OBAMA IS WRONG ABOUT BRITAIN IN THE EU…AND HERE’S WHY

BILL JAMIESON

US President Barack Obama and the Scottish National Party have not always seen eye to eye. There was his eleventh hour plea in the Scottish independence referendum for voters to stay with the UK and reject separation.

But today there is unity between Mr Obama and First Minister Nicola Sturgeon. Both are urging that we remain part of the EU and reject independence.

Of course, the SNP has not always been in favour of EU membership. For many years it urged withdrawal. And today SNP supporters favouring a vote to leave include veteran independence campaigner Jim Sillars.

But what of the US President’s intervention in the debate? I don’t dispute his right to tell us his views on the EU or indeed, to challenge his responsibility to defend and protect the interests of the US as he sees them. That is the first duty of a President.

But I do take issue with the view that the UK would be safer, stronger and better equipped economically by remaining an EU member.

That may mask an altogether more basic view across the US administration: that it is simply more convenient to have to deal with one European leader rather than different country presidents and prime ministers. It reflects a concern for corporate convenience.

Remember Henry Kissinger’s frustrated outburst: “When I want to speak to Europe, who do I ring?”

Obama set out his arguments that the EU is a politically stable entity, a successful economic bloc and one that is making progress, But what is the evidence?

The EU is struggling to reach a coherent policy on the biggest single issue it currently faces.

For the past eighteen months it has failed to find common ground on the millions of refugees and economic migrants who have flooded in from the Middle East and northern Africa.

This has created violent stand-offs at EU borders and fuelled rising social and political apprehension across the region – strong enough to bring thousands onto the streets in protest and to sap support from centrist, consensus parties. The stable social democratic political order that has prevailed for decades is under threat. And there is no sign of this threat abating.

Europe’s single currency is threatened by continuing deep austerity in Greece and questions over financial stability in several other southern European economies.

Talks on yet another bail-out package with Greece’s creditors have failed to reach an accord and may yet fail. The country’s unemployment rate remains around 24 per cent and its debts are colossal. There is a persistent belief that a break-up of the Eurozone is more likely than not.

Across the single currency zone the post financial crisis recovery struggles to gain traction. It may be argued that Greece is a small, peripheral member of the Euro zone of little consequence for the rest of the single currency area.

But problems are not confined to Greece. There is a looming banking crisis in Italy, with a run on capital and banks struggling to survive under the weight of bad loans. Support for Euro sceptic parties is also growing here.

Austria’s far-right Freedom Party candidate has come top in the first round of presidential elections, with Norbert Hofer gaining about 36 per cent of the votes.

The clear victory of the far-right candidate reflects widespread discontent with the status quo, as well as concerns about immigration and the economy. And French voters now threaten to elect the protectionist Marine Le Pen of the Front National as president.

Those who advocate a vote to remain in the EU might say that these problems are nothing new and that constant focus on them obscures the benefits for the UK that EU membership would hold for trade and investment.

Obama hails the EU as a successful single market and identifies the Transatlantic Trade and Investment Partnership as an example of its ability to expand markets.

But the Dutch are not totally convinced: in fact, they want a referendum on it. Here in the UK the Left views TTIP as a crowbar with which to prise apart the NHS. And at various times Hilary Clinton, Donald Trump and Bernie Sanders have all criticised TTIP as a conspiracy of the rich.

Obama’s argument rather suggests that we trail other EU countries in trade and investment. But do we? The UK is the world’s 10th most competitive economy according to the World Economic Forum’s latest “Global Competitiveness Indicators” report, scoring higher than all but two EU countries (Germany and the Netherlands).

The UK is the 6th best location for business, according to the World Bank’s latest “Doing Business” report and the most popular choice in Europe after Denmark.

According to the latest Global Financial Centres Index (GFCI, Long Finance), London remains the top international financial centre, ahead New York and well ahead of the other leading European centres (Zurich, Luxembourg, Geneva and Frankfurt).

So why shackle ourselves to a failing Euro project?

Obama is asking Britain to do something that the USA constitutionally cannot and would not do – sacrifice its sovereignty. For all its advocacy of free trade agreements, there is no open border with Mexico – and no North American supreme court tries to overrule Congress.

