourable a deal as we do now, and that other EU countries would probably seek to punish us for abandoning them. 

On the other hand, Brexit supporters say that it is hard to imagine that the UK would negotiate a worse deal with the EU than the small EFTA countries, given our huge amount of imports from the big EU countries. They also say that our influence over EU trade policy is limited in practice because we often take a different view from other nations because of our different economic and political objectives, but are usually overruled.  They say that leaving the EU will mean that we regain our place at the World Trade Organisation where most international trading rules are negotiated, and are in fact later implemented via the EU. The EU currently acts for all EU nations at the WTO.

Without the benefit of a crystal ball, it’s very hard to say what the overall effect on trade will be of leaving the EU.  Estimates from the respected reformist UK-based EU think-tank “Open Europe” are that our economy will shrink or grow by up to 2% either way – stay or leave - and probably by no more than 1%. 

Verdict

I prefer to concentrate on the more neutral figures from Open Europe than the more exaggerated claims of growth and savings touted by the current political campaigns, which are impossible to make sense of. If the Open Europe figures are right, then it gives us a greater ability to base our vote on longer-term political issues.

The pound has lost about 10% of its value against the dollar in recent weeks and we can expect a barrage of claims in this campaign that leaving will cause us economic disaster. I think the reality is that market traders will exploit the political uncertainty in the short-term but that in the long-term, deals will be done to ensure that the current free trade continues, at least to significant extent, for mutual benefit. 

In practice, Europe will still be a very important place to do business after Brexit but will also be a less favourable place because of a loss in goodwill. If we do leave the EU, we need to expect that other EU nations will do us no favours, and be ready to accept some short-term economic pain in the form of more expensive imports and some reduction in exports to the EU; we would also need to be serious about developing our economy in the direction of the rest of the world.  This would be a huge political task requiring great vision, competence and persistence on the part of our politicians.

Next week: The democratic “deficit”

Against EU : The EU is undemocratic in that the people of the UK do not want Brussels to control numerous policy areas and don’t understand how this happens;  also the European Commission and European Court of Justice are not appointed, yet have huge power to initiate and drive through new law and policy in ways which we cannot predict or challenge effectively.  As a result, the UK government is gradually becoming a body which only implements laws made in Brussels, and we are becoming more alienated from politics.

For EU : The EU is democratic in that its powers come from treaties which have been signed by the governments of all member states, and most important decisions continue to be made unanimously by all heads of state, including the UK Prime Minister.  Decision making power is shared by the European Parliament, whose MEPs are directly elected, and by the European Commission which can be sacked by the European Parliament.