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 Scotland: the lessons for the EU referendum

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Looking at the failure of Mr Salmond to carry the day on his independence campaign, we have already ventured the possible causes, so much so that further analysis is almost like shooting fish in a barrel.

In the first instance, the "yes" campaign's exit plan - despite its length – was terribly slender, relying on unproven (and in some cases unprovable) assumptions – such as continued Scottish membership of the EU, and the ability to continue using the pound.

Therein lies the point of Flexcit, which stands for flexible response and continuous development. For our primary exit pathway from the EU, we suggest EFTA/EEA membership (the "Norway Option"), but we recognise that this might not happen, so we have a fallback position, with our so-called "shadow EEA".

Lacking flexibility, Salmond didn't have a fallback. So when key people (including Barroso) said Scotland couldn't stay in the EU, he had no alternative, and was forced to bluster, the argument degenerating into a "yes we can, no you can't" squabble that he could never win.

In fact, Salmond could have adopted roughly the same strategies we have, with Notre Europe setting out his options.

Lord Ashcroft lists issues which influenced voters, with 15 percent citing the EU issue as a reason for voting "no". On that question alone, it is conceivable that satisfactory answers could have brought Salmond his victory.

On the issue of the pound, even more were influenced, with 57 percent citing this as a reason for voting "no". But with Salmond claiming that the pound was "Scotland's currency just as much as it is the rest of the UK's", he could have, at the very least, taken note of Irish independence and come up with ideas of what to do in the event of a refusal of the (remaining) UK to co-operate.

The same goes for tax and spending, pensions, the NHS, defence and security, and the other matters raised. But these should have been discussed years ago, the questions raised and answered long before they were to become issues in a referendum.

Salmond had not done the early preparation, though, so when the FUD (fear, uncertainty, doubt) started to fly, he was unprepared, lacking the in-depth treatment these issues need. The short time of the campaign was too short for him to work up the answers, and then deliver them convincingly, which meant that the FUD prevailed.

Therein lies our lessons for the EU referendum. Defenders of the status quo can and will rely on FUD, and to counter it we need to be properly prepared – and well in advance. And it isn't just a question of defeating the FUD. We have to drive past it, in order to plant our own narrative.

One other aspect which has been raised is the personality of Salmond, and the similarity of his approach with a well-known "eurosceptic" leader. Both tend to come to the party unprepared, relying on bluster and force of personality to make their points, without in any way mastering their respective briefs.

In the Scottish referendum, this cut no ice, and in the EU referendum it is unlikely to do any better. And, in this event, Salmond has paid the personal price, preparing to stand down as leader of the SNP at an annual conference in November, when he will resign as Scottish First Minister.

With him is likely to die his obsession, as did Quebec independence in 1995, after the independence movement lost by a margin of just over one percent.

David Cameron certainly thinks so, declaring that the question of Scottish independence has been settled for a generation. "There can be no disputes, no re-runs, we have heard the settled will of the Scottish people," he says, doubtless hoping that, if we do have an EU Referendum, he will be able to say the same thing of us all.

One can only hope that the Scottish referendum is taken as a warning by the anti-EU movement. If we follow the path of Salmond, we could be following him in defeat.

Meanwhile, before we even get there, Owen Paterson, who was sacked as environment secretary in the July cabinet reshuffle, has called for the recall of parliament - currently in recess for the party conference season - and said the "chaotic" narrow "no" vote "undermines" the UK.

He described the promises made to Scotland as "rash" and "unacceptable", saying that the preservation of the Barnett Formula for calculating Scotland's share of cash, was "unfair". "It's such a lopsided settlement, it cannot last," he added.

"It is unfair Scottish politicians will continue to vote on taxes raised from the English, while voting special tax raising powers to Scotland alone … Such a lopsided constitutional settlement cannot last; it is already causing real anger across England. If not resolved fairly for all the constituent parts of the UK for the long term, it will fall apart".


