Volume 9 Number 6 Focus on The March 2002 £2.50 GibraltarEuropean Journal The Journal of the European Foundation

Daniel Hannan, mep What Makes Us Want To Betray Gibraltar? & Allister Heath • Michael Gove • Maurice Xiberras Peter F. Carter-Ruck • Mark Francois, mp • Marques de Lendinez Hon. Peter R. Caruana, qc • Lindsay Hoyle, mp • Daniel Feetham Marie Lou Guerrero • Hon. Joe Bossano • Andrew Rosindell, mp John Tate • Peter A. Isola • William Serfaty • Tony Lodge Dr Véronique de Rugy • Dr Elaine Sternberg Dr Daniel J. Mitchell • Matthew Elliott Professor Gerard Radnitzky • John Rennie Stewardson Alex Wieland • Dr Lee Rotherham

The European Foundation 61 Pall Mall, London SW1Y 5HZ www.europeanfoundation.org Chairman: William Cash, MP March 2002 Vo lu m e 9 Number 6 THE EUROPEAN JOURNAL The Journal of the European Foundation

For reference, numbers on pages are as in the printed copy Original PDF Articles below are hyperlinked – use the hand icon, point and click Page Page Devil in the Detail in Barcelona 23 Solon Focus on Gibraltar 34 Allister Heath Another Foreign Office Sell-Out 45 Michael Gove What Makes Us Want To Betray Gibraltar? 5 6 Daniel Hannan, MEP Defending the Gibraltar Constitution 67 Maurice Xiberras Gibraltar: a Lawyer’s Analysis 78 Peter F. Carter-Ruck Gibraltar and the 2004 Intergovernmental Conference 89 Mark Francois, MP The Inalienable Right to Genuine Self-Determination 910 Marques de Lendinez The View of the Gibraltar Government 11 12 Hon. Peter R. Caruana, QC Westminster, Self-Determination and the Rock 12 13 Lindsay Hoyle, MP Gibraltar: is Legal Action the Answer? 14 15 Daniel Feetham An Appeal to Britain 16 17 Marie Lou Guerrero Gibraltar Cannot Trust the EU 17 18 Hon. Joe Bossano Defending the Rock: the Case for Integration 18 19 Andrew Rosindell, MP, & John Tate Gibraltar – The Business View 19 20 Peter A. Isola The Case for a New Gibraltar Constitution 20 21 William Serfaty Gibraltar’s Rights must be Recognised 21 22 Tony Lodge Research Roundup: Europe in Figures 22 23 Allister Heath The European Union Tax Cartel is Bad for the US Economy 24 25 Dr Véronique de Rugy The Defects of German Corporate Governance 25 26 Dr Elaine Sternberg The Flawed WTO Tax Decision 28 29 Dr Daniel J. Mitchell Brusselsbourger 29 30 Matthew Elliott The EU: the European Miracle in Reverse 30 31 Professor Gerard Radnitzky Ships Passing in the Night 35 36 John Rennie Stewardson The Marshall Plan: Fifty Years After 38 39 Edited by Martin Schain Reviewed by Alex Wieland Chunnel Vision: Blueprint Europe 40 41 Dr Lee Rotherham Editor: Allister Heath Publisher: The European Foundation, 61 Pall Mall, London SW1Y 5HZ Telephone: +44 (0) 20 7930 7319 Facsimile: +44 (0) 20 7930 9706 E-mail: [email protected] ISSN 1351–6620

Typeset by Nelson & Pollard, Oxford Solon

Devil in the Detail in Barcelona

here was more to the Barcelona European Council on 15 persistent denials from the British government that no Tand 16 March 2002 than first meets the eye. Although Tony harmonisation of direct taxation is on the cards, the Blair’s frustration at France’s continuing failure properly to Conclusions stipulate that “where member states pursue tax deregulate its electricity markets was widely reported, the cuts, priority should be given to reducing the tax burden on low- Summit’s rather more important discussions, in areas including wage earners”. macroeconomic policy harmonisation, hardly received any Evidently, the Irish ‘No’ to Nice has fallen on death ears. The coverage. The Presidency Conclusions called specifically for the Irish Prime Minister was forced to outline how he would reinforcement of existing fiscal policy co-ordination in time for ensure victory in a new referendum to be held later in 2002. the 2003 Spring European Council. The ministers also The Council apparently liked what it heard and emphasised endorsed the launch of new Broad Economic Policy Guidelines, that it was willing to support the Irish government and focal points of which would include “the quality and sustain- “contribute in every possible way” to a ‘Yes’. The courageous ability of public finances, pursuing further necessary reforms in and underfunded ‘No’ campaign in Ireland certainly has its product, capital and labour markets and ensuring coherence with work cut out. The ministers decided to hold further talks on the policies established in each domain”. the matter in the forthcoming Council in Seville. Barcelona was the second annual spring meeting on the The EU’s move into health and education, two areas “economic, social and environmental situation” in the EU. Those supposedly to be left to national governments, continues who believe that the EU has now embraced a dynamic market apace. The Council agreed to launch a European Health economy should read the Presidency Conclusion’s section on Insurance Card by the end of 2003, allegedly to promote intra- Reinforcing social cohesion. Despite the EU’s awful record EU labour mobility. Far worse is the decision to authorise a on economic growth and job creation, the Council saw fit to ‘feasibility study’ into web-based twinnings between schools claim that the European ‘social model’ “is based on good across the EU. And once again, the Council called openly for economic performance, a high level of social protection and yet more EU propaganda in schools: further action “to education and social dialogue.” Notwithstanding its oft-repeated promote the European dimension in education and its claim that it wishes to encourage entrepreneurship and the integration into pupils’ basic skills by 2004”.

ust as interesting was the discourse emanating from terms of common rules for tax policy, again when the economy is JEurope’s governing elites in the days immediately prior to the booming and when tax revenues are higher than expected,” Prodi Council. Romano Prodi, the President of the European added. In recent months he has repeatedly demanded the Commission said the European Union needed new common introduction of a code of conduct for economic and fiscal rules on how to handle budgets and tax policies in boom times. policy. The French Prime Minister and Presidential Candidate Addressing a news conference on 13 March 2002, two days Lionel Jospin has called for a “political Europe” centred upon a before the Barcelona summit, Prodi said the EU’s Stability and European constitution and including the Charter of Growth Pact has a short-term horizon to prevent member Fundamental Rights drafted in the run-up to the Nice Treaty. states running excessive deficits. But, he claimed, this is not Jospin’s openely stated goal is the creation of what he calls a enough to manage their growing economic interdependence “European federation of nation states”. Echoing the mission and avoid repeating what he called the ‘mistakes’ of the 1980s. statement of the 2004 IGC, Jospin wants to ‘clarify’ the “Experience has shown that mistaken policies are usually respective competences of the EU and of the member states. He conducted in good times, when the economy is expanding. We find also supports the creation of a permanent Council of Ministers that at that time, member states fritter away the leeway that they of Europe (which would include a British Minister for Europe). need to cater for leaner times when there is either reduced growth The new permanent council would report back to national or actually recession,” he said. “Secondly, we could also think in governments and co-ordinate European policy with Brussels.

Allister Heath, Editor of the European Journal and Head of Research at the European Foundation will be stepping down in early April 2002 to go and work for a national newspaper. His first article for the European Journal was published in January 1999, and he served as Executive Editor and then Editor. The staff of the European Journal would like to take the opportunity to thank him for the effort that he has put in to the Journal and to wish him well in his new job.

Jump to Contents 2 Focus on Gibraltar March 2002

Focus on Gibraltar by Allister Heath

ritain is preparing to betray the mented by the ‘New Left’s’ anti-historical just in the Council of Ministers but potent- Bpeople of Gibraltar in a desperate bid by project to abolish Britain. Daniel Hannan, ially at future European summits, including Tony Blair to boost his flagging influence in MEP’s contribution complements that of the next Intergovernmental Conference itself,” the European Union. Although the Rock’s Gove. The government’s attitude to he writes. The Marques de Lendinez, a population is staunchly opposed to incor- Gibraltar “tells us a great deal about Labour’s prominent UK-based pro-Gibraltar activist, poration into Spain, the British government whole attitude to Britishness.” Ministers and provides a wide-ranging and lucid intro- is determined to strip the territory of its much of our ‘left-wing’ establishment duction to the Gibraltar question. Hon. colonial status. Talks are currently under obviously despise everything Britain stands Peter Caruana, QC, the territory’s combat- way between Britain and Spain which will for, from the common law to lower taxes. ive and highly articulate First Minister, almost certainly lead to a ‘new constitut- They hate the fact that Gibraltar is so self- outlines the Gibraltar government’s official ional settlement’ – including some form of consciously British and patriotic; that view on the matter. He sees little point in joint Anglo–Spanish sovereignty – being Gibraltarians refer to the UK as the ‘mother taking part in the Anglo-Spanish talks presented to the people of Gibraltar as a country’. The Blairite project consists in because they are obviously rigged. A major ‘done deal’. Fortunately, the agreement is ‘modernising’ everything we do differently problem is that even following a rejection in bound to be rejected in a referendum in from the rest of the European Union. a referendum of the ‘done deal’, “this agree- Gibraltar, but the proposals will remain on Obviously there can be no room for a ment will remain on the table for all time as the table. Just as the Danish rejection of the British Gibraltar in such a Brave New World. the agreed UK/Spain political position.” Maastricht Treaty and the Irish rejection of Maurice Xiberras, a socialist and a the Nice Treaty were angrily dismissed, former Leader of the Opposition in Gibral- on. Joe Bossano, the charismatic Europe’s governing elites will not take tar, is the last remaining Gibraltarian to have Hformer Socialist Labour Party First Gibraltar’s ‘No’ for an answer. We can safely taken part in the convention which drafted Minister and currently Leader of the predict that a tidal wave of propaganda will the territory’s 1969 constitution. He Opposition, explains how recent events be unleashed and that another referendum reminds us that the constitution’s preamble show once and for all that the EU cannot be will be called when the time is deemed states specifically that “Her Majesty’s Gov- trusted. right. ernment will never enter into arrangements Lindsay Hoyle, MP, the Labour Chair- The European dimension is at the heart under which the people of Gibraltar will pass man of the All Party Parliamentary Group of the Gibraltar question. The territory’s under the sovereignty of another state.” Peter for Gibraltar, sets out how and why he will opt-outs from some of the more damaging Carter-Ruck, the leading libel lawyer of the be stepping up his campaign on behalf of EU policies, including Value Added Tax, the last few decades, demonstrates that under the territory in the House of Commons. Common Agricultural Policy and the cus- the terms of the Utrecht Treaty – Article X Peter Isola, Jr., and Marie Lou Guerrero, toms union, help explain why the European of which handed over Gibraltar to the UK – two leading representatives of the business political establishment is so keen to cut the it is only if Britain were to surrender its world, show how trade is being impacted by Rock down to size. The territory’s relatively ownership of Gibraltar to a third party that Spain’s illegal blockade. Andrew Rosindell, low tax rates, which have helped attract the Rock would revert to Spain. Of course, MP, the European Foundation’s Inter- numerous financial institutions, have the world has moved on since 1713. The national Director, and John Tate, a former repeatedly been targeted by fiscal harmon- right to self-determination is now widely Head of Research at the Foundation, argue isers at the Organisation for Economic Co- accepted and the Gibraltarians should have that Gibraltar should be decolonised via operation and Development (OECD) and the right to choose their own destiny demo- incorporation into the UK. It should have its in Brussels. It thus seems appropriate to cratically. In a related contribution, Daniel own Westminster MP, they believe. Tony devote much of this issue of the European Feetham, a Gibraltar-based barrister, makes Lodge, a former Editor of the European Journal to the Gibraltar question. Our the case that the right to self-determination Journal, writes that diplomatic expediency contributors – an unprecedented group of for colonial people, as enshrined in the UN should not be allowed to get in the way of journalists, politicians, lawyers, policy charter, also applies to Gibraltar. He argues fundamental human rights. William makers and businesspeople – analyse recent that Spain’s claim and the validity of the Serfaty of the Self-Determination for Gib- developments in virtually every conceivable Utrecht Treaty should be tested in the raltar Group recounts how his organisation way. International Court of Justice. successfully took the UK to the European Court of Human Rights and how the Gib- or Michael Gove, one of Britain’s ark Francois, a young Tory MP raltar Parliament now favours the adoption Fforemost political commentators, Brit- Mfrom the 2001 intake, argues that the of a new constitution. ain’s sell-out is just the latest in a long series betrayal of Gibraltar during Spain’s turn as Enjoy. of Foreign Office betrayals. According to President of the EU’s rotating presidency is Gove, there is a tradition in British foreign hardly a coincidence. “The whole process of policy “which regards one constitutional negotiation is now being undertaken not for Allister Heath is Head of Research at the destiny as an illegitimate choice for anyone. the benefit of the Gibraltarians but rather for European Foundation and Editor of the Being British.” The Foreign Office’s brand of reasons of gaining Spanish support for European Journal. He can be contacted at anti-Britishness is now being comple- Foreign Office objectives within the EU, not [email protected]

Jump to Contents 3 The European Journal Focus on Gibraltar

Another Foreign Office Sell-Out by Michael Gove

ew conditions are as disfiguring as Gibraltar partly as some sort of artificially vote for British parties and vote any Fdiplomat’s tongue. Like legionnaires’ partitioned German Democratic Republic party out of government. And, most disease it spreads quickly within one, often whose detachment from the rest of the shamefully, in Hong Kong millions who had sick, building. But so far, in Britain, it has Iberian Peninsula is an anachronistic grown up in liberty under British been isolated within a singular establish- ideological nonsense, and partly as another protection were handed over to a tyranny ment – the Foreign and Commonweath Ulster from whom every connection with without being given the chance to speak for Office. the Crown is to be slowly stripped. themselves. The condition’s victims first tend to Now it is the turn of Gibraltar’s citizens to develop a thick brown coating on their oral find that the Mother of Parliaments is not a muscle – often most conspicuous after a For the past 30 years fit parent, and they are to be abandoned to visit to the Arab nations of the Middle East the custody of another. The imminent but now also visible after even the briefest the Foreign Office has British betrayal fits the already established European tour. After this discoloration a Foreign Office pattern, but it contains more striking alteration occurs, as the found it almost another, distinctly contemporary and tongue forks, the consequence of saying quintessentially Blairite, component. different things out of each corner of the impossible to uphold The Government’s desire to relinquish mouth. The latest high-profile victim to fall British sovereignty over Gibraltar is prey to the deformity is not a professional the right of anyone to designed simultaneously to further the diplomat but a relatively recent arrival at remain a subject of the process of European integration and efface the breeding-gound for infection, our anything which is distinctive about our Minister for Europe, Peter Hain, MP. Over Crown whose Britishness national story. the last few months, Mr Hain has shown not The casual fashion in which Gibraltarians only that his tongue has acquired a lustrous is at risk from another can find their ability to decide how they Iberian coating, and that it is as forked as should be governed taken from them by one could wish when offering guarantees to sovereign nation Foreign Office ministers, with their British Gibraltarians, but also that it has developed citizenship formally preserved but its a capacity to issue venom. distinctive substance, and their sovereignty, After all, what could be more toxic than here is a particular irony slowly dissolved, is entirely characteristic of telling 30,000 people who deeply value their Tamounting to shame in a British the new EU. Britishness that their passionate attachment minister seeking to deny 30,000 people the And the manner in which British history, to this country risks leaving them “stuck in right to decide the fate of their territory. The the attachments it fosters and the the past” ? most elevated tradition within British guarantees it has provided are considered to Mr Hain has been making ever more foreign policy – from Canning, through be part of a past in which no sane person explicit one of the most shaming initiatives Palmerston, Gladstone and Asquith to the would wish to be ‘stuck’ is entirely that has ever emanated from the Blair Eden of the Thirties and even the Cook of characteristic of the ‘New Left’. Foreign Office – the planned abandonment Kosovo – is that this nation will exert itself of a solemn guarantee that British citizens to uphold the principle of self- n a world grown more dangerous, the be allowed the free exercise of self- determination. Iright of people to cleave to the trusted determination. There is, however, another tradition and familiar should be respected, not The Minister for Europe has been within UK foreign policy which regards one dismissed. In a world where a retreat from seeking, in suitably fork-tongued fashion, to constitutional destiny as an illegitimate obligations encourages the advance of wriggle out of the binding assurance Britain choice for anyone. Being British. For the enemies we should stand by those who have gave Gibraltar in 1969 that the British past 30 years the Foreign Office has found it always looked to us. And in a world sovereignty of the Rock would never be almost impossible to uphold the right of rendered more unstable because people are transferred contrary to the wishes of the anyone to remain a subject of the Crown denied the right to self-determination that people of Gibraltar. Even though they have whose Britishness is at risk from another principle must be defended. So much is so been as flinty as their home in their sovereign nation. obvious it hardly needs stating. But it is still determination to stay as Crown subjects, Mr The Foreign Office sent signals to too much to swallow for those in the grip of Hain is seeking, slowly but surely, to deny Argentina over the future of the Falkland diplomat’s tongue. them that right. Islands which encouraged the Argentinians Europe, he has emphasised in his to believe that a Britain indifferent to the statements, has changed since 1969, with islanders’ Britishness would not contest Germany unifying and Northern Ireland’s their invasion. In Northern Ireland, a form constitutional position slipping, and so, he of government was devised for British argues, Gibraltar too must alter. The people, primarily in negotiation with Michael Gove is Assistant Editor of The implication is clear – the Foreign Office sees Dublin, which deprived them of the right to Times.

Jump to Contents 4 Focus on Gibraltar March 2002

What Makes Us Want To Betray Gibraltar? by Daniel Hannan, MEP

ow would you feel,” my Gali- eventually yield results. And, for that, our of Empire, so as to sit in Brussels on the “H cian barber asked me the other own Government is to blame. same terms as everyone else (except the day, “if we had occupied, say, Plymouth, filled Gibraltar does not fit easily into Labour’s French, who have somehow managed to it with colonists, and then hung on to it?” conception of a modern, European Britain. hang on to their own outposts without “To be honest, Pepe,” I told him, “I think It is too shrill, too patriotic, too red-white- anyone thinking the worse of them). In such most British people would treat it as an exotic and-blue. The stance which this adminis- a scheme, Gibraltar is a positive embarrass- holiday destination. We would go there for tration has assumed over the Rock tells us a ment. Gibraltarians, like Ulster Unionists, the flamenco and the sangria, and enjoy the great deal about Labour’s whole attitude to represent everything that Mr Blair finds fact that we had a little bit of Spain on our Britishness. disturbing in his country. They are loyal – doorstep. What I do not understand is why At his very first conference as Labour visibly, painfully loyal – to the kind of Brit- you chaps are still so edgy about these things leader, Tony Blair told his party: “I will never ain that he is trying to consign to history. after three hundred years.” allow Britain to be isolated or left behind in Pepe shrugged. “No tengo puta idea,” he Europe.” At one level, of course, he simply fter all, in a world where national replied, in his coarse, cheerful, Spanish, and meant that he wanted to sign up to whole Aidentity is not meant to matter, we turned the conversation, as we often do, swathes of EU policy which the Con- Gibraltar’s politicians speak of little else. to our favourite bull-fighters. servatives had eschewed, such as the euro European integration is founded on a belief The Gibraltar issue tells us as much about and the social chapter. But he also meant that national loyalties are temporary and ourselves as about the Spanish. After all, you something much deeper. When Labour transient, quickly to be discarded in favour cannot really blame Madrid for pushing at a modernisers speak of “the Project” they have of the benefits of living in a bigger state. door that we have so ostentatiously in mind a complete overhaul of Britain: an Simply by existing, Gibraltarians make a unlocked. The world is full of disputed ironing out of the things that make us mockery of this entire philosophy. Through territories. What makes this case special is different from the rest of the EU. This decades of bullying and harassment by their the unique pusillanimity of the British includes the continentalisation of our eco- larger neighbour, they have clung stead- Government which, despite having both nomy, through higher taxes and more state fastly to their British identity. Neither international law and democratic self- intervention; the continentalisation of our threats nor enticements have served to determination on its side, seems deter- constitution, through the introduction of make them think differently about who they mined to turn a non-issue into an issue. regionalism and proportional represent- are. In the final analysis, they would choose When we huff and puff about Spain’s ation, and the abolition of such British to be poor but free. hypocrisy in pressing its claim while anomalies as the House of Lords; and the To New Labour modernisers, as to our refusing to discuss the status of its North continentalisation of our legal system bien pensant diplomats, such thinking is African enclaves, Ceuta and Melilla, we are through the incorporation of European anathema. It is hard to avoid the suspicion missing the point. The reason the Spanish human rights codes. that, even if Spain did not claim the have become so exercised about Gibraltar is Part of becoming a modern European territory, they would be keen to get rid of it. because they believe that their pressure will country means shedding the encumbrances With its fish-and-chip shops, its Union Jack

Jump to Contents 5 The European Journal Focus on Gibraltar

hats, its provincial inhabitants, it represents neighbour’s car, would he be expected to let they are unable to name any specific, everything they hate about their own me use it on certain days of the week in the concrete advantages that would come to country. To have 30,000 members of the interests of ‘reaching a solution’? For Britain if we gave in to Madrid. We are being forces of conservatism under their Britain’s legal claim is guaranteed in a asked to betray our Gibraltarian country- jurisdiction is bad enough. The idea that watertight Treaty, and bolstered by the near men in return for that most nebulous of these people might actually impede a deal unanimous support of the population who, europhile concepts, ‘influence’. with one of our European partners over in 1967, voted by 12,138 to 44 to remain The truth is that, for many in this agricultural prices or whatever is simply British. administration, jettisoning Gibraltar is an horrifying to them. end in itself. If Madrid happens to put In February 2002, I participated in a ven on its own terms, the argument something on the table in return, fine. But debate in Oxford against a very senior Ethat Britain stands to gain from a one feels that Labour would still seek to British eurocrat. As we lingered over our ‘solution’ is spurious. After all, we were withdraw from the Rock, even if they had to port after dinner, he leaned back in his chair members of the EU for a full 13 years before pay Madrid to take it. The only thing that and asked, theatrically, “why is it that every- Spain was admitted. Spain, consequently, stands in their way is the stubborn loyalty one seems to want a solution to the Gibraltar was not able to join without Britain’s of the Gibraltarians themselves. Our problem except the Gibraltarians?” permission. One of the issues on the table countrymen on the Rock are displaying a “What do you mean ‘problem’?” during the accession talks was the status of steadfastness and a belief in freedom that “You know: the Gibraltar problem. We Gibraltar, which Spain was obliged to accept we in the UK seem to be in danger of cannot let one issue like this hold up our other as an EU member with full rights. Are we forgetting. It may be out of place in Labour’s interests in Europe.” really to believe that, at a time when we held Britain. It may be awkward. But it is the last Note the interesting use of the word all the negotiating cards, we deliberately defence they have. ‘problem’. If Britain chose to make a betrayed Gibraltar’s interests? If so, what unilateral claim on, say, Sicily, would this does this tell us about the Foreign Office? Daniel Hannan is a Conservative Member of create a ‘Sicily problem’, with consequent And, if not, what is it that Spain is meant to the European parliament for South East pressure on the Italian Government to meet be offering us now? For the extraordinary England and a columnist for the Sunday us half way? If I took a fancy to my thing about the appeasers’ argument is that Tel e g r aph. Defending the Gibraltar Constitution by Maurice Xiberras he articles in this special issue the spirit and even the letter of the Preamble This commitment will not be rescinded by a Tof the European Journal express the to the 1969 Gibraltar Constitution, to the contrary result in the referendum. sentiments of the whole of Gibraltar with drafting of which I was privileged to regard to the ‘done deal’ the British Govern- contribute: ittle wonder that many in Gibraltar ment has declared it will sign before any “Her Majesty’s Government will never Lare beginning to campaign against any proposals arrived at by the two Govern- enter into arrangements, under which the referendum, the result of which will be so ments are put to the people of Gibraltar in a people of Gibraltar will pass under the shamefully pre-judged and de-valued. referendum. sovereignty of another state.” If it has any regard for constitutional Michael Ancram, MP, the Shadow In signifying by an Agreement with the propriety and obligations formally entered Foreign Secretary, has repeatedly stated the Government of Spain, which will be into, the British Government should desist. opposition of the Conservative Party to this reached against the known wishes of all The proposed Joint Declaration will only ‘done deal’. Having already been forced to Gibraltar’s elected representatives and in heighten and perpetuate Spanish expect- accept by Parliamentary and public pres- anticipation of a referendum, its intention ations, which can only be fulfilled with the sure that any change to British sovereignty to work with Spain towards a transfer of consent of the people of Gibraltar. It is the over the territory and not just the nation- sovereignty, Her Majesty’s Government people of Gibraltar who will suffer the ality of the people should be subject to their would effectively be entering into an consequences of this crass policy. wishes, the British Government continues ‘arrangement’, under which the people of to ‘duck and dive’ to have its way regardless. Gibraltar would “pass under the sovereignty The ‘Principles of Agreement’ it proposes of another state”. The Agreement will be in to make public, before any Gibraltarian vote breach of the Preamble. Maurice Xiberras is a former Leader of the is taken, is a disreputable device designed at Nor would any provision made for the Opposition in Gibraltar and of the Integra- worst to by-pass Parliament, which more people of Gibraltar to keep their British tion with Britain Party. He accompanied Sir likely than not will be in recess. At best, it nationality, or for the transfer of sovereignty Joshua Hassan, the then Chief Minister, to will present Parliament with a fait accompli, to be merely nominal or partial, or for the talks as part of the British delegation, a statement of British Government policy implementation of a Declaration to be ad between the Spanish and British foreign not even debated in Parliament before it is referendum, alter the reality that the British ministers at Strasbourg and Paris. Maurice made. Government would for the first time ever be Xiberras is the only living Gibraltarian who Since the Agreement will be concerned committing to a transfer of British sover- took part in the Constitutional Conference of with sovereignty, it will also be a betrayal of eignty against the Gibraltarians’ wishes. 1968.

