EU Referendum: How We Can Win

My previous piece reflected on the free bet that is the offer of a referendum in 2017. It maybe that Cameron doesn’t deliver, and that is of course a risk, but it’s the only offer currently on the table. We should remember that extracting this promise from Cameron has long been UKIP policy. For example in 2011 (2 years after “cast iron”) Farage had this to say:

…Ukip could form an electoral pact with the Conservatives at the next election if David Cameron were to promise a referendum on membership of the European Union. There was "every chance of forcing David Cameron into giving us a referendum", he said. Whether or not to propose an electoral pact with the Conservatives in 2015 would be a "huge decision" for the party, he said. But he had offered the Tories a pact before the 2010 election, he said.

Given Cameron’s track record it’s reasonable not to trust him, though that would imply that other politicians can be trusted. However in my view the question of trust doesn’t come into it. If Cameron wins in 2015, albeit with a small majority, he won’t have any choice but to deliver lest the party give him an offer he can’t refuse. Less a case of trust, more a case of pure political calculation.

If there is to be a referendum in 2017 then another obvious concern is that it will be loaded in favour of staying in. It’s worth noting at this point that exit is very unlikely to ever occur without a referendum being offered and won. The precedent for constitutional change has now been set with the referendum in 1975, Scottish & Welsh devolution, the AV vote and the Scottish independence vote. Nor indeed can we expect ‘perfect conditions’ for one being held.

It’s certainly going to be a challenge to overturn the message of the establishment, media and FUD all of which will be heavily funded. An example of this was during our entry into the then EEC where pro market lobby groups were co-ordinated under the umbrella of the European Movement part funded by the EU Commission to act as an integral part of the government campaign. Efforts were made to bring the media on board particularly the BBC where eurosceptic presenters were dismissed in favour of more sympathetic ones.

However this is not 1975, the world has moved on in 40 years and as a consequence we do have a number of potential advantages over that campaign which can help nullify if not overcome the challenges.

The EU: 
The first advantage is that the EU is no longer just the EEC or a ‘Common Market’. In some 40 years since UK membership the EU has taken ever larger strides towards political union such that its ultimate goal has become much more obvious.

Now it is a ‘European Union’ rather than a ‘Market’. By calling it a “Common Market” meant the 1975 referendum was defined by the terms pro-marketeers and anti-marketeers – membership argued in simple economic terms. Thus in this context Wilson was able to get away with his sham negotiations by reducing it down to the level of import quotas on New Zealand butter and cheese.

40 years on, Cameron could not get away with anything so lightweight. It’s no longer a Market but a Union. Thus there would be demands for a far more substantial return of powers - none of which can be achieved without Treaty change. And that leads us neatly onto the next advantage...

David Cameron:
As has been well documented Cameron did not want a referendum nor does he want to leave the EU. That he has offered a referendum against his wishes is a reflection of his political weakness not his view that he thinks he can win it. We know this because he has made a political mistake. His offer was due to being under pressure from backbenchers who in turn are under pressure from UKIP in the belief that such a promise would win him the next election, and it is an offer made regardless of what concessions Cameron thinks he can spin from Brussels. It is very likely he chose the date as the UK takes over the Presidency of the Council of the EU rather than any other consideration.

The reform option has always been dangerous as it splits the “out” vote to the benefit of those who wish to remain EU members. However Cameron’s promise largely negates the reform option as he can’t possibly hope to have any substantial concessions which he can put to the electorate by 2017. The changes needed to the founding Treaties simply cannot be achieved in time. Thus all he can rely on is what will be unconvincing spin without substance.

And this is where his track record of ‘PR man’, ‘cast iron’ and ‘lack of trust’ becomes an asset to the out campaign. Without Treaty change it will be spin few will believe and it is a mistake we can capitalise on. A mistake that Clegg appears to appreciate very acutely during the Lib Dem conference:

The Lib Dem leader said he was committed to a vote when there was EU treaty reform, but criticised the "arbitrary date" of 2017 set by the Conservatives.

