Speech

Remarks by Brian Hayes MEP at the Mc Gill Summer School, Glenties Co Donegal- July 2015

Bernard Ingram, Margaret Thatcher’s loyal press man for close to 30 years was once asked what headlines on Europe in British Press most impressed Lady Thatcher. He thought about it for a while and then replied.

“There were two banner headlines that she especially enjoyed”, he replied. One was THATCHER DEFIES EUROPE. The other THATCHER THRASHES EUROPE. Sir Bernard made it clear that either of the headlines could be used, but that his former boss wanted at least one of them. It was an interesting insight.

Winston Churchill’s famous speech in Zurich in 1946, arguing why Europe needed to become like the United States of America, has been used by European federalists ever since as evidence of pro-European instincts within Britain.

But of course Churchill, like so many other post-war political leaders in Britain, was happy to see unity break out on the continent, while they remained as bystanders, looking on from afar. Britain has always been keen to encourage other Europeans to integrate – once it doesn’t include them.

Britain has never fully understood why Europe has needed the EEC, now the EU. And even when they did, they were prevented from joining.

Since the end of World War Two, European countries needed the European Union for very different reasons. For Germany their commitment to democracy after Nazism was expressed by their commitment to the EU. The French needed a new relationship with Germany, a kind of new economic inter-dependence, and found it in the EU.

For others like Spain, Italy and Greece they needed the EU to bookend a period of military control and dictatorship. The new accession counties to the east expressed their independence from soviet domination by joining the EU.

Ireland needed Europe for slightly different reasons. How independent were we in the 1950s because of our dependence on Britain? The punt was pegged to sterling. The Bank of England effectively set our interest rate. The economic war with Britain in the 1930s highlighted just who was boss in trade and export terms. If ever there was an example of not paying your debts to a big country, if there was an example of default, it must be the economic war between Britain and Ireland. In taking on battles, in politics as in life, scale is important.

We joined the EEC with the British in 1973, because we couldn’t have joined without them. I wonder if they were to leave the EU now, would the same logic apply?

Our economies are totally connected and not just on trade both ways. Our economy resembles the British model. IT, financial services and a heavy dependence on exporting mark both of us out. We are both very Northern Europe in the economic model we employ.

Free trade and opening up trading links is at the epicentre of British business. It’s also the corner stone of the EU. Since the 1980s Europe has established a single market, liberalised trade and demolished protectionist barriers to the freedom of movement of goods, services and people. That free market approach – is much more in common with British values and British business life.

Ireland joining the EU was a kind of coming out to the world. Much of the progress we have made since joining the EU, both with the economy and with Northern Ireland – is due to our membership of the EU. Europe allowed us to get over our attitude to Britain as big brother on our door step. We became members of a big club with Britain and sat around the same table, deal making, negotiating and trading – which is the nature of politics. In fact the new relationship Ireland has built with the UK, especially in relation to Northern Ireland, was greatly helped by our joint membership of the EU.

For Britain they never really understood why Europe needed this thing called The EU in the first place. They had won the war. Britain didn’t go the way of fascist Europe as their institutions were not disgraced , as others had been in refusing to stand up to continental fascism. The British institutions remained intact post World War Two. And having been unable to understand the need for EUROPE, they were then prevented from joining it because of French interests. Like us they waited in line to join.

The upcoming UK in/out referendum on Europe is the biggest decision affecting Irish foreign policy ever. Its ramifications are without exaggeration enormous for us and for the rest of Europe. Were Britain to leave the EU, we would face a terrible dilemma.

My family are now living in Brussels. Travelling to Belgium last year, via the ferry from Rosslare to Cherbourg, you can only be struck by the enormity of history as you travel parallel to the French/Belgian coast line. The history of Britain over many centuries cries out to you and demands respect.

You see dotted along the route sign posts for Omaha, Bayeaux, Liseau, Dunkirk, Waterloo and Mons. The idea that Britain wants to disconnect itself from continental Europe – seems an appalling travesty of history and the sacrifices of a fallen generation who helped liberate Europe from tyranny.

Last September I said that a British In/out referendum was no bad thing, in that it once and for all resolved a question that has bedevilled British politics for a generation. I speak to many of my friends in England especially who actually want to vote on this question. I actually believe that a referendum in the UK on Europe may help to define a new relationship with Europe.

