By Joseph Willits
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In a backbench debate on the European Council yesterday, veteran Eurosceptic MP Bill Cash warned that a proposed fiscal union would be both undemocratic as a whole, and damage the national interests of the UK. The Liberal Democrats, he said were currently an "obstruction to our vital national interests", and it was crucial for the House to be united on the future of Europe:
"A house divided against itself will fall, and the situation will be worse still if it is built on sand. There are now two Europes, both built on sand, and the situation is not only precarious but dangerous."
Whilst a lack of growth in the Eurozone was "contaminating the UK economy", the situation across much of Europe was more worrying, Cash said:
"Elsewhere in Europe it is creating civil disorder, with youth unemployment of up to 45% in Greece and Spain, and 30% in Italy'"
In its present form, the European Union is "completely undemocratic" said Cash, and that "existing treaties should be sent to a convention so that all the member states could have the opportunity to face one another and decide what kind of Europe they want". Cash's most chilling prediction, was that a trend of a lack of democracy which exists within the current setup of the EU had the potential to mobilise the far right:
David Cameron addressed the House of Commons about his decision to veto the EU Treaty. Here is his statement in full:
With permission, Mr Speaker, I would like to make a statement on last week’s European Council.
I went to Brussels with one objective: to protect Britain’s national interest. And that is what I did.
Let me refer back to what I said to this House last Wednesday.
I made it clear that if the Eurozone countries wanted a treaty involving all 27 Members of the European Union we would insist on some safeguards for Britain to protect our own national interests. Some thought what I was asking for was relatively modest. Nevertheless, satisfactory safeguards were not forthcoming and so I didn’t agree to the Treaty.
Mr Speaker, let me be clear about exactly what happened, what it means for Britain what I see happening next.
Mr Speaker, let me take the House through the events of last week.
Friday 8.45am John Redwood MP blogs:
"Orderly but rapid break up would be the least cost option. It would liberate the countries allowed out, and permit them to adjust their competitiveness by a devaluation which would be swift and easier to sell than large wage cuts. There is no foundation to the proposition that the EU would lose 10-50% of its output if they changed currencies. To my knowledge 87 countries have left currency unions since 1945. In most cases they have prospered more after exit. The successful break up of the 16 member rouble bloc could be the model."
8.30pm Philip Hollobone told Sky News:
"...we need to have a disorderly breakup so that the whole of Europe and the rest of the world economy can get back to significant economic growth in the future. This idea that we can prop up the eurozone in the next ten years with constant austerity is just not going to work."
6.45pm The leader of the Conservatives in the European Parliament, Martin Callanan MEP said:
"If there is any treaty change which creates European fiscal union then clearly that will radically effect the UK and that should be put to a referendum. That is what democracy demands, because we would be creating a fundamental change to the EU and our relationship with it. However, that could take years to complete. It might be a way to solve the next crisis - but not this one. That is why the focus should be on measures to address the issues at the heart of this crisis."
He said these would include "The casual one-size-fits-all approach that had undermined the euro from its foundations", "The massive economic imbalance between its prosperous and economically-disciplined members and those which were debt-ridden and financially dysfunctional", "The over-regulation which hampered wealth-creation and innovation and encouraged a dependency culture in struggling states."
5.30pm Paul Waugh reports that Edward Leigh said the following in a Westminster Hall debate this afternoon:
"We have had enough of reading of British prime ministers over the last 20 to 30 years in the days preceding a summit that 'they will stand up for the British national interest' and then coming back from a summit with a kind of Chamberlain-esque piece of paper saying, 'I have negotiated very, very hard, I have got opt-outs on this and that and I have succeeded in standing up for British interests'."
Update: Paul Waugh tweets:
"No.10 hits back at Edward Leigh's Chamberlain remarks. PM's spokeswoman: "It was offensive and ridiculous.""
