Sunday, June 15, 2008

Ireland offers chance to look at future of EU

The resounding "No" vote for the Lisbon Treaty in the Republic of Ireland is bringing out the very worst in what so many Europeans loathe about the European Union - the complete contempt that those running it have for their opinions.
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Reports of the likes of Gordon Brown, Sarkozy and the EU Commission president all saying that"ratification" will continue, flies in the face of the fundamental point that without all 27 EU member states ratifying it, the Lisbon Treaty is not meant to proceed.
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With the exception of Czech President, Vaclav Klaus, most of the EU political establishment is calling for things to continue as usual, as if Ireland is some small irrelevancy - exactly what so many Irish voters no doubt fear.
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So what IS it that European voters fear? Much has been made of how Ireland has benefited from the EU. It has to some extent, on the one hand for some years Ireland received millions of Euro in subsidies for infrastructure projects as one of the "poor" countries of the 12 of the time, it also had a new open market for its products and services. However, it helped immensely that Ireland cut taxes, especially company tax, and sought to be business friendly. This was not an approach that some EU members (e.g. France, Belgium, Italy) have taken.
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Irish voters may ask "why" the Lisbon treaty is important. Talk about it making the EU more efficient sounds rather peculiar. However more clear is the removal of the national veto for more issues, in other words evolving the EU from an association of 27 more or less equal member states to one of double majorities. It is very clear that Lisbon Treaty advocates have failed to sell the advantages, if any, of the Treaty.
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Opposition to the Lisbon Treaty is sometimes seen to be opposition to the EU, opposition to globalisation by those on the left, and a resurgent old fashioned nationalism by those on the right. At the skindeep level I don't particularly mind this, but I embrace globalisation and find nationalism largely knuckle dragging.
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I like the EU on one level. Let's not forget what it has done. In a generation, countries that were once at war shared open borders, within two generations former Soviet Republics were integrated into a customs union including Ireland, Portugal, Cyprus, Sweden and Germany. The prospect of war among EU member states is unthinkable, which considering the history of Europe is remarkable. A similar union in Latin America or Asia, is difficult to envisage, although Australia and New Zealand (and USA/Canada) could be in such a pairing, albeit both examples would be highly unbalanced.
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The opening up of borders to trade, investment and movement of people among EU member states is unprecedented on any other continent. It is more liberal than CER between Australia and NZ, especially between Schengen countries. It has undoubtedly contributed to the growth in wealth, diversity and prosperity for member states. However, you could argue the European Free Trade Agreement (EFTA) which today still exists, incorporating Norway, Iceland and Switzerland (none of which are EU members), could have delivered this liberalism.
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Beyond free trade an argument can be made for the EU harmonising some basic laws of business and creating a customs union. Common approaches to contract law, company law, conflicts of law, land law, personal property law and commercial law can make some sense. Mutual recognition of all sorts of basic licences like driving licences, vehicle roadworthiness and the like makes sense too. Finally, a customs union - so that the EU negotiates as a whole for trade access, also has great advantages. Whether something enters in Sofia, Shannon or Stockholm, it should move freely throughout the EU.
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As a project for liberalisation of trade in goods and services, it has done wonders. It has forced member states to open up transport, telecommunications, broadcasting, energy and postal markets. However, the EU has become far more than this, it has sought to become another layer of government, bureaucracy and rule-making.
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The ugliness of the Common Agricultural Policy is perhaps one of the most well known examples of this. The CAP sucks the biggest part of the EU's budget from net contributors such as Germany, the Netherlands and the UK, to prop up inefficient farmers in France, Finland, Belgium and the like, it also pays some farmers to not produce, it uses the customs union to ban imports of some commodities from some countries, impose quotas on others (like dairy products from NZ) and tariffs on yet others, then it subsidises inefficient farmers to dump their goods on world markets. On top of that it isn't ever fair across the EU, as the 12 newest member states only get subsidies at one-third the level of the others, so undoubtedly the most impoverish farmers in the EU, the Polish, Hungarian, Romanian, Bulgarian, Slovak and Baltic ones don't get anywhere near the support of France's inefficient farmers. This monstrosity in itself should give pause for thought about the EU, but it is only part of it.