Jump to Contents 6 Focus on Gibraltar March 2002

Gibraltar: a Lawyer’s Analysis by Peter F. Carter-Ruck

he dramatic headline in the Daily When for many years I had a property in he Treaty of Utrecht provides, inter TTel eg raph on 12 January 2002, “Britain Spain, I suffered from the harassment Talia, that the thrones of Spain and to share Gibraltar with Spain”, caused me, as imposed by the then Spanish government France should never be united and that it must have caused the majority of our by the long hold-ups at the frontier, the England should retain control of Gibraltar. fellow citizens, the deepest concern, most of closing first at 11.30 at night and then, for This has been the situation for nearly 300 all for all those who put justice before years, the total closure of the frontier gates years (as opposed to 170 years in the case of surrender. Our country has already suffered between Gibraltar and Spain, followed by the Falklands). It was only if we surrendered so much and so many lives have been lost as the closing of the ferry from Gibraltar into our sovereignty that Gibraltar should be a result of the weakness of our Foreign returned to Spain. We have not surrendered Office and of the government during the As Lord Bethell made our sovereignty, nor do the Gibraltarians past 60 years. wish this. Firstly, the prevarication and surrender to clear, there is no It might be contended that the Treaty was the forces of the Nazi dictatorship. Secondly, conceivable justification signed at a time when the world, in the initially over the Falklands, when we were main, was ruled by autocracies and that already aware of the attitude of the Argen- for Gibraltar having to therefore we should not now revert, in tineans and yet withdrew the Endurance concede any of its rights considering what is just, to long past eras. If from the Antarctic waters, which led to the that is so, the case for the return to Spain is Falklands war and loss of life. Fortunately, to another country even weaker because we now live in a world owing to the determination of the then of democracies, where self-determination is British government under Lady Thatcher, Spain (so that we had to travel to Tangier the main feature of determining citizens’ we took immediate action after the start of and back to be able to get from Gibraltar to rights and the Gibraltarians, by an the conflict and secured freedom, and with Spain and vice versa). I must make clear that overwhelming majority, wish to remain it freedom of choice, for the 5,000 citizens of this was not the attitude of the Spanish British. the Falkland Islands. But it seems that the citizens, who were always very friendly and I contend strongly that if Peter Hain or lessons of the past have not been learnt and who complained of the fact that they were the Foreign Office wish to go to Madrid, it we are now, once more, vacillating over the no longer able to fraternise in La Linea with should be solely to protest vehemently rights of Gibraltar, a community not of their friends from Gibraltar. In spite of this against the way in which the Gibraltarians 5,000 but of 30,000 British citizens. discrimination, it appears we are now have been unjustly harassed. The actions, so far, of the Foreign Office seriously considering ‘sharing’ Gibraltar I had thought that, over the years, Peter and of Minister Peter Hain, MP, have been with Spain and, whilst being prepared, Hain had matured into a leading politician rightly described by the Shadow Foreign rightly, to defend the 5,000 citizens of the and that Jack Straw, as Foreign Secretary, Secretary Michael Ancram, MP, as Falklands, we are willing to sacrifice the would be a minister who would support ‘despicable’ and, by Lindsay Hoyle, MP, as 30,000 Gibraltarians as well as both their what is right and just, both legally and ‘appeasement’ and as a betrayal of the legal and moral rights. morally. It is a matter of considerable sur- people of Gibraltar. prise that they should not wholeheartedly My concern is increased by what appears s Lord Bethell made clear, there support the independence of Gibraltar, to be the duplicity on the part of Peter Hain Ais no conceivable justification for when this already has the overwhelming (or that he has now succumbed to the vacil- Gibraltar having to concede any of its rights support of many Conservatives, Liberal lation and weakness of the Foreign Office). to another country, when considered either Democrats and Labour Members of Parlia- When recently he was challenged on a BBC on historical grounds or in the context of ment, and of the House of Lords. Question Time programme as to how he contemporary society. As Mandy Martinez said in her letter to could support cricket in Zimbabwe when, at I have examined this carefully, as a lawyer, the Daily Telegraph on 24 November 2001, the time of apartheid, he was a vigorous despite the difficulties I endured in attempt- we should take a moment’s pause to think of protester against being a party to sport in ing to obtain a copy of the relevant treaty – the pride of three centuries of people who South Africa, he said it was then racial the Treaty of Utrecht of 1713. I first checked have lived, worked and died under the discrimination and that did not apply today. my own copies of the first editions of British flag of Gibraltar; people who are The murder, mutilation, humiliation and Halsbury’s Laws of England and Halsbury’s facing an end to their culture and identity. obscene violence against the white farmers Statutes, and the Oxford History of England, in Zimbabwe was not, in his view, racial in none of which could I find any reference discrimination. In short, it appears that if to the details of the Treaty. I also checked at the events serve the force of the strong the Law Society, the British Library and the Peter F. Carter-Ruck is the former Senior against the weak, we are prepared to Stationery Office. None had a copy of the Partner and Founder of Peter Carter-Ruck sacrifice the weak. This failure to support Treaty. I finally discovered that the Public and Partners (www.carter-ruck.com) and is our own countrymen, it seems, is also to be Records Office had a copy but it would cost now a media and trust consultant. He is the a feature of our attitude towards Spain over me £54 to have a copy of the Treaty, which author of Carter-Ruck on Libel and Slander Gibraltar. binds this country, Spain and Gibraltar. (Butterworths, 5th Edition).

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Gibraltar and the 2004 Intergovernmental Conference by Mark Francois, MP

n 31 January 2002 a debate took place Spanish relations was admitted by Mr Hain comprehensive agreement before the summer, Oin Westminster Hall (the new second in the recent Westminster Hall debate: covering all outstanding issues, including co- debating chamber of the House of Com- “The strong relationship that Britain now operation and sovereignty.” mons) on the British Government’s ongoing enjoys with Spain cannot reach its full This “comprehensive agreement” between negotiations with the Spanish Government potential until we resolve the Gibraltar issue. the two Governments is then likely to be put over the future of Gibraltar. I took part in Gibraltar matters to us. It has mattered for to the people of Gibraltar in a referendum, that debate which, even by Westminster many hundreds of years. It will continue to probably in 2002, or perhaps 2003, when it standards, became quite a heated affair and matter to us but so does our relationship with will probably be overwhelmingly defeated during which the Minister for Europe at the Spain. Spain is a big country. It is increasingly by the people of the Rock. Nevertheless, in Foreign Office, Rt Hon. Peter Hain, MP, prosperous; soon it will be a net contributor to diplomatic terms this would still serve an came under fire from MPs on all sides of the the EU. It is increasingly powerful inside and important purpose. chamber. beyond Europe.” 1 By putting the agreement ‘on the record’ it The three-hour debate was televised and Following on from this review, the British will become a reference document in its broadcast to Gibraltar, where, apparently, Foreign Office re-instituted negotiations own right and will no doubt be cited by demonstrations began while the debate with the Spanish Government under the Spanish Governments in any subsequent was still in progress, as a number of auspices of the so-called ‘Brussels Process’, negotiations, thus, in effect, giving Spain a Gibraltarians reacted to what the British first initiated in 1984 under the Con- diplomatic toehold on the Rock. British Government were proposing, supposedly in servative Government of Margaret (now support for an agreement would thus be of their name. Baroness) Thatcher. material value to the Spanish Government Clearly the British Government are not in seeking to pursue its long-term aim of pushing ahead with this process on behalf owever, these negotiations pro- reasserting Spanish sovereignty over Gib- of the people of Gibraltar, who are bitterly Hceeded much further than had ever raltar, even if it did not lead to achievement opposed to any suggestion of weakening been realistically suggested in the 1980s. of this objective overnight. their link with the United Kingdom in They now include the prospect of some Conversely, from Labour’s perspective, favour of Spain. So the question has to be form of joint sovereignty over the Rock, Gibraltar represents an obvious bargaining asked, why is the Foreign Office pursuing which is anathema to the fiercely pro- chip for seeking future Spanish support in this negotiating process so actively, when British Gibraltarians. The issue came to the Council of Ministers. However, the the people of the Rock are so obviously light in the Autumn of 2001 following a issues are no longer just about that great against it? series of leaks in the press, which revealed intangible quality of ‘influence’ within the To find the answer it is necessary to look the ‘progress’ which both Governments had European Union. back to the first term of the current Labour been making in the talks but which The EU has recently established a Government, which came into office in provoked a sense of anger, even betrayal, on convention to help formulate what would 1997 promising to increase Britain’s influ- the Rock. As the present Chief Minister of amount to a ‘constitution’ for the European ence within the EU. As part of this objective Gibraltar, Hon. Peter Caruana, QC, argued Union, to be ratified in theory by the next Prime Minister Tony Blair commissioned a in the Sunday Telegraph: European Intergovernmental Conference review of Britain’s relationship with other “I could give you a long politician’s speech (IGC) scheduled for 2004. European countries and EU institutions. about why we feel so angry about this, but if Even leaving aside the argument about The review identified several areas in which you want a gut response, it is that for 297 the dubious need for a European constitut- the UK might seek to exert ‘leadership’ in years we have been unswervingly loyal to ion, it remains likely that in the negotiations Europe, most notably in the field of Britain in good times and bad and we have leading up to the IGC the UK will be European defence (an issue which has since always believed, naively perhaps, that loyalty looking to win the support of other sizeable been debated extensively, not least in the was a two way street.” 2 European nations, including Spain, for a pages of the European Journal). Nevertheless, rather than acknowledge form of document that it would prefer. In However, the review also sought to the genuine concerns of the people of this context, a joint declaration over Gibral- identify how Britain might seek to win the Gibraltar – and delay, or even abandon, the tar which materially pleases the Spanish support of other European nations, outside negotiations – the Foreign Office has Government could have a bearing not just the traditional Franco–German core of the continued to press ahead with them. On 4 on future votes in the Council of Ministers EU, in countries such as Italy and Spain. February 2002, shortly after the West- but potentially at the IGC itself. This is One of the sticking points in relations with minster Hall debate, a further Brussels reinforced by the Government’s own admis- the latter was clearly identified as the issue Process meeting took place between British sion that any changes to the status of of Gibraltar and Spain’s ongoing claim to and Spanish Ministers to discuss the Gib- Gibraltar might in turn involve changes to the sovereignty of the Rock, in defiance of raltar issue. The joint communiqué issued European Union treaties, which could be the long-standing Treaty of Utrecht. The subsequent to that meeting stated that: “Our effected at the IGC. I raised this point extent of this impediment to Anglo– common aim remains to conclude a directly with Mr Hain during the debate in

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Westminster Hall and solicited the already exists. Moreover, if the people of being undertaken not for the benefit of the following response: Gibraltar could somehow be browbeaten Gibraltarians but rather for reasons of Mr Francois: “The Minister has referred into accepting the outcome of the putative gaining Spanish support for Foreign Office several times to the European Union and the ‘comprehensive settlement’ the linkage objectives within the European Union, not relationship with it. Will he confirm that would become all the stronger, as the just in the Council of Ministers but changes to the status of Gibraltar may require changes might actually have to be ratified at potentially at future European summits, subsequent change to European Union the IGC. including the next Intergovernmental Con- treaties, to which we are party?” ference itself. Peter Hain: “Any change of that magnitude he British Government’s initiative over would have to be endorsed in a referendum TGibraltar is being undertaken over the by the people of Gibraltar. However, there heads of the people who live on the Rock 1 Hansard, 31 January 2001, col 136WH. could be changes to the treaties required, and without their consent. Indeed it is being 2 “Sell-out fear turns Gibraltar anti-British”, which would require the approval of the pursued despite their intense opposition to Sunday Telegraph, 25 November 2001. European Council at the intergovernmental any form of joint sovereignty with Spain. In 3 Hansard, 31 January 2002, Col 176WH. conference in 2004.” 3 short, this process is being conducted in So it is not fanciful to link the Gibraltar their name but not for their sake. issue with the 2004 IGC, as the Foreign It is difficult to escape the conclusion that Mark Francois is Conservative Member of Office itself now admits that a potential link the whole process of negotiation is now Parliament for Rayleigh. The Inalienable Right to Genuine Self-Determination by the Marques de Lendinez he Gibraltar Government is As a point of interest the frontier was Statement, which according to the late Gen- Tleading all Gibraltarians, of whatever always kept open during daylight hours on eral Sir William Jackson almost succeeded political persuasion, in an intense campaign the Gibraltar side whilst General Franco in laying down a framework to resolve the to persuade the Prime Minister that it is not would not even allow Holy Communion problem. Alas when the Spanish Foreign in the interests of the Gibraltarians for the wine and oxygen cylinders into Gibraltar. Minister returned to Madrid, the ‘right Labour Government to sign a joint The ferry service to Algeciras was also wing’ elements in the cabinet forced him Agreement of Principles with the Spanish cancelled by the dictatorship. effectively to abrogate the Statement. Government. Despite the introduction of democracy to Now the British Government had the For those readers who are not familiar Spain and its membership of the European upper hand as the Spanish Government with the intricacies of the Gibraltar problem Union and NATO, the attitude of the decided that they wished to join both NATO I will explain the background. Spanish Government to the Gibraltarians and the EC. Gibraltarians will argue that the Gibraltar was captured on 4 August 1704 has not altered one jot. Any aircraft whose Conservative Government failed to use this by Admiral Sir George Rooke on behalf of flight plan includes Gibraltar is not allowed window of opportunity to use its Queen Anne in the name of the Hapsburg to land in Spain whatever the emergency. considerable bargaining power to resolve claimant to the Spanish throne. Gibraltar When bad weather closes down Gibraltar the problem. Instead Sir Geoffrey Howe in passed under British sovereignty under airport then the plane has to fly to Tangier 1984 signed the Brussels Process which on Article X of the Treaty of Utrecht of 1713. It and not Malaga. A new flight plan has to be the plus side resulted in the opening of the also provides that Spain will have the first filed – Tangier, Malaga, London. On arrival border and the promise to restore the ferry option of ownership of Gibraltar if “it shall at Malaga the passengers and their luggage service and a host of other aviation and hereafter seem meet to the Crown of Great can leave the plane and be bussed to maritime matters (none to this day have Britain to grant, sell, or by any other means Gibraltar. But cargo has to remain on board been implemented) but on the debit side alienate therefrom the propriety of the said and there are no exceptions to this agreed that issues of sovereignty would be town of Gibraltar”. regulation. In February 2002, the body of a discussed. Gibraltarian was being flown from London In 1987 Sir Geoffrey Howe signed the n 1954, following a visit by the Queen, the to Gibraltar for burial on the Rock with the Airport Agreement which was subsequently IFranco dictatorship imposed border family waiting to conduct the funeral. The unanimously rejected by the House of restrictions which were gradually increased Spanish officials were adamant that the Assembly (Parliament). Fernando Moran, until there was a total unilateral closure of body could not be taken off the plane. when he was Foreign Minister, tabled the frontier in 1969. This followed the Instead the body was flown back to London sovereignty proposals which were not introduction of the 1969 Constitution and and then on to Gibraltar the next day. rejected until 8 years later by Douglas Hurd. its oft-repeated Preamble, which promised Imagine the extra anguish felt by that family. It was Douglas Hurd who persuaded the that “HMG will never enter into 1975 saw the death of General Franco and Spanish Foreign Minister to agree to a ‘two arrangements under which the people of the gradual restoration of democracy to flags, three voices’ formula to enable Gibraltar would pass under the sovereignty of Spain. Gibraltar’s Chief Minister to attend Brussels another State against their freely and In April 1980 Lord Carrington met with Process talks. Upon Javier Solana’s return to democratically expressed wishes”. Marcelino Oreja and they issued the Lisbon Madrid the ‘right wing’ of the cabinet

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ensured that this was rescinded and it was many interviews and without exception all the Spanish Government. Furthermore not until last month that this formula was the national quality newspapers have pub- many of Spain’s autonomous regions are reinstated. By then the Foreign Office had lished articles setting out the Gibraltarians’ insisting that the exact measure of self- ensured that the Chief Minister’s seat had in case which is simply for the Rock to remain government given to the Gibraltarians will effect been booby trapped. British and for them to remain British also apply to their governments. At present In 1997, with a Labour Government in citizens with absolutely no Spanish Govern- Gibraltar enjoys considerably more self power, a Brussels Process meeting was held ment involvement in their affairs. The late government than any autonomous region in London under the chairmanship of Rob- Lord Boyd-Carpenter was firmly of the in Spain. in Cook. Abel Matutes tabled new proposals opinion that it would be disastrous to allow which in effect gave Gibraltar political and the Spanish Government a toe-hold on the he Spanish Government belatedly administrative autonomy within the Span- Rock; he was totally against the imple- Twoke up to the size of the can of worms ish State. He offered Gibraltarians Spanish mentation of the 1987 Airport Agreement that was being opened and, during the last citizenship, but allowed them to retain dual and was delighted when told that it had round of Brussels process talks held in nationality and an indefinite transitional been unanimously rejected by the Gibral- London on 4 February 2002 this year the period of joint sovereignty which would tarians. Foreign Minister said that even if an agree- eventually lead to a total retrocession of The Leader of the Opposition, who has ment was reached to share the sovereignty sovereignty. eight years experience as Chief Minister, has of Gibraltar the Spanish Government would Although the Matutes’ proposals have also given countless media interviews and never follow the Irish Government’s been rejected unanimously by the House of has been to London to lobby Parliament- example in renouncing its claim to total Assembly, the UK Government will not arians. As leader of the Gibraltar Labour sovereignty. The claim for total retrocession reject them but has ‘laid them aside.’ To be and Socialist Party he has concentrated his of sovereignty would always remain on the fair to Robin Cook, enough was enough and fire on members of old Labour. table. Furthermore the Spanish Govern- no more Brussels Process meetings were Gibraltarian speakers, led by Albert ment would never agree that the Gibral- held under his stewardship. Poggio, the Gibraltar Government’s repres- tarians have an inalienable right to self entative in London, travel the length and determination. arlier this year the Prime Minister breadth of the United Kingdom addressing This threw Jack Straw, Peter Hain and Edecided that his Government was audiences about the problem. The former their senior officials Sir Emyr Jones-Perry going to yield on virtually all matters within leader of the Opposition, the staunch and James Bevan into a flat spin with the the European Union as on each occasion socialist Maurice Xiberras, even addressed result that the talks overran by an hour. Jack the Spanish Government would demand the Christmas dinner of the Petersfield Straw, during the Press Conference, tried concessions or impose vetoes unless Conservative Club; the first time he had and failed to spin himself out of trouble. progress was made on the retrocession of ever ventured into such a bastion of Even Tony Blair is beginning to Gibraltar’s sovereignty. Tony Blair is under- capitalism. The warmth and support shown appreciate that neither Parliament nor the stood to have instructed his new Foreign by the members almost moved him to British people will accept the Spanish Secretary that the 30,000 inhabitants of switch to the Conservative Party. Government’s position on sovereignty. It Gibraltar were not going to be allowed to In 1970, Manuel Fraga Iribarne, the came as no surprise to Gibraltarians who block his vision of a new ‘Europe’ and stand former Spanish Ambassador to the Court of have known all along that the Spanish in the way of his growing friendship with St James and present President of Galicia, in Government will never give up its claim to the Spanish Prime Minister, and so Jack an attempt to be elected Prime Minister of Gibraltar. This is based on the Treaty of Straw must find a solution before the end of Spain, published his manifesto. In it he Utrecht which gives the Spanish Govern- the Spanish Presidency of the EU on the 30 declared that whilst it would remain Gov- ment the right of refusal in the event of the June 2002. ernment policy to demand the retrocession British Government wishing to leave Jack Straw immediately called for a of Gibraltar’s sovereignty into the Spanish Gibraltar. Even if the Labour Government Brussels Process meeting which was held in state he must point out that whatever pro- wished to hand Gibraltar to Spain it cannot Barcelona and delegated the South African gress is made on this front, a similar status do so without the consent of the majority of born Peter Hain to visit Gibraltar and tell eventually will have to apply to Ceuta and Gibraltarians. the Gibraltarians what would happen to Melilla. This stark political truth remains There is also the problem of the growing them if they did not agree to Blair’s solution even more valid today. In March 2002 Ali importance of the base. In the mid sixties which was for them to sign up to the Bajijoub, the distinguished executive the late Major Patrick Wall, in a speech on Agreement of Principles. As Jack Straw has director of the Maghreb Arab Press, said the Rock, said that the greatest threat to yet to fly down to the Rock, it appears that, that there is one certain political fact and peace and stability in Europe would come because of the weakness of his case, he is that is whatever is decided between the via the southern flank of the Iberian frightened to face the Gibraltarians. British and Spanish Governments over peninsula, or as he called it ‘Europe’s soft The campaign to force the British Gibraltar will have a direct bearing on the underbelly.’ This was long before the advent Government has started and is having future of Melilla and Ceuta. of Islamic fundamentalism. considerable success. The Chief Minister, a Similarly the Portuguese Government is Because the base is scattered round the quick witted and articulate QC, has been demanding the same arrangement to be Rock it is not possible, as in Cyprus, to have interviewed on countless television and made in respect of the Olivenza, 200 square one area as the sovereign base. The intelli- radio programmes both in the Mother kilometres of Portuguese territory that has gence gathering facilities and the storage Country and in Spain. He has also given been appropriated many centuries ago by area for weapons are to be found

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underneath and inside the Rock. The Peter Hain, in an attempt to bribe the So if the Agreement of Principles is Americans have no wish for the intelligence Gibraltarians, offered a £37 million EU signed later this year then each and every gathered in Gibraltar to be passed onto package for economic development, pro- Gibraltarian knows that it will not be long other NATO allies – in particular to the vided they voted for the Blair proposal. This before it will be abrogated by the next Spanish Government. was immediately turned down by the Conservative Government. Gibraltar is also an important base for Gibraltar Government. What Hain did not communications, training and submarines. appreciate was that Fraga Iribarne had During the last three years no less than 300 offered, in around 1968, a considerably training exercises have been carried out by larger bribe when he proposed that every British forces in and around the Rock. Gibraltarian family who left the Rock would The Marques de Lendinez is a Gibraltarian Surprisingly the number of servicemen be given a luxury villa in Spain and an who has studied the Gibraltar problem since stationed on the Rock has shown a dramatic inflation proofed pension for life. This was leaving Cambridge University. As a result of increase, as has MOD expenditure. rejected by the Gibraltarians even before it his articles published at the start of On 25 March 2002 the biggest had been vetoed by the Spanish Treasury. Gibraltar’s 15th siege (economic) he was demonstration ever held on the Rock took placed on the persona non grata list by the place with some 25,000 out of a population he biggest boost to the Gibraltarians’ then Prime Minister Admiral Luis Carrero of 30,000 taking part. This was to show the Tmorale is the decision by the Rt Hon. Blanco and was not allowed into Spain until world that the Gibraltarians will never agree Michael Ancram, QC, MP, Shadow Foreign the death of General Franco. Under the to the Tony Blair proposal to hand over half Secretary, that the next Conservative byline M.R.B. he has interviewed 100 British of British sovereignty to the Spanish Government will abrogate any Agreement politicians about the Gibraltar ‘problem’; Government. The Chief Minister told the of Principles signed by the British and these have been published in the Gibraltar crowd: “Today we have spoken as a people Spanish Government if it is rejected by the Chronicle. He is also the editor of The with one voice. Our rights, our aspirations as Gibraltarians in a referendum. He said that Friends of Gibraltar Heritage Society a people are not for bilateral negotiations the Conservative Party cannot be bound by newsletter. If any reader wishes to be sent a between the British and Spanish Govern- an agreement come to between the two complimentary copy of this 32 page ments. It is neither Britain’s to give away nor governments with which we have openly newsletter please contact him by e-mail: Spain’s to claim.” and clearly disagreed. [email protected] The View of the Gibraltar Government by Hon. Peter R. Caruana, QC t is the longstanding position of the Government nor the people of Gibraltar Once this framework or declaration has IGovernment of Gibraltar that it is willing, can protect Gibraltar. been agreed and entered into between the indeed that it seeks, to take part in dialogue Readers may be asking what the problem UK and Spain, containing we do not know with Spain on an open agenda basis. is if everything will be put to the people of what, there will then be further dialogue to Regretably, the politically unrealistic and Gibraltar in a referendum and not imple- work out detailed proposals based on the diplomatically self-serving intentions of mented if we reject it. The short answer is principles already agreed between the UK both the UK and Spain as to the that although nothing will be actually and Spain. methodology of this dialogue has made it implemented unless approved in refer- impossible for us to participate in it. endum, Britain and Spain do not intend to he proposals based on the agreed The Gibraltar Government’s position has put everything to referendum before Tprinciples – but not the principles been, and remains, that dialogue should be formally agreeing to it between themselves themselves – will then be put to the people safe and viable for all sides. This means, for in principle. of Gibraltar in referendum. If we reject them Gibraltar, having our own separate voice none of the proposals will be implemented, and being safe from damaging agreements ometime before summer 2002, the but the Anglo-Spanish declaration, agree- being reached over our heads and which SUK and Spain intend to sign an agree- ment or framework of principles that they pre-determine the outcome of the dialogue. ment, declaration or agreed framework of entered into as phase 1 will survive our We have made good progress with principles applicable to the settlement of referendum rejection of the proposals based London on the separate voice issue, through the Gibraltar issue. The detail of what this on those principles. This agreement on the two flags, three voices formula which document will contain is unknown. We do principles will remain on the table for all has, at last, been seriously and realistically all know, however, that it will have four time as the agreed UK/Spain political dealt with. pillars: respect for our way of life, respect for position on Gibraltar. This will defraud our But we have not succeeded in persuading our EU rights, maximum self-government wishes. the British Government to make the talks and sovereignty. The Government believes This will, for all time, set the parameters safe for Gibraltar by being protected from that in relation to sovereignty, the content for and limit our future rights, options and damaging agreements being struck over our will be such as to amount to extensive ‘in aspirations. It will for all time politically, heads. The Gibraltar Government will not principle’ concessions to Spain, probably diplomatically, and possibly even legally, participate in dialogue from the unwanted some sort of model based on some form of legitimise Spain’s sovereignty claim and will political consequences of which neither the joint or shared sovereignty. betray our right to self determination, even

