Month: July 2011

 

         Listening to the BBC you could get the impression that the tea party minority in the Congress has the power and the wish to wreck the world’s financial system. We heard stories about how their refusal to vote for a Republican compromise threatened world bond markets, banks and the world economy. A day later a Republican proposal did pass the Congress. The Democrats then imposed a veto on  that in the Senate, but did not get the same blame for threatening the financial system.

         Let me begin by saying I am no card carrying tea party Republican. They propose different remedies for a different country. I myself do not think a western democracy is able to  cut public spending by 10% in cash terms in a single year, given the politics and the way western governments are run. Companies and individuals sometimes have to do that and do do that, but different rules seem to apply to governments. When it comes to cutting spending by around 10% of GDP, that’s a very tall order indeed. That’s what it would take to cut out the whole deficit in one go.  

         Nor, however, is it right to say it is  just the tea party members who are holding an otherwise sane world to ransom. They are making at least two  fair points. They are saying that the problem of too much borrowing can best be solved by spending less.  They are arguing that if the US goes on boosting spending and borrowing with never a thought for tomorrow or how you might pay it back, it will all end in tears as it has in Greece and Portugal.

          The BBC should apply its critical faculties to the Democrat position as well. Why doesn’t the President lift the spectre of world banking and market melt down by saying that whatever happens on the debt ceiling, the US will of course honour its debts and pay the interest on its bonds? He could do that now, immediately. The US collects huge sums in taxes, that cover the bulk of the state ‘s spending. Surely he could indicate that the tax revenue will be used to ensure no default? He says default is a bad idea, so why doesn’t he rule it out? He could also reassure key state employees that their wages will be paid from the tax revenues. There are plenty of other items of spending that could be deferred or cancelled.

           He still needs to argue with Democrat and Republican Senators and Congressmen about the pace of introduction of sensible spending controls, and any tax revenue rises they think they need. This need not be done under  the pressure of a threatened default. The truth is the tea party minority do not have the votes to veto a higher debt ceiling and higher spending. The  Democrats need to set out various budget proposals, and settle for the highest spending version which moderate Republicans will accept.

           The USA, like most other western governments, is spending and borrowing too much. The sooner it takes action to rein it in, the better. Fiscal stimulus is no longer working to boost the western economies. It is increasingly dragging them down by the weight of the debts, and the growing fears that some countries will be unable or unwilling to repay them. The US is just adding to the tensions by this foolish posturing.

 

            Spending a week on foreign policy has stimulated a lot of replies. Many have commented shrewdly on  the problems the UK faces, and many have agreed we want a new relationship with the emerging United States of Europe.

             A few have defended the EU and claimed that we will have to follow their laws anyway, so we might as well stay in to influence them. This is a misreading of the position. We do will not have to obey their laws here in the UK unless we stay under full EU control. We do not  have to follow US or Indian laws here in order to be able to trade with them. Of course exporting companies have to meet customer requirements, including any requirements necessitated by local laws in the country to which they are exporting. International trade agreements and law is designed to prevent any country or regional grouping making these anti competitive or unfair to exporters.

         It has always been a nonsense that pro EU campaigners have implied we have to stay in and go along with the EU’s ways in order to be able to trade with them. Germany wants to sell her BMWs to non members of the EU as well as members. It has also been misleading to say the EU has kept the peace in Europe since 1945. The peace has been kept because the main western countries are now all peace loving democracies, and because the US army and missiles were stationed  in the centre of the continent.If there had been no EU, Belgium would not have invaded Holland, and Germany and France would have lived in peace together after the bruising experiences of three wars.  The EU did not keep the peace in eastern Europe.

