The EU – Britain’s options are limited

As David Cameron flies off to Brussels, promising to bring back powers from the EU (whatever that means) in return for his support for the Euro rescue, he will hopefully keep in mind just what is at stake here.

The EU may look horrendously complex but Britain’s long-term options are quite simple.

There are five ways the Britain’s relationship with the EU could develop:

  1. Britain joins the Euro.
  2. Britain stays in the EU but out of the more integrated Eurozone; part of a dwindling group of tier 2 countries and possibly, over time, losing some of its influence.
  3. Britain leaves the EU and joins the EFTA countries, still paying into the EU and still subject to many EU laws but with no vote.
  4. Britain leaves the European Economic Area altogether, its status in relation to the EU becoming no different from that of the USA, China or India.
  5. Britain vetoes Eurozone reforms and the Euro collapses. Britain becomes an international pariah, blamed for bringing about the second banking crisis.

None of these options looks particularly attractive but, right now, number 2 looks the best of a bad bunch. Which, once the posturing stops and grim reality sets in, is probably where we will end up.

Update: Anyone who thinks Option 3 looks attractive should read this piece from Nosemonkey.

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23 Responses to The EU – Britain’s options are limited

  1. Pingback: The EU – Britain’s options are limited - Rick - Member Blogs - HR Blogs - HR Space from Personnel Today and Xpert HR

  2. Ross Parker says:

    Under your option 3, why do you suggest that Britain would still pay into the EU if it left the EU? Also, why do you state that Britain would be subject to EU laws if it left the EU? My understanding is that both of these suggestions are incorrect, which changes the balance from 2 to 3 somewhat.

    • John Mccusker says:

      To have a trade relationship similar to that of Norway is option 3. EEA EFTA participation is hence on an equal footing with EU member states. The total EEA EFTA commitment amounts to 2.4% of the overall EU programme budget. In 2008 Norway’s contribution was €188 million. Throughout the programme period 2007—2013, the Norwegian contribution will increase substantially in parallel with the development of the EU programme budget, from €130 million in 2007 to €290 million in 2013. For the EEA and Norway Grants from 2004 to 2009, Norway provided almost €1.3 billion.[8][

  3. shodanalexm says:

    I think you’re probably right. Certainly option 5 – which seems to be the Eurosceptics favoured option in pursuit of capturing some weird version of the golden age when Britain was Great – is absolutely suicidal. The apparent failure by some of the little Englanders to understand or accept the bigger picture is mind boggling.

  4. Ah yes, “little Englander”, the favoured term of abuse for those that can’t defend their positions by logic. Usually made by people who don’t understand the honourable (anti-Imperialist) origins of the term, and typically one step below describing someone as “racist”. Pathetic.

    The big option that is missing from this list, is to take up the long-standing invite to join the North American Free Trade Agreement and act as a trading hub between North America and Europe. That would be a profitable version of option 3, (and we wouldn’t have to pay into CAP etc. if we weren’t members of the EU, despite your suggestion that this would continue).

    • Rick says:

      David, two questions:

      When was the UK invited to join NAFTA?

      Why would we want to quit an organisation based just across the channel, in which we are one of the three big players, to join one based thousands of miles away, and which is dominated by the largest economy in the world?

  5. Paul says:

    Ross, The EFTA countries (except Switzerland) are also members of the EEA and as such have to adopt the legislation of the single market without having any say on the decision making.

    Members of the EEA also contribute financially to the single market, although not as much as if they had full EU membership. Yet they don’t receive any funding.

  6. Ross Parker says:

    Paul, your conflation of EFTA and the EEA is very confusing, and it’s hard to avoid the conclusion that the debate is being skewed by the way the options are framed.

    There are four EFTA countries: Liechtenstein, Iceland, Norway and Switzerland.

    The first three of these are also EEA members. Yes, they abide by some common market rules/laws, sure. But they get to avoid the most costly ones on fishing and farming, like the Common Agricultural Policy. And those common market laws that do apply to them come as part of their EEA membership, not as part of their EFTA membership. Also as EEA members, these three contribute to the EU’s funding, but at a lower level than full EU members. You are correct, however, that they do not receive any EU grants/aid.

    However, Switzerland, the largest EFTA member, is not a member of the EEA, does not have to abide by Common Market laws or contribute to EU funds. So when you say in passing “except Switzerland”, you are saying that actually your argument doesn’t apply to 1/4 of the EFTA countries, or 70% of EFTA’s nominal GDP.

    By saying that Option 3 means “become like Iceland” and not “become like Switzerland” you are skewing the debate. If you added “become like Switzerland” as option 3b, would you still think option 2 is the best?

    • Rick says:

      The Swiss do pay into EU funds. And, not having a vote, it seems that there isn’t much they can do to stop the EU putting the price up either:

      http://www.researchresearch.com/index.php?option=com_news&template=rr_2col&view=article&articleId=1025886

      • John B says:

        The existence of EFTA aside from the EEA is solely a shenanigan to avoid Swiss referenda. In real life, there is no difference at all between the obligations faced by EEA members and by EFTA members. It’s also one of those handy “is this person a liar” moments – if someone raises that kind of point, then you can helpfully realise that they are.

