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Kate Ironside: Is there a middle road amid eurozone integration?

By Western Morning News  |  Posted: September 17, 2012

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So which way will the UK jump? It's pretty clear which way the cookie is crumbling and at some point we will have to make a decision.

It is not one that any of the three principal political party leaders relish. At the moment they argue that events are too fluid. They say it's impossible to be sure which path our continental partners will take.

Labour's shadow foreign secretary, Douglas Alexander, was arguing this summer that the UK couldn't decide what to do as it wasn't clear whether the EU would just get gridlocked, whether the eurozone would break up, whether a small core of eurozone countries would integrate further or whether most of the EU would integrate further. The repercussions of each on the UK would be different, he argued.

That's true. That's also a useful holding position, nothing more – and it is becoming increasingly unsatisfactory.

Any observer can see the broad outline of the direction in which our partners are heading and can work out the likely consequences for the UK. On current evidence, it seems that the fourth Alexander scenario is taking shape: remorselessly, the eurozone is moving towards closer and closer union.

Not only is it looking at a banking union, but also greater budgetary union. They may even set up their own eurozone-wide parliament or political assembly. How that would work alongside the European Parliament is not clear, but you get the drift.

The EU has long had a loose inner ring, but it has been one the UK has been able to march in and out of at will. Now a solid and more impenetrable one is forming.

Where will that leave us? Alexander argued, perfectly sensibly, in the summer that that depended on how many nations were in the inner ring. If it were to be essentially Germany and France plus a handful of others, there would be plenty of other EU nations outside that ring with whom we could ally ourselves. The game would carry on much as normal; we could cope.

But if, as seems possible, this inner ring encompasses the vast majority of EU nations, then the UK has a serious challenge on its hands. The vast majority would be acting as an integrated cohesive bloc. The old British strategy of forming ad-hoc alliances across the EU on an issue-by-issue basis would be seriously curtailed.

So how do the political parties respond to such a scenario? They may not feel ready yet to talk about that in public, but don't tell me that their blue-sky thinkers haven't been round this block on multiple occasions.

It is profoundly in our national interests to have a close working relationship with our immediate neighbours. It is also profoundly in our national interests to be able to influence them as much as possible. So how do we order our relations with them if they transform from a relatively disparate group into a highly cohesive one?

Option A would be to join them, to become part of that cohesive group. Politically that is cloud cuckoo land, simply undeliverable in the current climate – although, I suspect, several generations down the road we might find ourselves knocking on the door, begging to be let in, much as we did in the 1960s. History has a habit of repeating itself.

Option B would be to seize the opportunity to cut loose as much as possible. Much of Fleet Street is likely to be vociferous on this subject, but that would be disastrous for the UK. We do not want to end up like Norway, paying considerable sums for the pleasure of trading with our partners and having to follow the rules even though we have no say over the making of them. That way lies impotence and utter lack of sovereignty. Our national interests would only suffer.

So is there an Option C? A proverbial middle way that will enable us to have our cake and eat it, which is always an attractive goal?

It would have to involve us working closely, supportively and positively with our partners. There would be no mileage being the awkward squad or the grumpy kid in the corner. From that close, supportive relationship would, hopefully, flow the continued influence over and involvement in key decisions.

But would we do it? Could we do it? Or are we too busy cutting off our nose to spite our face?

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