The rejection of the EU-Ukraine partnership agreement by the Dutch populous, albeit non binding for the Dutch government, serves as a stark reminder of the troubles the EU is in.
The recent decision of the ECB to cut the Eurozone's central interest rate to 0% marks the worry of the EU policy makers regarding lack of growth inside the Eurozone.
In 1959 the EU started as a mere Common Market because the French Parliament rejected a fuller union.
The UK is to make a decision on EU continued EU membership in a few weeks.
Ireland has rejected a new EU Treaty twice.
In 2005, the French and Dutch voters rejected the Treaty of Lisbon.
Swiss voters have rejected EU and EEA membership years ago.
Swedish voters rejected EMU/Euro membership.
Danish voters rejected the Maastricht Treaty and EMU/Euro membership.
19 of the 28 current EU members have joined the Euro, 9 have not. That creates an unstable system.
ECB interest rates with the insistence of the inflation phobia driven Bundesbank have traditionally been high, to avoid inflationary pressures. That has kept the Euro high and has hurt Eurozone industry not only in foreign markets but also (from imports) at home.
There are no single taxation system, no strong federal EU budget, no single social security system in sight. No wonder intra EU migration is very low compared to the US one then. Plus there are some 23 national languages among the EU 28.
No wonder an unbalanced union as the current one faces unemployment and growth problems. And when such problems arise, then many voters vote for nationalist parties and policies.
True, the EU has helped Europe avoid feuds such as another world war. But this peace has come at a price. The EU decision making machine is seen as foreign by many citizens of the EU member states. Member states with a strong social model such as the Netherlands and Germany have revised these models downwards in recent years. For example Dutch unemployment benefits used to be high, now they are significantly lower. Who are the voters expected to blame?
Countries with strong social models such as Sweden, Norway, the Netherlands have attracted intra and non EU migration in recent years and that has promoted xenophobia among the population.
To this day, the EU has 28 distinct countries as members, there is no real union to speak of. Plus the existing EU has produced too many laws, in addition to the national ones. As a result, too many small companies do not like the Single Market, they see it as a threat, not an opportunity.
Problems have brought fiscally conservative parties into government in many EU member states. Their policy agenda has been conservative, austerity driven and as a result anti-EU and de facto xenophobic. The Eurozone's austere economic policies by its members and the ECB have hurt the Eurozone. The 0% rate by the ECB is maybe too late. The Eurozone is damaged goods. The EU is damaged goods.
A No by the UK voters in the coming weeks may be a blessing for the EU. It may force it to take a good look at itself. On the other hand, it may not. Some EU policy makers have a tradition of dismissing reactions in the member states. They will be mistaken to dismiss the Dutch No to the EU-Ukraine agreement.
Ukraine has a right to feel betrayed at a result. But it should realise that the EU is in trouble, not the Ukraine. I spoke to many youths in Georgia a year and a half ago and they are not gang ho about joining the EU. Maybe they realize it is not paradise for countries in trouble. The ex USSR and ex Eastern bloc states that joined the EU went through very dire straits because of the need to follow the EU standards.
What is the solution? It is hard to say. A United States of Europe would be a solution but so far the EU is stuck with a Eurozone of 19 without a common tax or social models. At the same time, not only Greece but other EU and Eurozone member states as well are facing significant growth and employment troubles.
The EU could ask for things at an international level to help deal with its own problems. For example use its size and its internal market as leverage for even more free trade. Free migration should exist to counter balance freedom for capital and goods. People migrate because there is war (refugees) and to seek a better life (economic migrants). Two and a half decades after the fall of communism in the USSR, the world has structural problems. The West has become de-industrialised to a large extent. Migrants want to flow into the de-industrialised US and EU whereas new jobs are being created elsewhere.
These things need to be discussed and debated in the WTO and the UN. Probably they won't. In absence of a global summit on growth and jobs, countries will continue to pursue their own remedies. And the EU will make even less sense.
The EU needs an IGC to decide on its future, with or without the UK. It needs, above all, to start making sense to the European common man. It probably won't, though.
Thursday, April 7, 2016
Thursday, March 31, 2016
Should the UK leave or stay in the EU? Some crucial questions.
Well, it is up to British voters/citizens to decide.
My analysis.
Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.
Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.
Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.
My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.
How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?
The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?
Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?
The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?
A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).
A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.
There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?
A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?
Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.
Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.
In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.
My analysis.
Many Britons feel that Britain has lost sovereignty to Brussels. Policies and laws in many areas are decided by the EU institutions and this takes power away from Westminster. This includes standardisation issues for products and services produced and sold inside the EU.
Many argue that Britain needs to be part of the EU Single Market so that it can sell more easily to its most significant trade partner, the rest of the EU. That is true, but more and more minor as the cause of WTO world trade advances. Plus a non-EU UK can be a member of the European Economic Area as Norway and others do.
Has non EU and non EEA membership hurt Swiss exports? That is a crucial question proponents of the Yes and No to the EU must answer.
My 2 cents is that a globally strong and competitive UK does not need to be a member of the EU and its single market.
How will an exit from the EU affect the revenues of The City? That is a question for the City to answer. Will there be another financial hub in the EU that will compete with a non EU City if the UK leaves? To what extent?
The EU, via its policy on EU enlargement, has managed to hinder the process to a United States of Europe by the EU. Why does then the UK have to leave? Are EU laws enough reason for the UK to leave the EU?
Now, let's be reminded that the UK is neither a member of the Euro area nor the Schenger area. Will thus EU exit allow the UK to better determine its immigration policy?
The EU does not have an industrial policy. Will a non EU UK be able to have an industrial policy and help develop more manufacturing? Maybe yes. But is any political party arguing this factor? Cameron should have been arguing for an EU industrial policy for years now. He has not. Why? Has Labour?
A non EU UK will be able to depart from the EU working time legislation and have the type of social, industrial affairs and employment policy it wants to. Be reminded that Blair incorporated the EU social protocol other UK governments had vetoed (most notably, the Maastricht Treaty opt-out).
A non EU UK will be able to also develop its own environment, transport, VAT and other policies and laws. Will they be much different than the existing EU ones though? That is a question UK policy makers must answer.
There is no question that some non EU companies with manufacturing activities in the UK may be tempted to leave the UK and settle inside the EU if the UK leaves the EU. It will depend on what they perceive the problems of selling in the EU if the UK leaves to be. Who has asked them, in the debate so far?
A non EU UK will not have to contribute to the EU budget. But is the UK contribution to the EU budget (much inferior to the US one) so important (see UK Rebate) after all?
Now, what will happen to UK citizens living and working "freely" in other member states and citizens of other EU member states living and working in the UK? That is a matter that may be settled via UK-EU negotiations as part of an exit agreement, should the UK decide to leave the EU.
Of course, it is most likely these questions will remain unanswered and the decision in the referendum will depend on more top of the mind issues.
In any case, there will be no Doomsday though. Why? Because the UK has the policy makers and think tanks to address policy issues, whether the decision is Yes or No.
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