Tuesday, 16 February 2016

We have much to gain from Brexit

Blogger and highly committed time-wasting contrarian, Very British Dude, offers us some of his thoughts for digestion on his own blog (that he STILL hasn't fixed). I should know better by now, but I'll take the bait.
It's sad that such a central trope from the 'Leave' campaign turns out to be an outright lie, but there you go. I suspect it's because grunting 'KIPpers cannot tell the difference between "material error", around 4.8% (which is lower than the USA's 5% but well over the UK's 1%) and "the auditors not signing off the accounts". But 5% of the money goes missing doesn't make for an easy soundbite, because just 5% going missing sounds like a pretty good job, for a government.
Indeed. I'm not going to argue. Much. This particular canard was a Ukip favourite in the early naughties. It was part of the Ukip songbook. For as long as it was true it was not a persuasive argument - and yet for some reason, the entire eurosceptic movement seems to think arguments that didn't work then will suddenly work now. Someone should do a study as to why this is.

However, the great genius of the EU in keeping its corruption rates down is to legalise much of it and find some dubious sustainability justification. But it does take two to tango, as VBD himself notes.
The EU spends its money in places where corruption is rife, and the institutions of Government are weak, like Romania or France, not in places with strong institutions like the UK or Germany. And the European union funds are going into especially corrupt sectors like construction. Perhaps this error rate is understandable. Building roads and airports in Romania is going to help the Romanians, and eventually us. 
This is something of an understatement and is in part why the Euro is on such shaky ground. too much happens in the grey economy and Spain, Italy and Greece have not done nearly enough  to counter the corruption endemic to the culture, and this is a goodly reason why I am not so sympathetic that the Greek government is under close supervision.

In this regard, development aid is only useful to us if bridges and roads are actually completed and maintained, which is not always the case. If anything the EU has done far too little far too late. Projects of this kind tend to see vast sums of money vanishing into the hands of local mafias and corrupt officials and is of limited use in terms development in that the money is more likely to be resting in a Caribbean bank.

Of more use is remittances, which have risen significantly in Poland over the last twenty years, and now amount to a noticeable share of the balance of payments and the economy. At over US$8 billion in 2011, they placed Poland as the 17th largest recipient of remittances. Remittances grew from 0.5 to 1.5 percent of GDP in the period 1995-2011, with a peak of 2.5 percent of GDP in 2006-2007. The value and share of remittances in GDP increased considerably after the Polish accession to the EU and the opportunity for the Poles in most European labour markets. Remittances were also larger than EU transfers until 2008.

To me that suggest freedom of movement is a far more intelligent means of economic development in that remittance end up in the hands of the people rather than the crooks and is more likely to be spent locally. In terms of on the ground development, the EU often delegates to OCSE, passing on the blame for failures and taking credit for successes. OSCE have been hugely active in Ukraine both on the ground and also in assisting in the creation of anti-corruption measures.

Like everything else, the EU obscures from view the activities of a myriad of worthy organisations, many of whom operate in anonymity. Until I took up a specialism in Brexit issues I had never heard of UNECE or the IMO or any of the other bodies who are instrumental in designing and implementing systems of good governance, and again we see the EU as a middleman.

And this brings us to the question of EU budget contributions. VBD mentions Norway's contributions but a substantial part of the EEA package is a provision for a range of financial contributions to EEA-Norway Grants, made by Norway to eastern enlargement countries to help with their post-Communist economic rehabilitation. In the period 2009-14, these voluntary grants amounted to €804 million, supporting 61 programmes in 13 countries in Europe including the member countries that joined in 2004 and 2007.

The money is not paid to the EU but is administered separately, under the aegis of the Norwegian Ministry of Foreign Affairs. Norway also provides 95 percent of the funding to the EEA Grants, which with the Norway grants brings the total to €1.8bn (€1.71bn paid by Norway). This OECD briefing gives a good insight as to what it does. Clearly the work is extensive and works in full cooperation with many of the other major international organisations.

Which then begs the question what do we need the EU for? Well, put simply, we don't. As much there would be nothing stopping us diverting our own contributions to the EEA grants system, that does not rule out inter-EU cooperation, and arguably Brexit enhances our own domestic trade and aid policy, making it more accountable and useful in the process as LeaveHQ points out. On that matter alone, I can, and do, bore for England. Well, Britain as it happens. So let's move on and have a look at VBD's other reservations:
  • The cost? Non-EU Norway pays 90% of our fees per head for access to the single market (which we want, right...?), UK's EU dues are falling.
Well, I'm not going to get into this conversation in that there are multiple value added services and cooperation agreements we will continue participating in and at under £10bn - some of which will be used for domestic agricultural subsidy, we are not going to see any substantial savings, and I have repeatedly chastised the Leave campaigns for making such an obviously flawed argument. I actually believe this one issue alone is why Leave has signed its own death warrant.
  • Democracy? The belief the EU rules the UK is overblown fantasy. The UK remains a democracy, in the EU or out. The EU spends 5% or so of UK managed expenditure, and shovels a lot of high-volume, low impact trade law to us much of which we'd implement even if we were out. This really isn't a big deal.
The say that the EU rules the UK is not an overblown fantasy. But it's a statement that carries caveats and nuances which are not Twitter friendly. We can say that technically parliament is sovereign and could force an exit at any time, but the practicalities of that make that impossible in reality so no, parliament is not, in reality, in charge.