          Many have used this opportunity to demand that we leave the EU altogether.Some seem to think it is my fault that we do not! As I voted “No” in 1975 when some of my current critics voted “Yes”, I think they are more of the problem than  I have been.  I tried to persuade Margaret Thatcher to only surrender vetoes over single market matters for a temporary period and for specified measures. I fought within the Major Cabinet for free votes and a referendum on Maastricht. I voted against Nice, Amsterdam and Lisbon  in  the Commons. I have continuously and consistently made the case for sticking with a common  market relationship which the people  voted for, and against any move into the federal union. I helped make the case against surrendering our currency, and am pleased to say we won that crucial argument.  As a democrat I accepted the vote of the people for a Common Market. I was a good loser.  I do not think it was a vote for a federal EU. I would like a new vote on our relationship with the EU, preferably after a renegotiation.

         The small band of UKIP supporters tell us all would be different if Conservatives would now join them. They are wrong. UKIP has spent years and two failed General Elections setting ever higher Eurosceptic hurdles for Eurosceptic Conservatives to jump, instead of wooing Lib Dem, Labour and Green voters to their anti EU cause. In European elections they have been able to split the Eurosceptic vote sufficiently to win a few seats, but in General Elections splitting off a small bit of the Eurosceptic vote just helps the federalist Lib Dem and Labour parties more.

         Some of these UKIP supporters live in a dream world. They think there is a majority of the British people who agree with them, yet that same imagined majority just never get around to voting for them. They think the best attack is to target and seek to undermine the most Eurosceptic Conservatives in the most Eurosceptic areas, wrongly thinking them the problem.

             Just for the record, I am not following a secret pro EU policy to stay in with some secret cabal within the Conservatives that wants a federal outcome. I do not have to change my Eurosceptic  views in order to keep my pension entitlements. Nor am I planning a leadership bid, as one correspondent suggested. I am urged to speak out on the European issue. That is what I do regularly, as this website shows. The views get into the older media, as on Any Questions recently. This site is not irrelevant, nor some Conservative party approved humouring of the Eurosceptics.

              I understand the frustrations of some that whatever we do or say EU powers have increased, are increasing and ought to be diminished.How will the tide be turned? By mobilising public opinion. How can that happen? By those of us who think the EU has too much power striving to explain to our fellow voters why it matters and how it can be changed. It will not be changed by very Eurosceptic people complaining that other Eurosceptic people are not Eurosceptic enough. You do not create a majority by detaching some votes and MPs from  one large party to a party which has failed to make any electoral impact at Westminster.For MP s there is nothing to join. If you are elected as a Conservative you should not switch to a defeated party between elections, as you have promised to serve as a Conservative. If an MP did decide to switch parties  to one defeated at the previous election, they should  resign, and  fight to win back the seat as UKIP or whatever. How do you think that would work out if anyone tried it?

            I cannot  take UKIP seriously, as when I need other MPs to vote against EU powers, there are no UKIP members to do so. Politics is about numbers and tides of opinion as well as about having the best policies and the most telling arguments. When you ask me what can you do to advance the cause I say spread the word and support all of us who make the case in Parliament and on the public airwaves. If Eurosceptics keep arguing amongst themselves, you should not wonder that the cause lacks political influence or the numbers to make a difference to our laws.

 

           The UK has arguably fought too many wars. There are limits to how much influence you can have or should want to have  over how government works in distant countries. This period of retrenchment and reconsideration of our role should also be one of reflection on the limits of our power, and the effective limits on what military actions can achieve.

          Over the last thirty years there has been no great principle behind intervention. We intervened in the Balkans,  Kuwait, Iraq, Afghanistan and Libya. We did not intervene in North Korea, Zimbabwe, Syria and a host of other dictatorships and civil wars. The cry has gone up that because we cannot intervene everywhere that should not stop us intervening in some cases. I agree. It would still be wise to examine whether we have intervened too often, and whether in some cases the intervention will  not be successful in the longer term.

          I look forward to your thoughts on a war too far. When should we intervene? Should there by some principle behind it?  Should we just intervene when a country is invaded and seeks help, as with the Falklands or Kuwait? Should we intervene where one side in a civil war wants help and we think they have the worthier cause?  Does the UN always get it right, and should we only intervene at their request? Should we initiate more UN interventions, or seek fewer?