Obama’s America is no friend of shared sovereignty with other countries, never mind “ever closer union”. Rather it believes “our true policy to steer clear of permanent alliance with any portion of the foreign world”.

And it would certainly endorse this advice: “Peace, commerce, and honest friendship with all nations – entangling alliances with none.”

Quotes from swivel-eyed Brexiteers and Euro sceptics? Not really.

The first is from George Washington. And the second is from Obama’s hero – Thomas Jefferson.

Share on FacebookTweet about this on TwitterShare on Google+Share on LinkedInPin on PinterestEmail this to someone

Feedback

  Comments: 2


  1. Wouldn’t it be a good idea to reduce the no of politicians and bureaucrats we’re forced to support financially ? A good start would be dumping EU , then let the O & M teams loose on Westminster , House of Lords , Scottish Parliament , Regional/District councils, Foreign Office, HMRC etc etc. I bet that would be copied in other countries.

    “Commonsense is sadly not so common”………….. Voltaire

  2. Robert McDowell


    Bill,
    As any economist knows, or should do, economic growth policies in an open economy do not work unless ones trading partners follow suit, otherwise the growth impulse leaks out. hence, on the question of democratic self-government, in economics and other important questions it is necessary to be part of the EU. And also because we are not like Norway or Switzerland because we do not have strong good exports. Compared to when UK joined the EU we have lost two thirds of our manufacturing base. The UK has many weaknesses that have developed as a consequence of free and open markets and is far less self-sufficient or not at all in all major categories. The UK is a far less well-rounded economy than forty years ago. It survives as well as it does only because of international interest and support in the UK. A retreat into home waters will only expose its chronic state mercilessly.

    This was not a consequence of joining of course but of indifference by banks (who grew their property lending in the same period from 10% against property to 70%) and by governments to physical trade and manufacturing in favour of services or abstract policy-making in general. The problem of an economy reliant on services net exports to finance the current account is that this is essentially a mostly balanced two-way trade that follows financial markets or follows good trade and FDI flows. Financial services are mainly finely balanced i.e. it is hard to gain a large sustainable surplus, not least when the UK end (in London’s markets) is dominated by foreign banks many of whom are EU and they and the US firms will if they wish or feel obliged to de-camp a lot of their activity to inside EU and that is merely inevitable. Oxford Economics, PwC and Treasury grossly under-estimate under-estimate the medium term disaster (a decade’s worth) that the UK economy will experience including sterling crash without much compensation in stock market equity prices. For some there will be a boon in the UK becoming even more of a devil-take-the-hindmost desperate tax haven for dodgy money and in Central London property (per sterling prices only) and other dispensations to attract private harder currency inflows.

    After a recession plus the EU Brexit price (inevitably a high one that EU will exert again out of political necessity to make leaving expensive) there will be a settling down in a structurally changed economy and back to some normal rhythms. But Obama and others are surely correct in assuming the UK status in the world will be diminished and politically there will be a long period of UK politics fighting further internal break-up plus all the issues around the next recession and unemployment etc. and therefore mainly a domestic focus of a battling that spirals around the “we ourselves alone” mentality. That can appeal to some people as a desirable outcome and similar to the collapse Scotland would experience if it left the UK. All this is not about a machine and whether the economics machine should go on as before but a matter of how Europe will see the UK and what that means for trade and every other kind of international intercourse. The UK will be made to pay for its insult and disparagement of what was the greatest thing to emerge out of World War II. EU like every governmental system is a curate’s egg and may it always continue so, otherwise we don’t have strong politics. Without healthy politics the UK breaks up and when politics are especially feeble we get war.

    The UK, like others, became driven by ideological trust in broad principles, of which the democratic deficit is but one. In consequence the UK abandoned targeted planning industry by industry and we would have to return to that. There would need to be a revival of the equivalent of economic central planning if the UK is to trade its way out of the Brexit corner it would find itself in and then forget all the nonsense about EU red tape. We’ll be milling it ourselves in giant bales.

Letters to the Editor