      • Ross Parker says:

        Rick – I stand corrected on Swiss EU contributions. I did not realise the extent of these payments. Tell me, do the Swiss also have to abide by EU law? My understanding on this was that their relationship was governed by 100+ bilateral treaties (http://eeas.europa.eu/switzerland/index_en.htm). However, I could just be as wrong on this I guess. Evidence is always welcome.

        John B – The Swiss did have a referendum on the establishment of EEA in 1992. A majority voted against entering into the EEA Agreement, which meant the agreement did not enter into force until 1994, without Switzerland. 50.3% voted against, with 49.7% in favour; voter turnout was 79%. So if “The existence of EFTA aside from the EEA is solely a shenanigan to avoid Swiss referenda” it is a shenanigan that failed before it began. As for your “is this person a liar” test, I would suggest a slightly tighter heuristic.

  7. Westfallen says:

    Every question is biased, but option 4 must be the best.
    China and India have both amassed incredible wealth and created millions of jobs through their international trading relationship with the EU and they do not pay billions each year to be a member.
    The EU has usurped power to feed the blind political ambition and greed of the political classes, which has nothing to do its ability to prudently manage the European economy. Moreover, this has been facilitated by too many European people who are too cowardly to face-up to their own responsibilities.
    Sovereignty must be returned to individual nations, and if Britain becomes an international pariah. so be it.
    I would rather be criticized for being right, than allow myself to be destroyed by others who are wrong.
    Cameron has a choice: he either acts like a real leader and takes us out of this EU abortion, or he calls an election, and allows us to vote for someone who will!

    • Rick says:

      Westfallen, China and India have huge labour forces and extremely cheap labour, which is why their economies have taken off. Are you suggesting that the UK should match them on labour costs? Do you really think theUK would have the same clout when trying to re-nagotiate all its trade agreements with the EU – an EU that would already be pissed off with us for wrecking its currency if we followed your line of argument.

      As for being criticised for being right, I wouldn’t worry too much about that if I were you.

      • Westfallen says:

        Ultimately the UK will need to provide labour cheaper, if it wishes to compete, create jobs, and bring back some stability.
        One thing we should have learnt from this crisis is that each economy in Europe is different, and each country would be better off, if it pursued policies more suitable for its individual situation.
        This is exactly what China and India have successfully been able to do.
        You strangely talk of “clout when trying to renegotiate”, but seem extremely fearful of “pissing the EU off”. What is the point of having clout, but being frightened to use it, in your own interest, when necessary?
        It is fear which allows people to be bullied into doing something which is not in their interest. And I don’t think a country with the UK’s ability and “clout”, should fear retaking control over its destiny.
        Moreover, if the UK can wreck the Euro currency, then it is obviously not fit for purpose, so why should we help support it.
        I may be wrong…but that would put me in the company of some extremely well paid MEPs

  8. John B says:

    Ross, you’re an amusing gentleman, As a great fan of Willard Quine, I interpret matters according to the principle of charity. Under which, I’m going to assume you genuinely thought I believed the Swiss and the folks of the EEA were working things in the opposite fashion to the one that would have made sense, rather than the one that made complete sense. Which, given the contorted level of beliefs required to avoid believing in shenanigans,is troublesome.

    But hey, if my only argument was yours, I’d be jumping on it like Boris at a Dirty Posh Ladies Club meeting too.

  9. Rick says:

    Ross, as I understand it, what John B says is right in that the ‘bilateral treaties’ are a device for protecting Swiss national pride and making it look as though each piece of EU law is considered and implemented separately. The Swiss can therefore claim they haven’t signed up to the imposition of EU law when, in effect, they have.

    http://www.swissinfo.ch/eng/politics/foreign_affairs/Switzerland_falls_into_line_with_EU_laws.html?cid=7639686

  10. margecsimpson says:

    Seconding learning more from blogging than reading the papers !

  11. Dipper says:

    Switzerland is a unique case. Its main economic activity by far is legal tax avoidance for Europe’s rich, and secondly to make money from being neutral. Our situation and the nature of our relationship with Europe is completely different.

  12. Dipper says:

    I’m amazed in the course of these on-line discussions how few people seem to have any experience in negotiating deals of any nature. The EU makes a threat and people go “oh no they made a threat we must do what they say!” We aren’t Norway and we aren’t Switzerland. We are a major nation that imports enormous amounts of manufactured goods from Europe partly because European laws prevent us from importing them from anyone else.

    Take the long view. Be sure of our ground. don’t be put off by threats and bluster. All the facts are in our favour. Stand firm and it will come our way.

  13. Option 5 is mis-phrased, I’d hesitantly suggest. Many think that the Eurozone reforms as presently constituted are quite capable of failing with or without any help from a British veto. indeed, some of us think this is a far bigger story than the the domestic implications of Cameron’s behaviour last Friday.

    • Dipper says:

      agreed.

      I think he issue is almost a psychological one rather than an economic or political one. There are parallels with people in failing relationships or whos world is falling apart developing psychoses, and unable to do anything but repeat patterns of failure.

      Rick – do you have an HR background? Can you shed some professional light on what is going on in the EU? If you had a team of managers behaving like this what would you recommend?

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