Richard North 19/09/2014

 Brexit: the end of Civitas

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Jonathan Lindsell, Civitas EU research fellow has produced what he laughingly calls a "book" of 119 pages, in which his idea of "research" is to put statements to a small group of people and then to record their edited statements, without further elaboration.

On the role of international organisations in agriculture, he chooses to quote "EU commentators such as Dr Richard North" who argue that, "like Norway, Britain would have a lot of 'upstream' influence on global organisations such as UNECE (United Nations Economic Commission for Europe) and the Codex Alimentarius Commission, which sets food standards, guidelines, codes of practice and advice.

Citing as background, a six-year-old blogpost (sending readers to the now redundant blogspot site), Lindsell then turns to Martin Haworth of the National Farmers' Union, to ask him if this might alleviate the problems of leaving. He gets the following response:
Not really. We'd definitely be a separate member of the WTO, but not a particularly influential one. As for the Codex and UN – those are important in terms of global trade but have no influence at all in terms of European single market.
I don't know what Lindsell thinks he's trying to achieve by spreading such ignorant trash. Not least, it contradicts completely his own narrative (on p.95) where he cites a KPMG report that notes the importance of UNECE and the World Forum for Harmonisation of Vehicle Regulations (WP29) in "influencing global harmonisation and mutual recognition".

This, we are told, "has implications for more than the Department for Transport: all UK departments will find, post-Brexit, that they gain (or regain) 'competences' that have been controlled by or shared with the EU for decades".

In other words, outside the EU, the UK would gain "upstream influence" though organisations such as UNECE, Codex and many other organisations, which, largely through Article 2.4 of the WTO Agreement on Technical Barriers to Trade, are increasingly dominating EU single market standards.

Nevertheless, with such shoddy work, Lindsell is ruling out any idea of Civitas being a serious player in the "Brexit" debate, which will be increasingly dominated by the very thing he (and many others) dare not mention – the Flexit plan.

For sure, Civitas will continue to get an airing, because it has "prestige", and it is really interesting to see the lengths to which commentators such as he will go to avoid mentioning Flexcit. It really does terrify them that much.

But, in the event, the the trivial, rival plans that we have seen so far – and associated commentary - will dry up and disappear. They have no substance to sustain them.

That, at least, is my view. Witterings from Witney, however, disagrees - "slightly". The shallow outpourings of other, he says, will, unfortunately, continue as, (a) they control any debate and (b), are aided and abetted by a supine mainstream media who will not publicise any view that is outside the Westminster Bubble (Booker excepted).

Sadly, WfW may be right, although a feature of the current debate is its sheer tedium. We desperately need to see some new thinking injected, and for that you will have to go to Flexcit. As I see it, the cumulative wisdom of the many who contributed to the plan will eventually prevail, simply because it will be the only thing left standing that has anything new to offer.

Nevertheless, I do concede that we have a long way to go before the legacy media even begin to recognise the work. In a way, though, that is quite helpful. If they publicised it now, they would only get it wrong.


Richard North 05/09/2014

 Defence: tanks for the payoff

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One could have predicted it, of course, but Handelsblatt makes it official. The Ukraine crisis has prompted European governments to reconsider the gradual phasing out of the main battle tank (MBT) - a weapons system which during the Cold War confrontation between East and West played an important role.

Vladimir Putin's "annexation" of Crimea and the concentration of Russian troops on the border with Ukraine have given neighbouring countries cause to to ponder, says Frank Haun, CEO of the tank builder Krauss-Maffei Wegmann (KMW).

The demand for equipment such as the Leopard 2 had diminished in recent years in Europe, since the relations with Russia improved. Some 3,200 Cold War tanks have been sold to the armed forces of 16 countries, but in five years not a single new model more been made.

But now, for the first time since the collapse of the Soviet Union, countries such as Finland and Poland are thinking about acquiring more tanks. As tensions rise in Eastern Europe, Poland, Finland, Norway, Estonia, Latvia and Lithuania - all direct neighbours of Russia – are increasing defence budgets.