          What have we and our allies achieved by Middle Eastern intervention in the last decade? What is the right pace of disengagement?

 

                In the post imperial world of the last seventy years the UK has sought to continue in a global role. This has caused arguments. Some have argued that we do need to join a United States of Europe, to have influence over a rising regional power in Europe. Others have said we need closer ties with the world’s only superpower, the USA.

               Neither of these approaches appeals to me. The UK would make European union that much more difficult. We do not share a full set of common foreign policy  interests with the rest of the continent. Nor do I see any need for closer ties with the USA. The framework of NATO works well. A participant country does not have to join in with an American war if they do not wish to. Particpants do benefit from a secruity guarantee when it comes to warding off any threat to their own borders. I have no more wish to be a state in the American Union than I do to be  a state in any United States of Europe.

                      The truth is the UK does not have to decide to integrate more either with Europe or the USA. The UK is a serious sized country with an island base. We do not have the border issues that countries on the continent face. Our borders are easy to police, and entrants to the UK have to come via just a few main ports and airports.

                     We can choose what kind of a world role to undertake. We should keep our membership of NATO to add allies to our defence forces, just in case a new military  threat should ever emerge to our independence. We should keep friendly relations with the continent, and reach agreements on trade, transport links  and other matters of common interest with our neighbours. We should strengthen and nurture the Commonwealth.

                   In our current economic plight it might be wise to avoid too stretching a world role. We need a little time to get our public spending under control and to get our economy firing on all cylinders again. We need a strong  diplomatic corps to project our interests and concerns. We should keep sensible forces that are mobile and capable of intervention from sea and air so we can contribute to wise UN and NATO tasks that make sense for us. We should have an aid programme to assist with famine, flood and other disasters. We should not be offering aid to nuclear weapons countries, or think that old style aid will lift countries torn by civil war or marred by bad dictators out of poverty.

                       We should think better of ourselves. We do not need to tie ourselves irrevocably to any major power.We have strong links across the Channel, and strong links across the Atlantic. There will be many things we wish to do with our European neighbours, and many we wish to do with our American allies. Each one should be judged against the questions can we do it, do we want to do it, and is it in our interests to do it?

                        We have lost an empire, but have a world to influence. The UK can be a force for the good. We should help assemble coalitions of the willing for causes we believe in, from free trade and democracy, to civil liberties and the attack on poverty.

 

            The UK’s price for agreement to a more centralised Euro area government should be a looser relationship for ourselves with the emerging colossus.

             Most British people I talk to want trade, peace and friendship with our continental neighbours. The majority do not want a government in Brussels telling us what to do in a myriad of areas, where we would rather make up our own minds. There is no appetite for Brussels to control our money, our taxes, our budgets, our foreign policy, our armies or our criminal justice. Many British people are not happy with the way the fishing and agricultural policies work.

             Everyone’s first priority is to protect and develop our trade with the continent. This preoccupation arises from years of wonky brieifng, implying that if we do not go along with all aspects of ther EU scheme we somehow will no longer be able to sell them our goods.

              We need to recognise that the EU represents a minority of our trade when including services as well as goods, and a declining proportion of the total. We do not need to join the USA in order to trade with her. Our trade with Europe is protected both by the fact that they sell more to us than we sell to them, something they will not wish to lose, and by  international agreements supervised by the World Trade Organisation. Those who fear for the export of British pharmaceuticals or weapons can rest easy in their beds.

                     The simplest way to fix the problems in the UK’s relationship with the EU would be to restore a modified UK veto over all matters.  The new veto would allow us to say No to  any law or proposal emanting from Brussels, but would not allow us to stop them doing it for themselves without us. This would take much of  the pressure out of the situation.

                          No Brtish government after such a change could ever again say they had to do something to comply with the EU. We restore UK democracy. Any British government that wanted to be in line with the EU, or liked what the EU was doing, could adopt as much of it as they saw fit.

