10 October 2015

Leave can win the EU referendum


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“I wished to found a European system, a European Code of Laws, a European judiciary: there would be but one people in Europe.” Napoleon Bonaparte.

There was one small problem with Napoleon’s ambition to create a European system in the early 19th century. Other states didn’t like the idea much and they were prepared to fight the Emperor to stop him having his way. War was the result.

Mercifully, the latest attempt at creating a system – the European Union – has been peaceable. The EU emerged from the ruins of the Second World War via trade agreements and its development was carried out under the protection of an American umbrella, in the form of Nato. No one seriously thinks that Germany, France and Britain could end up fighting each other militarily any time soon. We are too busy eating each other’s food and drinking each other’s wine while watching European football, although German food and English football could do with improving.

It is easy, however, to fall into the trap of thinking that the story of Europe is mainly about war. The story of Britain and Europe is as much about openness to trade, with war interrupting, as it is about conflict. Cooperation is not new. Europeans have long done it.

The need for trade and interest in profitable cooperation is what sent Sir Thomas Gresham – creator of the City of London’s Royal Exchange in the 1560s – to Antwerp, where trade was far more advanced than it was at that stage in Tudor England. In Antwerp, Gresham honed his skills as a trader and engineered a bailout of the severely indebted English Crown.

Equally, it is impossible to understand the development of London without acknoweldging the pivotal role played by the Dutch in the 17th century. Yes, the Dutch sailed into the Thames estuary and burnt a large part of the fleet in 1667. But Amsterdam was a financial pioneer whose innovations, on the formation of companies, trading shares and banking, were copied in London and Edinburgh.

The voracious trading impulse in that period was driven initially by crude mercantilism, of course, with each state regulating the economy to out-power rival states. Decisively from the 1840s, though, Britain adopted free trade and fused with Adam Smith’s pioneering pro-market vision it produced an incredible increase in prosperity.

In other words, Britain and London’s rise in the 18th and 19th centuries owed a great deal to openness to outside influence and new ideas. The flag-waving Rule Britannia interpretation of the last few centuries, which emphasises supposed British exceptionalism and claims of innate genius, is wildly overblown. Churchill, who has been misused so often in the debate about Britain’s role in Europe, was avowedly international in his outlook and passionately pro-French, despite the wartime provocations of Charles de Gaulle.

Churchill was not alone. Once religion faded and then ceased to be an instrument of European power politics, it became apparent that common European feeling was much more potent and long-standing than some Eurosceptics pretend now. The British and the Germans in the 19th century were natural cultural allies, for example.

So, there is a perfectly valid pro-EU position which says that the UK remaining as part of the European Union is consistent with history.

The difficultly is that the latest European system – the EU – is in one hell of a mess and while it should be fixable it seems it won’t be fixed, or not yet. While there is a long-established case to be made for Empires, or partnerships of nations, offering superior scale and international leverage, any such arrangement will struggle if it cannot deliver on the basics. The EU has been proven to be useless on border control. The single currency has created widespread distress and not, as promised, increased trade between members states.

Clearly, any empire or club of nations that cannot control its borders and isn’t much use at economics is not much of an empire or club.

But the time for British moaning about such matters is running out. A referendum on membership will take place next year or the year after. Ahead of that vote, the German Chancellor spent Friday with David Cameron at Chequers, the Prime Minister’s retreat. Merkel is asking a perfectly reasonable question. For years now the EU has heard much vague talk of the UK’s demands for reform. So, what, exactly, are they? What, she says, do you Brits want?

The answer remains frustratingly unclear, even to senior members of the British government. Unfortunately, rather than spending years making the case in the EU for a detailed reform programme, the Conservative leadership has adopted the classically British approach of hoping something will turn up. The Chancellor ‎of the Exchequer’s allies point out that the EU has been so pre-occupied with the Eurozone crisis and then the migrant crisis that it is only now getting round to considering the British crisis.

Whatever, events are now overtaking the UK government. This week, ‎the Leave/Out campaign launched. So slow has been the government’s progress that the moderate Eurosceptic position of waiting for the outcome of the renegotiation has been rendered obselete. Both sides are getting organised. Battle is commencing.

On Monday, the Remain/In  campaign will launch its campaign, to be fronted, it is said, by the pro-EU businessman Stuart Rose (the former M&S boss) with a host of others – including Lord Mandelson – in attendance.

At CapX, as the campaign unfolds, we’ll strive to offer a wide range of perspectives, from across Europe and beyond. From Britain we will feature voices from both sides and none. But my personal view is that this is increasingly winnable for the Leave campaign.

Leave, or Out, looks likely to offer a variation on the Better Together campaign aimed at saving the Union in the Scottish referendum last year. Ah, but that campaign was successful and a predominantly negative effort concentrating on the risks ‎worked.

Remain will be able to say this time that voting to leave could imperil the UK, if Scotland is taken out of the EU against the wishes of Scottish ‎voters, and that leaving creates too much uncertainty over future trading arrangements.

That is useful ammunition, of course, but negativity may quickly pall. In Scotland the side defending the status quo started with the luxury of a large polling lead which was steadily eroded. Although Better Together won (55-45) it did so only with a last minute scramble and the offer of concessions and more powers. That option will not be available to those campaigning to stay in the EU as the renegotiated deal will have been done months before the final leg of the campaign.

This time, the “Remain” crowd goes into a referendum without the comfort of a major polling advantage. Indeed, the polling so far suggests they generally have only a small lead. In addition, the “Leave” campaign is well-funded and if it can ensure that moderate voices predominate – rather than the shrill tones of UKIP – then it may be able to organise an attack with two strands, simultaneously casting the EU as an out of date monolith failing where it matters and enticing voters with the upbeat prospect of more trade with the rest of the world. They will also emphasise the annual cost of EU membership (which bothers swing voters when they hear about it but not the media elite) and stress renewed control of laws and borders.

If the UK does reject the EU, perhaps it will wake up the continent’s leaders. Perhaps they will then turn their attention to organising an arrangement by which the countries of Europe can trade and co-operate without the need for a failed version of Napoleon’s European system.

Iain Martin is Editor of CapX