One development, though, would have Jean Monnet celebrating, were he still alive. Twp of the leading European manufacturers of armoured vehicles have just decided to merge, the German makers of the Leopard, KMW, and the French tank builder, Nexter.

Thus we are seeing the ultimate in Franco-German interdependence, the ethos which drove the creation of the EEC, thereby depriving former warring nations of the means of fighting each other. With a joint tank-making enterprise, we can now be assured that France and Germany will no longer be able to go to war with each other.

Instead, we have a new "regional champion" which, as a good European, will probably have its headquarters in the Netherlands, where it will manage an order book with a volume of more than €6 billion, including in the most recent order for the Leopard 2, which came from Qatar last year.

Nexter wants to provide the French Army with an upgrade for its Leclerc MBT, and wants to develop a light tank and a troop transport.

Apart from making Jean Monnet, happy, though, the consolidation of the European arms industry would have significant advantages. Currently, it maintains 17 active production lines for the manufacture of tanks, troop carriers and artillery.

In the United States, however, there are only two major producers. Through joint production in Europe, unit costs of equipment could fall by 30 percent. And therein also lies a significant issue for the UK, which could equally benefit from defence industry rationalisation, if we could ever agree a common equipment standard for the equipment we need.

In fact, though, we are already committed by treaty to seek such rationalisation – a treaty which lies outside the EU.

This is the treaty signed between the British government and five other nations – France, Germany, Spain, Italy and Sweden – on 27 July 2000. Described as a "Framework Agreement" between the six countries, it concerned "measures to facilitate the restructuring and operation of the European defence industry".

In Part 7 (Articles 45-49), the Parties recognised "the need to harmonise the military requirements of their armed forces" and set out a permanent process for "harmonised force development and equipment acquisition planning".

The Framework Agreement is an inter-governmental treaty and is thus not an EU institution. It does not have an office, secretariat or budget and relies on the parties to agree and deliver the work programmes. It was one of the first examples of closer European co-operation in the armaments field.

Crucially, the Parties agreed "to co-operate in establishing a long term master-plan that would present a common view of their future operational needs". This would constitute a framework for harmonised equipment acquisition planning and "orientation for a harmonised defence related R&T policy".

To that effect, the six countries have agreed to subscribe to a "detailed analysis of military capabilities and the national planning status and priority of equipment and system programmes", as well as co-operating "as early as possible" in the genesis of the requirement up to and including the specification of the systems they wanted to develop and/or purchase.

So far, we have not seen the full measure of this treaty, but the Franco-German merger is a step in that direction. And with British troops riding in German MAN trucks, it seems only a matter of time before we replace our ageing Challengers with Anglo-German panzers, ready for the coming war with Russia.


Richard North 19/08/2014

 Brexit: with friends like these …

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In setting the scene in his new book telling us how to get out of the EU - published by Civitas today - Dr David Conway is at pains to recall "what West German Chancellor Konrad Adenauer reportedly told the French Prime Minister Guy Mollet at the height of the Suez crisis".

The background is to the joint incursion of France and Britain into Suez, at the point at which the United States "had forced them to abandon their military operation". Conway thus offers a verbatim quote, the source of which he references to Keith Kyle's book Suez: Britain's End of Empire in the Middle East, originally published in 1991, which is probably its first appearance in English translation.

This has Adenauer saying to Mollet:
France and England will never be powers comparable to the United States and the Soviet Union. Nor Germany either. There remains only one way of playing a decisive role in the world; that is to unite to make Europe. England is not ripe for it but the affair of Suez will help to prepare her spirits for it … Europe will be your revenge.
In fact, the original source is French Foreign Minister, Christian Pineau, who wrote it in his book 1956/Suez (Le temps des révélations) published in French on 1 Jan 1976 by Robert Laffon in Paris (p.191), twenty years after the event – of which there is no official record.

Initially, in the original version of this review, I misread the source attribution that Conway gave – a mistake easily made by the author's use of endnotes rather then footnotes, and my own eyesight problems (since addressed with a hospital visit - see also my Disqus comment), ending up in my accusing him of fabricating the source. For that I apologise.