David Cameron needs a deal on Europe and we can help in arguing for a fair and balanced agreement that meets the concerns of the majority of Member States. Germany wants to help Cameron and will do everything, bar treaty change, to keep the British in.

David Cameron has so far said nothing that would allow him not to do a deal. From his first major Bloomberg speech to the recent UK election, he hasn’t boxed himself in. Many in Europe agree with Britain’s argument for reform of the EU, but resent the way that reform is put forward as an exclusive British concern. Tony Blair made this exact point some time ago in suggesting that too often the question of EU reform is argued by Britain in exclusive British terms – rather than in the wider European context.

So what might that deal look like?

-An honest stocktaking exercise of what has and hasn’t worked within the single market to date.

-A demand that those countries not members of the Eurozone be involved more, especially where Eurozone decisions affect them.

-Probably a final acceptance that the EU today is permanently two-speed.

-A more effective decision-making process.

-Less inter institutional gridlock.

-Better use of the EU budget to stimulate growth to more SMEs.

-More involvement of national parliaments in EU legislation and how that legislation can be shaped.

I believe that all of the above is possible in an overarching agreement between Britain and the EU. Where I fundamentally disagree with the British approach is on the question of European migration. Notwithstanding the fact that over 2 million British live in other Member States, a fact frequently ignored in this debate, David Cameron will get no support in trying to limit the right of EU citizens to live and work within the EU. It is a fundamental right that Europe grants to all Europeans. It cannot be on the table and I believe that the British understand this.

Just as Churchill encouraged Europe to unify in 1946, the UK is now encouraging the Eurozone to complete the task of integration, while placing itself outside of the single currency. In my view that’s a dangerous strategy.

The Eurozone currently makes up 19 of the 28 member states of the EU. That 19 was somewhat in doubt up until recently – but it’s still 19! There is of course a fundamental question for Britain in the future. What happens when some of the 9 member states currently outside of the Euro, join the single currency? Could Britain conceivably in 15 years be the only EU member state not a member of the Eurozone?

Now I can hear all those Euro critics speaking up now. How is it possible, I hear them say, that more countries would want to join the Euro? Haven’t the shocking flaws in the design of the currency, exposed so badly in the teeth of the financial crisis, made it impossible for more to join? And yet that has happened this year as the currency zone went from 18 to 19 as Lithuanian joined. In fact, 7 of the 9 non Eurozone countries have expressed a positive view in wanting to join the Euro at some point in the future.

Presuming that the Eurozone is doomed to constant failure – is presuming a lot.

Nothing stands the same, things change. Who knows where the Eurozone will be in 5 or ten years. But one thing is absolute – a firm determination on the part of the Eurozone countries, having redesigned the rules and retrofitted the currency, to make the euro work.

As Mario Draghi said recently, people only want to join something or stay in something if they see a benefit in it. Benefits must be understood by ordinary people living their lives. And that’s where the entire question of the future of the Eurozone is so linked to reform of the EU itself.

People may not like to hear this but the euro was at its heart a political project. The only way it can work properly is for those Eurozone member states to integrate more.

People are dissatisfied with Europe because Europe is not working. How can it when 23 million EU citizens have no work and where youth unemployment stands at over 20%. Over 90% of the world growth this year is not in Europe. Europe is getting older and less productive. Europe has to change and the adjustment is difficult but necessary.

Europe needs to be reformed from top to bottom. But in my view, that reform agenda can only work by continuing the essential integration of the Eurozone. And there are big questions for this country in this especially in the area of tax and expenditure.

We need more Europe not less. We need more integration not less. We need a properly functioning internal market that delivers more jobs and cuts costs for consumers.

People have to see a clear link between increased integration and increased prosperity. Keeping the Euro strong demands a new approach across the Euro area. Rules, which were blatantly ignored before under the Growth and Stability Pact, must now be fully implemented.

Further integration now has five outcomes in my view;

1 – If it is right that countries in excessive deficit spend less and tax more so as to reduce risks to the Euro area, it must equally be right that countries with a surplus spend more to compensate for reduced economic activity elsewhere in the Euro area. In the same way on the issue of debt and state borrowing, is it conceivable that a country could be told to borrow more, as many have been told to borrow less?

2 – The new order for the Euro means that irrespective of your size, if you constantly flout the rules, even if you are a big Member State for example France, that sanctions can be applied – as a clear demonstration that the rules are there for everyone.