It’s worth noting that the Scottish referendum also had superficial promises of the reform option announced by, among others, Gordon Brown who tried to rewrite the UK constitution on the back of a fag packet in an impassioned speech by offering essentially devo-max to the Scots. Yet the pledge of reform made little difference to the final results which were in line with months of predictions by the polls. Other core substantive issues instead decided the referendum which we will explore later in this piece.

Experience: 
The 1975 referendum was the first ever in the UK, thus there was no real direct experience to draw upon. As a result many mistakes by both sides were made, not least in the failure of establishing a coherent message particularly from the anti-marketeers - with the word 'anti' portraying negative connotations, In contrast we have the opportunity to learn not only from the referendum of 1975 but subsequent ones over AV and Scottish independence, and we can endeavour to try not to repeat mistakes made there.

The Internet:
In 1975 the media and all the newspapers bar one – the communist Morning Star – supported EEC membership. Such support would be similar today, including from the likes of the Daily Mail which in editorials has made it clear it supports EU membership.

However unlike 1975 we now have the internet and everything that comes with it; smartphones, Twitter, Facebook and forums. The establishment no longer has a monopoly on information. Scotland revealed the significance of this development. The independence campaign was a dry run of how an EU referendum would be conducted and it showed comprehensively that unofficial campaigns centered on social media was very powerful.

Indeed the Scottish referendum has revealed that social networking via Twitter and Facebook played a very significant part in the vigorous and intellectual debate to the extent that the “yes” vote remained strong in the final outcome:

The 2008 US election showed how politicians could use it as a campaigning tool, but it wasn't until the Scottish referendum that Britain really caught up.

According to Facebook, more than 10 million interactions were made about the fight in a month. So who won the social media wars - and what can we learn from it? The simple answer is: the Yes campaign was victorious.

The official Twitter account of the Yes campaign has an impressive 103,000 followers compared to 42,000 for Better Together. Alex Salmond boasts 95,000 Twitter followers and Nicola Sturgeon has 66,000 - while Alistair Darling has just 21,000. On Facebook, the Yes campaign page attracted more than 320,000 likes compared to 218,000 for the No.

But debate was not only held on the most well known outlets, there was much passionate debate on forums such as Celtic Football Club’s which ran to an impressive 1674 pages.

It’s also worth noting that during any campaign the URL address http://www.eureferendum.com/ would be much sought after – and this is already registered by Richard North. Typing the words “EU Referendum” into a search engine and links to the country’s premier eurosceptic blog comes top of the search results.

Thus with the internet we can bypass the mainstream media. This is a tactic that was used by Farage in UKIP’s early days. Comprehensively ignored at the time by the media, Farage went under the radar by taking the message direct to people by travelling the country and addressing local meetings. He was to replicate this method in 2013 with the Common Sense tour.

As UKIP proved, such methods can be very effective in getting the message across despite the bias of the legacy media and so it can prove with a referendum in 2017.

There's a strong anti-establishment vote: 
Unlike 1975 where there was more deference to the political system, we now have the obvious decadence of Westminster politics. A decadence which reveals itself by the increasingly lack of quality in MPs, hopeless leadership, the lack of relevance of political parties with membership plummeting, and the electorate itself being treated with contempt and their anger in return.

Revulsion at this decadence and alienation from Westminster is common to both England and Scotland. In England it expresses itself partly in UKIP; in Scotland it helps power the SNP.

Thus unlike 1975, the parties of Westminster campaigning as one in 2017 to stay in the EU could actually prove to be useful as part of an effective anti-establishment campaign which when based around sound exit answers can win over a lot of people, as was shown in Scotland.

The establishment is not always united:
The Scottish referendum illustrated that the establishment campaign epitomised by Better Together was not always united. Although they shared the same aims of keeping the union together the fundamental differences between parties and between themselves could not help coming to the fore. Gordon Brown was sidelined until the last minute, Darling was consistently criticised for running a poor campaign, for example in May 2014:

Alistair Darling has effectively been dumped as head of the campaign to keep Scotland in the UK following crisis cross-party talks.

