Great European Disaster?

May 12, 2016

On April 12, 2016, BCCJ members and guests gathered at the Tokyo American Club for a breakfast session to hear Bill Emmott, independent writer and consultant on international affairs, speak about  Europe's multiple crises and what's at stake in Britain's EU referendum.

The EU - past & present

Emmott began his talk by asking the audience to reflect just ten years back when politicians and pundits acclaimed the future role of the European Union as a leader in world trade, economy, governance and diplomacy, perhaps even taking over world leadership from the United States. Indeed, the European Union is the world's largest trading block and economy as a single entity, yet this union of 28 different countries now seems to be facing collapse or at the very least a gradual demise. "Why is this?" asked Emmott.

The answer? "First and foremost economic stagnation". Since the Lehmann shock in 2008, said the speaker, "Europe has been facing a deteriorating outlook for the economy as a result of both the global economic and political situation and its own internal mistakes, suffering similar symptoms to those of Japan at the end of the 80s; rising unemployment, fiscal contraction that makes things worse, an increase in short-term contract workers with lower pay, less innovation in the science and tech sector, intense pressure on the European Central Bank due a a drop in core inflation, and a deteriorating outlook for the economy as a result of uncertainty about global growth, volatile markets and geopolitical risks."

Emmott emphasised, however, that "Europe lacks the socio-political cohesion that Japan enjoys, and due to recent developments such as the sudden increase in immigration, faces increased tension and division. Whereas the EU was once focussed on the creation of a border-free zone, it is now building new borders and introducing additional checks."

The speaker also highlighted the uncertainty looming with the UK's EU referendum to be held on June 23, France's presidential elections next year with indications of success for the National Front, and the future of the Chancellor of Germany, Angela Merkel, who is under pressure from her own party to step down as a result of her open stance towards immigration.

Emmott then posed the big questions to the audience: "If the European Union ceases to exist, will it matter?", "If Britain votes to leave will it matter?"

"Yes, it would, on both counts" the speaker asserted. Emmott highlighted three key areas which would be affected by the exit of the UK from the EU:

Defence and security

Emmott pointed out that the collective weight of partnerships such as the EU made it easier to deal with the recently increasing number of global threats, that the EU adds to the security provided by Nato, and that this is needed now more than ever. Britain would lose this if it were to leave, and would undermine the collective security of the EU too.

Freedom of trade

The speaker warned that a move away from the EU would result in less trade freedom. "Outside the EU, the UK would need to strike new deals with all EU member states and countries such as Norway and Switzerland that currently have individual free trade agreements with the EU. This would take time, and would be harder to achieve than the pro-leave campaigners are saying"

Financial stability

Emmott argued that with the current turbulence around banking systems in Europe, further political change could risk causing not only a depreciation of sterling, a credit crunch and higher interest rates for mortgage payers and businesses, but in the worst case put the euro into doubt and cause banking systems to collapse.

"Most of all", Emmott emphasised, "if the UK pulls out of the EU, which as a union of liberal democracies finds itself increasingly surrounded by closed authoritarian societies, they will find themselves further removed from the values of economic openness and human rights, and will have undermined the ability of remaining EU members to defend these values themselves".

What would be the outcome? The speaker said "there is a strong political will among the elites of the EU to maintain or reform the EU and a willingness to compromise in order to ensure a positive outcome. So I am hopeful collapse can be avoided. Moreover the British voters are regarded as a 'sober bunch of people not willing to gamble'". So will they shrink back from leaving? "I hope so", Emmott said.

The speaker went on to examine further issues affecting the outcome of the UK's EU referendum.

Voter behaviour

This will be only the third national referendum in the history of the UK: two of those three, in 1975 and 2016, have concerned Europe, and the other, electoral reform. Ironically, referendums bypass the sovereignty of parliament to which the British attach so much importance, and which supposedly is what the leave campaigners want to restore! 