However, I then went on to accuse him of "sloppy, dishonest … scholarship", which I do not withdraw. Conway uses a secondary source (which we all do occasionally, as a short cut – we use a secondary , but different source in The Great Deception for the same quote), but in this event he bases a major part of his argument on that single source. Given the pivotal nature of the quote, a reputable scholar would have gone to the primary source, and then triangulated with corroborative evidence.

As written, he uses this single quote as the foundation of an argument that the EU is a German-dominated construct, established with malevolent intent by Adenauer and thence developed with a view to constructing a Europe "free of British influence over foreign and defence policy irrespective of its membership status". Yet, even in the context of the Kyle book, the quote suggests that Adenauer was more anti-American than anti-British.

The immediate source from which the quote is lifted should have warned Conway to take care. Kyle explicitly notes that Pineau is working from memory twenty years after the event, on issues for which there is no independent corroborative record. Pineau's memory is sometimes demonstrably fallible, says Kyle.

Despite that, we see Conway towards the end of his modest book (of 157 pages), argue that Britain's best "negotiating tactic" is to adopt what he calls the "Adenauer gambit". With Adenauer established as the man in the black hat – primarily on the basis of the Pineau quote - it becomes legitimate to turn the tables on him (as a proxy for Germany), by leveraging the desire of the EU member states to secure agreement on one deal by linking it with another – in the manner that Adenauer secured early post-war recognition of West German sovereignty.

Conway actually needs to learn what a "gambit" is but, in terms of specifics, he is advocating a particularly inadequate idea by ex-UKIP and now Tory MEP, Campbell-Bannerman, as his preferred mechanism for leaving the EU, trading agreement on this in return for our agreeing to a treaty on the euro.

Bannerman's idea is called "EEA-lite", which he suggests can be introduced as a cut-down form of the EEA Agreement, oblivious to the fact that, once you start breaking into the original agreement, the negotiations are thrown wide open and they could end up taking years - or even decades - with unpredictable results.   

When we get to the meat, though, we find Conway destroying his own case. He acknowledges that, outside the "context of negotiations needed to resolve the euro-crisis", "the prospect remains very small that Britain might be able to obtain some such new settlement as EEA lite".

This, of course, is what we have been trying to tell Campbell Bannerman, but that man is on "transmit mode" only. He simply isn't listening. However, Conway comes to his rescue with a tale that Britain is "about to acquire a rare window of opportunity". And since the EU is poised to launch a new treaty, that gives him the leverage that is so necessary.

But in his second example of shoddy scholarship, it is evident that Conway relies (once again) entirely on secondary sources, specifically, articles from The Daily Telegraph and Der Spiegel, to inform him on whether there might be negotiations on a new treaty.

And while indeed there were distinct signs of a treaty in the offing last year, a closer look at primary sources from this year strongly indicate that the idea of a treaty is firmly on hold. The "window of opportunity" no longer exists. Even if EEA-lite was a viable option, therefore – which it isn't – its prospects now are non-existent.

Here then, Dr Conway betrays a further lack of scholarship.  In his book, he has taken us laboriously through four options – the Norway, Swiss, Turkish and WTO options – only to dismiss each in turn as coming with "very substantial drawbacks". This is how he comes to recommend Mr Campbell Bannerman's EEA-lite. It is his fifth option.

But if there is no window of opportunity, Conway has nowhere to go. He does not have a fallback, which means that his entire endeavour of telling us how we should leave the EU is wasted. He doesn't have a way out.

His biggest mistake, though, is to have me as a "vociferous" champion of the Norway option (while Hannan is more gently a "fervent advocate" of the Swiss option). He thus completely fails to realise that I am not actually championing the Norway option as my exit plan. I am actually advocating an option that he hasn't even considered, despite it being readily accessible here.

What I have done, and what Conway should have done, is recognise that all options have "very substantial drawbacks", so we need an interim solution to get us out of the EU with minimal difficulty, thus opening the way to define a longer-term solution.

