Following rumours that consensus had been reached, the DUP’s objection caused it to fall through.
Yesterday, senior officials said that “regulatory alignment” has been achieved on the issue of the post-Brexit Irish border. However, while this appeased Ireland, Northern Ireland’s DUP rejected draft proposals – despite Theresa May personally phoning DUP leader Arlene Foster. Given that the Conservatives owe their working parliamentary majority to the co-operation of the DUP, the latter wields significant power in the ongoing Brexit negotiations. The collapse of the deal comes just days before the December EU summit and therefore reduces the time available for the member states to outline their proposals for the union’s future relationship with the UK.
Brexit Deal Gives Trade Talks the Go-ahead
The UK has reached a deal on three contentious issues which have prevented negotiations moving on to trade. The deal ensures no “hard border” between Northern Ireland and the Republic of Ireland, that the rights of EU and UK citizens be protected irrespective of whether they live in the UK or EU post-Brexit and commits the UK to a divorce bill settlement estimated to cost between £35bn and £39bn. EU Commission President Jean-Claude Juncker called the deal “the breakthrough we needed.”
— UK Prime Minister (@Number10gov) 8 December 2017
Why It’s Important
“Theresa May has achieved what she wanted – the green light to move on,” said the BBC’s Political Editor Laura Kuenssberg. Britain plans to leave the EU at the end of March 2019, yet trade has not been discussed. May will now be able to negotiate on trade and a transition deal, providing businesses with greater clarity over the regulation. However, the entire basis for UK-EU relations is still to be discussed.
“We all know that breaking up is hard but breaking up and building a new relation is much harder.”
European Council President Donald Tusk
The EU plan to offer Britain a Canada-style trade deal, which would impose new tariffs on trade, a document leaked last month revealed. Trade negotiations are expected to be tough and could take several years. The importance of reaching a clear transitionary framework will be vital for businesses, and a lack of clarity may deter businesses from investing in the UK.
UK Assault Ships Face the Axe
The Royal Navy may cut key strategic warships in order to plug a £20bn black hole in funding.
Gavin Williamson, the UK’s new defence secretary, may have to axe HMS Bulwark and HMS Albion, Britain’s two amphibious assault ships. Presently, the UK and France are the only two nations in Western Europe with the capacity to conduct large-scale amphibious assaults on enemy territory. As such, the possibility of the UK scrapping this capability has prompted worry among its NATO allies. The US has said that the removal of the UK’s amphibious ships would strongly impact America’s strategy in Europe while also strengthening the hand of NATO’s opponents.
Further EU Integration: Is It Still on the Cards?
The call for both political and economic EU integration – as a means of reviving the fortunes of the European project – is now gathering momentum. Both the EU Commission and leaders in the EU27 (with the UK no longer in attendance) continue to explore ways of halting the rising tide of Euroscepticism and finding ways of reaching out to voters in the way that Euro-wide populist movements have done so successfully of late.
In the UK. the drive for an ‘ever closer union’ was roundly rejected by the previous Cameron government, but with Britain exiting the EU in 2019, it is now firmly back on the European political agenda. The most pressing issue on this agenda is the reform of the Eurozone into a currency union advocated by most leading economists for its ultimate survival.
A Currency Union
Opposition to this comes not from ‘new Europe’, where membership of the Euro in the Czech Republic, Hungary, Poland and Romania has still to take place – subject to their satisfying convergence criteria agreed in Maastricht by member states in 1991. This specified inter alia that government deficit should not exceed 3% of GDP with government debt at levels in excess of 60% of GDP.
Germany has all along rejected the drive to fiscal union. Many Eurozone partners continue to run budget deficits (of 3% +) and public debt in excess of 100% of GDP (Spain 99% Italy 132.6% and France 96%). A fiscal union would in effect create a ‘federal’ state for the Eurozone area with calls for its own finance minister (and common budget). Germany sees itself as one of few members running a budget surplus with acceptable levels of public debt/GDP ratios. German taxpayers are in sync with Berlin’s strong views of being firmly opposed to a fiscal union.
