One of the arguments of those wishing the UK to stay in the European Union is that if the UK decides to leave, it will still need to accept most, if not all, EU laws if the UK wants to continue to trade and interact with this bloc. (This is the position, for example, of Norway and Switzerland, or so the Remainers say.) It is all about keeping British “influence”.
The Remainers often don’t appear to realise where the logic of their argument leads. Surely it leads to the case for World government. Let’s look Westward for a moment. Consider the recent example of how the US uses a “worldwide system” of tax. Any American living abroad has to file an annual return to the Internal Revenue Service. The US recently enacted a thumpingly controversial and intrusive piece of legislation called the Foreign Account Taxation Compliance Act, or FATCA. This means any foreign financial institution must take all necessary steps to establish whether a client is American or not or, if it interacts with the US. If no such steps are taken, the FFI must pay a 30 per cent withholding tax. It means that the IRS and other branches of US government have been able to enforce a massive piece of extra-territorial legislation on the rest of the world. Many Americans can’t get access to accounts when they live abroad. The situation is a shambles. Do I hear Remain-type people arguing that we should join the US in political union to try and sort this out and “influence” the US? Of course not. In another case, that of the football organisation FIFA, it was the use of dollar-based transactions by the alleged crooks at FIFA that led to the US Department of Justice, rather than the Swiss or others, sending in the investigators to Zurich. I haven’t heard of Swiss people arguing that Switzerland should become part of the US so that the Swiss can gain “influence” in Washington over such powers.
In other words, countries that have the economic muscle to create a situation where dealing with it entails certain extensions of judicial power can have influence way beyond their borders and aren’t likely to want to have that power diluted by sharing it with others. The US is, despite the best efforts of its political class, the world’s largest economy, and likely to remain so for a while. Ironically, the US hasn’t actually signed up to many of the very cross-border tax compliance moves that it insists upon when applied in other lands. Rank hypocrisy, you might say. But what this also reveals is that when you hear a lot of fine words about “gaining influence”, what it really boils down to is brute economic wealth and power. China, for example, owns a lot of US Treasury debt, as do a number of other Asian jurisdictions, and I suspect that explains why the US hasn’t launched many noisy campaigns about evil expat “tax evaders” in that region. This isn’t edifying, but that’s reality.
The “influence” that the UK may have in the corridors of Brussels comes, if it exists at all, from the relative prosperity and hence economic power of the UK, rather than on anything else.
In fact, to gain the “influence” that involves going along with the Brussels machine as the Remainers see it requires the UK to operate under the Qualified Majority Voting system of the EU. So, on key issues, such as a proposed EU transaction tax on banks, the UK is likely to be outvoted, suffering damage to a key industry (the City). The UK is most likely to object to EU directives where the UK sees a key interest at risk, and by definition, most likely to be in a minority when a QMV process occurs. The “influence” is diluted, often in ways that hurt real UK interests. QMV may seem to benefit the larger countries, but in certain respects it means that the UK can lose key votes on issues that really matter, such as to financial services.
Competition between jurisdictions, with freedom, crucially, of citizens to be able to migrate and with open capital flows, represents arguably the best check on power that we have. A looser Europe, enjoying free trade and free capital flows, but without such centralised political power, is arguably the best outcome from a liberal (in the right sense) use of the word. World government is a deluded dream, but I fear the Remain camp is not willing to face up to where the logic of its argument is leading.
I have spent the last few days in Geneva – I travel to Switzerland regularly as part of my job – and needless to say, the prospect of the UK leaving the European Union comes up a lot in the Alpine state. For good reason. Switzerland is not in the European Union (that country has more sense), is unlikely ever to want to do so, and has a broadly amicable relationship with its neighbours, apart from when they aggressively seek to break down Swiss bank secrecy laws. (Such laws are, for cross-border purposes, no longer effective, although within Switzerland, the laws remain on the statute book and there are no plans as far as I know for lawmakers in Berne to repeal them.) By and large, Switzerland’s financial services industry is still in good health, although like many other centres, onshore as well as offshore, has had to contend with mass of regulation, some of it home-grown. (Swiss banks operate under unusually severe capital adequacy rules and the country now has negative interest rates, which hits banks’ margins.)