3 –  Getting Europe back to work after this crises also means a new understanding of investment and how prudent long-term investments to make Europe more competitive is the right approach. While the Germans are right about the new rules underlying the European economy, they are wrong about the rules for investment – especially in those counties, like our own, that have seen a reduction of over 20% in investment. While the recently agreed Juncker Plan hopes to stimulate the EU-wide economy by over €300 billion, we need to do more. The issue of Eurobonds must also be brought back on the table.

4 – The new order also demands that country specific recommendations, the outcome of the European Semester, are taken seriously by Member States. In fact, in the future, shining a bright light on uncompetitive practices in all Member States is something that people generally support. We should benchmark ourselves against other similar sized countries. If this financial crisis has taught us anything, it’s the need for constant external and independent analysis. We need to inculcate a contrarian culture where questioning is welcomed, not side-lined. Europe can help in that.

5 – A new era in European wide financial regulation and financial supervision. The establishment of the Single Supervisory Mechanism is key to establishing order and confidence in Europe’s banks. Providing proper EU financial scrutiny and control for the engines of future growth, the banks, is crucial to sustain growth.

To pretend to the public that we operate in a totally nation state setting in 2015 is to delude people. But equally it’s delusional to suggest that we have a United States of Europe. We have of course pooled our sovereignty where it has made sense to do that. We live in an intensely globalised world – that’s not going to change. Are people frustrated by the poor growth of Europe? Of course they are.

But blaming Europe for our problems – or pretending that AUSTERITY was all because of European decision making, is nothing more than a fairy-tale. Of course the response to the financial crisis by European policy was at the time totally inadequate. But as Prof. Nyberg said to the banking enquiry: our problems were principally home-grown. If anything the lesson of the crisis was the need for policy coordination, especially around the banks.

It’s easy to blame Europe because it’s distant. When things go right it’s down to Member State governments; when things go wrong it’s the fault of Brussels.

Yes the structure of the EU is complicated; it has to be to deal with 28 Member States and their particular needs. We have seen the rise of the hard right and the hard left in recent EU parliamentary elections, however, what is sometimes ignored is that a pro-European majority still exists in parliament.

What is needed now however is a new idealism for the European Union. And that idealism can only be constructed by showing to the world, that the Euro is here to stay, and that we Europeans are going to complete the task of making the euro work. The euro is not some currency construct – it’s is OUR currency and we have to defend and strengthen it.

That’s why the recent paper presented by the rather grandiose title of the ‘5 Presidents Report’ on completing Europe’s economic and monetary union is a welcome contribution to the task ahead. It is welcome because we need a big debate on the future of the EU itself and especially on the Eurozone. The presidents of the EU parliament, Council, ECB, Commission and Eurogroup have produced a readable and understandable roadmap with the ambition of completing European Monetary Union. There are enormous questions for Ireland in this and indeed for every other EU Member State.

While some of the measures within the report centre around existing plans to complete banking union, such as potentially a European Deposit Insurance Scheme, there are radical proposals around establishing a euro area treasury into the future.

Should wage rates within the Euro area be referenced by a euro area set of rules?

What’s the role of national and EU parliaments in implementing measures to reduce imbalances between euro area Member States?

How do we strengthen the role of the Eurogroup and demand of it the kind of parliamentary accountability that it currently lacks?

What is the role of taxation and the allocation of budgetary expenditure?

What will now follow is a white paper in the spring of 2017.

We have had no debate in this country on this highly important report. No Dail debate. No debate within our political parties. No debate in government.

Ireland needs to think out what it wants of this process. We cannot be passive bystanders – we are member of the Eurogroup and that demands that we think out what exactly we need. We need to build coalitions with other euro and non-euro area Member States now on the substance of what might be coming down the tracks.

So to conclude, I very much hope and believe that Britain remains in the EU. I think we have a role to play in arguing for an agreement that is good for Britain and good for the EU. Notwithstanding the result of the referendum, we along with other euro area Member States have a responsibility to complete the project of EMU. In my view that’s the best way to deliver the increased prosperity we all desire for all Europeans. If we make the euro the strong reserve currency that it can become, that is the best way to deliver long-term sustainable growth. Without that necessary reform of the euro, Europe will go backwards and the progress made by the continent since the end of the world war, could well be put at risk.

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