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Britain and a two-tier Europe

Published: Tuesday, 16th October 2012

Our last conference here at Ditchley was dedicated to the possibility of a two-tier Europe and its consequences. It turned out to be a particularly lively and timely debate, against the background of the eurozone’s continuing struggle to survive in more or less its present form, and the historic fork in the road now apparently in front of the UK and its European policy.

While a more negative view is certainly possible, most around the table at Ditchley were assuming that the eurozone would muddle through somehow, and that to enable it to do so, its members would move to a degree of integration in some key economic areas involving the cession of significant further amounts of sovereignty. That would mean the 17 eurozone members operating as a bloc in these areas, with the remaining 10 member states outside this bloc for some considerable time, even on favourable assumptions about progress in resolving the current crisis. This bloc could also start to work together in areas which were not just the exclusive preserve of the eurozone. That likelihood was what lay behind the idea of a two-tier Europe in the title of the conference – the EU has long had multiple speeds and variable geometry, but two distinct groups heading in potentially different directions, not just heading in the same direction at different speeds, would be a new and very different development.

In practice, most conference participants did not accept this description of what was likely to happen: the 17 members of the eurozone were not a cohesive group in any other way than their membership of the eurozone, while most of the 10 (soon to be 11 with Croatia) wanted at some stage to join the Eurozone or at least not be left behind in some second class status. In other words the only country likely to find itself in a second tier on a durable basis might be the UK, which would not want to join the eurozone for the foreseeable future, if ever, and was indeed apparently seeking a new, more distant relationship with the EU in some areas.

The UK’s position was not the main focus of the conference, rightly, but this raised some basic questions. What was the degree of readiness of the rest of the EU to renegotiate British terms of membership? Not much, seemed to be the answer. There is little if any goodwill towards the UK left among the other 26, and little inclination for example to allow the UK to continue to benefit from the single market and a say in how it is run, without the UK accepting some of the other common rules which underlie it, particularly in the social area. The risk of either serious British semi-detachment, or even departure from the EU altogether at some stage, looks correspondingly high. Many other EU members would regret this, not least because of our foreign and security policy weight, and free-trading instincts. But this does not mean they would do much to prevent it, or would be ready to pay much of a price to do so.

Are we therefore heading for a new ‘Messina moment’, when we repeat the 1950s self-exclusion from a European project we judge both inappropriate for us and doomed to fail anyway? In the 1950s our judgment turned out to be wrong. Could the same happen again?

Of course some in Britain would welcome moves towards semi-detachment, or even departure, seeing a brighter future for us once free of EU constraints. Personally, I believe this to be an illusion. The process of detachment would be long and painful, and hardly likely to inspire confidence among partners outside the EU, who would not understand or sympathise with what we were doing – even the US, which clearly wants us to stay engaged in the EU. I fear instead a rather inglorious prospect, where we would lose our European anchor, however irksome it may be at times, without finding any substitute, and become an increasingly marginal international player – a big Norway without the money, if you like. This would not be the end of the world. Citizens of countries which do not seek a central role in international affairs may have a calmer life. But it would not be the Great Britain our leaders still claim to want to see. And I wonder whether the City of London could maintain its dominant financial place over time, as others in the EU make the single market rules in this area to suit themselves, not us.

Is there any way of avoiding this stark choice? If the UK were actively and constructively engaged in making sure that the EU of 27/28 was still the main actor and unit, not the Eurozone, and supporting institutions like the Commission accordingly, we could go a long way towards preserving the coherence of the whole EU and towards not finding ourselves alone in a second tier. But the signs are that our behaviour may be for the most part the opposite, and the opposite of what we have traditionally tried to do – we now seem to be inviting others to integrate fast if they wish, and not worrying about not being at the table to defend our corner when they do.

One other way out would be if the Eurozone collapsed under the weight of its own contradictions and the ever widening democratic deficit – in other words the gap between where Eurozone leaders are taking their countries and where their people think they are going. That could conceivably leave the EU (which would not in my view need to collapse along with the euro) a more comfortable institution for the UK and one in which we could once more join wholeheartedly. But the short-term economic, and perhaps political, consequences of this would be horrendous, including for the UK, and it is not to be wished for, even in the dead of night, still less worked for. 

 

Sir John Holmes GCVO, KBE, CM
Director
The Ditchley Foundation