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to the curtailed extent that the Foreign Matutes proposals have not had that status establish a framework for what he thinks Office admits that we enjoy the right to self or effect. will be a durable solution. He confirms that determination. What Mr Straw cannot airbrush away, this Anglo/Spanish declaration would In this respect I note that Sr Piqué said in evaporate or shred, but is nevertheless survive the referendum as a statement of the the European parliament that not even the problematic for us, is the bilateral declar- British Governments view of ‘the best way UK recognises Gibraltar’s right to self- ation, agreement and framework of forward’. determination. This is not correct. I would principles and their subsequent, post refer- refer Sr Piqué to the Parliamentary answer endum political effect on Gibraltar and our n the Gibraltar Government’s given by Peter Hain, MP, on 6 November rights and aspirations. The point is that Ijudgement this means that the political, 2001 in which he said that HMG’s position there is no reason or need why he should diplomatic and possible legal effects of any is that Gibraltar’s right of self- enter into such a framework of declarations in principle concessions that may be made determination is not constrained by the of principle in the first place, and thus the to Spain on the question of sovereignty will Treaty of Utrecht except that independence problem of shredding would not arise. It is survive the referendum to our future is not an option without Spanish consent. therefore not a case of being unable to make prejudice. the principles evaporate, but rather that he I have replied to Mr Straw that his he referendum will therefore be only chooses, unnecessarily, to do a done deal on apparent refusal to alter course from this Tabout whether the proposals are applicable principles, precisely so that those unnecessary and damaging intended course implemented. It will not be about whether principles will not evaporate. of action condemns the Gibraltar Govern- the UK adopts formal positions in principle This is why London and Madrid will not ment to not participating in the dialogue. I on the issue of sovereignty contrary to our agree to my reasonable terms for have also informed the Foreign Secretary wishes. This will not represent full respect participation in talks. This is why they will that the Gibraltar Government is commit- for our wishes since the UK would be enter- not agree not to reach agreements over the ted to actively opposing this with all means ing into arrangements in principle (albeit Government’s head, precisely because that at its disposal. unimplemented) and would be adopting is what they want and intend to do, ie the The position is not that we are practising positions on sovereignty, and other issues declaration or framework agreement on the politics of the empty safe chair, but affecting us, regardless of and contrary to principles (including sovereignty) that will rather that the Foreign Office has booby- our wishes, as we may subsequently express predetermine all subsequent dialogue if it trapped the chair itself and then complains them in a referendum. contains adverse in principle sovereignty to the world that we won’t sit in it. They will have entered into a bilateral concessions to Spain. Finally, I have repeated that the Gibraltar ‘done deal’ on applicable principles above The proof of this is that Mr Straw says Government would take part in open the head of the Gibraltar Government. The that once they do their done deal on agenda dialogue resulting in proposals political, diplomatic and possibly even legal principles I can then, after that, take part in which will not be implemented if rejected in effect of this deal will survive a referendum dialogue about the details, on an equal basis referendum. Such proposals must not be rejection of proposals based on those with the UK and Spain. Why then can we survived by an Anglo–Spanish framework principles. We will not be able to protect not take part on an equal basis before the containing damaging in principle ourselves from these consequences in a declaration of principles? Obviously sovereignty concessions to Spain for all referendum, although we will be able to because they do not want the Gibraltar time. prevent their actual implementation. Government to be able to decide on the content of the declaration of principles that or dialogue to be fair, the price of he Gibraltar Government rejects they want to enter into. Ffailure must be the same for all Tsuch ‘done deals’. It is wholly We have during the last few months participants i.e. the status quo prior to the unreasonable and unrealistic to expect the worked patiently and intensely to try to dialogue. What is actually intended is a dia- Gibraltar Government to take part in a persuade the Foreign Office to abandon the logue from which Spain will derive massive dialogue the outcome of which is pre- intention to enter into a ‘done deal’ on progress, at our expense, even if the talks fail determined by this done deal on principles, applicable principles, containing damaging to produce proposals acceptable to the the contents of which we are not aware of, sovereignty concessions, the political people of Gibraltar. Spain has understand- and cannot therefore even assess before currency and effect of which will survive a ably described failure to obtain Gibraltarian committing ourselves to the process. referendum rejection of proposals. The time consent to the proposals as nevertheless Mr Straw says that, once proposals are has come to accept that, despite our efforts representing “a historic milestone” for her made he cannot “airbrush” them away, or he the Foreign Office has refused to convert because of the Declaration of Principles. cannot make them “evaporate” or “shred this dialogue into a reasonable process in Spain’s “historic milestone” will be at the them”. This is a complete red herring. Of which we could safely participate, as would expense of a historic millstone around our course he cannot “expunge” the fact that be our wish. I recently wrote to Mr Straw necks. proposals were made even if they are asking him for an assurance that he would rejected. We have no problem with that, not do a done deal on principles with Spain provided that rejected proposals will have affecting sovereignty. no damaging, lingering, political or In his reply Mr Straw fails to give that diplomatic effect on Gibraltar. They will not assurance. Indeed the letter has the opposite become our political magna carta for all effect. He says that he will enter into a joint Hon. Peter R. Caruana, QC, is Chief Minister time. Just as the rejected Moran and UK/Spanish declaration which will of Gibraltar.

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Westminster, Self-Determination and the Rock by Lindsay Hoyle, MP

t is widely accepted that an agreement the Chief Minister of Gibraltar and without isters. It appears that a joint agreement will Ibetween the British and Spanish Govern- the consent of the Gibraltar people. be reached and a framework established as a ments will be reached by the summer of The last time public opinion was tested basis for future discussions. We strongly 2002. We are therefore entering one of the was in the 1969 referendum. Over 12,000 oppose this, particularly as Spain remains most important periods for the Rock in its citizens of Gibraltar voted to remain with intransigent. Until Gibraltar is given the 300 year history as a British overseas the UK and only 44 voted against. If and respect she deserves and the Spanish territory. when a referendum is held following any Government acknowledges the rights of Despite the fact that sovereignty over agreement, it is certain that the result will be Gibraltarians to determine their own future, Gibraltar was ceded to the British in an overwhelming rejection of any joint no such framework should be established. perpetuity by Spain under the Treaty of I believe that a whole range of options Utrecht in 1713, the Spanish maintain that should be discussed regarding the future Gibraltar should come under Spanish rule Gibraltarians can be sure status of the Rock. Further integration with and have refused to drop their claim over that members of the All the UK has been rejected by British Gibraltar. Government Ministers, yet this is a serious Spain’s bitterness over this matter is clear Party Parliamentary option which should be considered. Indeed, to see today. As part of everyday life, Group will be stepping if we look at Spanish overseas territories, Gibraltarians face border delays, a shortage they are classed as part of the Spanish of new telephone numbers which hinders up the campaign on their mainland. Gibraltar is no longer dependent business growth, restrictions on mobile behalf in Parliament on the military for its economic viability. telephone roaming rights, restrictions on The economy is going from strength to air space and exclusion from the EU Single strength and is based on finance, tourism, Skies Policy. They are unable to participate sovereignty deal. Indeed, people in the UK shipping and bunkering, as well as on the in UEFA competitions. These are just some are opposed to an agreement on sover- Ministry of Defence. The economy is self- of the ways in which the Spanish Gov- eignty. I have received letters from all over sufficient, the number of visitors continues ernment continues to bully the people of the country opposing the Government’s to rise, and full independence is a matter Gibraltar. position. which requires more attention. The UK Government has made it clear Yet, despite a rejection of a joint that Spain is a useful ally in the European sovereignty deal in a referendum, this will f we do believe in democracy and the Union. With the presidency of the EU not be the end of the matter. The Spanish Iright to self-determination, then the currently in Spanish hands, it is important Foreign Minister, Josep Piqué, has already people of Gibraltar should be given as many that we are seen to be ‘solving the problem made clear that he does not recognise the options as possible. Only with their consent that has dogged relations over the years’. right of Gibraltarians to determine their should any change to the status quo be Ministers argue that the status quo is not an own future. I find it difficult to believe that a made. They are the people who have to live option. They are therefore holding talks to young democracy such as Spain can reject there and work under any new arrange- solve both ‘the difficulties being faced by the democratic rights of the people of ments. It is only right that they have the Gibraltarians’, and to address the lack of Gibraltar. How can Spain maintain the right to decide. progress that is being made in the EU with moral high ground in this case, when they The one fact that Gibraltarians can be Spain. themselves have a number of territories in sure of is that members of the All Party northern Morocco, namely Ceuta and Parliamentary Group will be stepping up owever, whether the status quo is an Melilla? the campaign on their behalf in Parliament. Hoption or not depends on one factor – Indeed, one of the arguments presented Already a number of debates have been held the opinion of the people of Gibraltar. The to Government Ministers is that, if a new and the officers of the group have met on a citizens of Gibraltar have to have the right to form of rule is to be established in Gibraltar, number of occasions with the Foreign determine their own future. If the people of perhaps we should consider the models Secretary. As the talks come to a head in the Gibraltar are happy to maintain the present used in Ceuta and Melilla given that the summer, we shall continue to work closely situation, then so be it. If they want to stop Spanish seem to believe they work well. with Albert Poggio, UK Representative for Spain in its constant petty-minded bully- Given the present view of the Spanish Gibraltar, and the Government of Gibraltar ing, then so be it. This should not, however, Government, it is worrying that a deal will to represent the views of the 35,000 come at the price of joint sovereignty unless be struck over joint sovereignty. While Gibraltar citizens. We will seek to pressure the Gibraltarians agree to it. specific proposals will be rejected in a Government Ministers as much as possible It is on this basis that I do not support the referendum, a framework argument, as we to get the best deal for the citizens of Government’s present talks with Spain. We witnessed in Northern Ireland, will remain Gibraltar and maintain their right to self- are being led to believe that an agreement in place. determination. will be reached on joint sovereignty and This is one area in which members of the that a new framework will be drafted. All All Party Parliamentary Gibraltar Group are Lindsay Hoyle, MP, is Chair of the All Party this is happening without the presence of currently pressuring Government Min- Parliamentary Group for Gibraltar.

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Gibraltar: is Legal Action the Answer? by Daniel Feetham

wenty-six years ago, between May to self-determination in any given situation Civil Rights 1976 provide that “all peoples Tand October 1966, the then Labour contravenes Article X of the Treaty. An have the right to self-determination, by virtue Government held talks with Spain on the astonishing example of this was one of Peter of that right they freely determine their future of Gibraltar for the first time. On 10 Hain’s answers to a question posed by a political status and pursue their economic, October 1966, after argument and counter- member of the Foreign Affairs Committee. social and cultural development”.5 The argument, the British Delegation wrote to Mr Hain was asked about integration of obligations contained in the Covenants their Spanish counterparts that “in the light Gibraltar into the UK. His reply was that have been extended to Gibraltar without of their study of the Spanish statements and, integration would contravene the Treaty of qualification. The right is also recognised in of course, these negotiations to date, Her Utrecht. That of course is a complete annual statements on decolonisation by the Majesty’s Government have come to the nonsense in that Britain would not be European Union Presidency before the UN conclusion that several legal issues lie at the disposing of Gibraltar and thus the pre- Fourth Committee which explicitly state root of the differences between the two emption clause in Article X of the Treaty of that colonial people have the right to self- Governments and that these legal issues Utrecht would not be triggered. The reality determination irrespective of population cannot be resolved by further discussion is that unless the British Government size or geographic location. between them. They will, therefore, propose to approaches the matter in good faith or the The fact is that the right to self- the Spanish Delegation that the legal issues in scope and effect of Article X is tested in an determination is a peremptory norm of dispute should be referred to the Inter- international tribunal, Gibraltar will remain public international law that has emerged national Court of Justice. The acceptance of boxed into a constitutional alleyway with since the signing of the Treaty of Utrecht in this proposal … would, in the view of Her only one exit. And that exit points to Spain.4 1713. A peremptory norm is one accepted Majesty’s Government, constitute real pro- The Labour Government knows this. That is by the International Community of States gress towards a just solution of the problem of why Messrs Straw and Hain are at pains to as a whole as a norm from which no Gibraltar.” 1 I believe that these conclusions emphasise that the status quo for Gibraltar is derogation is permitted and which can be are as sound today as they were all those not sustainable. If the status quo is not modified only by a subsequent norm of years ago. sustainable and further devolution through General International Law having the same Although I do not intend to rehearse all constitutional reform would contravene the character. In other words the right to self- the legal issues relating to this problem, Treaty of Utrecht, then the only alternative determination takes precedence over the there is one issue in particular which I is, of course, the alternative that the Labour proviso to Article X of the Treaty of Utrecht believe is central. Do the people of Gibraltar Government is currently pursuing. from which the Spanish claim is derived. A enjoy the right to self-determination? Is this simple reference to the International Court right constrained in any way by the proviso he right to self-determination is of Justice would undoubtedly confirm this to Article X of the Treaty of Utrecht which Tmerely the right to determine your own analysis. Unfortunately, Gibraltar has no provides that “if the British Crown would future and should not be constrained by a locus standi to make a reference and the UK desire to … in any way alienate … Gibraltar strait-jacket imposed by treaty. and Spain both now refuse to refer the issue. … the preference would be given to the The right to self-determination for On 5 November 2001, in response to a Crown of Spain excluding any other party.” colonial peoples is enshrined in the UN statement by Mr Piqué that “self-determin- Spain believes that “any other party” for Charter and lies at that heart of Chapter XI ation for Gibraltar would breach inter- these purposes includes the people of Gib- on the Declaration Regarding Non-Self national law” the Chief Minister of Gibraltar raltar. Any alteration of Gibraltar’s colonial Governing Territories (see Article 73 and responded by saying “if Sr Piqué truly status would constitute an alienation of also Article 1 of the Charter). Gibraltar is a believed that, he would accept Gibraltar’s Gibraltar triggering this right of pre- non-self governing territory (i.e. a colony) invitation to refer that very question to the emption. The position of the British and is listed as such at the UN. Article 103 of International Court of Justice for an advisory Government is that the people of Gibraltar the Charter provides that in the event of opinion. Whilst Spain refuses to do so it enjoy the right to self-determination and conflict between the obligations of mem- cannot pretend that its views constitute that it is limited only provided that it is bers under the Charter and their obligations international law, and expect Gibraltar exercised in accordance with Article X of under any other international agreement, simply to accept that position.” the Treaty of Utrecht.2 This position their obligations under the Charter prevail amounts to nothing more than a political (see also UN Resolution 2734 (XXV) of 16 he problem for Gibraltar has sleight of hand where the British Govern- December 1970). The right to self- Talways been finding a tribunal where ment pays lip service to the existence of the determination is also a fundamental human our right to self-determination could be right to self-determination, whilst its right enshrined in two International established and the reversionary clause in interpretation of the scope of Article X has Covenants on Human Rights adopted by Article X of the Treaty of Utrecht the effect of preventing its exercise in any the UN General Assembly and of which the challenged. In a debate in Gibraltar’s House meaningful way without Spanish consent.3 United Kingdom is a signatory. Article 1 of of Assembly in November 1999 which led to The reason for this is that in practice the both the International Covenant on Eco- a consensus motion asking the UK to refer British Government is the ultimate arbiter nomic, Social and Cultural Rights 1976 and the issue to the International Court of of whether the practical exercise of the right the International Covenant on Political and Justice, the Chief Minister announced that

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he had obtained a very positive legal bilateral negotiations with the Gibraltar Gibraltar wants to remain British. Secondly opinion from a leading public international Government. Instead, he has said the pro- even if it were otherwise, the right to self- jurist stating, inter alia, that the Treaty of posals will be discussed within the current determination cannot be curtailed in this Utrecht did not limit the rights of the people bilateral negotiations with the Spanish way. Indeed, even if that right is not a right of Gibraltar to self-determination but that Government under the Brussels Agreement. specifically enforceable under the common the problem lay in finding an international That process is itself incompatible with the law of England and Wales, a Minister of tribunal where Gibraltar had sufficient right of the people of Gibraltar to self- State cannot just simply make decisions standing to ventilate the issue without the based on a misconceived idea of its obli- assistance of the UK. gations under an outdated bilateral Treaty, I believe that the current crisis in The right to self- its interpretation of that Treaty, or its Gibraltar offers the opportunity to test these determination takes obligations to non-self governing territory issues in the United Kingdom in judicial under public international law. At the very review proceedings. Judicial review is the precedence over the least, the decision would be challengeable means by which the High Court exercises on grounds that the decision to reject it is supervisory jurisdiction over, inter alia, proviso to Article X of the wholly unreasonable. Individuals in public bodies, including the decisions of Treaty of Utrecht from dependent territories have successfully Ministers of State. There is no doubt that the challenged decisions of the FCO in recent British Government through the Secretary which the Spanish claim is years (see R (Bancoult) v. Secretary of State of State for Foreign Affairs is taking derived. A simple reference for Foreign and Commonwealth Affairs decisions that are affecting Gibraltar and [2001] 2 WLR 1219 and R (Quark Limited) the rights of the people of Gibraltar directly. to the International Court of v. Secretary of State for Foreign and One such decision is the decision to accept Justice would undoubtedly Commonwealth Affairs (unreported 5 or reject our proposals for Constitutional December 2001)). Gibraltar has nothing to Reform. Gibraltar wants a modern con- confirm this analysis. lose by undertaking this course of action. stitutional relationship with Britain that is Even if we were to lose we would be no non-colonial in nature and similar to that worse off than the position we find which the Channel Islands enjoy. On 27 determination. It is a process where the ourselves in today. February 2002 the House of Assembly in British Government, by its own admission, Gibraltar approved proposals for constitut- agrees with Spain to plough ahead with 1 Gibraltar Talks with Spain, May – October ional reform from the all-party Select deals done over the heads of the people of 1996, Miscellaneous No. 13 (1966) page 115 Committee for Constitutional Reform. Gibraltar and their elected government and 2 Answer by Peter Hain, MP, to a question by the These proposals will now be put to the which would also survive any referendum Honourable Member for Bolton North East, Foreign Secretary. The Chapter on Funda- rejecting it. The fact that the UK and Spain Mr Crausby, MP, on 6 November 2001; and mental Freedoms in the draft constitution have not been able to accommodate the more recently in a written answer to enshrines the right to self-determination as Gibraltar Government’s terms for participa- Geraldine Smith, MP, on the 5 March 2002. set out in Article 1 of the 1976 Covenants. tion is proof of this. Indeed, our proposals 3 It is noteworthy that the position of the The existing preamble is retained and there could not survive the process. On the British Delegation in submissions to the is a second preamble inserted which states crucial issue of sovereignty it must by United Nations during the 1960s was that the that the acceptance of the draft Con- necessity mean driving a coach and horses right of the people of Gibraltar to self- stitution by the people of Gibraltar in a through the type of relationship Gibraltar determination was not curtailed by Article X. referendum constitutes the exercise of our wants with Britain and above all our wish to 4 A former Labour Government had in a right to self-determination. Having ex- retain full British sovereignty over Gibraltar. memorandum dated the 26th June 1976 amined the proposals, I do not believe that Otherwise the Labour Government would already stated that “there is no scope for they trigger the pre-emption clause because not be able to come to an agreement with further devolution … the British Government there is no alienation of Gibraltar by the Spain and accommodate her bottom line of cannot accept that there is a need for British Crown in any event. However even if joint sovereignty. constitutional change.” it were otherwise, it makes no difference to 5 This is enshrined in the preamble to the the analysis in this article. he only possible basis upon which Falkland Islands Constitution. There is no doubt that Constitutional Tthe British Government could reject Reform is the practical exercise of the right our proposals is on the basis of its to self-determination. The rejection of our interpretation of Article X of the Treaty of proposals for Constitutional Reform is Utrecht. No other basis exists. If this is the therefore a denial of that right. There is no basis for any rejection and it is possible to Daniel Feetham, BA, LLB, is a Barrister doubt that our proposals will be rejected prove this through numerous Ministerial practising in Gibraltar. He is the Head of the sooner rather than later. The Foreign statements even if it were denied, then it is Litigation Department at Isola and Isola. He Secretary has already intimated in an wholly misconceived as a matter of public practiced at the independent Bar in England interview with the Gibraltar Chronicle (5 international law. Firstly there is no during the 1990s where he was a founding February 2002) that there is not the slightest alienation of Gibraltar such that would Member of Merchant Chambers in chance of the British Government accepting trigger the pre-emption clause. Indeed, the Manchester. He is a former member of the the proposals or using them as a basis for very essence of the proposals is that British Labour Party and leader of the

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An Appeal to Britain by Marie Lou Guerrero

uring the period 1969–1982 the As part of the overall strategy of Spain to ‘high levels’ according to the British Dland frontier between Spain and Gib- cause whatever harm they possibly can to Government, it is not of such a priority that raltar was permanently closed. Following Gibraltar they have, with their British it would cause sufficient concern to provoke Franco’s death, the ‘new’ Spanish democracy Government allies, managed to ensure that an international incident. The Gibraltar continued to prevent the free movement of all airport related measures specifically community is expected to suffer the people and the gates remained locked. In exclude Gibraltar, despite our being a consequences in silence. the early 1980s Spain had a desire to British territory within the EU. We have become a member of the EU, a position that been excluded from the Air Liberalisation pain continues to veto any inter- Gibraltar had held since 1973 as an affiliated package, the Open Skies regulations and Snational event that Gibraltar enters member to the United Kingdom, and prove more recently the serious Anti-Terrorism whether it is a dog show or a sporting event. to the world that her aspirations of Euro- Security Regulations which followed the 11 Within the EU it continues to veto all pean democracy and leadership were well September disaster. legislation unless Gibraltar is excluded, founded and sincere. unless Gibraltar’s inclusion causes extra The people of Gibraltar, who had suffered ne has to question the logical work or hardship to the Rock’s population. problems since Queen Elizabeth II visited Oreason for two democratic countries Gibraltar has implemented more EU the Rock in 1953, against the wishes of Spain, with populations of 60 and 35 millions legislation than Spain. During a recent believed that there was the possibility of respectively to try to impose their joint check it was revealed that the number of ‘light at the end of the tunnel’. A new era was wishes on a country of only 30,000 people. directives still to be implemented in Spain beginning and a normalisation of the What possible difference can it make to was considerably higher than those pending relationship with Spain could be considered. those nations to have joint control of an in Gibraltar. The support for Spain’s admission to the airport that serves fewer than 150,000 Spain does not recognise Gibraltarian EU grew and shortly afterwards the land passengers per year? institutions or authorities. Numerous frontier was opened to all in early 1985. Our Spanish persecution and aggression examples exist where our Courts have been ‘light’, however, became dimmer. Having continues. Despite agreement to do so when abused, our driving licences refused and gained access to the EU, Spain system- it joined the EU and opened the gates to our passports rejected. All these measures atically began her renewed campaign for Gibraltar, Spain continues to refuse to allow are contrary to EU legislation and go sovereignty over the land and the people of direct access by air or by ferry. When bad against all Human Rights objectives. Spain Gibraltar. weather forces the closure of Gibraltar air- apparently continues with her actions There were no subtle tactics, just political port, the airlines are forced by the Spanish knowing full well that they are contrary to aggression and persecution of the Gib- air traffic control to take their passengers to these objectives but also knowing that it is raltarians. Innuendoes, half-truths and Tangier in North Africa. After landing they unlikely that anybody will go to the expense downright lies began to appear in the press can file a flight request to move the same and hassle of taking matters further. and, inter alia, at international conferences passengers to Malaga in Spain, some 70 Usually, with the intervention of our and within Brussels. miles away. On arrival in Malaga those same government offices or the police, fines that In 1987 Britain and Spain, negotiated an passengers are nearly always subjected to have been imposed are refunded. But the agreement whereby the latter would gain baggage delays and security checks even antagonism continues. joint control over the Gibraltar airport. The though they commenced their journey Britain was taken to the Court of Human representatives from Gibraltar, who had from another EU territory. Most sane Rights when the people of Gibraltar were initially been invited to attend the people would question the necessity to refused permission to vote in the European negotiations, but were later moved to an place passengers at risk by insisting on a parliament. The Court ruled that Britain ante-room, were only informed of the terms visit to North Africa when the flight path to should enfranchise Gibraltarians to enable of the agreement at the joint press Gibraltar is directly over Malaga airport them to vote. This has, of course, not been conference afterwards. They had no say in which by air is less than ten minutes away! carried out and we still remain the only the discussions and were not a party to the Contrary to EU law, the Spanish Govern- Europeans who have no representation in agreement but were now expected to ment has chosen to limit international the European parliament. support and to promote it to the people of telephone links with Gibraltar. They have The European parliament, despite its Gibraltar upon their return home. Needless refused to accept the international tele- protestations, prefers to ignore the demo- to say, this promotion did not occur and a phone code granted to Gibraltar of 350 and cratic and human rights of the people of mass demonstration culminated with the have amended their telephone system to Gibraltar. Spain and Britain, who proclaim rejection of this agreement by the people. prevent the roaming facilities of Gibraltar devout belief in democracy and freedom of However, that agreement is still in existence mobile phones. This not only curtails the choice, are attempting to dictate and and is repeatedly mentioned by Spain and expansion of Gibraltar telephonically but organise a people that are prevented from Britain as the way forward despite the over- causes delays for overseas callers when speaking for themselves. The question whelming feeling of the people of Gibraltar modern computers link our system through remains the same, in a ‘European demo- that a foreign country should have any say Spain. This is another form of economic cracy’, where are the democratic rights of in the running of their own airport. blockade and whilst it has been taken up at Gibraltar and its people?

