21 Fighting against federalism

Rt Hon the Lord Shore of PC

Introduction The problem that Europe in general and the euro in particular poses for Prime Minister and his Chancellor can be simply stated: both men are genuine europhiles, eager to carry forward the whole process of European integration in foreign and defence as well as in domestic policies, keen to bury the pound sterling in the single currency as they see Britain’s future as above all centred in the (EU) and quite undeterred by the accelerating progress being made towards transforming the European Union into a fledged United States of Europe. Both men want, if not a Federal Europe, then something very close to it indeed. Their problem is that they dare not admit it. Their deep commitment to all things European and their longing to be ‘at the heart’ of Europe, is the ‘love that dare not speak its name’. They dare not admit it because, while they rightly assume that the majority of their fellow countrymen are well disposed towards their continental neighbours, they do not and will not accept that Britain, with its separate history, its separate institutions, its parliamentary democracy and its worldwide interest and connection, should be stripped of the powers of self-government and transformed from an independent state into a province of the United States of Europe. British political leaders are not dishonourable men. Moreover, obvious false- hoods are, in a democracy, sooner or late exposed, with serious loss of public trust in public men. So, the Prime Minister and the Chancellor in their public state- ments, along with virtually all closet Federalists in UK public life, do their best to dodge the central question: isn’t the creation of a United States of Europe now the main objective of the European Union? And isn’t the euro simply one of the main means of achieving it?

Deception and self-deception Were dodging not impossible, like so many of their predecessors they engage not in direct deceit but in self-deception. People around them, overwhelmingly euro- philes themselves, whether they are drawn from the FCO or from the appointed advisers in the Number 10 Policy Unit, understand the government’s problem very Fighting against federalism 197 well and use all their sophisticated skills and word play to give them credence and support. In what is now almost a separate branch and art of politics, they have created their own euro-speak vocabulary: ‘pooling’ sovereignty, subsidiarity, tax ‘coordination’ etc. The Labour Party’s approach was worked out years ago in Opposition and thrived during the period of latter-day and John Smith just as much as in the period of our present Prime Minister. Just how far self-deception can go was revealed in the Labour Party’s 1997 General Election manifesto in this statement ‘our vision of Europe is of an alliance of independent nations choosing to co-operate to achieve goals they cannot achieve alone. We oppose a European Federal Superstate.’ And for those who don’t read manifestos, Tony Blair broadcast the same message through the columns of the Sun in these words: ‘New Labour will have no truck with the European Superstate’ and ‘if there are those in Europe who want a Federal Superstate, we would refuse to go along’. Little was said than about the single currency, except for the low keyed ‘we are not opposed, provided it is in the United Kingdom’s interest’ and the same basic approach was fully deployed by Chancellor Gordon Brown in his definitive statement in November 1997 of Britain’s policy. The essence of what he had to say was that the issue was essentially one of economic judgment and that Britain would join provided that five tests of national economic self-interest were met. Yes, there were some constitutional and political considerations but these were in no way of a character that should be allowed to influence the decision to join. This pragmatic and low keyed approach seemed at first to be working well. The Amsterdam Treaty of June 1997 posed no major problems for the new government and the British Presidency in the first half of 1998, while embarrassingly short of any serious achievements, avoided the great row. Indeed the single currency, the euro, was formally adopted by 11 states of what we now call Euroland on 2 May 1998 at the meeting of ECOFIN with a benign UK Chancellor in the Chair. Chancellor Kohl of Germany, in particular, well understood the political problem of the British government and along with his close colleague, President Chirac of , understated rather than overstated the immense political significance of the single currency, leaving the triumphalist noises to be made by the Commission’s Yves de Silguy and Jacques Santer. Moreover, the whole strategy of downplaying the significance of the single currency, denying its real meaning and political significance, and asserting that we would join, but only if it didn’t threaten Britain’s economic interests, had this added attraction: it played very well in the party political battle, both before and after the 1997 General Election. Labour’s apparently no-nonsense, straight- forward and friendly approach to our European neighbours contrasted vividly with the increasingly hostile, muddled and obviously divided approach of the Major government and of ’s post-election Opposition Conservative Party. Labour’s spin doctors were convinced, not without some reason, that the deep divisions within the conservative Party on the issue was politically and electorally damaging to the Major government and was perhaps the crucial factor in Labour’s electoral success. The spin doctors took the same view about the 198 Peter Shore damage caused by division and open dissent within the Labour Party. Much effort, art and skilled media manipulation was deployed to stifle and conceal the continuing Labour debate about Europe and the single currency. The strategy and approach seemed to be working. But the trouble remained as virtually all the opinion polls showed that the British public remained stubbornly hostile to the single currency. Furthermore, that stubbornness was undoubtedly strengthen as the grass roots level by the vigorous campaigning of the Sun and Daily Mail newspapers and by the clear editorial eurosceptic tilt of The Times and the Telegraph, very influential broadsheets read by virtually the whole British political class.