And naturally there were tensions between the Tories and Labour:

A Labour MSP has criticised his party’s decision to “hold hands” with the Tories in the ‘Better Together’ alliance against Scottish independence and has claimed that the No campaign is now unable to “outline a coherent vision”.

Then arguments over "reform"

The Better Together campaign has been accused of “spiralling into self-destruction” after UK cabinet ministers appeared at odds over enhanced devolution proposals.

And after the vote:

Ed Miliband today publicly snubbed Gordon Brown after thanking every Labour MP who campaigned against Scottish independence – apart from the former Labour leader.

The 'in' campaign is likely to be as split as the 'out' one.

Having a major party on board is not always necessary:
As the SNP found out to its cost, a major party with an official position does not always mean party supporters and members follow suit  - voters in Salmond's own 'backyard' of Aberdeenshire gave independence the thumbs down. Official positions of Labour and the Tories in an EU referendum are likely to be very different to its members when deciding on an EU referendum and there are likely to be splits within.

The question has already been decided:
Should Cameron endeavour to progress with a referendum then it's out of the question that he can manipulate the question. The Electoral Commission has already given its advice to Parliament - the full details of its advice can be found here. In summary it advises:

If Parliament wants to retain the use of ‘Yes’ and ‘No’ as response options to the referendum question, then the Commission has recommended that that the question should be amended to:

'Should the United Kingdom remain a member of the European Union?'

If Parliament decides not to retain a ‘Yes’ and ‘No’ question, the Commission has recommended the following referendum question:

'Should the United Kingdom remain a member of the European Union or leave the European Union?'

The European Economic Area (EEA):
Unlike in 1975 we have an off-shelf economic model in form of the EEA which can successfully nullify the FUD which will undoubtedly be deployed to portray by fear that leaving would be economically disastrous. The EEA was designed as a ‘stepping stone in’ for reluctant countries such as Norway and this can very easily be used as a ‘stepping stone out’. The economic arguments of 1975 would be made redundant:

Let us be clear about one thing: In or out of the Common Market, it will be tough going for Britain over the next few years.

In or out, we would still have been hit by the oil crisis, by rocketing world prices for food and raw materials.

But we will be in a much stronger position to face the future if we stay inside the Market than if we try to go it alone.

Inside, we can count on more secure supplies of food if world harvests turn out to be bad. And we can help to hold down Market food prices - as we have done since we joined in 1973.

The EEA therefore allows us to sideline the economic arguments effectively and so use the referendum to concentrate on the political aspects of the EU which prove to be so unpalatable for the British people (my emphasis):

Public opinion is divided on the detail of Britain’s role in Europe, however. Around three in ten each would prefer to see ‘Britain’s relationship with Europe remaining broadly the same as at present’ (32%) and ‘Britain returning to being part of an economic community, without political links’ (30%). One in five would like to see ‘Britain leaving the European Union altogether’ (20%), with ‘closer political and economic integration’ with other EU member states the least favoured option (13%).”

The 1970's pessimism has gone:
It's not unreasonable to suggest that the early 1970s provided probably the only window of opportunity to have joined the EEC. The UK was beset by a national lack of self confidence not long after "Great Britain had lost an Empire and had not yet found a role", the Suez crisis, devaluation in the 1960's, a global recession, spiralling inflation, collapse of Britain's traditional manufacturing industries and rising unemployment and industrial unrest.

With this in mind it's easy to understand why the UK sought refuge in the EEC. Yet largely as the result of the Thatcher reforms of the 1980s, the UK escaped from the inward straightjacket of its past. Rather than pessimism overshadowing the next referendum a confident UK will now be able to take advantage, outside the EU, of the dominating factor of trade...

Globalisation:
Nothing illustrates the ever decreasing need for single market access for the UK than the rise of globalisation. This is the EU's redundancy notice, its P45. The EU is a relic of the 20th century, a time when the cold war dominated, when memories of war on the continent were still painfully fresh. Yet during the late 1970s and 1980s we had the emergence of other markets such as Japan.