The Swiss trip got me thinking about London’s position in the EU referendum. One regular argument you might read about in the financial pages of pro-EU papers such as the Financial Times, for example, is of how if Britain quits, this will hurt London’s financial sector (aka “The City”), because we will no longer be able to “passport” financial services run from London across the whole of the EU. This seems to be a greatly exaggerated worry. For example, in many cases with the fund management industry, fund structures known as UCITS (the acronym is for a long set of French words), which can be bought and sold across the EU – and beyond – and issued in different currency share classes, are typically registered in Luxembourg and Dublin. There are now Chinese yuan share classes in UCITS funds, and China is not, bless its cotton socks, in the EU. Many of the portfolios held in these pan-European structures are managed by investment whizzes in London, and indeed, Zurich, and Geneva, or Hong Kong. So it seems unlikely, to pick this one example, that leaving the EU means disaster. If the UK leaves the EU, then some non-EU member state banks, wealth managers and insurers might have to set up onshore, representative offices in the EU, which is irksome, but hardly seismic. Similarly, the European Union directive affecting hedge funds and private equity, called AIFMD, applies to the European Union, but non-EU jurisdictions such as Jersey and Guernsey have acquired the ability to be treated as “equivalent” for the purpose of this directive.
And that leads to a broader point about rules, treaties and standards. To trade, transact and interact, one doesn’t need to have centralised, top-down legal rules and a single political entity, such as the EU, but to have – and the is the crucial bit – mutual recognition of another’s standards. If the the UK quits the EU, then German carmakers will need to recognise and honour UK motor manufacture rules (which would be sensible for Germany to do, given it is a net exporter to the UK) and the UK would have to return the favour. And so on and so on. Australia has to acknowledge our rules, and we theirs. We see this sort of mutual recognition in all fields of life. Over time, of course, a wider set of rules can be adopted, rather as languages and standards around computer software do.
To trade with people living and working in the EU, it is not necessary to be married to an undemocratic, clunky structure in Brussels. Ending that misconception will not just help win the case for UK exit, it might also encourage people to think more clearly about the very structures of power that we assume are necessary for economic activity to happen. So regardless of what happens next week, I hope it might galvanise thinking about proper authority, and the role of transnational organisations.
On some specific issues around trade, the City, and so forth, this article by Conservative MP and former Cabinet minister, Peter Lilley, is simply excellent. The Adam Smith Institute has a good piece on the classical liberal case for leave.
There may be some specific consequences that are adverse – but within certain limits. For example, take those strange creatures, “non-doms” – persons who live for a period in the UK and enjoy freedom from UK tax on their worldwide income but who have to pay a levy to enjoy this status. Some of these non-doms live in the UK because it also gives them the freedom to roam around the EU. And there are people buying “investment visas” (a sort of market for passports) who want to get a British visa not because of our marvellous weather, but to roam around the EU. They may choose to get a “golden visa” in Spain or Malta instead.
But in the broad scheme of things, losing money from rich overseas investors using the UK as an entrepot doesn’t seem such a massive blow, given the overall balance. If we leave the EU, the City will not have the impost of a pan-European transaction tax (aka “Tobin tax”) on financial transactions that hits London disproportionately hard and which was imposed by qualified majority rule in the EU. The UK financial services sector might be spared the horrors of a massive lump of “investor protection” (sarcasm alert!) regulation due to hit the market, called MiFID II, or at the very least we will be able to haggle around whether we need to respect all of it to sell financial services into the EU. Some of this regulatory crap will still be a part of our lives, but there will be a better chance of getting changes to how the UK is affected via the democratic process, however imperfect that is.