The truth will out But the crucial input that now threatens to wreck the whole New Labour approach to the euro has come, not surprisingly, from Euroland itself. Chancellor Kohl lost the German General Election in the autumn of 1998 and the successor govern- ment under Chancellor Schroeder, with former Finance Minister Lafontaine and his Foreign Minister Fischer, have felt free to openly state both the real significance of the single currency, emphasising its political importance for European integra- tion and stating, in unambiguous terms, the over-riding purpose of accelerating the process of creating a European State. There were audible sighs of relief in Downing Street when Lafontaine unexpectedly resigned. But his successor, Hans Eichel, a far less flamboyant personality, is if anything an even more committed federalist than his predecessor. In an article in January 2000, Eichel wrote ‘we will now strive towards political unification . . . EMU will not be enough . . . why do we still need national armies? One European army is enough.’ Equally and embarrassingly clear was Foreign Minister Fischer’s statement to the Strasbourg Parliament on 12 January 2000: ‘For the first time in the history of the European integration process . . . an important part of national sovereignty, to wit monetary sovereignty, has passed over to a European institution . . . the introduction of a common currency is not primarily an economic, but rather a sovereign and thus eminently political act.’ And, if that was not enough, in his 26 November 1998 speech he said, ‘transforming a European Union into a single state with one army, one constitution and one foreign policy is the critical challenge of the age’. The former Finance Minister, Lafontaine, had made his views crystal clear and indeed reminded his fellow countrymen and his European colleagues that ‘the United States of Europe has been the aim of the Social Democratic Party all along’. Not only have none of the 12 states in Euroland dissociated themselves from these remarks, they have added greatly to their strength. Thus former Prime Minister Gonzalez, speaking shortly after the decision of the 12 to join the euro asserted that ‘the single currency is the greatest abandonment of sovereignty since the foundation of the European Community . . . we need this United Europe . . . we must never forget the euro is an instrument for this project’. The voice of Belgium, in the person of its then Prime Minister Jean Luc Dehaene claimed that ‘monetary Fighting against federalism 199 union is the motor of European integration’. The Italian Finance Minister Carlo Ciampi is scarcely less forthcoming when he says, ‘I don’t think we will have a Federal Government, but something between a Federal State and a Federation of States’. And it isn’t just the European politicians who have loosened their tongues and spoken the truth. Hans Tietmeyer, President of the Bundesbank, strongly believes that the ‘European currency will lead to member nations transferring their sovereignty over financial and wage policies as well as in monetary affairs. It is an illusion to think that states can hold on to their autonomy over taxation policies.’ And no less a person than the (then) President of the European Central Bank, Wim Duisenberg, publicly asserted, ‘the process of monetary union goes hand-in-hand, with political integration and ultimately political union’. Our European partners have indeed blown the gaff! If that wasn’t enough, at the centre of the agenda of the German Presidency, which began on 1 January 1999, were placed the two dreaded items of tax harmonisation and the financing of the European Union, including the large and much resented British rebate. They remain on the agenda.