The Free Democratic Party (FDP), who recently pulled out of German coalition negotiations, backs stricter adherence to the EU’s stability and growth pact. This policy reflects the view of many taxpayers who feel they have borne the brunt of recent bailouts to Portugal, Ireland, Greece and Spain (the PIGS). With the lack of a consensus on an effective Eurozone Banking Union and a Eurozone-wide deposit insurance scheme, a vision of a currency union and deeper economic integration remains a distant hope.
‘Ever Closer Union’
The State of the Union address by EU Commission President Jean-Claude Junker in Strasbourg on 13th September 2017 acknowledged that urgent action is needed to reinforce the benefits of membership with voters.
Nationalistic governments in Eastern Europe, as well as right-wing populist movements in Austria, Germany and Italy, have sent a clear message to Brussels to accommodate the needs of ordinary citizens and communicate why there is a need for more integration. Electorates have warmed to the theme.
In one of President Junker’s key messages entitled ‘Better Regulation’, he stated that:
“We should not meddle in the everyday lives of European citizens (…) We should not march in with a stream of new initiatives or seek ever growing competences. We should give back competences to Member States where it makes sense.”
“I will be setting up a Subsidiarity and Proportionality Task Force as of this month to take a very critical look at all policy areas to make sure we are only acting where the EU adds value.”
This was precisely the kind of language to draw interest from EU members, especially those critical of the whole principle and goal of ‘ever closer union’. Beata Szydlo, the Polish Prime Minister, reflects views expressed by her Visegrád neighbours (namely the Czech Republic, Hungary, Slovakia) and those of other post-2004 Accession states in saying that:
“People in Europe feel more and more that the elites in Brussels are no longer in touch with the problems that they should be concerned about — such as the safety of the citizens of the EU, the labour situation, and increasing employment and improving wages… They are more and more focused on the bureaucracy, and on the red tape that they have themselves created . . . This leads to crisis..”
Both Poland and Hungary have preexisting and ongoing tensions with Brussels. Both governments are engaged in passing legislation which is seen as an attempt to erode the rule of law and press freedoms – in flagrant disregard of EU law and their EU accession treaty obligations.
Frans Timmermans, vice-president of the European Commission, has threatened EU action against such attempts by the ruling Polish Law and Justice party to break the independence of the judiciary. This, he says, poses a “systemic threat to the rule of law”.
In reply, Ms Szydlo rejects such criticisms and says that Poland and Visegrád countries are “not always assessed objectively”, claiming that Poland’s reforms are based on models from several western European states.” Her government is seeking to preserve conservative Catholic values, and attacks the judiciary as the arm of a neo-liberal elite.
A part of the discussions for closer integration has focused on a “multi-speed Europe”. A group of countries from mainly ‘Old Europe’ (pre-2004 EU accession members) would press ahead with shared policies in particular areas, giving others the opportunity to join later as their economies stabilize. This proposal would lead to a two-speed Europe, a move deeply unpopular with post-2004 entrants. Their main concerns are for a reduction in central bureaucracy and advocating a return of some powers to national governments.
Most observers argue that deeper integration among Eurozone states is desirable as a means of strengthening monetary union but further consensus is needed. In other matters, such as defence and security, there are proposals for an EU-wide defence policy, but northern and eastern countries see NATO as much more important for their defence. The new Trump administration in the US has demanded that NATO members honour budget pledges of 2% of GDP – targets that some nations are finding hard to achieve.
Moreover, the US displays no enthusiasm for the creation of a separate European defence force championed by the French. The UK has stated it would not join any new alliance, preferring to rely on the umbrella of NATO. Eastern European NATO members are likely to fall behind Britain on this. On security matters and the fight against terrorism, Britain has given strong assurances that Brexit will not alter UK commitments and spirit of co-operation.
Winning back voters to the European cause is a task that Brussels will find difficult without using the very weapons of digital technology and social media that were so successfully utilised by populist parties in Europe and the US. The EU has failed to boast of its achievements in ways that can be understood by ordinary citizens. The resurgence of the European ‘spirit of solidarity’ is largely in their hands.
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