It is this concept of a two-stage solution which defines Flexcit, of which Conway seems completely unaware, and which "transmit mode" Bannerman chooses to ignore. Thus, Conway ends up producing a sterile, useless book, over which Bannerman then preens on Twitter, both of them driving hand-in-hand up a blind alley.

Probably, the only good thing about Conway's book, therefore, is the first part of the title – alluding to the lack of value of the production. With friends like Civitas sponsoring such low-grade material, we have another waste of time. It takes us no further forward in agreeing an exit plan and simply panders to a shallow ego on the back of flawed scholarship.

Fortunately, the europhiles – for the moment – seem just as crass, but we really cannot afford to waste time and effort on such flawed work.

Richard North 13/08/2014

 Brexit: money down the drain

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Stephen Knight, who happens to be a Lib-Dem member of the London Assembly, is not too happy with Mayor Alexander (aka Boris) Johnson.

By making a "Europe" speech at Bloomberg, following the prime minister who used the same venue over a year ago, he says, "it was clear that the Mayor of London was sabotaging the launch of his Chief Economic Adviser's report on our place in the EU as a (re)launch pad for his political career".

That, Mr Knight, regards as something of a waste of money, helpfully informing us that Mr Johnson paid Volterra Partners £36,400 to provide supporting research for the report. And given that Dr Lyons is paid £128,472 a year for a four-day week, and picked up £14,376.83 in expenses during the last financial year, I guess we can add a few more grand to cover his contribution.

Then there is Nicholas Garrott, Lyons' economic assistant. He helped with the report, in addition to which the economics team at the Greater London Authority had their work incorporated. Then there was a "small steering committee", with four others, plus the labour of diverse PAs and the services of Helen Booth who (rather badly) proof read the report.

Putting it all together, it would not be unreasonable to suggest that this little enterprise cost about £100,000 – all to give Mr Johnson a backdrop for a career relaunch.

Just what a complete waste it all was comes with the findings of the report, which has Dr Lyons ruling out the Norway Option as "not being a suitable future option for the UK", and also the Swiss option which he marks down as "not suitable for the UK".

Yet, on one occasion, Mr Johnson tells us that, "we could negotiate a generous exit, securing EFTA-style access to the Common Market", while on another occasion, Lyons himself blandly informs us that the UK could leave the EU "and strike a new deal along the lines of those enjoyed by countries like Norway and Switzerland".

Not only does it appear that Mr Johnson hasn't read the Lyons report, I don't think Dr Lyons has either. And with the headlines focused on Mr Johnson's plans to return to the Commons, the debate about our role in the EU, complains Mr Knight, "gets swept under the carpet and reduced to meaningless sound bites".

For a hundred grand, or possibly even more, we really should have got better value, but then it isn't the first time money has been poured down the drain on a Brexit plan. It seems a general rule is beginning to emerge – the more money spent, the worse the plan.

By that measure, Flexcit is going to be pretty spectacular when it's finished - and another thing that neither Dr Lyons nor Mr Johnson will read.


Richard North 08/08/2014

 Brexit: the illiteracy of Lyons

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Gerard Lyons is chief economic advisor to the GLA and Alexander Johnson (aka Boris), and also an Open Europe board member. And this is the man who has just issued a "win-win" report on London's relationships with the EU, upon which Mr Johnson based his speech yesterday.

The report is 108 pages (linked to unlocked version), with appendices running to 130 pages, which can be accessed from the GLA website.

London taxpayers have funded this production, and they should demand their money back. It is a disgustingly superficial piece of work, technically illiterate, flying in the face of treaty provisions, written under the hand of a man who is as ignorant of the EU as his master.

It should not be the case that we should have to waste time dealing with this sort of rubbish. Amongst his many other failings, the man so completely misunderstands Article 50 that he suggests that, if it comes to leaving the EU, we should negotiate an exit without it. In an argument worthy of the UKIP kamikaze tendency, he suggests we keep it in "reserve", as a threat, or some such.