The growing anti-Europe force in the UK was unsuccessful in gaining much broad support until 2008 when depressed incomes and rising immigration became contributing factors. It is now said that a slim majority are for staying, but that a substantial portion of voters remain undecided. There are also no polls indicating how high the turnout might be. 

In terms of voter sentiment, those who would like to leave the EU tend to feel very strongly about the issue and the majority of them are in the older age bracket, which means they are more likely to vote. However, such a referendum remains vulnerable and heavily influenced by events and by the media, especially in light of recent scandals such as the Panama Papers or reports of mixed messages of uncertainty.

"As no minimum turnout is required and only simple straight majority will be required to provide the result, it was a risky venture for Prime Minister Cameron to call this referendum."

Brexit or Bremain?

Emmott argued, "It is in our strategic interest to stay in. What happens in continental Europe influences us whether we are in or out. If we leave we will no longer have a say. Even Churchill and Thatcher realised that even if they didn't like the EU, it was better to be in."

"Access to the 500 million market is vital" said the speaker. "If the UK were to leave, it is unclear what kind of access would be given. British Eurosceptics are eyeing Norwegian and Swiss-style association agreements, but it is unlikely that a post-Brexit UK would allow free movement of people, making such agreements improbable."

The speaker then continued to describe potential consequences for the UK upon leaving the EU. "British government would be dominated by the renegotiations of the relationship with the EU and with replacing EU law established in Britain."

Emmott warned there could be a fall in pound sterling due to the fear of Britain leaving as well as a risk of rising borrowng costs. "As Scotland wishes to remain in the EU, the SNP could well demand a new independence referendum. This would result not only in a constitutional crisis, but with Cameron's resignation also a domestic political crisis."

In the subsequent question and answer session, Emmott answered questions on EU regulation, the proposal of a "north-south EU divide", Turkey membership, the position of the civil service, and the future of the UK if remaining in the EU. As a result of the British referendum, warned Emmott, pressure in other EU countries regarding their EU membership would grow. Current anti-immigration sentiment evident throughout Europe in addition to the growing popularity of the National Front in France could exacerbate matters and a process of fragmentation could begin. "The scenario of a Trump-Le Penn partnership would be the worst nightmare!"

In reference to the challenges of EU regulations, Emmott quoted former president Ronald Reagan who once said that the ten most terrifying words one could hear were, "I'm from the government and I'm here to help". Emmott joked, "even more terrifying are the words, 'I am from the EU and here to help you'"!

The speaker emphasised however, that over-regulation is "a disease of our times" and that this was not a reason for the UK to leave. "Quite the contrary - as a member, the UK can still influence and control EU regulations. As President Johnson once said, 'it's better to be inside the tent'".

In response to a questions about a European north-south divide as a potential solution, Emmott stated clearly his belief that "a game of two halves" would be detrimental to the future of Europe and that the European Union is now so interlinked that even if an attempt were made to take countries out of the euro, "it would be a nighmare in practice".

Answering a question in reference to Turkey's ambitions to join the EU, Emmott expressed his belief that this will not happen. "Turkey is nowhere near qualified" and "individual EU countries such as France would stand against such a move with their own referendums." he said. "It is good to involve Turkey, but there are still too many ongoing human rights issues".

Finally, Emmott gave examples of the role the UK could play as an active member of the EU. "If a clear majority of Conservatives wish to stay in the EU, the prime minister would first have to make considerable diplomatic efforts within his own party." 

The speaker then suggested the UK could work more closely in alliance with Germany and France, galvanising and making combined efforts to develop a union plan bringing a stronger sense of hope and positivity to the EU. Emmott expressed his hope that the UK would be less begrudging and instead take more initiative, for instance with a pioneering and collaborative project such as building a European electric grid.

Emmott encouraged the UK to listen to what other European countries are saying and highlighted the influence that external organisations can have in bringing about a positive exchange of views and a strong flow of opinions.


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