5.15pm Nadine Dorries blogged:
"I have no doubt that the PM will return with some form of a guarantee for Britain as the last thing Merkel wants is a referendum in Britain. If Britain succumbs, other countries may follow suit and the effect such an event would have on the markets would be damaging for Germany. After all, it’s all about Germany. A fiscal union of 17 EU members forming one new country and in effect a new trading block will have huge implications for Britain and British business. It's time we gave the British people their say via a referendum. The next two days will test the Prime Ministers courage and skills. If he misses this opportunity to grasp the nettle and give the British People their say, they may eventually make him pay with the one vote they will have."
4.15pm Nick Boles appeared on the Daily Politics show this afternoon, and argued:
"Today is the moment of maximum economic danger for Britain. Our retail sales are falling, manufacturing output is collapsing, Brazil has stalled, China has stalled. The entire global economy is sitting on the edge of an abyss and the urgent priority for the British people is to protect our economy and their jobs by getting this Eurozone crisis fixed. We need to repatriate powers but we need to come to that after we've saved our economy, not before. ... What I want David Cameron to do is to protect our economy, protect our jobs - mainly, because that's the thing that's under most threat from the Eurozone - protect the City of London, but he needs to help them get a solution to the Eurozone crisis so that the entire European economy doesn't fall apart. ... We are going to work out an entirely new kind of outer-tier relationship, and that is a big exercise, it's a very important exercise, and it offers big opportunities for Britain, but it's probably going to take two or three years - it's not the work of a weekend when the global economy is on the precipice."
3.30pm Sir Peter Tapsell told Radio 4:
"The fact is the French and German leaders have been meeting for weeks and weeks. I have very little doubt that they will not be able to solve the eurocrisis on Friday but it is very much in the British national interests that it should be solved. As we argued at the time of the Maastricht Treaty to think that you can have a single a interest rate for a whole variety of countries at different stages in their development. And that remains true today and although we opted out of the euro right from the beginning and very sensibly so, but we are affected by the euro and I feel really sceptical that they can solve to eurocrisis, I don’t expect it to survive. ... The reason why Europe is in crisis has to be traced back to the Maastricht Treaty. They then introduced a whole series of measures which weakened the European economy by comparison with those of the Far East and America and so on."
By Joseph Willits
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Zac Goldsmith would rather be known by the term "effective backbencher", than "rebellious backbencher". In a BBC Hardtalk interview today with Zeinab Badawi, rebellion and party dissent over Europe and the environment, proved to be the main focus. Although critical of the Government over its handling of an EU referendum, Goldsmith insisted that he remained loyal to the party:
"I have voted with my party more than 90% of the time ... if that is anything other than loyal, then I think we need to rethink those terms"
However, Goldsmith indicated his delight for fighting political causes and holding the Government to account as a backbencher, rather than in the "hellish existence" of a junior minister. "I didn't stand for election in order to have a lobotomy and to be programmed by a party leader", he said.
Goldsmith defended the Government on environmental policy, saying it had been "unfairly chastised" and that "twice as many environmental commitments as anything else ... [are] being delivered". He praised both the Green Investment Bank, saying it was "a step in the right direction", and the Green Deal. Although the Government was "beginning" to understand the priority behind environmental policies, he said, the Green Investment Bank, however, was "not big enough, or soon enough", and it was essential that Treasury got "behind... and turbocharged" the Green Deal.
By Joseph Willits
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Yesterday in Parliament a debate was motioned, and passed unopposed without a vote, to approve a European document related to Croatia's joining of the European Union. Europe Minister David Lidington began the debate by speaking of enlargement more generally, saying that the Government has long been "a strong supporter of EU enlargement as an effective and dynamic agent of change ... the European Union will remain strong only if it is outward-looking and continues to grow".
EU accession, he said, "has helped to entrench democracy, the rule of law and human rights in parts of our continent where those values and traditions were crushed for most of the 20th century." Enlargement would "create stability, security and prosperity across Europe".
Lidington said that providing accession criteria had been met, it was important that EU membership should be available to any European country, whether it be Spain or Portugal, or a Balkan or eastern European nation. The Minister made reference to Margaret Thatcher's Bruges speech of 1988:
By Tim Montgomerie
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Earlier this week John Baron MP called a debate in Westminster Hall to question UK participation in IMF bailouts of the Eurozone. Pasted below are extracts from what he, Mark Hoban MP and Mark Field MP said.