                            There would be no immediate revolution. The day after such a change the UK would still have the full panoply of EU law. The government could decide what bits it wished to repeal. It would be wise to do so carefully. It would be diplomatic to give plenty of warning to the EU authorities where we were going to remove parts of the canon, and to show them we intended to use the new powers sensibly. It would allow all those in the UK who still think EU law making is the right answer for the UK to defend the EU laws and to encourage us to retain them.

                             Europe would be liberated. The UK brake would no longer be regularly applied to the speeding train of European integration. The UK would get her democracy back. All laws in the UK would be ones the UK wanted, whether they originated in Brussels or at home. We would have a way of amending or repealing European law that did not work, whatever the rest of the EU wanted to do.

                                The UK could still take part in trying to find a common EU  law in  chosen areas, but both sides would be in a better position at the negotiating table. The EU would know we could not veto it, and we would know they could not force it on us.

 

           We have seen that the UK’s foreign policy has lurched from wanting a divided Europe with no one power dominating our near neighbours, to accepting the drive to European integration. This has never been put honestly and openly to the British people, who have been told sovereignty and power still rests with them, as it is wrestled away to Brussels.

           The crab like approach to European integration has proceeded on the basis that the UK will be a late joiner, but will in the end sign up to the whole menu. The UK was after all in the second wave of entrants to the EEC. She delayed joining the full criminal justice package but is gradually opting in, delayed entry into common borders but now is governed by some of the common measures, delayed joining the social chapter but later did so, and says she is against a common foreign policy yet backed the growing diplomatic corps of EU officials.

           Many on the continent thought it would only be a matter of time before the Uk joined the Euro. Maastricht gave us an opt out, but also left the door firmly open for us to join. I used to be the object of Germany briefing and persuasion, as various senior protagonists of European integration sought to persaude me to change my mind about the single currency.

          Today we are on the threshold of a new reality that cannot easily be hidden. Euroland intends to deal with its stresses and strains by pushing on to much fuller political union. The UK will not be in the Euro, and has a government which says it does not wish to surrender more power to the EU. Temporarily all three main parties are united in agreement that we should not currently  join the Euro, but disunited in what else we should say and do.

              The old nightmare of UK foreign policy is about to come true. France, Germany and the low countries, our nearest neighbours, will be a united single power. It is true they will have the bills and troubles of the south to worry about. There at last will be the powerful European sovereign authority that eluded the Spanish, The Holy Roman Emperors,  the French and the Germans at the height of their miltary power when they all sought to unite Europe by more violent means. It will be closer to the days of the Roman empire, when Roman rule stretched far and wide. They had a single language, latin, for administration, a single gold currency, a common system of government and enforcement by a very active army.

             I do not think the UK should try to stop this more modern and peaceful  union, as they seem to want it badly. I doubt it will last a thousand years, or even a hundred. I fear the Euro will do more damage to jobs, living standards and tempers before it is finished. We should warn them that we think there will be great troubles ahead as they press on with it. It will cost far more and take far longer than they expect. They will ignore our warnings as they did over the Euro.

             It is time for the UK to adjust to this new reality, and to set out what we want and  how we intend to proceed.

            We could begin by saying it has more chance of success without us in it. We could stress that by staying out the UK is acting as a good neighbour. With our state debts, large  running deficit and semi nationalised banks we would impose huge and possibly terminal stresses on the Euro project. It is better for them that we remain out.

               We should go on to say we will co-operate in creating the new political and constitutional architecture they want. They will need us to vote for it. We should do  so , as long as our interests are protected. Tomorrow I will talk about what we should want in return for approving the next big step in the project to create out of Euroland a United States of Europe.

 

 

            Expect endless economic idiocy in the commentary this week. We will be told that slow growth is the result of the “cuts”. Most will fail to remind us that public spending was up 5.3% last year (more than inflation), and is forecast to rise 3.8% this year (more than forecast inflation). Most will fail to remind us that so far this year public borrowing is as high as last year, at very high levels. How much more borrowing do these people think the UK public sector could get away with? Have they learnt nothing from Greece, Portugal and Ireland? Don’t they understand borrowing is just deferred taxation?