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lthough small, we are a people; a We learn from both Spanish and British agreement containing any concessions to ABritish people. We believe that we have Foreign Office Ministers that a joint Spain that, if the people of Gibraltar reject the right to determine our own future in the Declaration of Principles will be issued through a referendum, would nevertheless same way that other colonies have done. We before June 2002. The people of Gibraltar remain on the table. will not have our democratic, political and can accept or reject the ‘implementation’ of We can not trust the British Foreign human rights trampled upon because Spain this agreement at a referendum. Office to support our interests. We do, makes these into a ‘problem’ for the smooth To quote Minister for Europe, Peter Hain, however, believe that we can trust the running of the EU. “If we do not accept we will be left behind and British people and the majority of the We are told that Spain now has a different the status quo is not sustainable.” Members of the Houses of Parliament to attitude towards Gibraltar. Where is it? This is the ‘free, democratic choice’ support us and respect our democratically There have been no changes whatsoever. We available to the people of Gibraltar: either expressed wishes. have suffered much more harassment at we go down the road of Spanish It is to them that we turn for support. Spain’s hand than most people realise. Sadly, Sovereignty or else…? There seems to be no we have always implicitly trusted the British other choice. Government to stand by us. Can we We believe that the British Government Marie Lou Guerrero is Chairman of the continue to do so? should not enter into any form of Gibraltar Federation of Small Businesses. Gibraltar Cannot Trust the EU by Hon. Joe Bossano f anyone needed convincing of the ment at the heart of the Treaty of Rome – As a result, in June 2001, in the margins of Icase against European federalism, the the joint declaration was, in fact, a face- the Gothenburg summit, Blair and Aznar EU’s treatment of Gibraltar and the current saver designed to avoid humiliating Spain agreed to re-launch the negotiations (these attempted sell-out by the British Govern- and to help sell to Spanish public opinion had been dormant since 1988 following a ment provides all the evidence one could the lifting of restrictions. To sweeten the pill boycott of the Brussels process initiated by wish for. my Gibraltar Socialist Labour Party (GSLP) In 1972 Gibraltar negotiated through the Spain adopted the Government immediately it came into UK Government its terms of accession to office). The re-launch took place in July the then EEC as a European territory for strategy of using its veto 2001 and it became clear immediately that a whose external relations the UK had deal over Gibraltar’s future was about to be responsibility. Gibraltar became subject to to block the application done. all EEC laws except for those pertaining to of Community law The events of the last eight months have the free movement of goods. It stayed out of been widely reported. The UK has clearly the Customs Union, the Common Agri- indicated that it is willing to concede in cultural Policy and Value Added Tax. This Spanish nationals were granted Com- principle British sovereignty and instead reflected the fact that Gibraltar has no munity rights in Gibraltar in February 1985, establish an Anglo–Spanish condominium. manufacturing industry or agriculture; its eleven months before they were accorded In exchange Spain would promise to respect economy is based on free trade on world the same rights in the remainder of the EEC. the way of life of the Gibraltarians, their EU markets. Spain relaxed its land blockade but retains rights and an increased level of self- Spain has maintained a blockade of its sea and air blockades to this day. government. Gibraltar by land, sea and air since 1968 From the date it joined the EEC in But to almost everyone in Gibraltar it because the Gibraltarians have refused to January 1986 Spain adopted the strategy of seems unbelievable that we should be give up British sovereignty (which they have using its veto to block the application of expected to give up 50% of our sovereignty enjoyed since 1704) and come under Span- Community law to Gibraltar. It used this to to our powerful and hostile neighbour to ish rule. A Referendum in 1967 rejected put pressure on other EU states, and obtain respect for rights to which we are Spain’s ‘offer’ by 12,138 votes against and 44 through them on the UK, to solve the entitled by law, simply because the enforce- in favour. ‘Gibraltar problem’. Until December 2000 ment of the law is something that neither In 1984 Spain agreed to lift the blockade this unsatisfactory state of affairs meant that the UK nor the European Commission are in exchange for an agreement, the ‘Brussels Gibraltarians were being denied rights as prepared to undertake on our behalf. Declaration’, under which the UK would citizens of the EU simply because it was agree to discuss co-operation with Spain easier to appease Spain that to uphold the he latest twist in this sorry saga is and the issue of sovereignty whilst making rule of law for 30,000 people. Tthat Peter Hain, MP, Britain’s Minister clear (unilaterally) that no change of sover- In January 2001 however things took a for Europe, writing on behalf of Jack Straw, eignty could take place unless it enjoyed turn for the worse. Spain put the UK on MP, the Foreign Secretary, recently told majority support in Gibraltar. notice that unless concrete results were Gibraltar’s Parliament that the British At the time Gibraltarians were told that produced on the sovereignty claim and Government is willing to consider changing although Spain had to lift its blockade in unless the Brussels negotiating process were our terms of membership of the EU, agreed order to join the EEC – Madrid breached revived, it would turn up the pressure on the with us in 1972, if this would facilitate the fundamental principles of free move- UK within the EU. reaching an overall agreement with Spain.

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The European Journal Focus on Gibraltar

This came in reply to a unanimous and its indication that the very opposite is Hon. Joe Bossano was Chief Minister of resolution of the House of Assembly moved true – makes a complete mockery of Gib- Gibraltar from 1988 to 1996 and has served from the Opposition benches seeking an raltar’s membership of the EU and of the as Leader of the Opposition since 1996. He is assurance from the Foreign Secretary that UK’s responsibility to protect and defend its the longest serving member of Gibraltar’s Gibraltar’s terms of membership will not be EU status as the member state responsible Parliament, the House of Assembly, to which re-negotiated other than at the request of for its external affairs. The British Gov- he was elected in 1972. He has been Leader of the Gibraltar Government after consult- ernment seems determined to pursue this Gibraltar’s Socialist Labour Party since 1976. ation with Gibraltar’s Parliament. indefensible course of action and we are If you want to know how you can help, please The UK’s failure to give an assurance – equally determined to derail the process. e-mail the author at [email protected]. Defending the Rock: the Case for Integration by Andrew Rosindell, MP, & John Tate he British Government’s policy on rejected the idea. An opinion poll by the decolonised, and the most popular, TGibraltar is obsequious and wrong. Gibraltar Broadcasting Corporation found permanent, and sensible way of doing this is Rather than force Madrid by all available that a plurality of Gibraltarians now sup- through integration. The Government of means to abandon its unfounded claim, the port integration, lesser numbers supporting Gibraltar would remain as a devolved Government has put the future of the other options including free association authority and the territory would be territory up for negotiation – believing it to with the UK; independence; shared sover- awarded long-overdue representation in be, as Peter Hain put it, an ‘anachronism’. eignty; and Spanish control, respectively. Parliament, whilst the governorship could Madrid’s stance betrays the many be scrapped. With sufficient political will, occasions on which Gibraltar aided Spain. adrid, meanwhile, clings to her the territory’s special VAT status could be When British forces liberated Spain from Mdictatorial claim that the Gibral- preserved. Greater awareness of Gibraltar Napoleon, those forces came through tarians’ views are irrelevant. By holding within the UK would boost the territory’s Gibraltar. During the anti-Fascist campaign talks, the Spanish Foreign Minister claims, tourist revenue. Driving licences and against Franco, Gibraltar gave Spanish the UK and Spain are “building a house”. vehicle registrations could be incorporated refugees food and shelter. Franco never for- Gibraltarians, he adds, “may be allowed to into the UK system, ending Spain’s ability to gave the territory for the succour it lent his choose the colour of the rooms”. discriminate against Gibraltarian drivers enemies. For all of its democratic reform, Unfortunately, under the Treaty of Utrecht, and their vehicles. modern Spain maintains Franco’s line. he has a point. Gibraltar must be in either Whilst we must end the crude and illegal Messrs Hain and Straw try to justify their British or Spanish hands, without regard for pressure placed upon Gibraltar by Spain, negotiations with the claim that, “short of her inhabitants’ opinions. Times and the way to do this is not through gunboats, what else can we do?” The answer opinions change, however. The Treaty of negotiation. Spain is in direct breech of is that Gibraltarians must be given equal Utrecht was written in an age when international law and lacks any support in status to mainland British citizens, with monarchs signed over territories with little Gibraltar, yet for years London has squan- their own Member of Parliament. Integrat- regard for their inhabitants, and when dered opportunities to force the matter – ing Gibraltar in this way would end Gibraltar had little civilian population failing, for example, to block Spain’s Madrid’s perception of a half-open door anyway. accession to the EU or, more recently, to upon which she can continue to push. The legal and political standards of the Nato until she dropped her claim. Reward- France and, indeed, Spain herself provide twenty-first century leave the Treaty of ing Spain for her intransigence would be a models for this policy, having integrated Utrecht in tatters. Amongst the many ways betrayal of the loyal Gibraltarian people most of their overseas territories with the in which the Treaty has been broken include and of their right to self-determination. We result that they are now celebrated and the existence of Jewish and Moorish should be proud that the Gibraltarians wish constitutionally stable, and not subject to populations upon the Rock. Spain’s many to remain British and not treat them as a repeated referendums on their future. sieges of the territory also breached the colonial anachronism. Alleged obstacles to integrating Gibraltar Treaty. As well as being broken, the Treaty vanish upon examination. One alleged has been superseded both by the Treaty obstacle is the territory’s special tax status. of Rome, in 1957, and by the United Andrew Rosindell is Member of Parliament Yet Spain secured the duty-free status of its Nations Declaration on the Granting of for Romford and Secretary of the All-Party Moroccan territories, Ceuta and Melilla, Independence to Colonial Countries and Parliamentary Group on Gibraltar. He is also despite their being inside the European Peoples, in 1960. It is time that all sides International Director of the European Union. Spain holds her sovereignty over acknowledged that the Treaty of Utrecht – Foundation. these territories, wisely, to be ‘non- broken, superseded, and incongruent with negotiable’ despite Morocco’s claim to them. the democratic age as it is – is not worth the John Tate is a Senior Associate with The Treaty of Utrecht is also no obstacle to parchment that it is written on. It is the McKinsey & Company. He is a member of the integrating Gibraltar, as Harold Wilson Treaty that is the anachronism, not European Foundation’s UK Advisory Board; discovered when he investigated the matter. Gibraltar. Chairman of Associates’ Club; and a frequent Wilson offered to integrate Gibraltar, but Gibraltar must, for reasons of con- contributor to this and other publications. He the then Chief Minister, Sir Joshua Hassan, stitutional stability and democracy, be writes here in a personal capacity.

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Gibraltar – The Business View by Peter A. Isola

he Gibraltar Chamber of Commerce queues. These vary in length and time own good name and reputation. This is Twas founded in 1882. It is headed by a depending on the whim of Madrid. Spain something which does not go unnoticed in Board of 12 elected directors who promote also imposes other sanctions intended to Madrid, encouraging the Spanish to be ever the interest of commerce in Gibraltar. Its hurt Gibraltarians and their economy. This more forceful on the issue. members are drawn from all business constant harassment is of course damaging Britain, in the view of the Chamber, sectors – from the small retailer, wholesaler, to all sectors of trade and is an issue upon should have been negotiating first with importer and exporter, to the largest finance with the Chamber has particularly strong Gibraltar to see what long-term economy it centre players. views. We are, however, a proud people. We believes is sustainable without tackling the The Chamber produces information are proud that despite this harassment we sovereignty issue directly at this stage. through surveys and advises the govern- remain relatively successful for a city of our Commercially, we find it difficult to ment on issues such as the restructuring or size. understand why it is that our continued and reducing of import duties on certain goods We also remain successful despite our increasingly successful economy is deemed or the reduction of rates in certain being unable to enjoy many of our EU no longer sustainable and our future lies in circumstances. We sit on many Boards and rights. It is somewhat ironic when you shared sovereignty with Spain. Committees, including Trade Licensing, consider that these are ‘rights’ to which we The Minister for Europe, Peter Hain, MP, Health and Safety, Heritage, City Centre are entitled. The reality is that a small talks of our Chief Minister leaving “an Beautification, the Labour Advisory Board, territory like Gibraltar, unless it has the empty chair” at the Brussels talks. As a the Economic Advisory Council, and the support of the mother territory, in our case Chamber of Commerce we are always in Conditions of Employment Board among Britain, is unable to successfully challenge favour of dialogue. However, we find it others. matters within the EU. difficult to encourage the Chief Minister to The Board believes that its role is to focus We remain staunchly British despite the attend talks when he would not be there on on commercial matters. It leaves sensitive fact that at times we feel that Britain is not an equal footing. We are prepared to take a political issues such as the question of fulfilling either its EU obligations to realistic and commercial view of the matter sovereignty to the members of the House of Gibraltar or its obligations under our 1969 but our reading of the situation is that the Assembly (our Parliament which includes Constitution. This is a matter of deep regret dialogue to which the Chief Minister is the Chief Minister, his Ministers, the Leader to us. being invited is not what we would consider of the Opposition and other Honourable safe dialogue. No sane Chief Minister could Members). Ultimately, under our 1969 ur finance centre is also constantly expect to negotiate in such a pre-judged Constitution, it is for the people of Gibraltar Oharassed. Quite apart from the situation. It is unfortunate that the Foreign to decide on any issue pertaining to difficulty we have in taking advantage of the Office is unable to see or understand this. sovereignty. EU rights to which we are entitled, we are The business view is that the way forward Commerce and politics do overlap at subjected to malicious and inaccurate is in safe dialogue. We are concerned that times. Over the last few months the Cham- articles on money laundering. This is the Foreign Office seems unable to create a ber has met His Excellency, David Durie, particularly annoying as since 1990 we have safe environment, one in which real Governor of Gibraltar, Ed Owen, the special had a highly regulated and respected negotiation is possible, which would enable adviser to the Foreign Secretary, Jack Straw, finance centre. Even company managers our Chief Minister to attend talks. We and Emyr Jones Parry, the Chief Negotiator and professional trustees are regulated (no wonder whether the UK Government is at the Anglo–Spanish talks under the other EU territory, including the UK, really fighting for positive commercial Brussels Agreement. regulates such businesses) with the aspects to be considered in the talks. In a On each occasion we have reiterated the Commissioner being appointed by the UK. sense, we feel somewhat patronized as we importance to all Gibraltarians of our The regulatory and supervisory regimes are are told the talks will lead to a long-term British Sovereignty which we treasure and at least equivalent to UK standards and in sustainable economy within the Campo de wish to retain. In 1969 we were led to believe many cases exceed EU standards. Gibraltar area. But what exactly does this (my father, Hon. Peter J. Isola, was the With only £3bn in deposits and relatively mean? Are we to accept the economic levels Chairman of the Constitutional Committee small amounts of cash transactions moving presently enjoyed at the Port of Algeciras or at the time) that our Constitution would be on a daily basis it is difficult to see how those of our neighbouring town La Linea de permanent. So to many Gibraltarians it is Gibraltar could be a centre for money la Concepcion? There are diverse sustain- something of a surprise to find that the laundering. Moreover, as Gibraltar’s high able economies within the Campo area, status quo is apparently deemed not street banks include the Royal Bank of some of which are considerably less attract- sustainable. This is a message which we are Scotland, Barclays, Natwest, and SG ive than others. We want to know that our constantly receiving from the UK Govern- Hambros, these allegations are simply present level of economic success will not ment. Yet Gibraltar enjoys a prosperous eco- insulting to the UK and its financial be jeopardised. We want to know that we nomy, despite Spain’s constant harassment institutions. Unfortunately we have come to will be able to continue employing our which subjects Gibraltar commerce and its accept that the Foreign Office is more entrepreneurial skills to develop business. people to long, tedious, and totally concerned with maintaining good relations We are told that our British way of life will unnecessary and unjustifiable frontier with Spain rather than protecting the UK’s be secured and that we will have greater self

Jump to Contents 19 The European Journal Focus on Gibraltar

government. But the devil is in the detail. the case. We have written to the Foreign payment to the Gibraltar Government, What the UK and Spain may consider im- Office sending them a Report on VAT but to would be totally unacceptable. portant is not necessarily what we ourselves date we have received no response. We need The problem here seems to be that we are would consider important. to know whether, for example, VAT revenue being told what is good for us rather than We are told that we should join the EU raised in Gibraltar would be retained in its being asked what it is that we need. customs union and introduce VAT to put an entirety by the territory (I believe such an After decades of harassment, Gibraltar- end to frontier queues. But we are happy to arrangement exists in the Isle of Man) or ians are not going to ‘buy’ into anything continue living with the frontier queues if whether the VAT will be transferred unless the full details and advantages are that is the only way that we can maintain elsewhere and a voluntary payment made to explained to them. To date not even the our present economy and our present way the Gibraltar Government, as occurs with outline is appetising. of life. the voluntary VAT (re-)payment made by We are told that, on joining the customs France to Monaco. Obviously, whilst the union, Gibraltar will be better off. However, former may be acceptable, the latter, in Peter A. Isola is President of the Gibraltar we are concerned this may not, in fact, be which Madrid is making a voluntary Chamber of Commerce. The Case for a New Gibraltar Constitution by William Serfaty t may be hard for modern European position of strength there to attempt to Utrecht between the Crowns of England Ireaders to understand that there is a cor- undermine our culture, our economy, and and Spain. ner of the European Union where European our aspirations. The Group devised the Gibraltar Nation- citizens are still struggling to obtain a As readers know, Spain entered the EU on al Day as a celebration of Gibraltarian number of fundamental rights which other 1 January 1986. In the run-up to entry it national identity. It organises an annual EU citizens have taken for granted for negotiated a bilateral agreement with the political rally on that day to which politic- decades. UK designed to remove the Spanish– ians from outside Gibraltar are traditionally Gibraltar is that corner of the EU. This Gibraltar relationship from the EU context, invited. small country entered the EEC, as it then and set it on a path of confrontation with was, at the insistence of our own government Gibraltar. That action, which is still harming n 1996 the Group put up the daughter of and people, and against the desire of the UK, Gibraltar today, is known as the ‘Brussels Ithe Spokesman at the time Denise on 1 January 1973 under article 227(4) of Process’, not because it is related to Spanish Matthews, who would have been eligible to the Treaty of Rome as “a European Territory entry into the EU, but merely because the vote for the first time in 1994, to be the for whose External Affairs a member state is last act of signature of a bilateral UK– Plaintiff in a case before the European responsible”. At that time a gulf lay between Spanish agreement took place in Bussels. Court of Human Rights. The United King- our small country and the rest of the EEC, Year after year, more people realised how dom was the defendant. The complaint was the Iberian peninsula, the nature of whose bad this process was for Gibraltar. By 1992 a that the United Kingdom was depriving her regime at the time excluded it from mem- number of citizens from varied walks of life and all European citizens resident in Gibral- bership. Even in 1973 Gibraltar suffered formed the Self Determination for Gibraltar tar of our human rights by not arranging for from an insidious external irritant, the idea Group (SDGG) to oppose the ‘Brussels us to be able to vote in elections to the in Spain that the territory our citizens have Process’ and to put Hispano–Gibraltarian European parliament. Scandalously, the UK occupied for three centuries should be relations into the European context. At the defended itself vigorously, causing the case transferred to Spanish sovereignty, and our same time Gibraltar addressed its relation- to run for four and a half years. Denise traditional loyalties, values, and way of life ship with the UK, attempting to upgrade its Matthews won her case for the SDGG, and should come to an end. status from that of a British Colony to a the court ruled in 1998 that the UK must Gibraltarians were conscious at that time more modern relationship. It now found arrange for European elections to be held in that our insistence on EEC membership, it was debating its status with the Spanish Gibraltar. (Judgement 88 of 1998 in a judge- albeit a subsidiary one, was a surrender of and the British Foreign Offices, both of ment delivered in Strasbourg on 18 January sovereignty. There was little argument whom were hostile. It is not surprising, that, 1999 in the case of Matthews v. the United against joining in Gibraltar, perhaps having mutual interests, the Governments Kingdom, the European Court of Human because, although our culture is ‘British– of Spain and the UK should end up on the Rights held by 17 votes to 2 that there had Universal’, the roots of the many Gibral- same side. been a violation of Article 3 of Protocol tarians are in eminently European places The SDGG was founded to campaign for No. 1 – right to participate in elections to such as the ancient, and relatively recently the recognition of the right of the Gibral- choose the legislature – to the European vanished Republic of Genoa and in the tarians to self-determination, i.e. to decide Convention on Human Rights.) This is a Duchy of the Savoy. Our hostile neighbour our constitutional status for ourselves. Ten landmark case in the annals of Human had at the time (1973) already cut off all years on, this campaign is still necessary Rights in Europe, and is frequently referred land and sea communication for four years because Gibraltar is a Crown Colony and to as a precedent. in a ‘siege’. Little did we think that this because the Foreign and Commonwealth The UK argued in 1997 that there was would continue for a further 12 years, that Office (FCO) still believes that this right is insufficient time to organise the ballot for Spain would join the EU and then use its limited by a provision of the Treaty of the 1999 election, and undertook to make

Jump to Contents 20 Focus on Gibraltar March 2002

arrangement in time for the next election, presented 10 Downing Street with 12,499 in Gibraltar to be handed to Tony Blair. The but there is no sign yet of any preparation. signatures – about the same number as vote Declaration was also sent to the UN and The Group continues to pressure for the a typical general election in Gibraltar. the EU. arrangements to be put into place, and In 1999, at the United Nations Committee The Group is now pursuing the questions in the UK Parliament on this for Decolonisation, the Group added its implementation of the New Gibraltar subject are now becoming more frequent. voice to that of the Government of Gibral- Constitution agreed by a Select Committee The Group intends to step up action as it tar, which had been attending its meetings of the Parliament of Gibraltar (the House of becomes clearer to Gibraltar that the FCO since 1992. It was the first Gibraltarian Non- Assembly) whose deliberations started in appears to have no intention of complying Governmental Organisation to take this 1999 and were completed on the 10 with the judgement. step. December 2001. The New Consitution was In 1997 the Spanish Ministry of Foreign ratified by the Gibraltar Parliament on 27 Affairs made proposals to the UK in a docu- n October 2001 the Group was February 2002. It embodies a status for ment which has come to be known by the Iresponsible for devising a ‘Declaration of Gibraltar as a ‘Continental Territory of a name of the then Spanish Foreign Minister: Unity’ on Gibraltar’s stand on Foreign European Member State’ and provides a “The Matutes Proposals”. These contain, in Affairs. It obtained the signatures in support decolonised relationship with the UK which essence, a proposal for joint UK/Spanish from Government, Opposition, and most of falls well within the standard territorial sovereignty for a period of adjustment, to be the people who had ever been elected to the practice of the European Union. followed by full Spanish sovereignty. The Gibraltar Parliament. In co-operation with Group set about collecting signatures another pressure group it organised a William Serfaty is Spokesman of the Self- against these proposals and on 10 Dec- march, led by all the elected representatives, Determination for Gibraltar Group www.self- ember 1998, 50 years to the day after the to hand this declaration to a representative determination.gi. He can be contacted on Universal Declaration of Human Rights, it of the Foreign and Commonwealth Office [email protected]. Gibraltar’s Rights must be Recognised by Tony Lodge ondon and Madrid have resumed financial and air transport hub for the proposals on a ‘No’ vote? Do these proposals Ltalks on the future status and southern Iberian peninsula entered a new remain on the table awaiting another sovereignty of the ‘Rock’. Fears of a sell-out chapter when General Franco closed the referendum in a few years time? are rife. Gibraltar’s Chief Minister, Hon. border in 1969 for 15 years. Gibraltarians are The Foreign Office should undoubtedly Peter Caruana, has refused to attend, in understandably wary of talks with Spain. be in discussion with the Spanish. But this protest at the “dialogue which requires us to It can be strongly argued that if this should be on a platform of demanding that forfeit our own position and our right to self debate is about anything, then it is about the Spanish recognise and respond determination”. Europe. Spain continues to block some EU positively to the needs of Gibraltar, rather The last time Gibraltar voted on this issue legislation because of its impact on than tightening restrictions and breaking in 1967, 12,138 were in favour of the status Gibraltar – an irritation to the powers that EU law. quo and 44 were against. This vote be in Brussels. The plans, which followed Peter Caruana, QC, Gibraltar’s fearless prompted a new Constitution for Gibraltar the November 2001 meeting between Josep Chief Minister, vigorously promotes the which embodied the principle of consent Piqué and the Foreign Secretary, will give view that under United Nations resolutions before any future change in sovereignty Gibraltar 100,000 extra phone lines and and past decisions of the International could take place. This Constitution still allow access to health services in Spain. Court of Justice, self-determination must stands and has been consistently referred to However, that is cosmetic, as Gibraltarians prevail over any pre-existing Treaty by Foreign Secretary, Jack Straw, as a are entitled to those anyway. Once again, obligations. It is extraordinary that the benchmark from which negotiations with Spain is contravening EU legislation. British Government has been so reluctant to Spain are taking place. Sr Josep Piqué, The Spanish daily, El Pais, has recently test this simple legal position. Spain’s Foreign Minister, disagrees. He reported that there is to be an unlimited Spain has changed greatly since the 1960s insisted “The people of Gibraltar cannot have period of co-sovereignty. That flies in the and is now a democracy, a NATO ally and the right of veto over matters being discussed face of what the Government have said and EU member. However, this does not alter by two sovereign states.” of what the Foreign Secretary has been international law or the rights of the people Despite nearly 300 years of British rule, telling the House of Commons as recently of Gibraltar. Diplomatic expediency should the people of Gibraltar continue to face as 14 January 2002. not and cannot be allowed to get in the way Spanish claims to the Rock’s sovereignty. On 5 February 2002, the Foreign of fundamental human rights. The Spanish continue to show complete Secretary told the Commons that in the disregard for the wishes of the people who event of the people of Gibraltar rejecting the Tony Lodge is Political Secretary to William live there and regularly seek to block traffic Anglo–Spanish proposals in a future Cash, MP, and a former Editor of the at the frontier, cause unnecessary delays to referendum, “then the proposals will not be European Journal. He is a member of the shipping and interrupt telecommunications. implemented.” The next question which European Foundation’s UK Advisory Board. Their determination to prevent Gibraltar must be put to the Foreign Secretary is what He visited Gibraltar in February 2002 and from maximising its status as a major exactly now happens to the Straw/Piqué writes here in a personal capacity.