Given how many treaties and transnational pacts are decided at a global, rather than purely European, level, it also worth noting that in or out of the EU, a good deal of what goes on will not change all that much. But one big benefit for me is that however foolish UK politicians continue to be, and however onerous certain rules are, UK lawmakers will not be able to use EU membership as a handy excuse for something they want to do anyway, such as “Dear constituent, I agree this rule is mad but we cannot do anything because it is in EU law number xxxxxx.” Instead, our elected representatives will need to advocate new laws, or advocate repealing laws, by appealing to the merits of a case. It might also improve the calibre of people who choose to go into UK politics in the first place.
I am voting Leave.
If tunnel building were an Olympic support, I suspect that Switzerland would bestride the top step of the podium and its virtually unknown national anthem would blare out to the cheering crowd, thrilled by the culmination of a 20-year slog of building the Gotthard base tunnel, the world’s longest rail tunnel, which opens today, co-incidentally the anniversary of a British naval triumph against the French, the Glorious First of June (with those rebellious colonists being involved tangentially).
This twin-bore tunnel opened on time and within budget, and it runs level and almost straight through the varying geology of 35 miles of Swiss mountain, a fantastic achievement, but with sadly 9 deaths, but that seems very low over 20 years and 35 miles. If it can be traversed, per reports, in 17 minutes, that’s an average speed of over 120mph. The idea is to get lorries crossing the Alps through Switzerland off the Swiss roads. Switzerland is, of course, (along with Liechtenstein) surrounded by the European Union but outside it.
And meanwhile, as the Swiss literally give geology both barrels, in England, we have our glorious Channel Tunnel and the Channel Ports (as the Sage of Kettering relayed to me once ‘The problem with the Channel Tunnel is that it has a government at both ends.‘). Well, today a House of Commons committee has come up with a rather skeptical report about a new plan to cope with cross-Channel traffic. For those who do not drive in the South-East of England, there is a standing plan in place to cope with the vagaries of the joys of free movement of goods in the glorious European Union whenever the Channel Tunnel runs into a problem (e.g. when the French start horsing around, burning sheep etc.), called ‘Operation Stack’, where the Kent police close an entire motorway, the M20, and park lorries bound for the Continent on it pending the cessation of hostilities, typically a period of 5 days of so, when a major motorway becomes a lorry park, and to Hell with the locals.
part of the M20 was used 32 times last summer by queuing lorries – a process known as Operation Stack.
The British answer to this problem is, of course, to shell Calais and demand its return to English control (er, no), it is to build a 65 hectare lorry park at a cost of £250,000,000. This would be as big as Disneyland (the one in California) and bigger than the Vatican (a mere 44 hectares) and with the added bonus of no Pope. It will allow 4,000 lorries to be parked whilst the benighted lorry drivers await the restoration of normality. One might ask why each lorry space would cost £62,500 (c.$90,000 US)?
Do we see here cultural differences between the UK and Switzerland? The acceptance of failure and its normalisation, a tendency towards inflated cost and an attitude of weary resignation, against a positive can-do attitude that bulldozes through problems.
So why can’t we be like Switzerland?
Postscript: Eric’s comment indicates that the Swiss may not have been above a bit of creative accounting in completing the tunnel on time and in budget, for which I am grateful, I may have been misled by the BBC (which in Cyrillic was the acronym for the Soviet Army Airborne Forces, what a co-incidence).
Regular commenter Niall Kilmartin started writing this poem as part of the Erdogan poetry competition but found his thoughts turning in a different direction:
A Poem of Two Chancellors
Though Erdogan is just the man to merit mocking poetry,
Another leader claims my pen, a graver cause is troubling me:
I write of Merkel’s acts because they do not cause me levity.
Oh Angela, was Adolf’s far-from-noble dream once also thine?
I doubt it, yet it’s you, not he, who makes your country Judenrein
(And these days PC tells the Jews it’s hate speech if they dare to whine).