        Slow growth is the result of weak banks, low rates of money and credit growth,  high inflation and  high taxes. If the public sector spends more, the private sector is made to spend less to pay for the public sector by tax rises. That squeezes consumers more ,  leading to further falls in real incomes.

          As  often reported on this site, the last year has been the tale of two sectors. The private sector has been squeezed to help pay for the public sector. Labour and Coalition tax increases have raised Income Tax, National Insurance, Oil taxes, bank taxes , CGT and VAT.  The public sector so far overall has had extra spending power. Many  commentators have muddled up which sector is being squeezed. The public sector has to live with much lower rates of cash spending growth in the second half of this Parliament, according to the plans. Most of the debates about “cuts” have been about future cuts. The rest is down to decisions about which areas get larger  rises than average and which get falls to help pay for the increases elsewhere.

                  What could the government do to speed growth? As said here many times, mend the banks, cut tax rates on earning and enterprise to raise more revenue, deregulate, and invest (using private capital) in energy and transport improvements.

 

               For centuries England and the Uk has stood against any one power dominating the continent. In the sixteenth and seventeenth century the superpower was Spain. England supported the Dutch rebellion and established the supremacy of her navy, protecting these islands from invasion. The Protestant revolt fractured the power of the Habsburgs, who found it difficult to forge a union out of Iberia and the Holy Roman Empire, the wider Germany.

               In the later seventeenth century and the eighteenth century England stood against French imperialism. We constructed alliances of the smaller states who resented the idea of French  control. We fought lop sided wars,with the superior English navy trying to check the progress of the all conquering French army. Finally England forged an army of heroes, which fought its way up through the Iberian Peninsula to Paris. This same army had to finish the job at Waterloo, after  the victors mishandled Napoleon again.

            In the twentieth century even more blood and treasure was spent to prevent German domination of the continent. All these wars centred around the low countries. There has been much Flanders mud on British military boots over the centuries. The theory stood that England should never allow Belgium and Holland to fall under the control of a large and potentially hostile power.

             From 1972 onwards UK foreign policy has turned this round. It has backed plans to create a single governing force on the continent. Instead of playing off one great power against another, or one superpower against an alliance of smaller ones, the UK foreign office has promoted a scheme for bureaucracts and a proto Parliament to exercise more authority across a united Europe. EFTA, the rump of the old Protestant alliances,  was summarily dismissed.

          In the earlier days some remants of the divide and rule approach to Europe was incorporated.  Some were  reassured to learn that the UK, by being round the table, could get its way by exploiting the disagreements and rifts between the various continental countries.

           In more recent years all such pretence has been largely abandoned. The UK has been told by the foreign affairs establishment to go along with the plans emerging from Brussels. The double speak says we have to be in the EU to have influence, yet having influence usually means going along with whatever the latest EU fashion is in excessive government and more regulation.

          It is true we should worry less today about a large power controlling the low countries. Such a development will not lead to any direct threat to ourselves, as the emerging power or powers on the continent will not have military aims against the UK.  We should ask ourselves why there has been such a dramatic lurch in the UK’s position.

        We should  note that endless briefings have told us “Europe is going our way”. They meant by this it was moving to an association of sovereign states who wish to trade with each other and be friends with each other, promoting more competition and freer commerce. This is at best a monumental misreading of what has been happening, and at worst is an attempt to deceive.

         The truth was expressed in  the Treaty of Rome. It was no simple prospectus for a Common Market, as described by the political establishment of all three main parties. It was always a guide to ever closer union, the first steps on the long road to a United States of Europe. By ignoring it at first, then joining it later, the Uk has ended with the one thing it always said it wished to avoid – a single power on the continent with power over us. Successive governments have given it more powers in an attempt to humour it. The long retreat from the Common Market has proceeded through Maastricht, Nice, Amsterdam and Lisbon. Veto after veto has been surrendered, and with it  the capacity for effective self government in many areas.