And so your next question is going to be, does it matter? In a day to day sense, not really, but in a moral, legal and spiritual sense, it matter absolutely. That we would implement such "low impact" trade law in any instance is neither here nor there. It is a question of how we influence those laws and whether or not we can justifiably say they are low impact.

There are plenty of instances where our influence is most certainly curtailed and it does have material harm and that when you examine it as a whole, we see that it is not good for the world's fifth largest economy to be frozen out of the decision making process. Moreover, it's not especially conducive to good global regulation either.
  • We'd be free to trade? I think this is the weakest argument of the lot: The EU's trade deal with India was scuppered by, urm.... the UK, citing immigration concerns. You think we could do better alone? Australia and NZ would welcome us back with open arms? Possibly, but they both see the USA as far more important. The USA is ridiculously protectionist, despite which, the EU might get TTIP through. I doubt the UK could do much better. The EU isn't hampering our trade with the USA or Australia. And in any case, the EU is THE champion of free trade in Global fora, mainly because of British influence.
In any instance Brexit does not see us losing our existing trade connections we enjoy as part of the EU not least due to the presumption of continuity, but here we see the classic misapprehension of how trade is working these days. Big ticket high impact deals are slow and prone to stalling whereas we can secure much better arrangements by looking at bilateral partial scope agreements - which are less to do with tariffs as they are the removal of technical barriers to trade.

In this, to get the best from such trade we by concessions by way of paying for the necessary material upgrades to facilitate trade, be that port dredging or road building. This is why we need our own trade and aid policy. It must be integrated and working in conjunction with our own foreign policy. The model of trade has changed and we can do more with incremental "low impact" deals, without going via the bureaucratic EU. In this we could do a lot to open up new markets.
  • We'd control our borders? Well  most of our immigrants currently come from outside the EU (mainly the Indian subcontinent), where we do in fact have control. I doubt much would change here. In any case the immigration of hard-working polish plumbers is less of a problem to most people than 'KIPpers imagine.
No arguments here. In all likelihood, we're not ending freedom of movement and freedom of movement is not at the centre of our immigration problems. It's a bum ticket - and it's why we're probably going to lose the referendum.
  • We don't want to be part of a superstate? And we're not. The Eurozone may become one, but the non-Euro countries will not be part of it. 
The EU is setting the stage for what will be, sometime in the near future, a massive overhaul of what it is and how it will work. It will have huge ramifications. We are getting a two speed Europe. What this means is that the eurozone EU will be clear to form financial rules and treaties of its own - without the need to secure ratification from all EU member states.

As far as eurozone governance goes, and given the necessary reforms the southern states need, that's no bad thing really. In that two speed EU the inner tier can go ahead with "ever closer union" without having to consult us - and we will have no say. Which is again is fair enough. But where does that leave us?

It leaves us on the edge of the EU, excluded form the major economic decisions, with second rate internal influence and significantly hampered global influence as everything must be channelled through the centre. In effect, we are getting associate membership which is effectively the status quo, but with less autonomy than Norway, at greater cost - for the same market access.

So since we are not going to be "leading in Europe" by way of not being in the Euro, and we are not on the road to the same destination, what is the actual point of remaining in the EU, what purpose does it serve, and where is the advantage to being on the EU leash when the benefits of the single market are not contingent on being EU members?

In most respects, the EU has become a religion almost like the NHS where people assume it does far more than it does in reality - and likewise assume things could not possibly function better if it did not exist. In truth, it does not necessarily secure us better terms of trade, the horse trading within nullifies the advantage of pooling sovereignty and it places limitations on our abilities for no practical gain. The chains are entirely ideological.

Were the EU to function on the basis of multilateralism and cooperation as Efta does, then I would not even be writing this blog, but while it functions on the basis of subordination and diktat, I will oppose it for both moral and practical reasons. I do not see the value in EU membership and I think our continued membership is blocking the EU's progress as well as our own, when we could instead be far more active on global forums and working toward a much needed overhaul and democratisation of those processes.

This is especially urgent since corporate NGOs, sock puppet charities and philanthropic groups have an almost unchallenged rule over the top level agenda and not nearly enough scrutiny is applied to what happens there. Brexit at the very least would shine a torch on the institutions that really do govern us and no longer would the EU obscure them from view. This is less about the status quo as it is the future, and the way in which global governance is evolving. If in the end your reaction to that is still "meh" then there's never going to be anything I can say that will persuade you.

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