Fueled by the evolution of technology, improved transport (Containerisation) and the growth of multinational companies and trading blocks globalisation is now the dominating factor. With the growth of China and India, the United States for example is increasingly looking east rather than to the EU in terms of importance of trade.

With globalisation has come the increasing importance of global bodies setting international standards. The Single Market, is a collection of regulation which drives the harmonisation of standards, with a view to not only facilitate trade throughout the Communities but to lead to increasing "political union" in the EU. It has primarily a political objective not an economic one.

However the EU acquis of harmonisation is gradually being replaced by international regulation which does not have the same political overtones. As such the EU loses its European distinctiveness and simply becomes a property shared by all members of the WTO, which they will all use as the basis for international trade. The EU's Single Market thus will become redundant. Gradually it is being replaced by the globalised market.

As it stands, as long as we are in the EU, we have a subordinate position, (only 8% of the vote within the EU) on international bodies and the agreements on international standards are negotiated and approved by the EU on our behalf. 

However EFTA/EEA countries such as Norway are able to negotiate for themselves at the top international table and only after they have agreed them are they then processed into actionable law and passed down to regional trading areas such as the EU. The following graph illustrates how this works:

The early '70's demonstrated the UK's lack of ambition and self-confidence by tying itself to an inward-looking customs union based on the European continent.  A 2017 referendum will give the opportunity to argue instead for a vision which was not available in 1975 - a vision that embraces the globalisation one which the UK can fully participate in.

An Exit Plan:
With the above in mind it is essential then that there is a detailed, workable and credible exit plan. Nothing illustrates this better than what has been very apparent from the Scottish independence referendum. The 'yes' campaign was not undermined by FUD, nor by the closing of ranks by the establishment, nor by a loaded referendum question nor by the lack of funds. Instead what the polls clearly showed is Salmond lost primarily due to not answering the currency question:

Meanwhile so far as the issues are concerned, if the Yes side does lose it will probably have done so not least because it never managed to persuade a majority of Scots that the country would be more prosperous under independence. YouGov find in their latest poll that only 35% think Scotland will be economically better off under independence while as any as 47% reckon it would be worse off.

 And:

Of course, describing the patterns of the kinds of people who were more or less likely to vote Yes or No does no more than give us clues as to why people voted they way they did. What we can note at this stage is that women, older people, those in ABC1 occupations and those born elsewhere in the UK were all, according to YouGov’s final poll for The Times and The Sun, relatively pessimistic about the economic consequences of independence. And as we have repeatedly noted on this site, nothing seemed to matter more to voters in deciding whether to vote Yes or No than their perceptions of the economic consequences of leaving the UK.

In other words Salmond did not have a well thought out exit plan to deal with the basics. And failure to address the core problem of currency if Scotland left the Union then plants further doubts in voters' mind about other issues such as; defence, NHS,oil, immigration, EU membership, the Monarchy, pensions and so on. If Salmond had provided answers to these then it is very likely we would be looking at an independent Scotland.

One of the fatal flaws of the 1975 campaign was its inability to come up with a credible alternative to then EEC membership, a situation replicated by Salmond. With a fully workable exit plan we can avoid that flaw and crucially win...

Eurozone:
This is the joker in the pack. Without yet a resolution to the inherent problems of the Eurozone namely it's still only an economic union without the political union necessary its problems are far from resolved. Given that a referendum is likely to take place in September of 2017 (during the UK Presidency of the Council of the EU) it will be at a time that is traditionally one of market turbulence. We could see a Eurozone crisis right in the middle of a referendum campaign.

In many ways therefore we can see that winning a referendum in 2017 is perfectly possible. Reluctance to take a calculated risk until conditions are just 'perfect' obviously begs the question if not in 2017, then when?

The Fatal Flaw

The theft of Cypriots' savings without so much as by your leave is quite jaw dropping in its brazenness. As Zerohedge notes, bank accounts are private property so what has happened is effectively the confiscation of private property - the equivalent of the government driving off with your car on a whim.