                  It is time to be honest. It is time to reappaise. It is time to say what we want.

 

             The new arguments over a federal more centralised Europe pose again the biggest question of UK politics. What type of country do we want in the future? What should our relationship be with this new emerging state? Over the next week I wish to examine British foreign policy.

              I come to this proud of what England  has stood for over the centuries. I come to this proud of many of the things that the UK has achieved  in the last two hundred years.

              My pride in country swelled some years ago when I was taking a Russian visitor around the Palace of Westminster.  I told him part of the story of our natio. I  illustrated it  from the way the Victorians told it in the very fabric of the Palace building and the works of art they acquired. He responded, saying  he liked the way the UK was at peace with its past.

                There on the walls at Westminster are the outs and the ins, the Royalists and the Parliamentarians, the Catholics and the Protestants, Tory and Whig, Conservative and Labour, Establishsment and rebels. They have all helped mould what we are. They all are represented with their causes. Revolutionary societies do not merely re write history. They write the losers out of the script.  Older democracies which evolve like the UK also continuously  rewrite history, but there are always those who represent the losers as well, giving them their place in the plot.

              Let me describe my starting point for this examination of the UK’s sense of national purpose. Before you can define the “national interest”  you first need to say what you think is at the  heart of the nation.

               I am brought to my feet or moved to sympathy by the British love of liberty. There is in our national character a sense of fairness, a love of the underdog, a gritty determination to stand up for our beliefs when challenged. There is at one and the same time a deep democratic instinct, and an unruly anti clericalism that undermines pomp, questions authority and is suspicious of claimed expertise. At our best  there is that sense of enterprise, a buccaneering can do approach, which lay behind our maritime prowess, our sporting innovation and our commitment to the wider world. England has led through her industrial revolution, through her early development of more democratic government, and by inventing so  much that brings prosperity and pleasure to the many.

              I would have wanted to ride with the chariots of Bouddica. Her cause was to free our land from the Roman military occupation. They may have brought us baths and commerce, but they also brought slavery, and an eclipse of local political  freedoms. I would have wished to stand with Harold at Hastings, rooted to the sacred turf as Norman cavalry and archers fought for mastery.  

            I would have felt miserable as I saw the kingdom torn by the war of Lancaster and York, unsure who to back but certain that England was the loser whatever happened. I would have led the cheering for Thomas Cromwell’s Reformation.  I would have played court to Elizabeth, urging both caution and steely determination in seeing off the Spanish threat to our independence.

               In the civil war I would have started as a supporter of Parliament, but ended in disagreement with regicide. I would have been keen to restore the Crown,  and equally keen to change personnel at the Glorious Revolution, limiting the power of the monarch.

                  I would have given full support to Pitt the elder as England established her wider global role and to  Pitt the Younger  as he led coalitions against French domination of the continent.

                 Both my grandfathers fought in the mud of Flanders. They were the relatively  lucky ones, both surviving. The pointless slaughter of the First World War has always appalled me. Why did the UK involve herself? Did the balance of power on the continent matter that much?

               The UK  standing alone against the evil tyranny of the Nazis has inspired several generations. So too has the eventual victory of the mighty coalition assembled, once the USA was forced into the conflict. There were some arrangements and threats  on the continent that we could not ignore.

Amidst the flurry of press interest on the Euro I did not report this week’s latest figures on  the progress of the deficit reduction strategy.

In June public spending  continued to rise, as planned. Borrowing also rose, to £14 billion extra in June 2011 compared to £13.6 billion in June 2010. The cash requirement was much higher. In order to hit this year’s targets for modest reductions in  the rate of increase in borrowing, the government needs to do more to lower its spending or raise its revenues.

The press continues to report “cuts”. It needs to report spending and borrowing levels, which remain high and rising.