Jump to Contents 21 The European Journal March 2002

Table I RESEARCH Gross Domestic Product, Volume Percentage changes from previous period, ROUNDUP seasonally adjusted, at quarterly rates 1999 2000 2000 2000 2000 2001 2001 2001 2001 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Canada 1.3 1.5 0.5 1.1 0.4 0.3 0.2 -0.1 0.5 by Allister Heath Mexico 1.4 2.3 1.8 1.2 -0.5 -0.4 -0.2 -0.5 -0.4 Europe in Figures United States 2.0 0.6 1.4 0.3 0.5 0.3 0.1 -0.3 0.4 Japan -1.3 2.0 0.8 -0.7 0.3 1.0 -1.2 -0.5 -1.2 Public awareness of the main statistical Korea 2.9 2.3 1.9 2.5 -1.2 1.2 0.3 1.3 1.6 indicators remains very poor. It is widely Australia 1.3 0.5 1.1 0.3 -0.4 0.6 1.1 1.1 1.3 believed that unemployment is higher in the New Zealand 1.3 1.2 -0.4 0.9 0.3 0.2 1.8 0.2 0.6 UK than it is in France, for instance, or that Austria 0.4 0.4 0.7 0.3 0.6 0.9 -0.6 -0.3 0.2 European economies are booming. The Belgium 1.8 0.2 1.0 0.8 0.9 0.2 -0.5 0.0 -0.2 data contained in this month’s Research Denmark 1.5 -0.2 1.6 0.3 0.7 -0.6 0.3 0.5 0.1 Roundup help paint a more accurate Finland 1.5 2.1 0.9 1.6 0.7 0.0 -1.8 1.4 -0.5 picture. France 1.2 0.8 0.9 0.6 1.0 0.4 0.2 0.5 -0.1 Germany 0.8 1.0 1.2 0.1 0.2 0.4 0.0 -0.2 -0.3 Economic Growth Italy 1.0 0.8 0.3 0.5 0.8 0.8 0.0 0.1 -0.2 Netherlands 1.3 0.8 0.6 0.5 0.7 0.0 0.3 0.0 0.0 Germany has been in recession over the last Norway 0.9 0.5 -0.6 0.7 0.3 0.3 0.3 1.0 0.2 12 months, according to the latest available Spain 1.1 1.2 1.0 0.4 0.8 1.0 0.2 0.9 0.2 figures from the Organisation for Economic Sweden 1.1 0.8 1.2 0.6 0.3 0.4 0.0 0.1 0.3 Co-operation and Development (OECD). Switzerland 1.0 0.7 0.5 0.6 0.6 0.4 0.1 -0.1 0.0 Germany’s Gross Domestic Product (GDP) United Kingdom 0.8 0.4 1.1 0.7 0.5 0.6 0.5 0.4 0.0 is down 0.1 per cent over the last four quarters. Italy’s GDP grew by a paltry 0.7 Source: OECD, Quarterly National Accounts database, 29 March 2002 per cent during the same period, France’s by 1.0 per cent, Belgium’s by –0.5 per cent and Table II the Netherlands’ by 0.3 per cent. In contrast, OECD Standardised Unemployment Rates - percentage of civilian labour force the UK grew by 1.5 per cent. The euro’s 2000 2001 whopping devaluation has thus been insuf- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan ficient to boost the eurozone economies, whereas the strong pound has failed to halt OECD-Total 6.2 6.2 6.2 6.3 6.3 6.4 6.4 6.5 6.6 6.8 6.8 6.9 6.7 the British economy. The picture is not all EU15 7.7 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.6 7.7 7.7 Euro area 8.4 8.4 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.3 8.4 8.4 8.4 bleak in Europe, though: Spain’s output Major seven 5.6 5.6 5.6 5.7 5.7 5.8 5.9 6.0 6.1 6.3 6.4 6.5 6.4 grew by a relatively impressive 2.3 per cent Canada 6.9 6.9 7.0 7.0 7.0 7.1 7.1 7.3 7.2 7.4 7.6 8.0 7.9 during the last twelve months. Germany 7.7 7.7 7.8 7.8 7.8 7.9 7.9 7.9 7.9 8.0 8.0 8.0 8.1 Unemployment France 8.6 8.6 8.6 8.5 8.6 8.6 8.6 8.6 8.6 8.7 8.8 8.9 9.0 Italy 9.8 9.7 9.6 9.5 9.5 9.5 9.5 9.4 9.4 9.3 - - - One fact stands out of Table II on OECD Japan 4.8 4.7 4.7 4.8 4.9 4.9 5.0 5.0 5.3 5.4 5.4 5.5 5.3 unemployment data. The latest available UK 5.1 5.0 4.9 4.8 4.9 5.0 5.0 5.0 5.0 5.0 5.1 - - figures (which unfortunately go back to USA 4.2 4.2 4.3 4.5 4.4 4.6 4.6 4.9 5.0 5.4 5.6 5.8 5.6 November 2001 for the UK) show that Source: OECD Britain’s rate of unemployment is now lower Chart I than that of both the United States and Japan. The UK can also boast a smaller proportion of its labour force unemployed than Germany, France and Italy. An Ageing Population Secular falling birth rates and increased life expectancy have led to a steady increase in the number of older citizens. The ratio of the population aged 65 and over to the population aged 15 to 64 has shown a small but steady rise since 1960. For OECD countries as a whole, the ratio has risen from 13.8 per cent in 1960 to 19.6 per cent in 2000 and is predicted to hit a record

Jump to Contents 22 The European Journal March 2002

Table III Estimate and Projection of the Proportions of ‘Working Age’ and ‘Elderly’ people Ratio of number of people aged 65 and over to those aged 15 to 64, percent 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 ‘Trend’ ‘Trend’ Over 65s Under 15s United States 15.3 15.9 16.9 18.9 19.0 19.5 25.6 33.6 35.1 35.5 1.72 0.74 Japan 9.0 10.3 13.4 17.2 25.0 33.8 43.8 46.0 54.3 58.4 2.96 0.75 Germany 17.1 21.7 23.7 21.7 24.0 29.6 33.0 43.3 49.6 48.7 1.84 0.76 France 18.8 20.7 21.9 21.3 24.4 25.3 32.2 38.7 43.4 44.2 1.69 0.80 Italy 14.1 16.9 20.4 22.3 26.9 31.4 37.4 49.1 64.4 65.7 2.31 0.66 United Kingdom 18.0 20.6 23.5 24.1 24.6 25.9 31.2 38.3 42.3 42.2 1.60 0.81 Canada 12.7 12.7 13.8 16.5 18.7 20.7 28.0 37.3 39.8 40.1 2.16 0.73 Australia 13.8 13.3 14.7 16.7 18.0 19.8 25.9 32.2 36.1 37.5 1.94 0.75 Austria 18.3 22.9 24.0 22.1 21.5 24.0 28.5 40.3 50.5 53.7 1.74 0.72 Belgium 18.5 21.2 21.9 22.6 25.2 26.0 32.6 42.6 47.7 48.3 1.75 0.78 Czech Republic 13.4 18.2 21.2 18.9 19.5 21.9 31.8 37.7 47.0 60.6 2.05 0.59 Denmark 16.5 19.0 22.2 23.2 22.7 25.8 32.2 38.4 43.1 40.3 1.70 0.83 Finland 11.5 13.8 17.7 19.9 22.2 25.4 36.5 43.5 43.5 44.0 2.20 0.80 Greece 12.6 17.4 20.5 20.4 26.7 30.3 35.0 42.3 54.3 64.5 2.16 0.63 Hungary 13.8 17.1 20.8 20.1 21.5 23.0 29.1 31.9 38.6 48.2 1.76 0.67 Iceland 13.9 15.0 16.1 16.5 17.5 18.3 23.9 31.6 36.2 38.5 1.86 0.65 Ireland 19.4 19.4 18.3 18.5 16.8 18.2 23.4 28.3 32.5 40.0 1.55 0.67 Korea 6.1 6.0 6.1 7.2 9.4 13.1 17.5 27.7 37.5 41.7 3.67 0.54 Luxembourg 16.0 19.4 19.9 19.3 21.3 23.5 28.8 37.1 42.9 45.2 1.80 0.88 Mexico 9.1 8.6 7.4 6.9 7.6 9.0 11.7 16.2 23.5 30.0 2.42 0.48 Netherlands 14.8 16.2 17.4 18.6 20.3 23.0 31.7 43.0 51.4 49.1 2.17 0.70 New Zealand 14.8 14.2 15.7 17.0 17.7 18.9 24.1 30.4 33.5 34.3 1.76 0.72 Norway 17.6 20.6 23.4 25.2 23.8 24.3 31.1 38.3 43.8 42.2 1.60 0.82 Poland 9.5 12.7 15.4 15.5 17.5 17.7 25.4 31.8 34.8 44.8 2.08 0.62 Portugal 12.7 14.8 16.4 20.5 23.2 25.2 29.2 35.9 47.5 56.3 2.09 0.60 Spain 12.7 15.7 17.0 20.7 24.9 27.0 31.6 42.3 59.9 72.0 2.32 0.56 Sweden 18.1 20.9 25.4 27.7 27.1 29.7 37.5 43.4 47.3 46.5 1.69 0.85 Switzerland 15.2 17.5 20.8 20.9 21.7 24.8 31.4 44.3 53.1 53.2 2.05 0.78 Turkey 6.4 8.1 8.4 7.1 8.8 9.7 12.1 16.9 23.0 30.2 2.37 0.55 OECD Total 13.8 15.4 16.8 17.7 19.6 21.7 26.9 33.5 38.7 41.2 1.90 0.71 EU-14 (excluding UK) 16.0 19.1 21.1 21.5 24.5 27.8 33.2 42.5 51.1 52.8 1.95 0.72 Source: OECD, using figures from the UN Population Division, World Population Prospects Note: The “Trend for over 65s” is the change between ratio of people 65+ to those aged15 to 64 calculated on the average estimate during 1960 to 2000 and the average projection for 2010 to 2050. It provides a rough measure of the rate at which the proportion of ‘elderly’ people is expected to increase. Similarly, the “Trend for Under 15s” is a guide to the anticipated decrease in the proportion of children relative to people of working age.

Chart II 41.2 per cent in 2050. At the same date, the Increase in the number of elderly people relative to number of working age ratio in the UK will have reached 42.2 per cent, according to the predictions, and 35.5 per cent in the US. These compare favour- ably to figures for the EU-14 countries (excluding the UK) which are forecast to rise from 16.0 per cent in 1960 to 52.8 per cent in 2050. In addition to its demographic advantage, the UK makes much greater use of private funded pensions.

Allister Heath is Head of Research at the European Foundation. He can be reached by telephone on 020 7930 7319; fax 020 7930 9706; e-mail: [email protected]

Jump to Contents 23 The European Journal March 2002

The European Union Tax Cartel is Bad for the US Economy by Dr Véronique de Rugy

ecause it is increasingly easy for a year ago, the IRS issued a proposed to buttress their tyrannical tax systems by Binvestment funds to cross national regulation (REG 126100-00) that would gaining the power to tax income earned borders, politicians must exercise a degree force US banks to report the bank deposit outside their borders. That would require a of fiscal discipline to attract jobs, capital, interest they pay to non-resident foreigners. global tax cartel and a systematic elimin- and entrepreneurs instead of losing them to The purpose of the regulation is to help ation of financial privacy. another country. The United States is the foreign governments collect tax on US- This tax cartel would have a terrible effect world’s biggest winner in this process, source income. on US economy. A study by the Center for which is known as ‘tax competition’. That would be a major mistake. America Freedom and Prosperity highlights how America’s relatively modest tax burden, does not share common interests with high- international tax harmonisation schemes combined with privacy laws for foreigners tax nations. It makes perfect sense for would undermine America’s competitive seeking to escape oppressive fiscal systems, uncompetitive, overtaxed nations to try to advantage. Much foreign investment is has helped attract more that $9 trillion of set up a tax cartel and slay tax competition. attracted by low tax rates. With few foreign investment to the US economy. That After all, high tax countries suffer from tax exceptions, the US government does not tax inflow is a key source of American pros- evasion, capital flight and brain drain. the investment income of foreigners and perity because the money is put to work for does not report this income to foreign the nation and produces more jobs, higher onsider France: According to the governments. Low taxes and financial standards of living and general prosperity. CFrench tax authority, 25,000 taxpayers privacy really make the US a tax haven for Naturally, high-tax nations resent tax – many of France’s most talented workers – taxpayers around the world. competition. Most European politicians, for leave the country every year for tax reasons. instance, get upset when their taxpayers Further, the estimated level of tax evasion is f the EU wins, the US economy will lose shift their money to low-tax jurisdictions a whopping 17 per cent, higher than most Isavings and investment because foreign like Switzerland and the United States. They developed countries. Numerous studies governments will get the power to tax even have a plan – the European Union’s have also shown that over half of France’s income earned in the United States. The US ‘Savings Tax Directive’ – that would allow underground economy is tax driven, and economy would suffer at a time when it them to impose their burdensome tax rates that tax avoidance is widely practiced. With needs foreign capital the most. At a on income earned in places like America. a tax burden of 45.5 per cent of GDP minimum, the EU tax cartel would drive $1 The Directive rests upon a dangerous (including a top personal income tax rate of trillion out of the country. That translates idea. In effect, the EU wants US financial 54 per cent and an average VAT rate of 19 into fewer jobs and lower incomes for institutions to serve as vassal tax collectors per cent), it is little wonder. Americans. For the sake of American for Europe’s welfare states. Moreover, the EU To prevent more erosion of its tax base, taxpayers, the Bush Administration should is interfering with US tax policy by asking France has two options. First, cut tax rates. continue to reject the EU’s ‘Savings Tax the World Trade Organisation (WTO) to This is what the Irish government did in the Directive’. rule that some provisions of the US tax code 1990s, copying ‘Reaganomics’. Ireland’s are impermissible because they create too approach was a big success. As a result, it Véronique de Rugy is a Fiscal Policy Analyst much tax competition. If implemented, the now enjoys the second-highest living at the Cato Institute in Washington, DC. She ‘Savings Tax Directive’ would undermine standards in the EU. holds a PhD from the University of Paris- the right of the United States to set its own France’s second choice is to use Sorbonne and previously directed academic tax policy. international bureaucracies like the EU to programs for the Institute for Humane America should reject those schemes. undermine tax competition. Not surpris- Studies Europe in France. She has written for Unfortunately, some of the bureaucrats at ingly, this was the preferred choice, not only the Wall Street Journal Europe, the Atlanta the Treasury and the IRS want to help prop of France, but other high-tax nations like Journal – Constitution, National Review up Europe’s over-taxed economies. Almost Germany and Sweden. Those regimes want Online and Health Care News.

… news in brief overstretched with their commitments in the Balkans, and in the fight Karzai wants Germans to run Afghanistan against terror, and that Germany was therefore likely to remain within The interim leader of Afghanistan and former consultant to the its present role in the force which is currently led by Britain. (Britain American oil company UNOCAL, Hamed Karzai, has asked the German is to abandon this role by June.) As far as the extension of the area government to take over the command of the international protection of operation was concerned, Fischer said the UN Security Council had force in his country. Karzai told the German Foreign Minister that his to decide about that. Fischer emphasised the long-term commitment of people would welcome such a step. Moreover, he suggested that the area Germany to financing the reconstruction of Afghanistan. Germany has covered by the force should extend from beyond a few streets in Kabul to promised to spend 320 million euros on schools, the police, the cover the whole country. legal system and on reinstating women’s rights. [Handelsblatt, 13th Fischer responded by saying that German troops were already March 2002]

Jump to Contents 24 The European Journal March 2002

The Defects of German Corporate Governance by Dr Elaine Sternberg

ontrary to much public opinion, 50% of directors must by law be employee corporate actions, agents and assets direct- Cand despite recent legislative improve- representatives. Supervisory boards also ed at achieving the corporate objectives ments, as a means of securing genuine typically contain representatives of firms established by the corporation’s share- corporate governance the German system is with close functional relations with the holders and set out in the Memorandum of both theoretically and practically inferior to company, including suppliers, customers Association or comparable constitutional the traditional Anglo–Saxon model.1 The and bankers. document:6 corporate governance is strictly few genuine advantages that the German about means, not ends. The typical case for Ostensible Superiority system does afford are compatible with, and the German system, however, is about ends, could be better secured within, the Anglo– onsider the ways in which the not means. Usually, champions of the Saxon model. The German disadvantages, CGerman system of corporate govern- German system are simply endorsing a set however, go far beyond most of the same ance is commonly believed to be superior. of broad ‘inclusive’ social, economic and democratic deficits, directors’ defects, and Whereas, it is asserted, ailing Anglo–Saxon political values – consensus, community, shareholders’ shortcomings as the Anglo– corporations are forced into bankruptcy by harmony – that they associate with post- Saxon system.2 They are integral parts of a their bankers, German companies are war Germany. larger system that reflects a profound routinely rescued by them; whereas Anglo– distrust of, and lack of respect for, Saxon companies constantly have to defend or this approach to constitute a valid individual liberties. themselves from ‘immoral’ takeover bids, Fargument in support of the German Claims to the superiority of German cor- German companies can concentrate on system of corporate governance, its pro- porate governance are prima facie dubious. perfecting their products; whereas Anglo– ponents would have to show three things. Problems at major German companies that Saxon workers live in fear of redundancy, First, they would have to establish that have been serious enough to attract German workers enjoy secure jobs for life. the ‘inclusive’ values were indeed the most international media attention have included The standard argument is that the German important values, necessarily to be embezzlement, uncontrolled trading, fraud, system should be preferred because it is preferred to those others – including justice insider trading, massive hidden losses ‘long-termist’ and ‘inclusive’ in its outlook. and individual liberty, for example – with and industrial espionage. Compared with Unlike the Anglo–Saxon system, which is which they are often incompatible. This Anglo–American companies, German claimed to be damagingly ‘short-termist’ requires more than showing that the companies have also been markedly disap- and adversarial, the German system, it is ‘inclusive’ values are sometimes, or even pointing in delivering shareholder value. alleged, is better at achieving consensus and commonly, favoured. It requires demon- These results are, however, hardly social stability. strating that the ‘inclusive’ values should be surprising considering the very low priority The first thing to be noted about this preferred, that they are morally superior. given to shareholder value in Germany: the argument, is that its premises are highly Once that was established, proponents of main function of shareholding there is questionable. The ‘evils’ that it associates the German system would further have to instead to cement relationships and con- with the Anglo–Saxon system – notably show that the ‘inclusive’ values were solidate power. It is indicative that, despite ‘short-termism’ and takeovers – are not genuinely better served in Germany. And the need to attract investors to what was necessarily, or even typically, immoral. 5 third, they would also have to demonstrate Europe’s largest ever initial public offering, And the benefits that the argument claims that the ‘inclusive’ values were a necessary the Deutsche Telekom prospectus put for Germany are not available to significant consequence, or at least a necessary ‘generating attractive returns for share- subsections of Germany’s population: concomitant, of the German model of holders’ fifth in the company’s list of German guest workers have no job security. corporate governance. objectives. When shareholders rank so low Furthermore, even when the supposed Until and unless that ambitious project is in corporate priorities, it is hardly sur- benefits are available, they are at best a undertaken, however, the evaluation of prising that ‘Germans spend more money mixed blessing. They are achieved at the models of corporate governance depends on bananas than they do on equities’.3 cost of a paternalism and comprehensive on assessing them as means. It requires The most distinctive feature of the protectionism that not only undermines gauging them all against the same list of German model of corporate governance is accountability and shareholder value, but straightforward criteria,7 which measure the the two-tier board structure, which is re- also inhibits innovation and infringes extent to which the models enhance or quired by German law: German companies4 individual liberty. It is no coincidence that undermine accountability to the official must have both a management board and a activities as fundamental and as personal as corporate objectives set by shareholders. supervisory board. The management board shopping and contraception are highly The German system does seem, at least consists of executives of the company and is restricted in Germany. initially, to have two features that offer responsible for managing it; the supervisory Moreover, even if – counterfactually – its improved accountability to shareholders. board, which may not include executives, is premises and conclusions were true, the First, thanks to the two-tier board responsible for appointing and supervising standard argument offered by proponents structure, the German system apparently the management board. Though the super- of the German system is only remotely provides a clear separation between the visory board is elected at the general about corporate governance. Corporate responsibilities of directors and managers. meeting of shareholders, between 33% and governance refers to ways of keeping Such clarity is indeed a good thing, but it

Jump to Contents 25 The European Journal March 2002 could be achieved as well by having a worker representation; directors from both Moreover, supervisory directors tend to unitary Anglo–Saxon board consisting groups are expected to promote their be chosen not because they have any exclusively of non-executives. There is no constituency’s particular interests. particular skill in directing companies, but requirement, in principle or in law, to have Accordingly, supervisory directors because they represent particular interests. executives on the board; their talents and normally have personal, professional or Consider bankers: however popular they are expertise could be fully captured for the commercial interests that directly conflict as supervisory board members,13 their company by including them on executive with those of the company’s shareholders. presence is no guarantee of competent committees of various sorts. To the extent, Directors from banks, for example, are supervision.14 Given their traditional risk therefore, that a sharp separation of likely to have a vested interest in promoting aversion, bankers are indeed likely to be responsibilities were truly wanted, it could debt-supported size rather than profit- even less well suited than fund managers for be obtained perfectly well within the ability in the companies they control. directing complex commercial risks. This Anglo–Saxon system. Suffering from such structural conflicts of may help explain why so many German A second German mechanism that ought interest, supervisory directors can be companies have been disaster-prone. to strengthen accountability to share- seriously constrained from providing nec- German supervisory boards are also holders, is the fact that members of the essary criticism, or even useful supervision, deprived of a standard monitoring tool German management board owe their of the management board. Although such available to Anglo–Saxon boards: inform- positions to the supervisory board, and not conflicts of interest occasionally afflict ation. Barred by law from having any vice versa. In principle, this should help to Anglo–Saxon companies, they are endemic involvement in the daily operations of the ensure the independence of the supervisory in Germany. company, supervisory board members are board, because the appointments of super- They do, however, tend to be evaluated wholly dependent on information provided visory directors do not depend on the differently. The same features that com- by the management board. But German management. And it should also help mentators criticise in the Anglo–Saxon financial statements are not designed to improve the quality of the management system as conflicts of interest, likely to provide relevant and reliable information board, which must satisfy the standards set undermine directors’ independence and on company performance. Structured more by independent supervisors. Admirable ability to monitor effectively, are praised as to satisfy creditors and tax authorities than though those objectives are, however, they signs of ‘inclusiveness’ and sources of to enlighten shareholders, German financial could equally well be achieved within the consensus and stability when they occur in accounts typically paint a picture that is Anglo–Saxon system. They would result if Germany. This is evidence not of the super- substantially different than that which appointments of senior executives required iority of German corporate governance, but results from the application of US or UK board approval, and if directors were nom- of the operation of a damaging double accounting standards; they obscure, rather inated as well as elected by shareholders. standard. than disclose, how well shareholders’ Although the latter is illegal in some juris- objectives have been served. Moreover, dictions, these mechanisms are nonetheless urthermore, German supervisory before the 1998 enactment of the KonTraG, perfectly compatible with the Anglo–Saxon Fboards are rendered unsuitable by auditors of German companies were by law model. German law for exercising effective appointed by, and reported to, the manage- And theory differs from practice in both supervision. Appointments to supervisory ment board, not the supervisory board. systems. Even enshrining German boards are necessarily subject to veto by the Until and unless more transparent financial corporate governance requirements in law other directors:9 the directors who represent statements become the rule in Germany, does not prevent nominations for the board competing interests are unlikely to approve German corporate governance is at a of supervisors actually coming from committed proponents of shareholder distinct disadvantage. German management boards… it does not value. Another fundamental defect of the even prevent members of the management The legally-stipulated size of German German model of corporate governance is board from nominating themselves.8 When supervisory boards also makes it difficult the extent to which it disregards the legit- that is so, then supervisory independence for them to function effectively as super- imate demands of shareholder democracy. and management competence can be visory bodies. Required to have between Minority shareholders have few rights. compromised as badly as when executives twelve and twenty members, supervisory Plural voting rights are only now being influence the choice of Anglo–Saxon board boards have indeed been so unwieldy that phased out. Until the KonTraG, shareholers members. Once again, therefore, there is no legislation has been proposed 10 to reduce of German companies were routinely reason to prefer the German model. their size, in the hope of increasing their prevented from exercising more than 5–10% professionalism. Another impediment to of the company’s voting rights, regardless of Actual Inferiority proper supervision comes from the large the percentage of equity that they owned. oreover, there are many reasons number of directorships11 which members Such limitations hurt all shareholders: they Mwhy the German model is inferior to of German boards, particularly bankers, not only directly disenfranchised major the Anglo–Saxon system. Consider conflicts typically hold: the attention available for shareholders, but helped insulate German of interest. Although German supervisory each company is necessarily diluted. Even if companies from the beneficial effects of boards have no executive members, super- just two directorships are held, however, the takeovers. They also reinforced bank dom- visory directors are typically chosen either result is likely to be not just a conflict of ination of German companies. to reinforce relationships with firms that interest, but a positive conflict of obli- Banks influence German companies in work closely with the corporation, or to gation,12 as the fiduciary duties to different three main ways. They directly own comply with the legal requirement for groups collide. between 5–7.5% of the shares outstanding.