Of course the situation is being described as "exceptional and unique", as were the bailouts of Ireland, Portugal, and Greece. A precedent has been set and it's not difficult to envisage that this will happen again (it's a possible trial run) or that contagion, in the form of bank runs, will happen across Europe.

But it's seems to be forgotten among the outrage that our own Government is not adverse to similar actions themselves, only it's called something different.

If you want to raid savings accounts you can call it; quantitative easing, inflation or devaluation of the sterling. Different names but a similar effect. Or confiscate shares without compensation to shareholders that were still trading on the market at 90p at the time as per the nationalisation of Northern Rock. Or raiding dormant accounts. Or indeed bailing out a Eurozone country with taxpayer's money, despite promises to the contrary, but calling it "compensating British troops". When were we consented about this?

The EU's fatal flaw is its openness on the theft, an openness that is necessary because, unlike a successful currency union like the one that exists in the UK, it cannot disguise it via other methods due to the inherent shortcomings of the Euro. It is hamstrung by a flawed currency of its own making. It is being hoisted by its own petard.

However we should not be under any illusions that anything would be any different should we leave without a sea change in democracy at home...

Iceland And The EEA

It's been quite heartening and uplifting in the last few days that a handful of bloggers, and committed commenters, have rattled Open Europe's cage to the extent that they now acknowledge, albeit very very grudgingly, far from having no influence Norway does in fact have a say within the EEA Agreement. Given the tone of Mats Persson's Telegraph article, one suspects that Open Europe is not used to having its 'eurosceptic' credentials questioned, particularly with simple things like facts. This is especially important given that our esteemed Prime Minister reads blog comments.

Autonomous Mind has another example of Norway saying no to the EU regarding EU plans for harmonisation of environmental policy relating to oil and gas energy:

The Norwegian government has taken the view that the proposed regulation by the European Commission falls outside the geographic and substantive scope of the EEA agreement.

As AM notes:

Oh dear, David Cameron and Open Europe caught out lying again. You would think the media would be all over this, unless of course they have vested interests or are getting pressure from their owner barons to exercise bias by omission and ignore this important story…

Open Europe also seem oblivious that the EEA is not just Norway, but also Iceland and Liechtenstein. And it is to Iceland we turn our attention as it is involved with one of biggest rejections of the EU there has ever been by an EEA member. The dispute relates to the collapse of the Icesave online savings account in 2008 which infamously prompted the UK to invoke terrorist legislation against it. Crucially, when Icesave collapsed, EU countries, notably the UK and the Netherlands, attempted to force Iceland to fulfill its EU obligations. The arguments centered around two legal arguments:

1. ...that the Icelandic government is obliged to guarantee at least the first €20,000 in Icesave accounts;
   
   
2. ...that Iceland's actions surrounding the collapse of Landsbanki are discriminatory against non-Icelandic creditors.

The first challenge comes under EU Directive 94/19/EC, which was incorporated into Icelandic law in 1999, the second is that Iceland is in breach of its obligations under Article 4 of the EEA Agreement which says:

Within the scope of application of this Agreement, and without prejudice to any special provisions contained therein, any discrimination on grounds of nationality shall be prohibited.

The second is in accordance of Article 7 of the Treaty of Rome. Iceland's reluctance to reimburse foreign countries for money lost in its banks prompted, at the time, the following conversation between Alistair Darling and the Icelandic Finance Minister Árni Mathiesen (now hidden behind the Times firewall):

(AD) Do I understand that you guarantee the deposits of Icelandic depositors?

(AM)Yes, we guarantee the deposits in the banks and branches here in Iceland.

(AD) But not the branches outside Iceland?

(AM) No, not outside of what was already in the letter that we sent.

(AD) But is that not in breach of the EEA Treaty?

(AM) No, we don’t think so and think this is actually in line with what other countries have been doing over recent days.

