Notes on UK Strategy for C21 ii

A couple of weeks ago I was interviewed by a Bosnian journalist about the future of the City and the UK’s relationship with Europe. The conversation made me think – not for the first time – about just how deep a hole we are in, and how we find the right way out of it

The journalist, who had travelled from Sarajevo, saw the UK’s relationship with the rest of Europe changing; what is going on, he wanted to know? Is Cameron playing politics for short term advantage? Is the referendum a gamble? Was the City pulling Number 10’s strings to protect its own interests?

I replied that I thought he was visiting the UK at a moment of profound uncertainty, and that the current tensions between the UK and Brussels was merely the latest flash point in a relationship that has been dysfunctional for decades. Most British voters are now unhappy with the EU status quo, and while the rest of Europe appears committed  – at least for now – to further political and economic integration, the UK is in a small minority of member states which thinks integration has already gone too far. In this context, the prime minister’s bold call for sweeping reform, and his pledge to give voters an in/out referendum, looks tactically astute – in theory, it regains him control of his party and the European debate until the election, and it should stem the flow of disgruntled Tory votes to UKIP (though it did not appear to make any difference at the Eastleigh by-election, when UKIP beat the Conservatives into third place).

Every day the Eurozone crisis recruits more voters to the idea of leaving the EU  but most people are still wary about giving up on Europe altogether. Those who argue for exit have not yet made a persuasive case for how this complicated process would be managed, the precise terms of a transformed relationship with Europe, and the actual advantages of life as a freer agent. The complex context of 21st century geopolitics makes this decision even more difficult. My own view is that the prospects for EU reform are not yet played out, and that we owe it to ourselves and to our friends and partners in Europe to continue to make the case for change. If we are to one day decide that British interests no longer lie ins are no longer aligned with EU membership, then shouldn’t we take that decision having exhausted every alternative? We cannot move our islands further away from Europe. This is our neighbourhood, and whatever our relationship with the EU we owe the rest of Europe every possible courtesy.

The referendum is a massive gamble for the  prime minister. If he wins the 2015 election, and it’s a big ‘if’, Cameron will have to persuade British voters that the EU is the best long term play for the United Kingdom. When I asked a Nordic Ambassador about the UK referendum the response was polite exasperation that Britain should choose to compound the current crisis with its existential pangs. Number 10 and the Foreign Office know how difficult it is to lobby Brussels for change, but as one of the EU’s major powers and donors, we have every right to do so. And it is in Europe’s interest that we demonstrate that there is another way of working together. The bail-out in Cyprus reminds us how fragile the Eurozone now is, and how neglectful the European ‘project’ is of the citizens its leaders claim their mandate from. Cameron’s mis-timed London speech may eventually prove prescient. Should the Eurozone collapse, or more of the EU’s political leaders lose faith in its inevitability, then the reform principles Cameron laid down in his London speech in January – an EU focused on competitiveness, flexibility, the return of relevant powers to member states that want them back, democratic accountability, fairness – might guide a new and historic settlement.

If I was Cameron I would start negotiating now, and do everything I can to find common ground with Berlin, which is experiencing existential anxieties of its own. Channeling the frustration of British voters and businesses will help Number 10 make its case for change in Europe’s capitals. And I would use the process to initiate a wider debate back home about what we want our country to be / do / stand for in the decades ahead.

The prime minister also needs to challenge the strategic assumptions and elite decision-making that has guided UK strategy – if that is the right word – since 1945. Of  the five victorious powers of the Second World War (aka the 5 permanent members of the UN Security Council), two seem fundamentally unresolved: Russia and the UK. Russia’s post war history has been unsuccessful: the collapse of the USSR, Russia’s chaotic embrace of a version of capitalism, demographic decline, her elites scrapping over her vast oil and gas reserves, Soviet-era arsenal rusting in bunkers across the motherland … Moscow has good reason to feel angry with the modern world. But Britain was on the winning side of the Cold War. Our free markets and parliamentary democracy have gained traction around the world. We surrendered our empire relatively benignly and efficiently. English is the language of business and global aspiration, as well as some of its best writing, music and poetry. We have the best university system in Europe. The words used most of the time to sum up the British character: tolerant, humorous, open, fair-minded, creative, down-to-earth … all surely rather well suited to the difficult, wide open landscape of the 21st century. We have fine values. Why then is Britain so unsure of itself and its capabilities? Why is our confidence – despite being proved right about most things, despite the success of the London 2012 Olympics, despite the global appetite for our culture – so low?

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