“The best man for the job? Why, choose a woman!” – that’s a bitter joke
When calling doubters ‘Nazis’ is the means by which you meanly cloak
What kind of ‘refugees’ are brought by all this ‘kindness’ you invoke.
We know they’re really migrants since we see they mostly are young men.
We know young men commit most crimes in any group – it follows, then,
That their rate (high enough at home) must here be multiplied again.
Think you, if most of them don’t kill, it will not be like World War Two?
(When, as you know, most Germans did not personally kill a Jew;
When most are scared or hate-filled, acts of killing only need a few.)
Now each one missed by Hitler will be hissed or spoken of likewise
By migrants who care not if they are heard by one, percentage-wise
from that subgroup who won’t just talk but will make sure that that Jew dies.
At least I can be glad most Jews you rule can flee abroad (absurd
that they’ll be refugees for real – and so will be by you ignored).
A few new graves, attracting vandals hypocritically deplored,
Alone will then commemorate them, those canaries in the mine.
Oh Angela, was Adolf’s far-from-noble dream once also thine?
I doubt it, yet it’s you, not he, who makes your country Judenrein.
These two lines made the poem for me:
A few new graves, attracting vandals hypocritically deplored,
Alone will then commemorate them, those canaries in the mine.
Over-fearful? I would be glad to think so. I usually do think so. But the quickest of internet searches throws up recent news stories like this one from Spiegel Online International, “Skepticism of German-Israeli Friendship Growing in Berlin”, and this one from Deutsche Welle (DW), “Immigrants Beyond the Law”. The latter story says that migrants from warzones such as Syria, Iraq and Afghanistan are not particularly criminal but says, ‘It is a completely different story with immigrants from Morocco, Algeria and Tunisia though. “Activity quotas” for North Africans are no less than 40 percent.’ Wow. You would never guess from the strapline and first few paragraphs of the DW story that it contained such a statistic as that. Such evasion is typical and does much to increase mistrust.
I am at Brian Micklethwait’s place for his latest Friday. This argument against leaving the EU was made (I am literally live blogging, this is breaking news!): The good thing about Brussels is that it is impossible to be emotionally attached to it. This weakens the state.
Interesting discussion is now ensuing. And we have not even got to the speaker yet.
Reports reach me that the Czech Republic is thinking of adopting a new name for itself, Czechia. Perhaps lingering, but unarticulated resentment at the Velvet Divorce when, like certain types of yeast, Czechoslovakia split in 1993 has led to the Czech Republic hankering after a new, shorter name for itself* for everyday life, giving it a duality like ‘France’ and ‘The French Republic’.
When Czechoslovakia split, I recall one British comedian, iirc Paul Merton, quipping ‘Who gets the ‘o’?‘ at a time when less happy places were engaged in wars over secession, the lack of it, or issues arising. However the rationale for this is at once banal and quite engaging:
The Czech Republic is poised to change its name to “Czechia” to make it easier for companies and sports teams to use it on products and clothing.
How nice for a State (or perhaps a country) to actually want to make life easier for business. Will they start as they mean to go on?
Not all are happy, it seems:
Some have criticised “Czechia” as ugly, or too similar to “Chechnya”, the semi-autonomous Russian republic.
I doubt that the Chechens would lower themselves to the sort of ‘passing-off’ nonsense that we see from Greece over Macedonia.
Does a country’s name matter? I have no idea how the new name sounds to the locals, but to my ear it sounds distinctly odd and unnatural. Perhaps I should go there to see for myself.
* Yes, I know countries can’t hanker, only people, and dogs outside a butcher’s, can.
The Telegraph reports,
Turkey demands Germany prosecute comedian for Erdogan insult
Angela Merkel is facing a political dilemma after Turkey demanded one of Germany’s most popular comedians face prosecution for insulting its president, Recep Tayyip Erdogan.
The row could jeopardise the EU’s controversial migrant deal with Turkey.