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The EU also treats all member state Exclusive Economic Zones (EEZ) as common EU ocean space for fishing, all very well if it weren't for the overfishing subsidised and protected by the EU - one reason why major fishing nations Norway and Iceland have resisted EU membership. It imposes a requirement for a MINIMUM level of fuel tax for all member states - tough if you don't want one. It pursues projects of absurdity, such as the horrendously expensive Galileo satellite navigation system, a competitor for GPS and Glonass (Russia's version), except GPS and Glonass are free for users. It is costing EU taxpayers 3.4 billion euros, but the EU doesn't really care - it just sucks the money from member states.
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You see it is spending 116 billion Euro in the current (soon to be ended) financial year. Shared among 497 million people that is 233 Euro per man/woman and child. Yes, those in Bulgaria are unlikely to have contributed as much as those from Luxembourg, but you can see the cost per family of the EU - and that doesn't include the compliance costs of business, or the cost to taxpayers for their bureaucracies to service the EU.
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You see the EU is a synthesis of liberalisation and collectivisation. It has at once been a project of opening up the economies of member states to each other, and at the same time somewhat closing them to the outside world, whilst building up a new top layer of government, over central and local (and provincial) governments. Socialists in Europe have seen the EU become a repositary for funding regional development, in the form of massive infrastructure projects, cultural projects and others that no libertarian would see as a fit reason for the EU. Some have sought the EU having powers to interfere with tax powers of member states, to avoid the inconvenience of competing with the likes of Slovakia, which has a flat rate of income tax.
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This tension has built within in a kind of arrogance in Brussels, that it represents what people in 27 member states want (and after all its expansion surely shows how great the EU is, doesn't it?), it is what is GOOD for them, and the attitude so many politicians have had to the Irish vote is telling indeed. It has on the one hand the kind of big power dismissive attitude that Ireland is small and shouldn't hold up the "great project", the same attitude that those people would accuse of the USA. Since none of the other member states have been willing to hold referenda on the Lisbon Treaty, it speaks volumes of the fear the EU holds for them politically with the public.
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So while the Euroskeptics who want to throw away the EU are wrong, so are the EU adventurers who see the project as being an ever greater integration - one which is wholly unnecessary and not advantageous to Europeans. The EU should be a project of liberalisation, open up economies and markets, and letting nation states compete freely, and look outwards. Member states should be free to shrink their governments as they wish, and cut taxes, and cut regulations as they see fit - not be required to regulate because Brussels says so. Some in the east believed this is what it was - a chance to be part of a market larger than the USA (and to be fair, some money to build infrastructure wracked by decades of Soviet imperialism). Some in the west, such as France, see it as a way of cauterising liberalisation by forcing all member states to operate according to similar rules.
So it is time to have a debate - an open and honest one. Not one characterised by the EU aristocracy sighing and bemoaning critics as being narrow minded nationalists or ignorant, but also not one of shouting and EU bashing, justified though some may be. It is one about the role of the state, and what that means for the EU members. It will challenge the conservative right and the statist left to think differently - it offers the EU the chance to have the dynamism of the USA, and set its people free to develop, grow and embrace. As the EU observes Russia grow on the back of oil, the Middle East and Asia grow as economic powerhouses in their own rights, and the USA, despite current setbacks, continuing to be the world's economic superpower for the next decade or so, it might wonder whether its people can hold their own, or whether it should tie itself up in more and more little knots, called for by special interests, who see their main job being seeking favours paid for by other Europeans. Let any dabbling with socialism be a national project, than an EU member state can engage in at its peril - not one that strangles so many countries that spent over 40 years fighting to be unshackled from statist control.

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