Getting desperate So what is the British government now to do? Labour is criticised by their natural allies, Lord Jenkins, Paddy Ashdown, , Ken Clarke et al. for not being courageous enough, for not openly declaring their commitment to join the single currency. They are faced with a still hostile British public and a Europe now dominated by social democrat governments openly proclaiming not only their hostility to alleged ‘unfair’ British tax and other advantages but also their profound disagreement with the deflationary provisions written in to the Maastricht Treaty, the very provisions which Mr Gordon Brown, in particular, has totally embraced and accepted. The government’s increasingly desperate response has come in three instalments. First, a massive attack on the media, endangering the support that the Murdoch press has in the past given to New Labour, accusing them of hysteria on the subject of tax harmonisation and a new public relations strategy of by-passing the national press and other media channels. The second and more important reaction was of course the Prime Minister’s statement in the House of Commons on 23 February 2000 when, in Paddy Ashdown’s words, he ‘crossed the Rubicon’ and publicly committed himself and the government to joining the euro, just as soon as the economic tests which nobody takes seriously have been met. The launch of a National Changeover Plan backed with millions of pounds of new expenditure, is allegedly to prepare British firms and financial institutions, government departments and consumers for the adoption of the euro. In reality it is aimed at something much more, to convince the British people that the euro is coming, whatever they might wish, and to demonstrate to our European partners that we really do intend to ditch the pound, that we really are, unreservedly ‘good Europeans’ and that we do genuinely wish to be at ‘the heart of Europe’. 200 Peter Shore The third and most recent government initiative was its attempt to bury the unpopular euro issue in the larger issue of membership of the European Union itself. Both at the Labour Party Conference in Bournemouth and again at the launch of the ‘Britain in Europe’ campaign, with the Prime Minister openly in alliance with Heseltine, Clark and Kennedy, the claim was made that to oppose the adoption of the euro was to join a ‘conveyor belt to withdrawal’. Some of those who do oppose the single currency also wish to leave the European Union. But the great majority of those determined to keep the pound are also in favour of staying in. The crucial issue is not the alleged ‘conveyor belt to withdrawal’ but the far more dangerous ‘conveyor belt, via the euro, to total immersion’ in Europe, to the creation of the European State. To this, the Prime Minister has virtually nothing to say except: ‘I do not dismiss the constitutional or political issues. They are real.’ But what those constitutional and political issues were was not stated. Instead the Prime Minister went on, ‘monetary union is a big step of integration, but so were the Single European Act and the European Union itself’.

The goal is political union Yes, Prime Minister, these were important treaties. But there is a big difference between them and the single currency proposals, and the Prime Minister not only knows it but has articulated it with precision on many occasions. The single currency and Economic and Monetary Union are not just another incremental step but a massive leap forward for political union. As its proponents and opponents alike agree, the single currency decision is the most important that Britain and its people will have taken in the whole period since the Second World War. Why? Because at one and the same time, it destroys the capacity of any future UK government to use the power of the state to guide, influence and control the economy and, at the same time, gives precisely these powers to unelected European institutions in Frankfurt and Brussels. Moreover as the advocates and architects of EMU and the single currency well know, it cannot work without the further fiscal, economic and political integration of the member states. There is not a responsible governmental voice anywhere in the European Union that would deny it. If British ministers are deaf to the voices of their European political colleagues, they can scarcely fail to hear these words from Wim Duisenberg, the President of the newly created European Central Bank: ‘EMU is and always was meant to be a stepping stone on the way to a United Europe.’ The genie is out of the bottle. The appalling ‘F’ word, Federalism, is in the public domain and the United States of Europe, with Britain in it has become indissolubly linked to the issue of the euro itself. The argument cannot be avoided; the issues can no longer be hidden or concealed. The referendum of course will take place. The government is too strongly committed to that to now renounce it. But, when the British people are asked whether they agree to give up the pound sterling and joint the euro currency, as Prime Minister Blair and the europhiles in all parties will recommend, they will Fighting against federalism 201 know they are also being asked to give up their independence as a sovereign state and to abandon parliamentary government and rule by men and women whom they elect as MPs. Henceforth they will merge themselves, along with their currency, into a vast new European State whose institutions – the Commission in Brussels, the European Central Bank in Frankfurt, the Judges of the European Court of Justice in Luxembourg and the European Parliament in Strasbourg – they may occasionally influence but can never control and, except for 87 MEPs out of a total of 626, have no power to elect.