The German government confirmed on Monday it had received a “formal request” from Turkey over the weekend indicating it wishes to press charges in the case.
If Mrs Merkel agrees to allow the prosecution, she will face accusations of limiting free speech to placate the authoritarian Mr Erdogan.
But if she refuses it could put the migrant deal with Turkey, which she personally brokered, at risk.
Jan Böhmermann, one of Germany’s most successful young comedians, faces up to five years in prison over a poem in which he referred to Mr Erdogan as a “goat-f*****” and described him as watching child pornography.
Insulting a foreign head of state is illegal under German law, but a prosecution can only take place if a foreign government requests it.
Any prosecution also requires the express authorisation of the German government — leaving Mrs Merkel in a difficult position.
“One could hold pan-European elections, of course, with voters picking multi-national slates of candidates; but, then, one could also ask every person on the planet to vote for a world president. Such initiatives would ape democratic procedures, but would be a sham. They would be Orwellian takedowns of genuine democracy, not extensions of it. There would be no relationship or understanding between ruler and citizen, zero genuine popular control, nil real accountability; coalitions of big countries would impose their will on smaller nations, and elites would run riot. We would be back to imperial politics, albeit in a modernised form.”
– Allister Heath
GERMANY’S secret service spied on the EU’s British foreign policy chief and on the US secretary of state, it emerged yesterday.
The Bundesnachrichten- dienst, or BND, Germany’s equivalent of MI6, placed Baroness Ashton of Upholland under electronic surveillance when she was the EU’s high representative on foreign affairs and security.
It also tried to tap the mobile and office phones of John Kerry, the secretary of state, according to Der Spiegel magazine.
However, the attempt to listen in to Kerry’s mobile conversations failed because a bungling spy used an African country code by mistake. His other phones, including one at the American State Department, were successfully tapped.
The revelations are deeply embarrassing for Angela Merkel, who criticised the US over allegations the National Security Agency (NSA) monitored the German chancellor’s phone as part of a mass surveillance programme that included snooping on allies.
Speaking at the time, Merkel told President Barack Obama that “spying on friends is not acceptable”.
Particularly not those friends. To expose your poor spies to hours on end of Baroness Ashton or John Kerry is an unacceptable violation of the Framework Directive 89/391/EEC on Occupational Safety and Health.
Update: Niall Kilmartin adds, “Wow. They lose track of 130,000 immigrants from Isis recruiting areas but they can (almost) bug John Kerry. Is this a dramatic revelation of German government priorities, or does it merely indicate that the standard of electronic security set by Hillary was followed throughout her department and maintained by her successor?”
Joris Luyendijk is actually Dutch but honorary knighthoods can be conferred on foreigners who “have made an important contribution to relations between their country and Britain”. I think he qualifies. He writes,
Yes, we would strangle or crush the English in the post-Brexit negotiations, the way any group of nations comprising 450 million people would to an opponent eight times smaller who has just tried to blackmail them
This is why the best way forward for Europe is to threaten to hit the English as hard as we can. We must stop treating membership of the EU as a favour granted by England, and instead make the English feel their vulnerability and dependence.
A week ago, when 129 people in Paris were massacred as they went joyfully about their Friday nights, there were instant predictions of fury and instability. The cut-off commentariat in particular was worried that ‘ordinary people’ might turn Islamophobic. Hatred will spread ‘thick and fast’, said Scotland’s minister for Europe. Others fretted that there would be displays of jingoism, demands for revenge. Don’t agitate for a ‘clash of civilisations’, observers warned. One expert on international affairs even told us not to get angry, because ‘ISIS counts on anger… to advance its cause’. This elite panic about post-Paris rage spoke volumes about the anti-public mindset of Europe’s opinion-formers, who view us as volatile, easily turned from civilised creatures into warmongers.
In the event, though, in the seven days since the massacres, something even worse than all that happened: nothing. There’s been no fury. No clamour for a fightback, whether of the militaristic or intellectual variety.
– Brendan O’Neill