You really would have thought that if the GLA was going to produce such a work, it would have at least run it past a competent international lawyer, one who could have told these facile children something of the basics of treaty law, and in particular the meaning of lex specialis.

It is at this most basic, fundamental level that the report fails, an arrogant, time-wasting production where its authors assume they are in any way qualified to write of things about which they so obviously know nothing.

Lyons may be an adequate economic forecaster – his stock in trade. About that, I neither know nor care. But he is outside his sphere of competence when he pronounces on leaving the EU. He has nothing useful to say. His report is valueless.

Irritatingly, these people have blocked the copy and paste facility on the .pdf version of the report – despite lifting short extracts for review purposes being perfectly legal. This necessitates laboriously typing out excerpts, another example of the time-wasting arrogance of these people who cannot even assist a necessary review process.

Nevertheless, of the section where Lyons discusses the exit options for the UK, I have typed out sections on the "future relationship between Britain and the EU" (p.103 et seq), and append below sections of the text:
Comparisons are often made with the trade deals that Switzerland, Norway or Iceland have and the pros and cons of each. This is relevant as a benchmark for the UK, but the reality is that we are far bigger and more important economy than each of these countries, and so it is feasible the UK could negotiate a more suitable deal for both the UK and EU. The latter is particularly so given that the UK is such an important trading pater (sic) for them. This is not something the UK would have viewed positively in the past, but in the event of an exit it might work in the UK's favour, as a trade deal that penalised the UK would likely hit EU exporters to the UK, too. The UK trade deficit with the EU was £65 billion in 2013 and perhaps as many as four million jobs on the Continent may be dependent upon both British trade and investment.

The Norwegian option

This is not an option for the UK. The Norway Option is widely seen in the UK as not being a suitable future option for the UK, and rightly so. When this option is often discussed in the UK it is often overlooked that the terms of the Norwegian Option were negotiated in anticipation of joining in the EU, but its people subsequently decided not to join. Norway is not a member of the EU, but is a member of the European Economic Area. The one benefit is that Norway is not part of the common agricultural policy, but in most other respects this option would not be appropriate for the UK. As an EEA member Norway has access to the Single Market (which the UK would want) but it is subject to a rules of origin constraint to limit goods from the rest of the world accessing the EU via Norway and avoiding any necessary customs duties (that would not be appropriate for an open economy like the EU). Norway has to abide by EU rules, without getting to vote on them. Some call it diplomacy by fax.

The Swiss option:

The fact that Switzerland is neither a member of the EU or of the EEA and yet was able to negotiate a bilateral trade should suggest that the UK would be able to agree a far better deal if it chose. The Swiss Option is not suitable for the UK as it does not have full access to the services component of the Single Market. Switzerland earlier this year rejected the free movement of people element of the four freedoms and there has since been a focus on whether the Swiss deal will be negotiated.
Unlike the ex cathedra assertions made here, the contrary case is argued in full in my Flexcit report, in far more detail than Lyons could ever manage. I'm not going to take you all through it again. It's there for anyone to read, if they are so inclined.

If Lyons ever read it, he would doubtless disagree with it – in the unlikely event that he managed to understand it. But these people don't read anything outside their own bubble. They isolate themselves in their squalid little bunkers, feeding off their own collective ignorance, bolstering their confidence and authority by rigorously excluding anything which might challenge them. They don't engage in debate – they simply ignore anything they don't want to hear and assert that theirs is the only truth. 

Lyons thus goes on to build his facile, stupid little document with the offering of a "UK Option", in which he tells us:
There is no reason why the UK needs to be constrained by the deals other countries have with the EU. As the sixth biggest economy in the world, a country with whom the EU will wish to trade, and also as an economy that has the potential to the biggest in Western Europe, even larger than Germany within a generation, the UK should have the ability to forge a favourable deal. As President Barroso acknowledged in April 2014, the UK is different. Some provision for either full service sector access or with limited barriers is critical.