Endless bailouts and EU summits are not addressing the Eurozone's underlying uncompetitiveness: "Will additional IMF funding work? That will simply reinforce existing eurozone policy, which is itself fundamentally flawed. The existing policy simply does not address the core causes of the crisis, which are a lack of competitiveness and Governments spending too much. Debt is the problem, as I have said, not demand. We have had 14 or perhaps even 15 gatherings, conferences and summits to save the euro, but each has failed to address the core reason for the problem, which is a fundamental lack of competitiveness."
IMF packages usually rely on devaluation nut that option is not available inside the Eurozone: "Another reason why this policy will fail is that it fundamentally ignores the importance of devaluation to recovering economies. Usually, there are three elements in an IMF package: reduced spending, increased revenue and the ability to allow the currency to devalue. That last bit is important because a currency that devalues helps to take the strain off the economy. If an economy is deemed to be, say, 25% uncompetitive compared with its neighbours, allowing its currency to depreciate to about the same extent will go a long way towards taking the strain. If we cut off that option, that 25% gain in competitiveness can only really be brought about by cuts to public services, salaries and pension funds. That is simply not an option, and for that reason that makes those austerity packages so much worse."
The Eurozone, not the IMF should address its problems: "I question why the IMF is getting involved in these bail-outs. The eurozone is a currency union. If a state within the United States got into trouble, the IMF would not be expected to ride to the rescue. The same should be true of the eurozone. I contend that Greece is not economically sovereign; it has no central bank; it cannot set interest rates; it has no currency; and it cannot devalue. I would go so far as to question whether Greece is even politically sovereign. At least in the United States, the people can elect the governor of individual states. That is not happening in Greece and Italy."
The Bundesbank should use its reserves to save the Eurozone: "What makes the situation even worse is that the eurozone has resources that could do much more to help the situation. For example, the Bundesbank has reserves of £180 billion, £130 billion of which is in gold, and gold is going up in price. That is in stark contrast to our country and the action of the previous Government, who sold gold at near the bottom of the market."
The UK government is showing no leadership: "The Government seem to have fallen in behind the French and Germans in this cry that somehow we must save the euro. I suggest to the Minister that that is economic clap-trap. Binding divergent economies into a single currency without full fiscal union was, and remains, a massive mistake. Similar thinking warned us of the perils of exiting the exchange rate mechanism, yet look what happened then: almost to the day that we exited the ERM, our recovery started and it was a very strong recovery."
By Matthew Barrett
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Today in Strasbourg, the European Parliament adopted proposals to increase the EU budget, introduce a financial transaction tax, abolish national rebates, impose direct EU taxes and end the returning of unspent EU money to national governments.
The European Parliament set out its priorities for the next seven-year budget plan, known as the "multi annual financial framework" (MFF). Although the EU works on annual budgets, the budgets are set within the longer-term MFF. Current debates concern the next MFF, which will be in operation 2014-2020.
The European Conservatives and Reformists (ECR) group, of which the Conservative Party is the largest party, voted against the proposals. There were, in total, 468 votes in favour and 134 against. Labour and UKIP also voted against the proposals, with the Lib Dems a mixture of for and abstaining. Edward McMillan-Scott, who was elected as a Conservative in 2009 before defecting to the Lib Dems, voted for the proposals.
The ECR put down an amendment to the proposals, which said:
Is therefore of the firm opinion that freezing the next MFF at the 2013 level, as demanded by some Member States, is a viable option; welcomes the letter from the five Heads of Government – those of the United Kingdom, France, Germany, the Netherlands and Finland – and shares the opinion that commitment appropriations over the next multiannual financial framework should not exceed the 2013 level, with a growth rate below the rate of inflation
This amendment was defeated by 540 votes to 104, with Labour MEPs voting for the amendment, UKIP against, and the Lib Dems divided between abstaining and voting against it. Edward McMillan-Scott voted against the amendment.
Key extracts from William Hague's speech to the Commons yesterday on the Coalition's EU policy. Hague identifies extravagant spending as main cause of Eurozone's problems and promises to support Turkish membership of EU.