Jump to Contents 26 The European Journal March 2002

They have representatives on the super- at stake is nothing less than private property 11 Reduced to 10 per person by the Gesetz zur visory boards of most companies. And in and individual liberty. Kontrolle und Transparenz im Unterneh- their capacity as voting agent for other In summary, it is hardly surprising that mensbereich (‘KonTraG’), ratified 5 March 1998. shareholders, banks exercise control over the German model is defective in holding 12 Consider, for example, the case of Deutsche c. 50–55% of the shares of German corporations to their owners’ objectives: Banker Ulrich Weiss: during the Pirelli takeover companies.15 Although voting agents are protecting the rights of owners has little or bid for Continental, he was both chairman of required to solicit the views of the beneficial no place in the German system. In line with Continental’s supervisory board, and the owners, in the absence of instructions they German culture, the German system is director of Deutsche Bank with special are relatively16 free to vote the shares in their neither designed to nor used for protecting responsibility for Italy…; see Kochan, op.cit., p.67. own interests. At least prior to the KonTraG, property rights. A fundamental reason for For a discussion of conflicts of interest and in 22 of the 32 largest German companies, preferring the Anglo–Saxon system to all conflicts of obligation, see Elaine Sternberg, Just the banks regularly controlled enough votes the others is that it alone respects the Business: Business Ethics in Action (London: Little, to appoint all the shareholder represent- property rights that are so essential for Brown & Co. 1994, London: Warner paperback atives to the supervisory board.17 But as protecting individual liberty. 1995; second edition, Oxford: Oxford University already indicated, banks’ interests are often Press 2000) pp.100–102. 13 According to a report from the German at odds with those of the shareholders; 1 For a fuller description of the Anglo–Saxon and Monopolies Commission (quoted in Kochan, banks are not necessarily disposed or German models of corporate governance, see op.cit. p. 71), 75 out of 84 firms had a banker on equipped to protect shareholders’ interests. Robert Monks and Nell Minnow (1995), Cor- the supervisory board. In 31 cases, the banker Even more significantly, banks’ freedom porate Governance, Oxford: Blackwell, (‘CG’), and was the chairman of the board; in 18 of those 31 to vote the shares they administer applies Elaine Sternberg (1998), Corporate Governance: cases the bank was Deutsche Bank. even in respect of their own AGMs. Accountability in the Marketplace, London: Insti- 14 The supervisory boards of the disaster-prone Consequently, the banks which control so tute of Economic Affairs, (‘CGAIM’). KHD and Metallgesellschaft were headed by 2 For a full discussion of these problems, see much of German industry are themselves Deutsche Bankers; the collapsed Schneider 18 Sternberg, CGAIM, especially Chapter 4. effectively free of shareholder control. property empire, Daimler-Benz, and Volkswagen 3 Norbert Walter, chief economist at Deutsche Other companies may be accountable to the also are or have been under the supposed Bank, addressing a pensions conference; quoted banks, but the banks appear not to be supervision of the country’s premier bank/ in Cohen, Norma, ‘Restrictionist governments accountable to anyone. Far from improving shareholder. may fail to see the folly of their ways’ Financial accountability to shareholders, the German 15 In 31 of the 32 largest German companies, banks Times, 24 June 1996, p. 22. system thus effectively eliminates it for a control more than 50% of the votes. Baums, 4 All AGs and GmbHs with more than 5,000 em- major section of the economy. ‘Corporate Governance in Germany: The Role of ployees; Monks, CG, op.cit., p. 287. the Banks’, American Journal of Comparative Law, 5 Sternberg, CGAIM, op.cit, Chapter 3. ut there is an even more fundamental 1992, p. 503; reported in Du Plessis, Jean, B 6 For a full discussion of this conception of cor- defect of the German model: it actively ‘Corporate Governance and the Dominant Role porate governance, see Sternberg, CGAIM, op.cit.; prevents shareholders from determining Played by the Banks in Germany’, The Corporate Elaine Sternberg (1998) Stakeholding: Betraying corporate ends. The restriction starts with Governance Quarterly (HK) 2(1), March 1996, p.25. the corporation’s objectives, London: Social Affairs the German constitution,19 which requires See also Kochan, op.cit., pp.68-70. Unit; and Elaine Sternberg (1999) The Stake- that property be used to serve ‘the public 16 Although banks that own more than 5% of a holder Concept: A Mistaken Doctrine, London: The weal’, i.e., the interests of the German state. company’s equity and vote those shares are Foundation for Business Responsibilities (this The fundamental free-market presumption, banned by the KontraG from exercising open- latter publication is available online from the that property may freely be used to serve its ended proxies granted by clients, banks that Social Sciences Research Network on http:// owner’s interests, is therefore denied at the desist from voting their own shares, or have ssrn.com). outset. specific instructions from the clients, may vote 7 See Elaine Sternberg, CGAIM, op.cit., Chapter 4. The inclusion of employee represent- the proxies. 8 Consider Hilmar Kopper, Chairman of the 17 Baums, op.cit., p. 507. atives on the supervisory board is specific- management board of Deutsche Bank. Having 18 Most banks are, indeed, either member-owned ally intended to prevent corporations from retired early in recognition of the disasters cooperatives or municipally-owned savings pursuing courses of action that lack em- suffered by the bank during his management of banks; ‘Built in Bavaria’, The Economist, 26 July ployee support; so is the veto that employee it, he put himself forward to become head of 1997, p.91. representatives are allowed over the Deutsche’s supervisory board… Gapper, John 19 Article 14(2). Charkham, op.cit., p. 10. appointment of non-employee represent- and Fisher, Andrew, ‘Deutsche’s model of the 20 Sternberg, CGAIM, op.cit., Chapter 6, and atives to the supervisory board. Employee universal banker’, Financial Times, 31 October Sternberg, The Stakeholder Concept: A Mistaken advocates, and proponents of stakeholder 1996, p. 17. Doctrine, op.cit. theory, applaud such measures as providing 9 Nicholas Kochan and Michael Syrett (1991) New protection for employee interests. But by Directions in Corporate Governance, London: limiting corporations to those ends Business International Limited. It may, however, endorsed by employees, the German legal be possible to override an employee veto in the Dr Elaine Sternberg is the author of Just requirement constitutes an explicit restrict- second round of elections, which requires only a Business: Business Ethics in Action (second ion on the corporate ends that shareholders simple majority. edition, Oxford University Press, 2000) and of may choose. As has been argued more 10 Subsequently blocked by the trades unions… Corporate Governance: Accountability in comprehensively elsewhere,20 the price of Norman, Peter, ‘Bonn backs reform of shares the Marketplace (Institute of Economic such limitations is very high indeed: what is rules’, Financial Times, 7 November 1997, p. 2. Affairs, 1998). © 2002 Elaine Sternberg.

Jump to Contents 27 The European Journal March 2002

The Flawed WTO Tax Decision by Dr Daniel J. Mitchell

n a recent decision, the World Trade compete overseas, it is hobbled by the fact credits. Last but not least, a territorial IOrganisation (WTO) sided with the EU that foreign profits are subject to the US system is clearly WTO-compliant. and ruled that a section of US tax law is an corporate income tax (minus a credit for Indeed, most of our trading partners in unfair trade subsidy. any taxes paid to the country where the Europe already have territorial tax systems. According to the Geneva-based institut- money is earned). This may not make much European governments may impose op- ion, America's treatment of corporate difference when the company is operating pressive tax burdens on productive activity income from exports (as governed by ETI – in a high-tax environment like France, but inside their borders, but at least they are the Extraterritorial Income Exclusion Act) there are many jurisdictions that have very smart enough not to hamstring their violates trade rules. low corporate income taxes. And worldwide companies that are competing for business In many ways, this is a troubling decision. taxation makes it difficult for US companies in other nations. This is one of the few Most importantly, a dangerous precedent to compete in places like Ireland and Ber- aspects of European taxation that is more has been established. What happens, for muda. The fact that policymakers created pro-competitive than the American tax instance, when the French argue that Amer- ETI, and its ‘foreign sales corporation’ system. ica’s low tax rates are an export subsidy? As predecessor, is good evidence that they the Wall Street Journal stated on 17 January understand that worldwide taxation harms he Bush administration has already 2002, “Once tax policy is on the table, there's America's export-oriented companies. A Tissued some very positive statements no end to what the WTO might meddle in. territorial system will stop companies from about territorial taxation, as have important Which may be exactly what some Europeans fleeing America. lawmakers such as Ways and Means Chair- want. Saddled with their own anti- In recent years, major corporations such man, Bill Thomas. These officials should competitive, high-tax regimes, they would as Accenture, Ingersoll-Rand, Tyco and not hesitate to turn these good words into love to use the global trade bureaucracy to Fruit-of-the-Loom have shifted their concrete action. Territorial taxation is pro- force Britain, the US and other lower-tax headquarters out of America. In every case, tax reform and pro-competitive. It also is countries to become just as uncompetitive.” protecting shareholders from worldwide the only reasonable response to the WTO. The decision also reeks of hypocrisy and taxation was a major reason for the move. The only other two options – repealing ETI, double standards. The WTO has decided Indeed, America's punitive system of which would impose a big tax increase on America cannot choose how to tax certain worldwide taxation helps explain why a US export-oriented companies, and doing types of income, but European govern- recent merger resulted in Daimler-Chrysler nothing, which would allow the European ments are allowed to rebate the value-added and not Chrysler-Daimler. Simply stated, Union to slap steep tariffs on a wide range tax (which can reach 25 per cent) on worldwide taxation is a burden that is of American exports – are clearly not very exported goods. driving American companies to other attractive. In the final analysis, however, the WTO nations. Bermuda, a fiscal paradise that Shifting to a territorial system is the only decision is good news. Why? Because the does not tax either personal income or good response to the most recent WTO WTO has given US policy makers a reason corporate income, is a favourite destination. decision. Best of all, it will be a fitting to junk worldwide taxation of corporate A territorial system will significantly reduce revenge against the tax-harmonising income and instead implement a territorial compliance costs. The current worldwide bureaucrats at the European Union. The EU tax system. A territorial system is based on tax regime is one of the most complicated began this attack on America's tax code in the commonsense notion that a govern- parts of the Internal Revenue Code. Inter- hopes of forcing America to raise corporate ment should impose tax only on income nationally active companies have to file tax taxes and become less competitive. But if earned inside its borders, which is in stark returns overseas. But they also must list all US lawmakers shift to territorial taxation, contrast to a system – like America has now their foreign earnings when preparing a US the Brussels-based paper-pushers will have – that imposes tax on income earned in tax return. In an effort to minimise double- given us lemons and we will have turned other jurisdictions. Territorial taxation is taxation, they get to claim a dollar-for- them into lemonade. good tax policy for several reasons: dollar credit for the taxes they pay to foreign governments. But the paperwork burden territorial system will make Amer- generated by this process is extraordinary, Dr Daniel J. Mitchell is the McKenna Senior Aican companies more competitive. especially because of the myriad rules and Fellow in Political Economy at the Heritage When an American-based company tries to restrictions associated with foreign tax Foundation in Washington, D.C.

… news in brief paragraph 86 of the German penal code and thus a criminal enquiry is Did things turn Nazi in Neuötting? now under way. The people who claimed to have heard the cry were Several members of the Christian Social Union, the Bavarian branch of Social Democrat members in an adjoining room. The newly elected the Christian Democratic Union, have been arrested after someone Mayor, Frank Springer, said the accusation was a baseless calumny. He shouted “Sieg Heil!” to celebrate an electoral win in Neuötting. Several claims his colleagues were shouting the old carnival cry “Inn-Inn, Hei- witnesses claimed to have heard the infamous Nazi slogan coming out Hei”. He threatened to take legal steps if the criminal enquiry proves from a private room in a beer cellar near Passau. It is an infraction of groundless. [Handelsblatt, 4th March 2002]

Jump to Contents 28 The European Journal March 2002

on the “minimum health and safety requirements regarding the exposure of BRUSSELSBOURGER workers to the risks arising from physical agents (noise)”. The Council agreed to the by Matthew Elliott Commission’s proposal to reduce max- imum noise levels for places of work from A Rose by Any Other Name 90 decibels to 87 decibels, but the European European Union constitutes a milestone on parliament’s Employment and Social Affairs s we approach spring, Brussels- the way to a political union.” East Midlands Committee sought to strengthen the Abourgers are focused on the ‘Future of MEP Roger Helmer (EPP-ED, UK) replied proposals. Knowing that the parliament was Europe’ Convention which began its work at with the rejoinder: “This is why I (and most on equal standing to the Council on this the end of February 2002. Under the right-thinking people) reject it absolutely. But issue, the Committee tabled an amendment Chairmanship of the former French thank you for making the objective so clear.” limiting noise levels to 83 decibels. President (1974–1981) and President of the Another thought occurs to Brusselsbourger: Whatever the eventual outcome of this International European Movement (1989– Shouldn’t it be kilometrestone? tussle under the co-decision procedure, the 1997) Valéry Giscard d’Estaing, the directive will adversely affect the leisure and Geneva Declaration Convention will prepare the foundations for entertainment industry. Because sound is the 2004 Intergovernmental Conference n a further individual submission to the measured on a logarithmic scale, reducing (IGC). Much of the initial debate has IConvention entitled ‘The Future is Ours’, the permissible level of sound by even three covered the rules of procedure, in particular the YEPP claimed that “the single market decibels represents an actual decrease of 50 the power of the Chairman in relation to the and more recently, monetary union, have per cent. Pubs, clubs, concert halls and ruling body of the Convention. The Laeken secured prosperity for Europe’s citizens.” The sports stadiums will all be affected; but what Declaration named the ruling body the Declaration was drafted at their Council will it do to the work of the European ‘Praesidium’. The initial rules of procedure meeting in Geneva in Switzerland. Union? drawn up by Giscard d’Estaing used the Do As We Say … • Public scrutiny of Council meetings will term ‘Bureau’. Several Praesidium members still be allowed because the noise level were reported to have seen the term ‘Bureau’ he European Commission has outside the conference hall is 0 decibels. as an attempt to reduce the status of the Twarned the Czech Republic that it will ruling body to the advantage of the have to increase the number of women • The hushed voices of Commission Chairman, since Giscard d’Estaing was not involved in politics if it wants to become a officials, at 30 decibels, will continue particularly convincing when he said that full member of the EU. A Commission unabated as they discuss Paul van he found ‘Praesidium’ an ugly word in delegation highlighted the fact that only 13 Buitenen’s latest dossier. French (Bulletin Quotidien Europe, 28 per cent of politicians in the Czech Republic • Unfortunately, MEPs and their staff will February 2002). In the event, the rules of are female, in comparison to nearly a third no longer be able to enjoy the nightlife in procedure presented to the inaugural of Members of the European parliament. Brussels and Strasbourg, because the noise meeting of the Convention reverted to the The delegation claimed that “the position of levels in a busy bar represents approxim- term ‘Praesidium’. But were the unnamed women can be improved if the Czech Republic ately 90 decibels. Praesidium members correct in seeing a harmonises its law with EU legislation” (CTK ‘Praesidium’ as being more important than Czech News Agency, 7 March 2002), • Europhiles will be pleased to know, a ‘Bureau’? If they had consulted a good suggesting that European integration however, that the roar of disapproval from dictionary of politics, they would have inaugurates greater equality. the Irish electorate will be silenced when the found that whereas a Praesidium was Nice Treaty is superseded by the 2004 … Not As We Do merely a standing committee in the former Intergovernmental Conference (IGC). Soviet Union, the Politburo was the nearest eanwhile, at the first session of the Incidentally, the rapporteur for the Euro- it came to having a cabinet. M‘Future of Europe’ Convention, the pean parliament amendment to the direct- European Lobby for Women distributed Metric Muddles ive was Helle Thorning-Schmidt (PES, postcards showing a set of weighing scales Denmark), the daughter-in-law of the n the first day of the ‘Future of with the men, on one side, outweighing a British Commissioner Neil Kinnock and OEurope’ Convention, MEPs were e- token female, on the other. The caption says: substitute member of the ‘Future of Europe’ mailed a joint ‘Declaration of Associations’ “The future of Europe: do we have the right Convention. On the official Convention from the branches of the European People’s equilibrium? No! Tip the balance for equality website, the Danish socialist was initially Party (EPP): the association of Small and in Europe!” Of the 105 full members of the listed as a man (EUobserver.com, 7 March Medium Sized Enterprises (SME-Union); Convention, only 16 (15 per cent) are 2002). Perhaps this reflected the level of the European Union of Christian Demo- women. On the Praesidium, only 2 of the 12 common sense in her amendment. cratic Workers (EUCDW); the Youth of the members (16 per cent) are female. EPP (YEPP); the EPP’s Women Association Hush ! and the European Local and Regional Government Association (ELRGA). Their n the European parliament’s plenary Matthew Elliott, a researcher in the European message started with the proclamation that Isession in March 2002, MEPs passed an parliament, can be contacted at “the Convention on the Future of the amendment to the Commission’s directive [email protected]

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The EU: the European Miracle in Reverse by Professor Gerard Radnitzky

here is a close link between freedom keeping with methodological individualism the ascendant nation-states. It caused them Tand prosperity. Indeed, growth and and rational choice theory, I will analyse the to make significant innovations in strategy prosperity have always followed from incentive structure faced by individual and tactics as well as in armaments and institutional arrangements that foster actors to understand their motivations and logistics. The situation of economic and economic freedom – namely those which how these brought about a transformation military competition forced rulers to protect private property, freedom of in Europe’s fortunes. The right question to guarantee economic freedom to traders and contract and free, private markets; which be asked is: “What was (or would have been) investors. They did so out of sheer self- are open to the world; and which accept the in the interest of individual decision makers?” interest as economic growth was a source of equality of all (including political rulers) Investigating the initial conditions we find military power. before the law. that Europe’s luck was its diversity – The riches of the New World as well as This observation holds true between geographical diversity, linguistic diversity, domestic resources had to be discovered, countries and over time, and it can be and a diversity of capabilities and developed, and exploited. This led to the explained – otherwise we could not claim incentives. This diversity meant differences emergence of an intercontinental network that the two variables are intertwined. This in relative productivity and hence an of production and trade which stimulated relationship enables us also to make intensification of the division of labour. technological progress and investment in predictions ‘in principle’ – of the sort that Furthermore, there existed several Europe and the New World (globalisation is the political economist and Nobel laureate powers of approximately equal military indeed hardly a new phenomenon). On the F. A. Hayek called a “pattern prediction”. potential. This ensured continuous rivalry, supply side the overseas territories provided Such predictions are scientific so long as no not only in the form of economic but also of the Continent with raw materials. On the precise details are stated.1 I will apply these military competition.5 Following Ronald demand side they provided markets for the general considerations to the European Findlay’s6 ‘systemic’ view, I take ‘Europe’ or new manufacturing industries of Europe, Union: this essay’s title reveals my main ‘the West’ as a unit of analysis (other units opportunities for profitable investments thesis. would be East Asia, the Arab world…). By and later became the destination for a contrast, the ‘national’ view takes nation massive emigration from Europe of entre- The European Miracle states as units of analysis, and thus looks at preneurial, hard-working people. The istory offers many examples of the consequences of events for individual Dutch displaced the Iberian powers, which, Hdifferent institutional arrangements nations and at the motivation of national like France, were centralised and bureau- bringing about the success of some societies rulers. Systemic analysis highlights the fact cratised. The episodes of plunder and and the failure of others. The insight into that the West had multiple competing violence, especially by Spain, of the Indies the link between freedom and prosperity is centres and was therefore characterised by and the Americas proved to be a horren- well known to good economists.2 Poli- locational competition, something which is dous and wasteful mistake. The outward ticians all too often neglect it: even those particularly important for innovators. Since looking maritime states set the pace of that are not ignorant of economics and the various political units were in almost economic development, rather than inward history will often shut their eyes whenever ceaseless conflict with each other, in order looking land-based states such as the that insight conflicts with their personal to survive each of the Western states had Habsburg Empire, Prussia, and even France short-term interest, which is generally quickly to adopt the innovations of its to a certain extent. Agrarian states including winning the next election. The classical and rivals. The systemic view acknowledges and Russia, Poland and Hungary lagged far oft-cited example of an institutional set-up emphasises that the key comparative behind. Only the outward-oriented, non- leading to growth and prosperity, and hence advantage of the West was its “comparative centralised Low Countries and later Great to power, is called the “European Miracle” advantage in violence”, in the words of the Britain – first with its intellectual revolution from the title of Eric Jones’s famous book of Nobel laureate in economics Douglass in the form of the Scottish Enlightenment, 1981.3 Given that a miracle is, by definition, North. Thus it focuses on the long history of led by scholars such as David Hume, Adam something that cannot be explained, a naval rivalry in the North Sea and the Atlan- Smith, Adam Ferguson; and then with its better name for the phenomenon would be tic. By contrast, conventional historians Industrial Revolution – were able to initiate the ‘Eric Jones effect’. tend to ignore the economic significance of the modern industrial world.7 Until the year 1500, China, a closed, over- the use of force. A successful combination of Divided We Stand regulated and centralised society, was the commerce with warfare in an independent world’s most accomplished civilisation in polity (such as that witnessed in the ithout competition and relatively science, technology and organisational mercantile republics of Venice and Genoa, Wsecure property rights there would knowledge. At the time, Europe lagged far with the Dutch in the Atlantic…) was very have been no ‘miracle’, and Europe would behind the Chinese. The technologies rare outside Europe. Provided that there is a have stagnated at about the level it had relevant to the Europeans’ great voyages of rough balance of commercial capabilities reached in 1500, just as the Chinese empire discovery were imported.4 Ye t , f o u r h u n - between rival countries, the military edge of failed to progress. Findlay concludes that dred years later Europe ruled the world. one party may be decisive. The military the motto for the European states system How could this have happened? To try to revolution of early modern Europe is a should be: “Divided we stand, united we explain this monumental change, in product of the rivalry that existed between fall.”8

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Several episodes in modern history have and by introducing a burgeoning French politicians, working with German also been called ‘Miracles’, such as the ‘Ger- redistributive state (the infamous panem et industry and the banks, aimed to get rid of man Miracle’, which occurred following circenses or bread and circuses) – the the German Bundesbank. They worked that country’s post-Second World War parallels with the EU are quite obvious. together with a series of submissive German economic reforms. Similar developments What about other attempts? Charle- governments, from Adenauer to Kohl.13 have occurred in Japan, in East Asia and magne did not really wish to build a Euro- This is well documented. The French even in the Peoples’ Republic of China.9 In pean empire, since he divided his legacy politicians were more outspoken than their each and every case, institutional reforms among his three sons. The Holy Roman German colleagues. For instance, Alain protecting private property and civil Empire (which later became the German Juppé, former Foreign Minister in the liberties, freedom of contract, free private Nation or Germano–Roman Empire) was Balladur cabinet, claimed that Maastricht markets and increased openness to the out- fatally weakened in the Thirty Years War. would give Germany the right relationship side world have been rewarded by growth The emperor of the Casa d’Austria was vis-à-vis France: German proficiency would and prosperity. But it is the European interested only in his dynasty, not in the be more than compensated by French Miracle that exemplifies this relationship ‘Reich’. Bismarck did not harbour any genius.14 Balladur’s attitude towards the best of all. aspirations to European supremacy; he did market order can be seen from his dictum: Economic integration is clearly beneficial not even annex Austria. Adolf Hitler’s “What is the market? It is the law of the to all the nations concerned. But who profits ‘fortress Europe’ was but a short episode, jungle … the struggle against nature.” 15 from political integration? Why should and Stalin made it only to a line from the Destroying the Bundesbank leading national politicians want to induce Baltic to Berlin to Trieste or Sofia. nation-states to form a political union – be ermany’s submissiveness is equally Franco–German Alliance it a confederation of sovereign states, a big Gwell documented. For instance, multi-national superstate or a ‘judicial’ rance aimed at European supremacy Germany’s former President Richard von entity like the present EU, which belongs Fever since becoming a nation-state. This Weizsäcker once boasted that: “In Maas- neither to the first nor to the second ambition led to a series of wars starting with tricht we have rightly ratified the overall category? Absolute size does confer certain Louis XIV’s in the latter part of the 17th political [gesamtpolitischen] wish of the advantages in military conflicts. But nation- century and ending with Napoleon’s defeat French no longer to be dependent on the al politicians will only have an interest in the at Waterloo in 1815. In both the First and Bundesbank with its dominating D-Mark.” 16 promotion of political integration if they the Second World War, France had to be Roman Herzog reached the zenith of hope that they themselves may become rescued by American intervention, which submissiveness when during his time as members of the new EU political class turned out to be a humiliating experience. German President he made the euro a taboo which eventually will ‘rule’ Europe. They are Eventually France abandoned all hope of subject which was not to be questioned or likely to support centralisation in Brussels achieving European supremacy directly by discussed during general election and subjection to decrees from the EU military means. It changed its strategy to campaigns. In any other democratic bureaucracy, as this means less citizen con- an indirect approach: shrewdly and clan- country this would have caused an outcry – trol through elected national parliaments of destinely imposing its ‘model’ (étatisme, but not in Germany. However, it was not the rulers and of the influential, big rent- centralisme, dirigisme) on the evolving and only submissiveness which caused seekers. willing EEC. The French displayed brilliant Germany’s behaviour. Several interest negotiating skills. Their politicians and groups with close connections to Helmut The Battle of Arminius bureaucrats repeatedly demonstrated con- Kohl, including major banks and large o far, all attempts to rule ‘Europe’, siderable ability to bully their European industrial firms, wanted to get rid of the Sdefined as the western rim of mainland counterparts. Overall, they have been German Bundesbank. These groups, as well Eurasia, have failed. The Romans made the successful – take the CAP, the composition as the German government itself, had all first attempt. Their Pax Romana ended with of the personnel of the EU Commission and been suffering from huge amounts of debt the Arminius battle held in the Teutoburger the EU Court in Brussels. and felt that they needed ‘inflation relief’ to Wald in the year 9 of our calendar. The French strategy was willingly reduce the real value of their Deutsche Arminius’ victory destroyed the myth that accepted by the Germans, thus creating a Mark-denominated liabilities – at the Rome was invincible.10 The importance of Franco–German axis. Big business and the expense of citizens and small savers. Hence, that event can hardly be overstated.11 It may banks in Germany wanted a big market they supported Chancellor Helmut Kohl’s well be the most important event of with Brussels in control – less parliament bid to destroy the Bundesbank. Further- Europe’s whole history. Without it Europe and less Bundesbank. Germany’s ordinary more, large banks are the main creditors of would have become a European Empire: citizens also had much less commitment to states, many of which are de facto bankrupt: there would have been a precursor to the EU freedom and more of a tradition of sub- Belgium, Greece, and Italy are three almost two millennia ago. In the event, the servience to the ruling elite than, e.g., the prominent examples. If government debts regions east of the Rhine missed out on British or the French.12 This process was not are ‘socialised’ (vergemeinschaftet) within Roman civilisation. But this turned out to just a German capitulation to a power- the whole of euroland, the banks’ chances of be a price worth paying, because otherwise hungry France. Rather it was the emergence getting some of these debts repaid increase. unification would have caused Europe to of an ‘axis Berlin–Paris’, with the two core Moreover, the major European banks, and stagnate indefinitely, just as was the case powers planning to rule their neighbours, in particular the German banks, have large with China. In the end the Roman Empire regardless of any resentment in Rome, holdings of weakly performing Eastern destroyed itself by over-taxing its citizens Madrid, Stockholm or London . European investments. The banks were