The UK negotiation should be framed with one possible intention being little EU influence in the realm of anything other than specific goods and services regulation to allow exports into the EU market. As far as possible, the conduct of the British government, people or business should be removed from EU control or influence. Otherwise the benefits of leaving are undermined over time and it would be a case of short term gain dragged back over time by a regulatory heavy model.

Single Market membership via the EEA means that many negative aspects of European membership remain. This means the relationship with the Single Market needs to be reframed in a bespoke negotiation.

Thus the most likely UK option has to be a comprehensive free trade agreement, with its negotiation improved by the threat of Article 50 – clearly the UK would push for full market access. It is unlikely that this will be granted. Whilst it is not optimal to lose full services market access, the UK competitive advantage in services means that Europe may impose some barriers to market entry.

On the flip side, a bespoke negating (sic) relationship will give the UK the broadest possible operating environment from which to pursue its post exit future. UK business would decide to mirror EU regulations on products and services to allow ease of selling into the market – but these would be business decisions, not something imposed by a centralised bureaucracy. Existing social and employment legislation would need to evolve to suit the UK's domestic needs.
Thus, this man would have us going to Brussels, outwith Article 50, "negating" (sic) a bespoke agreement, without even attempting to suggest a timetable. He does not explore the political environment in which an agreement must be forged, and he obviously has no idea what might be achievable. There is not the slightest recognition that these will be difficult negotiations, in which the other parties will have their own expectations.

On the basis of a superficial, almost trivial appraisal of the state of the art, however, he concludes:
In conclusion, this section looked at the consequences of a UK exit from the EU. Leaving the EU would lead to considerable near-term uncertainty, but as we have outlined here for the UK economy to be successful it would also lead to the need for a clear framework of policy planning, in order to both create a future enabling environment for business and a clear strategic vision for the economy. As our earlier economic scenarios demonstrated, the future performance of the UK economy will not be determined solely by whether it is in the EU, or outside. If the UK were to leave the EU, our economic scenarios suggest that the path ahead would differ considerably if the UK adopted the inward looking path in contrast to the far more desirable, outward looking scenario that we have called One Regime, Two Systems. Outside the EU, the UK can no longer look to blame Brussels and Europe for any economic problems. The UK would need to realize its potential standing on its own two feet and seeking to position itself well in a growing global economy. London, as an open, dynamic capital city, would have much to gain in this scenario. Overall, if the UK can take a lead role in reforming the EU, or if it pursues an open and business friendly approach outside the EU, then it can succeed. It is a win-win situation.
What screams out from the likes of Lyons, therefore, is the arrogance. He with Mr Johnson, his master, is intellectually idle. They are complacent, in that they expect their substandard work to be accepted without demurral, but above all they are arrogant. They believe they can set the terms of the debate without even taking the trouble to learn the subject, not in the least attempting to show respect to their audiences by arguing their cases honestly and thoroughly. We deserve better than the low grade rubbish they are offering, but they feel it is quite good enough for the lowly plebs - criticism from whom they will ignore.

The believe that, despite their shallow, narrow perspective and their ignorance of the wider debate, they have the god-given right to decide our futures. Implicitly, they expect us to trust them to handle our most vital affairs, without them even taking the trouble to offer credible explanations of the options open to us .

In time, through diligent, patient work, we will show these people to be the charlatans that they are – and reciprocate the contempt they show us, in giving us shoddy, poorly researched and valueless arguments. But at least the likes of Lyons have done us one small service. They have shown us with absolute clarity that the establishment is not the place to look for a workable EU exit plan.

But then, I suspect, we knew that already.


Richard North 07/08/2014

 Brexit: Johnson – living on another planet

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We already know that Johnson is imbued with an ignorance of a profundity that only an expensive private education can buy, but one wishes he would not be quite so keen to parade it at every opportunity.

The particular opportunity of the day is the delivery of a speech at the Bloomberg headquarters in London, a significant venue as this is where Mr Cameron made his 2013 speech promising an in-out referendum.