The EU rebate will be protected: "We will not repeat their wretched handling of the negotiations on the current financial perspective, which saw them accept a cut of £7 billion in our rebate while obtaining nothing of substance in return."
Deregulation and freer trade is key to European prosperity: "We need to get Europe back to work, create jobs, attract investment and deal with the erosion of our long-term competitiveness. Those issues concern every member of the European Union, not just the eurozone. We will urgently make the case for the extension of the single market, better regulation that can lighten the burdens on businesses, and seizing opportunities to create freer and fairer trade between the European Union and third countries. In that context, we will particularly encourage greater economic engagement between the European Union and new, rising economic powers."
Extravagant spending is main Eurozone problem: "Deficits unaddressed or regulation that prices people out of work in some European nations are the real dangers to economic growth in the long term. When we consider the position of the countries in the eurozone that face the most severe fiscal difficulties, their problem is not insufficient state spending or insufficient regulation, but very much the opposite."
A 'referendum lock' will be introduced to ensure democratic oversign of Britain's relationship with the EU: "Both parties that form the coalition are determined to make the Government more accountable to the British people for how the EU develops, so that Bill will be introduced later this year. It will enlarge democratic and parliamentary scrutiny, accountability and control over the decisions that we make in the EU. As the House will know, it will include a referendum lock, so that no future treaty may pass areas of power or competences from the UK to the EU without the British people's consent in a referendum. The Government have already agreed that there will be no further transfer of sovereignty or powers in this Parliament in any case. The lock will also cover any proposal for Britain to join the euro. We regard that measure as essential in ensuring that the EU develops in a way that has the British people's consent."
Britain will not support gradualist expansion of EU powers: "At the spring European Council, five EU-level target areas were identified: employment; research and development; energy and climate change; education, and social inclusion. We are concerned that some, while not legally binding, may stray into the competences of member states. Some are inappropriate for the different systems and models that various member states use. That variety must be respected in creating a meaningful strategy that addresses the economic issues faced across Europe."
The EU must support more sanctions against Iran: "We remain extremely concerned about Iran's nuclear programme. Iran has failed to suspend its nuclear activities in line with UN Security Council resolutions, has shown no serious intent to discuss its programme with the international community and has failed to address the outstanding concerns of the International Atomic Energy Agency. For those reasons, we are pursuing-as we speak-new sanctions, and a draft resolution is now being discussed at the UN Security Council. The EU has agreed to take measures to accompany this process and we will work hard with our EU partners to ensure that we take strong measures that have an impact on Iran's decision making."
Support for Turkish membership: "Widening of the European Union must go along with the rigorous application of the entry criteria. The Government will continue to champion the European Union's enlargement, including to the western Balkans and Turkey. We will be assiduous in working with Ankara and other member states to resolve outstanding issues."
"The last Conservative Government left a considerable legacy in the European Union: the creation of the single market; the enlargement from nine to 15 members; and the setting in train of further eastwards enlargement. I will not take away from the last Government their achievement in helping to complete that enlargement, but in other respects their legacy is to be regretted: the alienation of the British public from the EU; the failure to stand up for Britain's interests on the budget, and so on. The new Government have started as we mean to continue-with activity and energy in European affairs. We will play our role with enthusiasm, while vigorously advancing our country's interests and never taking the British people for granted."
In a commentary the BBC's Europe Editor concludes: "Like others, the foreign secretary said the main issue facing the EU was the lack of growth, which he described as "anaemic." The basic message was that Britain would be co-operative, but it would not agree to further integration."
"It is not in Britain's interest for the Euro to fail, but it would also not be in our interests to sign up to it either. Britain can be a leading member of the EU without signing up to the Euro.
The Pound's recent fall in value in no way strengthens the case for Britain to give up our currency. The weak Pound is a side effect of Labour's recession and a weak economy.
We do need a change in the management of our economy, but only a Conservative government can deliver it. Just because our own government has lost control of the British economy, that does not justify handing over control to the EU."
This is the correct position.