Jump to Contents 31 The European Journal March 2002 playing paymaster to Eastern Europe not approximating a totalitarian state. The institutions of both countries failed to only during the Brezhnev and Gorbachev tendency is clearly visible. In their words converge. Who can guarantee that euro- eras but they have continued that practice they will continue to invoke ‘democratic land will not repeat that experience? even after the fall of communism. Mutatis values’; in their deeds they will be As pointed out above, it is imperative to mutandis, this applies also to big industrial interventionist, intensifying redistribution, focus on the personal interests of the key firms. Hence, they would all stand to benefit tightening controls and the monitoring of individuals involved when explaining the from a dose of ‘inflation relief’. the citizens. It is a safe prediction that a development of political entities (‘function- That the British kept a certain distance power-hungry political elite will consist- al’ explanations are spurious). Contrary to between themselves and the European ently attempt to reduce personal freedom. what is generally believed, the driving force project is understandable. They have They will conduct a ‘war against privacy’. behind the decision to abolish the Deutsche arguably always been more open and less Ideally their subjects should be ‘trans- Mark was the then German Foreign Minis- dirigiste than continental Europeans. There parent’, with as little privacy as possible. Of ter Hans-Dietrich Genscher rather than appears to be a basic difference in mentality course, there should be no financial privacy Chancellor Helmut Kohl.21 between the Anglo–Saxon world and the (Bankgeheimnis). Thus, the EU is bullying Genscher’s Plan Continental, which is demonstrated via Switzerland and Liechtenstein. The Federal their respective basic principles of morality. Republic of Germany stands as a warning: ince the Bundesbank was an inde In the Anglo–Saxon world the basic rule has it is in the process of becoming a sur- Spendent institution, Kohl and Genscher been that “everything is allowed that is not veillance state, with characteristics which could not control it. In fact, monetary explicitly forbidden”. On the continent the include the ‘thought police’ (Gesinnungs- policy and economics did not interest them, basic rule is that “everything is forbidden that staat). When crossing the German border, and they were ignorant of both fields. They is not explicitly allowed”. To this the the maximum amount of cash (or jewels) were, however, keenly interested in joining Germans have implicitly added “and what is that people may carry must not exceed in the game of foreign and defence policy, allowed is compulsory [Pflicht, a duty]”. €15,000 or its equivalent; on discovery the which they perceived to be an area where In summary, it is most fortunate for ‘incident’ is reported to the local tax one can dabble without possessing any Europe that Charles V, Philip II, Napoleon authorities.18 The EU is on the road to a special knowledge. Genscher was par- Bonaparte, Adolf Hitler, and Joseph Stalin ‘New Totalitarianism’. The tax cartel of ticularly interested in his personal influence proved unable to impose a unified bureau- states is a mechanism which enables the in Europe. He “was prepared to offer France cratic order on the whole of Europe. European political class quietly to exploit its the bait of diminution of German national Undeserved luck, certainly, but Fortuna is citizens without recourse to violence. The sovereignty in monetary policy, an area that capricious. result is a ‘Fortress Europe’ characterised by did not interest him a great deal, in order to political rent creation which fosters a increase Germany’s diplomatic weight.”22 Hayek versus Delors dependency culture.19 Genscher and Kohl thus decided to hand alf a millennium after the Brussels will push through one ‘social over a national policy instrument they did Hdiscovery of America, Western Europe charter’ after another, invent more and more not control in exchange for being admitted found itself at a crossroads: the choice was ‘social rights’, and abolish more and more as major players in the game of European between a ‘Hayekian Europe’ and a freedom in the name of ‘social justice’. The construction. They could not care less ‘Delorsian Europe’.17 The first possibility EU will be marked by protectionism, about what the German people were was a multiplicity of states engaging in regulation of labour markets, excessive size thinking, what was in the interest of citizens, political competition at all levels, including of the EU federal government and bureau- or about the warnings of the economist currency, tax and inter-jurisdictional cracy, confiscatory taxes, interventionism, elite. Kohl actually despised “economics and competition. Such a regime would be and polititicised courts. The European all that nonsense” (as he once said). In characterised by openness to the world and Court of Justice is an example; it is account- addition, remember that in Germany co-operation whenever it was deemed able to no one.20 The EU has become an ‘democracy’ means nothing more than useful. This set-up would have a high entity that as such will be progressively allowing the people at regular intervals to potential for evolutionary discovery, a inimical to liberty. Freedom will be change the relative numbers of back- process similar to natural selection – versus curtailed by salami tactics, which is the benchers. In fact, it is fair to say that a centralised superstate under an inter- normal way, as F. A. Hayek told us in the Germany’s leading politicians despise the ventionist corporatist regime, implement- Road to Serfdom. people: plebiscites were and are unthinkable ing a constructivist design: dirigisme, How could Helmut Kohl & Co. manage to for them. So Kohl and Genscher offered planification pure à la Française (“l’EU c’est get rid of the Bundesbank and establish the France the Bundesbank as bait. moi”). euro? Today that feat would be impossible. This master plan did not work out exactly The choice was made. The current shape Euroland is not the first multi-government as intended, because they used up this of the EU appears largely the unintended monetary union. None were successful. For bargaining chip during the negotiations consequence of actions by members of the instance, Singapore and Malaysia had a over German unification. France’s then classe politique acting as rational max- single currency from 1962 to 1971/72. It President, François Mitterand, did what he imisers of what they regard as their personal collapsed because of divergent macroeco- could to hinder German unification, but he interest – power and income. The wider nomic policies and differing productivity was de facto powerless. He could, however, public, meanwhile, was indifferent, cynical trends – ultimately because the two inde- have frustrated Genscher’s desire to or brainwashed. A maximum gain for the pendent governments were not prepared to participate in the European game of foreign classe politique can be reached in a regime give up sovereignty and because the social policy. Mitterand’s and Kohl’s closest

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foreign policy aides testified that “French state debts as security for the issuance of parties successfully prevents political com- reticence vis-à-vis unconditional reunifi- new money. This means that a commercial petition; whereas in commercial markets cation led to the single currency.” 23 Roland bank may present to the ECB its loans to, cartels do not last, the longevity of the cartel Vaubel points out that Margaret Thatcher say, the Greek state and thereby acquire is assured under political markets. For some was disappointed by Mitterand’s changed fresh euros, as Josef Schueßlburner has time to come non-centralised Switzerland attitude, and he asks whether she did not pointed out. with its referenda may remain as an oasis, understand “that Mitterand had made his The German government tried to make once again surrounded by totalitarians. separate peace with Kohl in exchange for the the euro more palatable to an unwilling Competition is not only the best but also mark?” 24 population by claiming that the European the only way to curb power. The EU will After the French effort to achieve ‘more Central Bank would be even more inde- systematically attempt to restrict or even equitable burden-sharing’ had failed, a pendent than the Bundesbank. However, eliminate competition at as many levels as Franco–German Economic and Finance the ECB suffers from crucial structural and possible. Centralisation will continue – the Council was set up. However, the President institutional weakness: it is not a centralised ratchet will move up a few notches – and of the Bundesbank rejected any non-voting decision maker, something which is a sine power will drain slowly away from the states membership, and the Bundesbank qua non for success in currency dealings. and be transferred to a super-state in successfully asserted its exclusive statutory Instead, the ECB is a club of national central Brussels. With the transfer of powers to responsibility for monetary policy in banks with different economic and political make collective decisions from national to 1988.25 In this situation, discussions took interests. During its early decades, manage- supranational institutions, the similarities place between the French and the German ment of the US dollar was conducted between the EU and the former USSR will foreign ministers (Roland Dumas and according to similar rules – until it came to become even more conspicuous.32 The Hans-Dietrich Genscher). The two a crisis. Powers were then centralised in the politburo has moved from Moscow to postulated that the single market needed a hands of the New York Federal Reserve Brussels with its 20 unelected Commissars. European monetary area with a central Bank. As Wolfgang Kasper has argued, such The only force which can exert real bank to complement it.26 Genscher seized an agency is indispensable in the quickly discipline on a federation or on an emer- the initiative with his Memorandum on the changing world of money. The alternative is ging multinational superstate is the fear of Creation of a European Monetary Area and a indecision, foul compromise and inflation, the secession of several member states. European Central Bank of 26 February 1988. as Bernard Connolly has pointed out.27 There is no formal right to secede from the Although it was originally intended for Also the claim that the ECB will be EU; the European political class has every internal discussion in his Party, the FDP composed of responsible, seasoned bankers reason to rule it out a limine. A state that (Liberal Party), it was forwarded to the Bun- is open to doubt. The Bundesbank itself has were to want to secede would most likely be desbank the same day. Genscher proposed been eroded; Karl Otto Pöhl was the last of called a ‘terrorist state’. Within the EU even to the European Council in Hanover on 27– its Presidents who embodied the ‘spirit of the exit option – voting with one’s feet – 28 June 1988 that they should establish a the Bundesbank’. It is instructive to read becomes pointless if the state to which one body to work out the principles. The Roland Vaubel’s 28 devastating criticism of flees has the same laws and regulations as all proposal made allowance for the misgivings the position of Otmar Issing, who is a the others. of France and other member states about member of the Executive Board of the ECB An End to Competition the dominance of a Bundesbank motivated and was previously a Board Member of the solely by the goal of price stability, in line Bundesbank.29 urrency competition has been with its statutory responsibility. In Hanover Why should the political class in Europe Celiminated. Fiscal harmonisation is on the Council appointed a study group under wish to replace national autonomy with a the agenda. Tax competition is deemed the President of the EC Commission, centralised, all-pervasive political authority, ‘harmful’ by the finance ministers of the Jacques Delors. The Delors Committee the European super-state? Because its high-tax states. But the low-tax states will be presented its Report on Economic and members are recipients of the rents gener- reluctant to join the tax cartel. The social- Monetary Union in the European ated by European political activism. No democratic Constitution of the emerging Community in April 1989; the Report was wonder that they behave like the priest of a EU multinational superstate will solve this accepted by the Council for further new political religion,30 the custodians of ‘problem’ by drawing fiscal powers away negotiations on 26–27 June of that year. In the Holy Grail of ‘European values’: ‘demo- from the member states and also imposing the end the French had won, and the cracy’ and political correctness. Conform- an EU tax system. Bundesbank with its long commitment to ism to this secular religious ideology Jurisdictional competition will also be price stability was doomed. becomes a moral imperative; heretics are abolished. This is because in a system persecuted.31 The word ‘democracy’ has to characterised by individual liberty, capital Sleight of Hand be taken with a pinch of salt. For instance mobility, free trade and the international he Maastricht Treaty was a jurists’ the currency issue was not put to a popular division of labour will soon discipline a Ttrick. It explicitly rules out the vote in Germany, where an overwhelming government that has high taxes, restrictive ‘socialising’ of state debts within euroland. majority wanted to retain the D-Mark. labour laws and a host of counterproductive But this prescription for currency Anybody requesting a plebiscite on as regulations, burdensome state and welfare management was undermined by the fundamental a question as that of the arrangements. Countries with institutions guidelines of the European Central Bank monetary constitution and the choice of a that promise better returns to mobile (ECB), which explicitly permit the Bank to currency was labelled an “enemy of Europe”. investors will attract capital (including accept non-marketable demands such as In Germany the ruling cartel of political human capital), and hence will prosper. As

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such capital movements would discipline 1990 and 1st in Europe; by 2000 it had 4 The compass, stern-post rudder, gunpowder the ruling class, the EU wants to reduce dropped to 15th. During the same time, (Chinese cuisine) and cannon came from jurisdictional competition. The euro- France went from 16th to 34th; Belgium China; the lateen sail and knowledge of the fanatics try to discredit the less inter- from 2nd to 20th; the Netherlands from 5th winds and currents of the Indian Ocean came ventionist and socialist political regimes by to 9th Many other EU countries have from the Arabs. calling jurisdictional competition ‘social stagnated in the international league tables: 5 W. Kasper and M.E. Streit (1998) Institutional dumping’. After the end of the Cold War, in Italy was 23rd in 1970 and 24th in 1999; Economics – Social Order and Public Policy. the 1990s, ‘overt socialism’ collapsed and Spain went from 25th to 29th; Greece from Cheltenham: Edward Elgar. See Chapter 12. ‘creeping socialism’ had to be marketed 31st to 38th. Over the same period, there 6 R. Findlay (1992) “The roots of divergence: under a new guise in its stead. One of the were also a few marked improvements: the Western economic history in comparative EU’s stated aims is “to close the prosperity UK rose from 27th to 4th and Ireland perspective”, American Economic Review 82(2): gap”. The EU believes that this can be progressed from 23rd to 6th. The economic 158 – 161 (May). achieved by imposing high and uniform consequences of such improvements in 7 P. Bernholz, M. Streit, and R. Vaubel, R. (eds.), welfare provisions and ecological standards economic freedom are well known and (1998). Political Competition, Innovation and across the whole of Europe.33 should surprise no one.38 Growth. Berlin: Springer. See the articles by de A perfect example of the EU’s arrogance But which policy design will win the Vries and Pollard on pages 209–222 and 223– is its attempt to limit economic freedom in upper hand under EU ‘harmonisation’: the 238 respectively. other countries. A case in point is the Kyoto ‘Anglo–Saxon model’ or a combination of 8 Finlay, op. cit., p. 161. Protocol’s bid to make Australian metal the ‘Rhenish model’ of increasing control 9 W. Kasper (2001–2002) “Economic freedom processors and metal industries less with Mediterranean dirigisme? It will be watch”, Policy (Australia) 17(4): 37–43. competitive.34 The EU even tries to impose interesting to see how the EU fares in the 10 J. Baechler (1995) Le capitalisme I: Les Origines. its environmental standards, which are 2002 Index. Paris: Gallimard. See p. 308. designed for a densely populated continent, The Maastricht Treaty is succeeding in 11 Baechler writes: The date of 9 April should be on New Zealand’s metal industry. creating an artificially ‘harmonised’, bur- considered by Europeans as the most eaucratised European welfare state, a taxing important date of their whole history. “La Decline and Fall cartel of states, a protectionist ‘fortress date de 9 apr. J.-C., … ou d’Arminius anéantit les n the current intellectual climate, Europe’ (similar to that of which Hitler trois légions … devrait être choisie par les Ithe mass marketing of politics by the dreamt). This artefact will not be able to Européens comme la plus importante de toute state-owned media will bring about a meet the challenge of the economically leur histoire.” See Baechler, Le capitalisme, op. situation in which the public passively dynamic USA and Pacific Rim states. A new cit., p. 328. accepts the degree of freedom the EU era may begin, an era of a united European 12 Subservience to the state and its elevation, e.g., government is prepared to grant it.35 Again welfare state failing to keep up with com- in Hegel to “God’s idea on earth” (“Der Staat is the Federal Republic of Germany serves as a petition in America and the Far East. This die göttliche Idee wie sie auf Erden existiert”) led warning: not only governmental but also conclusion is a scientific ‘pattern pre- to eponyms like ‘state slaves’ or ‘maladie non-governmental censorship has been diction’: if it is not restrained, the EU will allemande’ (Raymond Klibansky). conspicuous, particularly in the writings of eventually lead to the unravelling of the 13 Helmut Kohl was certainly the best Chancellor modern history and its treatment in the ‘European Miracle’. the French had ever had and will ever have. media.36 The public will wait for permission 14 Libération, 6 September 1992. granted ‘from above’ – slavery can best be 15 Quoted from an interview in the Financial marketed by calling it ‘liberty’. Brainwashed 1 Thus, in 1920 the Austrian economist Ludwig Times, 31 December 1993. by both the electronic and print media, the von Mises predicted the fall of the Soviet 16 Die Woche, 19 September 1997, translation by public forgets that freedom is not given but Union, because he recognised that that system Gerard Radnitzky. has to be ‘taken’ by those with a modicum of was untenable in the long run. Had he 17 G. Radnitzky (1991) “Towards a Europe of free courage and self-confidence.37 To the more specified a date for the collapse of the USSR, he societies: Evolutionary competition or tangible, visible costs of the EU should be would have turned his prediction into a constructivistic design”, Ordo. Jahrbuch für die added the enormous opportunity costs; prophecy, since the date when a particular Ordnung der Wirtschaft und Gesellschaft costs in the form of what ‘Europe’ could event will happen depends essentially on the 42:139-169. have achieved if it had institutions favour- initial conditions (singularities). These are 18 The ‘war against privacy’ has a long tradition in able to economic freedom and openness. influenced by human action, which cannot be Germany: one of the slogans of the National In this context it will be interesting to predicted – after all, ‘action’ means that an Socialist German Workers Party was: “We do no observe how the EU will fare in indices individual could have behaved otherwise. longer have private people” [Privatleute haben rating economic freedom and prosperity Moreover, actions often have unintended and wir nicht mehr]. Capital flight was punishable such as the Fraser Institute’s Index of unforeseeable consequences. by death. Economic Freedom of the World. In recent 2 I take this to be an analytical sentence: an 19 As Bismarck shrewdly commented: dependent years, key European countries have lost economist who denies this link I would not call people are easier to rule. The Swedish Social- ground in economic freedom ratings. In a ‘good economist’. Democratic Party designed the ‘Swedish 1970, Germany was the 7th freest economy, 3 E. L. Jones (1981) The European Miracle: Environ- model’ – the advanced welfare state – to foster by 1999 it had dropped to 15th. In the World ments, Economics, and Geopolitics in the History such a culture, because it offers the best Competitiveness Report (World Economic of Europe and Asia. (2nd Edition 1987). guarantee to be re-elected. Forum in Geneva) it rated 3rd worldwide in Cambridge, MA: Cambridge University Press. 20 A. Evans-Pritchard “Now it’s blasphemy to

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mock Europe”, The Spectator, 10 November Peter Bernholz of Hans Tietmeyer on 9 July Jasay, “all but a few are moving towards this 2000. 1995. socialist superstate with their eyes wide shut.” 21 R. Vaubel (2001) “The Road to Maastricht: 27 Connolly, op. cit. 34 W. Kasper (2001–2002) “Economic freedom Negotiating Economic and Monetary Union 28 R. Vaubel (2000) “Commentary on Issing” in: watch”, Policy (Australia) 17(4): 37–43. See p. 42. (review article)”, Economic Affairs, September Hayek, Currency and competition and European 35 Admittedly, there is increasing resentment 2001. London: Institute of Economic Affairs. Union, Occasional Paper 111. London: Institute among young people in Italy, Sweden, Spain See p. 61. of Economic Affairs. See p. 62. and even in Germany as books and periodicals 22 B. Connolly (1995) The Rotten Heart of Europe: 29 When secession rights were discussed at the testify. The Dirty War for Europe’s Money. London: Faber 2001 regional meeting of the Mont Pèlerin 36 See the work of the human rights analyst and Faber. See p. 74. Society, Peter Schmidhuber, a former banker at Alfred de Zayas. 23 See Jacques Attali (1998) The History of the Euro the Bundesbank caused a murmer by claiming 37 A de Jasay (1997) Against Politics. London: as well as Horst Teltschik’s diary of 1991: 329 axiomatically: “The EU is for ever.” Routledge. See especially the section on liber- Tage, p. 61 and his book Verbatim of 1995, vol. 3, 30 This term and concept were introduced by ties versus rights. pp. 353 f. Erich Voegelin in 1938 and by Raymond Aron 38 J. Gwartney and R. Lawson (2001). Economic 24 Vaubel, op. cit., p. 62. in 1939 [religions séculaires]; see also H. Freedom of the World, Annual Report 2001. 25 See P. Bernholz (1999) “The Bundesbank and Bouillon, (ed.) (2001) Do Ideas Matter? Brussels: Vancouver, Canada: Fraser Institute. See the process of monetary integration in Center for the New Europe, pp. 43 ff. Chapter 5. Europe.” in Deutsche Bundesbank (ed.): Fifty 31 See Evans-Pritchard, op. cit. years of the Deutsche Mark, Central Bank and the 32 See B. Vandulet (2001) “Macht und Ideologie in currency in Germany since 1948. Oxford: Oxford Europa: Wie die EU regiert wird”; Deutschland- Gerard Radnitzky is Emeritus Professor of University Press, Chapter 15, pp. 731–789; see Brief (August/September), pp. 6–13. Philosophy of Science at the University of also Historisches Archiv der Deutschen 33 See A. de Jasay, “Europe’s Social-Democratic Trier in Germany. Information about his Bundesbank. Government”, Wall Street Journal Europe, 5 publications is given on his website at 26 Bernholz (1999), op. cit. See the interview by December 2000. In the apt wording of A. de www.radnitzky.de Ships Passing in the Night by John Rennie Stewardson uring the first weeks after the of Europe were not prepared to accept recent times spanned about 8 or 9 years, and Dintroduction on 1 January 2002 of the federal union. So these politicians planned our own performance over such a time euro as the everyday currency of the twelve to lead their people “slowly and should be the minimum realistic assess- members of Economic and Monetary unconsciously” towards integration and ment period. This accords more with Union (EMU, that flightless bird), we have political union. By the roundabout way of Gordon Brown’s thinking which reportedly been hearing many and varied views about the innocent-seeming Common Market centres around 2008 or 2009 for entry, its reception by the people. Although the through the Single Market and on to whereas Tony Blair is keen on 2003. cost of the introduction has amounted to Economic and Monetary Union, and then Meanwhile, in mid-January 2002, Gus scores of billions of pounds sterling for the the trap would snap shut and their goal O’Donnel, the head of macroeconomic EU membership as a whole (including would be achieved. But it is becoming more policy and international finance at the preparations in the UK, it should not be and more widely recognised that monetary Treasury, and his predecessor Sir Alan forgotten), the peoples’ use of the euro as a union is a mere stratagem masking the Budd, have firmly stated that economics can currency is only part of the picture, and I purpose of bringing about integration and never be “clear and unambiguous”, that there suggest that we should all be pondering the federation. Leading figures have been is always room for disagreement, and that wider considerations. saying this for many years all around the EU the decision to join will ultimately be (except in the UK), and Romano Prodi, political. he Governor of the Bank of England, Commission President, said it again on the In January 2002, Romano Prodi TSir Edward George, has said that a BBC on New Year’s Eve 2001/02. reminded the Government that the UK single currency is not necessary for a single However, Gordon Brown and Tony Blair should join the Exchange Rate Mechanism market, but that once it is in place it will lead are still clinging to their charade of the five (ERM) for two years before joining the to political union. Also, history has shown economic tests as their criteria for the UK’s Third stage of the EMU, although this that when monetary unions have been set readiness to join EMU Third Stage, subject requirement was waived in the case of Italy up between non-federated states, they have to a referendum. These tests are purely and Finland when they joined the euro. failed after a few years. There are several subjective and are largely unmeasurable Prodi has spoken of it as a Treaty obligation examples of this from the 1850s onwards. with precision. Also, even if compliance on the UK to join the ERM first, but Article Indeed, it has since the 1940s been the with the Treaty convergence criteria is 1(6) of the Resolution of the European desire of many socialist-communists deemed to be achieved, the Treaty require- Council on the new ERM states that leaders of several Western European ment of sustainability of compliance cannot participation is voluntary for member states countries to create a federal union first, to be calculated for several years. This is outside the euro area. Prodi’s statement be followed by economic and monetary because, assuming no untoward economic reawakens dreadful memories of the UK’s union, but they calculated that the peoples shocks occur, the UK economic cycle has of two ruinous years of 1990–92 when it was a

