Monday, September 03, 2007

The price of EU withdrawal: be careful what you wish for

There is a substantial minority in the UK that would like to see the country withdraw from the European Union. Not reform, not regroup, but leave, period. They base this argument upon they idea that the EU is the enemy of Liberal economics and increasingly is restricting and not enhancing the cause of freedom in Europe.

Nevertheless, over the course of the past 20 years, the cause of Liberal economics has won many victories inside the European Union. From the Single European Act, which proved to be a breakthrough in the creation of a genuinely common market, to the expansion of the Union to include the Liberal economies of the east, to the erosion of the old statist consensus in trade, competition and agriculture, much as certainly been achieved to create a dramatically more liberal economy amongst the states of the EU.

For the anti-Europeans, though this does not go far enough- "too little, too late"- seems to be a fairly constant refrain.

I see too major risks about the exit of the UK from the EU, one is political and one is economic. It is generally accepted that should the UK leave the structure of the EU, it is not likely to want to leave the economic zone, since being outside the common external tariff would be damaging to both our exports and inward investment to the UK. So to a considerable extent, we are likely to have to retain most of the regulation and tariffs that we have now. The difference of course is that these would now be set without reference to the UK. Furthermore, without British influence it may well be that mercantilist voices in France and Germany can be heard more loudly, so there is an increased risk of a "fortress Europe"- a far less liberal economic direction, and event the possibility of the kind of beggar they neighbour policies that were last seen in Europe before the Second World War.

The political risks of withdrawal could be yet more serious. At the edge of our continent, Russia continues to nurse old grievances, and since the end of the democratic experiment, there are powerful forces in the Kremlin that are flirting with fascism- as the advent of the Nashi groups show all too clearly. The disruption of the EU is highly unlikely to reinforce NATO, indeed it is probable that the organisation will be weakened further. The USA, humiliated in Iraq and distrustful of its European allies be become more disengaged at precisely the time when Russia is resurgent. The new weapons of the Kremlin are money and oil. Already murky deals have implicated Gerhard Schroder and Jacques Chirac in allegations of corruption involving Russian money. An EU that lacks the shining torchlight of accountability that liberal economics demands could see the triumph of a corrupt and somewhat pro-Russian policy. In the meantime, a British withdrawal may well make the SNP, whose policy, let us not forget is Independence within Europe", far more assertive in its attempts to break up the UK- and backed by a great deal of money, they may even achieve their goal.

The Anti Europeans believe that liberal economics can only be served by withdrawal. I believe that the risks of withdrawal are so high that they can not seriously be countenanced. The world is increasingly unstable. As the Credit crunch begins to unleash a financial hurricane, from which no economy can remain immune, I believe we will look back on the last 15 years as an oasis. As the threat of tyrannical China in alliance with tyrannical Russia grows, as the Environmental meltdown has more economic effects, as the financial system stands on the brink, the idea that such a fundamental plank of our economic and political security can be so lightly abandoned is at best fool hardy, at worst an major challenge to our future political and economic stability and prosperity.

I am happy to fight a referendum campaign in support of the reform treaty which contains, I believe, necessary reforms. The EU is essential as a part of the future of the United Kingdom, and on that basis let us take our case to the British people.

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