Curiously, Alistair Darling in his book, Back from the Brink doesn't mention this conversation nor indeed any reference whatsoever to the EEA. Yet Iceland wasn't for backing down - a resolution of the Joint Parliamentary Committee of the EEA (opens as a Word Document) adopted unanimously on 28 October 2009 emphasised:

...the Directive’s lack of clarity over the legal obligations of governments if national guarantee funds, which are funded by contributions from relevant credit institutions, do not suffice for payments following a banking crisis, and more importantly if an entire banking system of a country collapses;

And:

...underlines that the shortcomings of the Directive became apparent in October 2008 when the banking crisis in Iceland spilled over to the economies of other EEA States;

In other words Iceland, via the EEA, is contesting both charges, charges that are still ongoing amid complex legal arguments after four years and two referendums later. A judgement that rather than be passed by an EU court will be ruled on by the EFTA court instead, and is due on 28th of this month. Iceland's case for the defence can be found here.

And that is the point, Iceland is a small country with a population of circa 313,000; a country with fewer people than the London Borough of Croydon which has 363,000, yet here it is with resilience, influence and the ability to say no. One can only look on in envy.

Iceland's main problem is unfortunately its size. That it may have to capitulate is less to do with flaws in the EEA/EFTA agreement but instead that it is being bullied, shamefully by, as the Icesave episode demonstrates, the UK. Being a member of the EU will not resolve that, ask Ireland, Czech Republic or Luxemburg

However, that Iceland can stand up for itself, while the UK will have no choice, but to adopt the attributes of a nodding dog within the EEA, is quite frankly absurd.

More to follow...

Darling Cuts Through The Spin

Stark evidence today that the botched coup earlier this week by Buff Hoon and Co has left Brown fundamentally weakened for the time being.

The interview in today's Times with Chancellor Alistair Darling is extraordinary for its candor regarding spending cuts; he is clearly emboldened by Brown's current weakness and has no problem with completely contradicting Brown's earlier dividing line of "Labour investment versus Tory cuts":

“The next spending review will be the toughest we have had for 20 years . . . to me, cutting the borrowing was never negotiable. Gordon accepts that, he knows that.”

Darling is, of course, only stating the bleeding obvious; the need for cuts and addressing the UK deficit is as obvious as it is imperative. For Brown to try to pretend otherwise is deluded and dishonest. The Cabinet are not hiding their frustration with Brown's tactics.

The problem though is the closer we get to the election the less weak Brown will be, because the chances of further plots against his leadership will diminish accordingly. I can't envisage Brown taking Darling's message about cuts into an election. Brown has a pathological hatred of the Tories, it would be against everything he believes in to agree with the Tories on the need for public service cuts.

He also is well known for micromanaging, and while it's not possible to micromange an election it won't stop Brown trying. I sense further bloody internal battles ahead, especially when the danger of another leadership challenge has passed, I suspect Brown and Balls will try to regain control of the election strategy; all those promises made now will be disregarded, like they were last June. The control of election strategy now looks set to be a fight to death between Darling and Mandelson on one side and Brown and Balls on the other.

The Tories must be absolutely delighted, not only does this vindicate their own 'need for cuts' message (although they've yet to spell out in detail how this will happen) but it's further proof that Brown is incapable of leading his Cabinet let alone the country. Campaign slogans are writing themselves.

It's not in the bag yet for the Tories, however, they still have an uphill task to win the General Election. They need 2 million more votes just to draw level on seats, and they need to win 117 seats in the next election to gain an overall majority of one, and 140 seats to win a 'working majority'. This will require at least a swing of 6.9% to the Tories – the biggest swing in 60 years.

Labour are doing their very best to help them though.

And lest we forget:

UK Still in Recession

Tucked away on the BBC website today is the news that Britain is still in recession:

The UK economy shrank by 0.2% between July and September, figures show.

Despite Alistair Darling saying in the 2009 April Budget (my emphasis bold):

And my forecast for GDP growth for the year as a whole will be –3 ½ per cent – in line with other independent forecasts.

But because of our underlying strength, the measures we are taking, domestically and internationally, I expect to see growth resume towards the end of the year.

Yeah, Merry Christmas Mr Darling, thanks for nothing!