Jump to Contents 35 The European Journal March 2002 member of the ERM for the first time. billion euros. (It should be added that, we don’t follow through with the con- During those fateful two years we suffered a according to The Economist, whilst sequences of such a Union. I am convinced we huge rise in business bankruptcies, over Germany’s unemployment in March 2002 will need a common tax system.” He also said 60,000 homes were repossessed, the value of is at 9.6%, France’s is at 9.0%, and Spain’s is it was clear that if the UK were to join the 1¾ million homes fell below their mortgage at 12.8%.) By contrast, Ireland, one of the euro, it would have to agree to co-ordinate levels, unemployment nearly doubled, and smallest members, is in real need of higher its tax policies with those of its EU partners. the cost to the nation of the failed venture interest rates, to curb inflation. These This view accords with Romano Prodi’s was estimated to be between £68 and £79 members, like all the others, can do very attitude that the euro would create a billion. The whole disastrous blunder was a little about it, having been deprived by the situation allowing the EU to impose a range shot in the dark. Next time, if there is one, ECB of the control mechanisms of exchange of economic policy harmonisations that it there will be no excuses. rates and interest rates. So, staying with the had hitherto found it politically Several of the twelve members of the maritime imagery for a moment, it is not a unacceptable to introduce. Other sources EMU fudged their economic figures case of the eurozone members ‘sailing in see potential dangers for the euro, for straining to meet the convergence criteria convoy’, but rather being ‘ships that pass in instance, the Organisation for Economic for joining and were allowed in by a the night’. Co-operation and Development (OECD) complaisant Commission exerting a cynical Adding a stir to the EU cauldron, some believes that the euro’s success depends on elasticity on the Treaty requirements. Now, eurosceptic noises this January have been major structural reforms to push forward a three years on, we see from the Com- coming from Italy, Germany and France. flexible and open economy. The OECD mission’s EU Economy Review 2001 that the Italy’s Prime Minister Silvio Berlusconi, report in mid-January 2002 reveals that far inflexible nature of the ‘one-size-fit-all’ himself a non-federalist, has some in his from converging, EU economics have been exchange rate and interest rate regime of the cabinet who, according to reports, have diverging since the Third Stage of monetary European Central Bank (ECB) is causing been rocking the boat. Antonio Martino, union began three years ago. It questions serious problems for at least five states: the Defence Minister, suggested that the how a single currency can operate properly Spain, Holland, Finland, Ireland and Portu- euro could end in failure and perhaps even in a zone where sudden changes, such as gal. The Review describes the condition of jeopardise European peace. Eiulio Tremon- increases in the oil price, can lead to Portugal as “alarming”. ti, the Finance Minister, made derogatory asymmetric shocks which affect some remarks about the euro, as did Umberto countries and regions more than others. t is a constant source of amazement Bossi, Minister for Institutional Reform. In The Report says that the introduction of the Ito many that the Commission and the Germany, Edmund Stoiber, Bavarian State eurozone remains stifled by cumbersome twelve members could ever seriously believe Premier for nine years, was nominated in administration reputations, rigid labour that the ‘one-size-fits-all’ exchange rate and January 2002 to challenge Chancellor markets and high operating costs. This interest rate system of economic govern- Schroder in the September 2002 elections. concern is shared by the Bank of England’s ance would be suitable and effective. The Stoiber is eurosceptic, anti-federalist, pro- director for Europe who warns of the risks Twelve (as indeed the 15, or later the 20, or freemarket, against EU tax-harmonisation of joining a ‘one-size-fit-all’ monetary 27) are all countries entirely different from and has strong reservations about the euro policy with sterling over valued and each other in every way including their and enlargement. Developments on the European markets remaining unreformed economic cycles, so divergence was always German scene in the next few months and inflexible. Even Gordon Brown at the bound to happen, and happen repeatedly. should be interesting. In France, Professor G7 meeting of industrial nations in April The imagery of states joining the EMU and Jean-Jacques Rosa, a eurosceptic economist 2001 observed that matching the eurozone’s steadily ‘sailing in convoy’ at a common of the National Foundation of Political 2% inflation target “would risk lower growth speed and course is the merest fantasy and Sciences was quoted in January 2002 as and higher unemployment.” is not remotely in touch with reality. It is expressing the following view: “Economists Coming back to the introduction on 1 highly improbable that all twelve will ever have been saying for years that the euro January 2002 of the euro as the everyday converge together, but if they do so at some would eliminate major variations in prices currency for the eurozone, the media have point, it will be for a fleeting time. A few of across Europe. I don’t know whether they been full of comments on the various the twelve may converge for slightly longer, really believed it or whether it was pure aspects of this event and have given great but that too is sure to pass. The economic propaganda. Now customers can see for importance to it. But from the political cycles of the Twelve are specific and themselves that it is a ridiculous and impos- perspectives, the euro-for-shoppers-and- individual to each state and cannot be sible idea. If you have independent states with travellers is as a grain of sand compared wrenched into conformity with all the their own fiscal policies, tax regimes, salaries with the mountain of problems and others. As we have been seeing recently, the and customer habits, then the euro will never disadvantages which would follow in the biggest and most powerful member, be worth the same in each of them. The only train of joining the Third Stage of EMU if Germany, is virtually in recession, with way it will is if you create a European the UK were to take that disastrous course. unemployment at over 4 million, and is Superstate controlled centrally – and that will First of all, how will the Government undergoing its worst economic perform- never work.” attempt to satisfy itself, and the country, as ance since 1993, and it badly needs lower to the fulfilment of the bogus five economic interest rates. On present form, Germany is upporting the federalist line, at tests? The Budget Economic and Fiscal getting closer to infringing the Growth and Sthe end of 2001 Hans Eichel, the Strategy Reports in 2000 and 2001 said the Stability Pact under the Treaty, and if it does German Finance Minister, was reported as determining factor is the national economic so, it could be liable to fines of up to 10 saying: “The currency union will fall apart if interest and whether the economic case for

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joining is clear and unambiguous. At this requirements were reinforced and all Pascal Lany, depriving the UK of its point we should recall the Treasury officials’ member states were required to “start the national status at meetings of the World view mentioned earlier, as well as the Treaty process leading to the independence of its Trade Organisation. A likely consequence at requirement of “a high degree of sustainable Central Bank”. Bank independence was an some stage is that the UK representatives on convergence”. Then, how would the Govern- early initiative of Gordon Brown, in the UN Security Council, the G7 group of ment deal in the position if it purported to obedience to the Treaty, soon after Labour industrial countries, the World Bank, the be satisfied on the five economic tests? What gained office in May 1997. Since then many International Monetary Fund (IMF) and forms of enquiry would be allowed, and by of the Chancellor’s actions and decisions other bodies would likewise cease to act whom? Would thought and detailed debate have tacitly been taken with the Treaty and would be replaced by representatives of be given time in both Houses of Parliament? framework of requirements very much in the EU. How would the Referendum Questions be mind. The latest Council opinion on the drafted, tested and debated, and by whom? updated convergence program for the ver the next several months it Would ample time be allowed for that United Kingdom 1999/2000 to 2005/2006 Owill be interesting to see how the euro process to be checked and challenged by all was issued in February 2001, continuing performs in relation to sterling, the dollar the appropriate people? If after unremitting their monitoring vigilance. and the yen, and whether and how it is propaganda and persuasion from the If this Government were to take us into influenced by the newly introduced notes Government the people yield and say ‘Yes’ to the euro, in addition to being thence- and coins for use by the general public. In the referendum and the UK were to join the forward under ECB control regarding the UK various polls show that a continuing eurozone, would we be required to join the exchange rate and interest rate, and even solid majority of the population do not new ERM for the two-year period more under the scrutiny of the Commis- want to join the euro, and important beforehand? And, of critical importance, sion, we would be subject to the progressive indicators such as employment levels, would we be likely to be allocated an harmonisation of a range of taxes including economic performance, and inward foreign appropriate exchange rate, with probably VAT, corporate, capital and ultimately investment support the view that we are differing views in the Commission and income tax. Increasingly every aspect of our safer and better outside the euro than in. amongst the various member states as to economic, monetary, fiscal and social Perhaps prompted by the polls and these what that rate should be? This went terribly policy would be controlled. The EU federal- indicators, in late January 2002 more than wrong in 1990 when we first joined the ists are using the 11 September situation 30 Labour MPs and Peers signed a letter ERM, and it would be devastating if it and also the approach of the enlargement urging the Prime Minister to defer a happened a second time. As part of the issue as stimuli to hasten steps toward referendum on the euro until after he has joining routine, we would have to hand over further integration. Amongst these will kept his pledges on health, education, and forever our foreign reserves (of the order of surely be the removal of more vetoes, 30 or transport. The thrust of their message is £26 billion) for the ECB to manage and use 40 which disappear in every treaty, the that the huge economic expense of joining as it sees fit, and subscribe to the ECB’s objective of the Commission being the euro, this “costly distraction” as they call capital, and make further payments if called qualified majority voting (QMV) by it, would make it impossible for the govern- upon to do so. member states on all decisions. If the UK ment to improve the public services before were to join the euro and these changes the next election. s the UK has remained outside the occurred, we would become, more There are always many imponderables in Aeurozone (which started with the completely than we are already, a mere the EU scene, and perhaps the only Third Stage of EMU on 1 January 1999), it province in the EU, and our influence in the certainty is that a state of flux will continue. may not be widely realised that the wider world would be eroded. Our national Commission and the Council have been stance in the world scene on issues such as overseeing the economies and finances of Foreign Affairs, or Defence, or Police and John Rennie Stewardson is the author of The all member states for many years. During Crime, or the Environment would not be Ratchet – A Cool Look at the European the First Stage of EMU, started in July 1990, propounded by a UK Government Minister Union, ISBN 0-9534697-1-9, The June Press every member state had to adopt measures but by an appointee of the Council advised Ltd, PO Box 119, Totnes, Devon TQ97WA; and ‘multiannual programmes’ to ensure by the Commission. In fact, this has already tel: 01548-821402; www.junepress.com. The lasting convergence. In the second stage, happened in the case of Trade, where the EU Ratchet is available direct from the publisher which started in January 1994, those spokesman is the French Commissioner for £6.99 + 10% p&p.

… news in brief Now the whole aid effort has been centralised in an organisation called Commission claims to be dealing with its aid problems EuropeAid, which now disburses nearly 6 billion euros per year. Yet In January 2002, the European Commission was the object of an despite the alleged improvements, EuropeAid still has some 20 billion outburst by the coordinator of the Stability Pact for the Balkans, Bodo euros stuck in the bureaucratic works. This money is the funding for Hombach. He accused the bureaucratic process of gigantic delays in projects that have never come to fruition. For the Balkans, the amount distributing aid. These were indeed quite stupendous. It took nearly of aid money which remains to be liquidated – i.e. money which has two years for food aid to be delivered and nearly four years for never reached the Balkans – is just under 1 billion euros. There are activities connected to human rights to get under way. It took over six therefore thousands of projects which have been announced and and a half years for aid to reach Latin America and over 8 years for aid agreed to but which have simply never been implemented. [Laurent to reach the Mediterranean. Zecchini, Le Monde, 12th March 2002]

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BOOK REVIEW The Marshall Plan: Fifty Years After Martin Schain (ed.) Palgrave, 2001, 297 pp., ISBN 0-312-22962-3, £30.00 Reviewed by Alex Wieland

ntil now, it has been largely accepted of the Marshall Plan and the “idealistic” US European defence system (p. 49, 58). Uthat the Marshall Plan, the programme foreign policy planners in Washington who Indeed, Howorth claims that it was devised by the United States government to conceived it, to build a Europe that was not Whitehall’s inclination to skirt the idea of aid the recovery of Europe after the Second only economically self-sufficient and a integrating its forces which propelled it to World War, was one of the primary building direct competitor of the US, but also politic- hide behind the “disingenuous” argument blocks in the creation of the European ally and militarily independent of American that deep UK involvement in a European- Community. In fact, its impact on the control. controlled system would conflict with formation of the EC has been vastly over- Howorth states that “the entire diplomatic Washington’s views and would force an estimated according to Michelle Cini in her and institutional nexus stemming from the American return to pre-war isolationism. essay in this new study of the Marshall Plan. Marshall Plan, including the drafting of the Therefore by dragging its feet, London was Nearly fifty-five years after its launch in Brussels Treaty, the establishment of the able to shake US confidence in its original 1947, the European Recovery Program, OEEC, and all that followed in their wake, plans, compel the Americans to abandon more popularly known as the ‘Marshall was explicitly predicated on the belief that their hopes for a Euro-directed defence Plan’ after its progenitor US Secretary of Europe should recover her autonomy” and initiative, and force the Truman admin- State George C. Marshall, continues to spark that reconstruction would not be a ploy to istration’s shift toward favouring a more significant controversy. The long-term rebuild Europe in “the American image” Transatlant ic par t nership. impact of the Marshall Plan upon the shape (p. 42, 43). This is to say that the US plan- of post-war Europe and its relations with ners hoped to create a European defence his interpretation suffers from the United States up to the present day has system that would not be subject to Tnumerous flaws, however. To begin continued to be the subject of furious schol- direction of the Pentagon or the Truman with, Howorth’s case that American foreign arly debate. Eschewing standard discussions administration and would be left to the policy behind the Marshall Plan was heavily of the economic aspects of the Marshall control of the Europeans themselves. In influenced by ‘idealistic’ notions of creating Plan, Fifty Years After focuses much of its essence, it was to be a supranational “embr y- a reconstructed competitor of the United attention on its often-overlooked security onic ESDI [European Security and Defence States is weakened by his choice of sources. dimension. Some of the essays presented in Initiative]” built around a solid Anglo– Primarily, he draws his evidence for this this volume take an unflinchingly ‘pro- French military alliance which would contention from statements made by people European’ line, viewing the Marshall Plan as provide much of the system’s planning and outside the Truman foreign policy team at a golden opportunity for the construction direction (p. 46). Therefore, in Howorth’s the time of the Plan’s formulation, people of an autonomous European security opinion, the Marshall Plan presented a like Foreign Affairs editor Hamilton Fish system with the complete blessing and ap- golden opportunity for ‘Europe’ to take Armstrong and former Secretary of War proval of the United States; more sceptical control of its own defence. Harry Stimson. While both were certainly historians challenge this long-cherished Yet, according to Professor Howorth, this respected observers of US foreign policy at image of the Marshall Plan as a key initial was also an opportunity that Europe the time, neither individual’s statements can step on the path to European security missed, as the United States started to be considered, by themselves, to be integration. Yet, if there is a common theme become more actively involved in Western definitive gauges of Administration think- among all the contributors, it is the desire to European defence in the late 1940s. For the ing on the future of European defence. All dispel what they believe to be popularly- author, this shift in US policy towards the that these comments prove is that there held myths about the nature of the Marshall creation of a Transatlantic alliance ultimate- existed some current of ‘idealism’ in foreign Plan, its implications for Western European ly culminating in the foundation of NATO policy thought on Europe, though not and (by extension) Transatlantic security, in 1949 was not, as widely held, due to necessarily in the government itself. By and US policy motives which formed the concerns over escalating Cold War tensions relying on them, Howorth undermines the backbone of the entire programme. and fears of imminent Soviet invasion. basic validity of his argument that America On one end of the spectrum is Jolyon Rather, he contends that it was British was officially committed to fostering an Howorth, currently Jean Monnet Professor “hostility” to integrating its armed forces independent and autonomous Europe in of European Politics at the University of with those of its Continental neighbours command of its own defence. Bath and formerly an instructor at the West- and the UK’s ultimate “failure to play the Furthermore, to contend that the ern European Union’s Institute of Security European role that history and geography decision to shift to a Transatlantic alliance Studies in Brussels. His interpretation could had carved out for her” which torpedoed as the basis of European defence was solely be classified as being avidly pro-integration. American interest in seeing the develop- the result of ‘unwarranted’ and ‘obstruction- He claims that it was the avowed intention ment of an independent and autonomous ist’ British Euroscepticism is completely to

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ignore the profound impact of Cold War EEC is erroneous. She asserts that such a political and military attention on Com- considerations upon US attitudes toward relationship should not be assumed and monwealth and colonial concerns while still Western Europe. He acknowledges that the “must be detached from the retrospective assuring their protection from the USSR. In underlying American idealism behind the myth-making that surrounds at least some this fashion, Latham asserts, the security dimension of the Marshall Plan historical overviews of post-war Europe” (p. foundations of NATO and of a Transatlantic came under “great strain” in the period 14). She argues that US interests in defence relationship were cemented. So, between the Plan’s introduction in 1947 and introducing the Marshall Plan and the post- instead of the picture of the aloof power the signing of the North Atlantic Treaty two war security arrangement for the Continent that Howorth suggests the United States was years later. But he barely hints at the fact that along Transatlantic instead of strictly at this time, we instead get the picture of an this period saw some of the most pivotal European lines, were driven more by activist US foreign policy that sought to events in the hardening of the East-West pragmatism than by ‘idealism’. Marshall aid grow and adapt to the changing split. The Berlin Blockade, the Soviet- was designed to promote internal Western international political scene in Western sponsored coup in Czechoslovakia, and the European co-operation. But, she argues, it Europe. civil war in Greece all served to raise fears was also intended to foster strong within the Truman administration that the collaboration between the US and Europe, a he most interesting facet of USSR was committed to dominating the fact often forgotten today (p. 22). Moreover, TLatham’s contention is his demon- European continent and that, if unpro- Washington saw its support for European stration that the current debate on the tected, the Western European states faced integration as “necessary for the achievement future nature of European defence is one the prospect of imminent Soviet invasion of American policy objectives in Western that has been simply deferred for the past and occupation. This heavily influenced US Europe” e.g. containing the Soviets, and was fifty years. By taking the dominant lead on moves to introduce countermeasures to its therefore a “means to a set of ends” (p. 17). European defence, the US relieved the foreign policy, most notably the policy of Latham goes one step further. He argues Western European states of the pressing ‘containment’ which stipulated that the US that security was deliberately placed at the need to provide for their own defence. He would use its resources to counter Soviet forefront of the Marshall Plan in order to argues that, “[w]hile Western Europe would expansion anywhere in the world and forestall objections from domestic con- exercise influence over the character of NATO especially in Western Europe. It was these servative opinion which favoured minimal strategy and weapons development through- worries, as much as any concern over intra- engagement in Europe or, indeed, anywhere out the Cold War, ultimate responsibility for Allied squabbles, that compelled the else in the world. Far from being a vehicle the production and maintenance of the Truman administration to take a more for encouraging the Europeans to take security system per se, did not lie with these active position on European defence in the command of their own defence, the Plan states,” but with the US (p. 77). In other late 1940s. This is a position the current US provided a way for the Americans to take a words, the Continent was left free to pursue administration continues to maintain with direct role in conjunction with their Euro- its economic reconstruction whilst largely its consistent commitment to NATO and to pean allies to prevent the possibility of a sheltering under the American defence an American military presence in Europe. Western European ‘drift’ into the Soviet umbrella. Now, as Latham rightly points out, camp (p. 69). While this would mainly take with the collapse of the Soviet Union and he essays by Robert Latham of Colum- place by assuring these states’ economic the absence of a new threat of similar size Tbia University and Michelle Cini, security, escalation of Cold War tension and magnitude, the debate on European Monnet Senior Lecturer in European prompted the “need to move substantially defence has returned to much the same Community Studies at the University of beyond economic measures” and to militarise place it was in the late 1940s, as the US and Bristol, are far less breathlessly pro- US–European relations along the lines of the EU grapple and often clash over the European integration. Instead, they suggest US containment policy. Moreover, the future of NATO and the ESDI. that US motives in the development and assumption of this activist role by the implementation of the security dimension United States had the effect of assuaging Alex Wieland is a PhD student in the of the Marshall Plan were indeed far more individual European interests and concerns. International History Department at the complex and complicated. For Cini, the very For example, US command and leadership London School of Economics and works as a notion of a direct causal link between the suited both Britain and France as this Research Assistant at the European Marshall Plan and the establishment of the allowed them to focus much of their Foundation.

… news in brief areas. This would effectively mean making Russia a member of NATO Russia to join NATO? without submitting her to any of NATO’s rules – an outcome which has The Secretary-General of NATO, George Robertson, has said that a place little support among other NATO states. Most NATO states do not want to is being kept warm for Russia to join NATO, and that in future she could allow Russia to have any right of veto over what the Alliance does. sit at the same table as all the others – “between Portugal and Spain”. A Certainly, they do not want Russia to be able to veto NATO enlargement new treaty is to be drawn up to stipulate the terms of the relationship to include the Baltic states. On the other hand, NATO states are extremely between NATO and Russia by May 2002, when a NATO summit will be keen to get Russia on board in the ‘war against terrorism’. The same goes held in Iceland. The German Chancellor, among others, has said that he for non-proliferation and arms control. It is odd that these discussions wishes to see a rapprochement between NATO and Russia. However, the should be continuing at the very moment when the USA says it still has precise content of these new relations remains unclear. Mr Putin wants plans to deploy nuclear bombs against Russia in the case of a conflict “an equal partnership”, to be as permanent as possible and to cover all with that country. [Andreas Middel, Die Welt, 12th March 2002]

Jump to Contents 39 The European Journal March 2002

Outre-Coldstream C H U N N E L V I S I O N We feel it is time to follow the SNP political agenda, grant Scotland inde- pendence, and place it immediately under Blueprint Europe the suzerainty of Brussels. Edinburgh politicians can then bask directly in the by Dr Lee Rotherham reflected glory of three votes in the Council of Ministers and none in the European Monsieur le Président Giscard d’Estaing, Central Bank. In compensation, Scotland will gain a chauffeur-driven buggy in the We have the great pleasure of sending you the latest draft of amendments to Ryder Cup. the Convention on the Future of Europe. Les voici, as un ten point plan, pour votre déléctation et dégustation: eo-Classicism NHarmonisation of the confiscation of rojection leading opinion makers of the printed and wealth should continue, to repair the PWe feel it is time to drop the ‘twelve stars broadcast word. A special Jean Monnet pavements of Brussels (Distrito Federale) on blue’ logo as it is already a national flag – School for Paparrazi to be established in and finish building the skyline. We already and worse, has a eurosceptic red line Milan, with a three week course in Vespa have a street policy cleverly identified by M. running through it; the emblem of little Management While Under the Influence of David Wilkinson of These Tides as Cape Verde off the coast of Senegal. Unlike a Fine Bordeaux. Façadism – ripping down old houses while Portugal, it has eenough economic keeping the old frontage, so that to the confidence to keep its escudo, despite a 1997 lternative Employment casual observer the old edifice is still in GDP per capita of only $833. According to AIn the noblest traditions of grandiose place. This is seen as a fitting metaphor for UN statisticians, eight threatened species nomenclature, a new PESCATOR pro- the European construct as a whole, live there, as opposed to fifteen in the EU, gramme should be installed establishing destroying democracy and the nation state but we do have another dozen applying to final Commission control of the UK by means through which the man on the join. fisheries. This five-year plan for vacuuming street cannot notice. Subsidies should the North Sea will be followed by the facilitate this. ccessibility EKETHUMP and LAZARUS programmes AWe can already find every document reinstalling the British fleet workforce in a uperpower Status in the EU world on the web, except the waffle factory outside Antwerp. SThe vigour of the European Union will interesting ones. All MEPs are already on be demonstrated through an aggressive line, which in terms of remote public ate Arrivals airwaves policy across the whole planet. As accessibility at least puts them ahead of MPs LAll trains will run on time. Despite is already known, the TV series Highlander – most of whom will be totally unaware that Railtrack privatisation having been based (agh, ye’ll not be wanting yer head noo) was a fake Mexican pixel anarchist has e-mailed originally on deregulation through a Trans- funded by the Commission back in the them a virus with the message, “Buenos dias, European Network directive from Com- 1990s, as an endorsement of infra- escalvos del capitalismo” [sic]. missioner Kinnock’s office. continental fraternity, fellowship, and sorting disputes out in a civilised manner. ordics bfuscation However, this budget should now be NWe should assess for a wider member- OLately released but scarcely noticed increased to immediately facilitate broad- ship of EMU using the five economic tests, has been a new set of regulations on how casting of Gunga Din and Carry on up the the seven economic dwarves and the four classified material will be held by the Khyber to all in the Tora Bora area as a economic Horsemen of the Apocalypse. Commission. This includes Top Secret level prelude to an EU motorcycle unit heading Francophone West Africa, Kosovo and East documents (graded as causing exception- East of the Oder sometime in the next Timor have effectively already entered the ally serious harm to one or more decade. euro, as have bits of South America, islands governments, or to the interests of the off Newfoundland and Australasia, and a Community, if released). Disappointingly, chunk of Antarctica. Then there is the according to HMG, the Commission does Monsieur le Président de la Convention, Vatican, San Marino and Monaco to com- not yet hold any. Notably, there are no We hope to have full agreement to this ten- plete the zone of economic convergence. So restrictions on those who have access to point plan before it is released in full why not use the Commission propaganda these documents from travelling to Havana translation to the delegates. The only possible machine to roll over the two guys in polo or Baghdad for their holidays, but the downside is the acronym. necks with their Labrador who kept the regulations do treat as seriously illegal Danish krona? the releasing of documents of interest to Yo ur s f e d e ral ly, … whistleblowers or to those opposing the ruffles clandestine fulfilment of Ever Closer Union. TIncreased monies must be spent on the This is most unfair as the Marxists can get (existing) ‘Journalists In Europe’ pro- all the money while the eurosceptics have all Dr Lee Rotherham is Secretary of Conserv- gramme for healthy indoctrination of the the jail time. atives Against a Federal Europe.

Jump to Contents 40 The European Foundation

The Great College Street Group was formed in Maastricht debates. Its task has been to mount a October 1992 in order to oppose the Maastricht vigorous and constructive campaign in the Treaty. The group, consisting of academics, United Kingdom and throughout Europe for businessmen, lawyers and economists, provided the reform of the EC as a community of comprehensive briefs in the campaign to win the independent sovereign states. The Foundation arguments in Parliament and in the country. continues to establish links with other like- The European Foundation was created after the minded institutes across Europe.

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