First on the agenda for Mr Johnson is to thrill the collective hackery with a promise that he will seek re-election as an MP in the 2015 general election. His speech, however, attends the matter of renegotiating terms with the EU, and is seen as an attempt to destabilise David Cameron, presumably as part of a grand strategy to support a leadership bid in mid-2015 after Mr Cameron stands down, following his failure to win the general election.

But before anyone looks to this buffoon for leadership, they should look at the detail of his speech which, in essence, shows that he does not have the first idea of what he is talking about.

On leaving the EU, for instance, Mr Johnson tells us that, "we could negotiate a generous exit, securing EFTA-style access to the Common Market", thereby confirming that reputation for the most profound ignorance imaginable.

The point, of course, is that EFTA does not have access to the "Common Market", better described as the Single Market. The "NIL" group (Norway, Iceland and Liechtenstein) have negotiated access through the EEA agreement, while Switzerland has negotiated a series of bilateral deals, which owe nothing to either EFTA or the EEA.

This confusion we picked up on Sunday - which incidentally confirms that Johnson doesn't read the leading independent anti-EU blog, therefore making him less well informed than many of his voters.

Needless to say, the distinction between the deals forged by the "NIL" group and Switzerland is not academic, and nor is it trivial. As an illustration, we just have to take one of the examples Mr Johnson gives in his speech, where he seeks to portray the burden of regulation imposed by the EU. 

"Take the waste framework directive", he says, "that means all small businesses have to register as waste carriers if they want to transport a small volume of non-hazardous waste in their own vans – such as a nursery wanting to take grass cuttings or compost, they have to register as a waste carrier".

The point here is that, if the UK adopts the EEA option, it will find that the waste framework directive is part of the EEA acquis, so if Mr Johnson wants access to the Single Market via this route, he will have to accept the directive as part of the package.

However, if he goes down the Swiss route, the negotiating team will be dealing with such issues on a case-by-case basis, but then it took 16 years for the current level of agreement to be reached, one that is currently under review. Would Mr Johnson have our Article 50 negotiations lasting 16 years – or more?

The plot then thickens, because the requirement for businesses to register if they move their own waste did not arise specifically from the waste framework directive. In UK law, it only took effect this year, but as a result of an ECJ ruling after a case in 2006 taken against the Italian government.

Since the ECJ has no jurisdiction over the EEA agreement, arguably, this ruling could be ignored and Britain outside the EU could choose to interpret the framework directive in its original sense, and exempt businesses carrying their own waste from registering.

Necessarily, that will be for the lawyers to argue, but if we step back from the law and look at the practicalities, we find that all that is required is for businesses to register their details online, for which there is no charge imposed. This is a one-time registration that does not need renewal, and takes about 10-15 minutes.

In other words, one wonders what point Mr Johnson is trying to make. What is the big deal? And what is the point when he picks on the "EU Driving Regulations" for vehicles over 3.5 tonnes, which impose a complex web of restrictions on driving hours?

How are we supposed to solve the construction boom in London and get small firms coming to the market when we have regulations like that, Mr Johnson asks, the hypocrisy of his question almost defying imagination.

Talk to small builders in London, though, and drivers' hours are the least of their problems. What really troubles such firms are the costs of operating with Mr Johnson's congestion charges, and the huge burden of inflexible parking restrictions combined with the predatory activities of local authorities.

All Mr Johnson's speech does, therefore, is highlight the actions of an ignorant man trying to make political capital out of issues about which he knows next to nothing. And a man who does not even have a grasp of the basics is hardly one who can be relied upon to guide us through the labyrinth of an EU exit campaign, much less provide leadership.

In truth, Boris Johnson has nothing to offer us on the EU. One view is that he is promoting a reform package that will be impossible to achieve, simply to wrong-foot Cameron and give himself a political boost.

What he should realise is that people generally have had enough of posturing politicians, using peoples' concerns to further their own careers. Johnson's carefully contrived image is beginning to wear thin, and his attempt to use the EU as his own personal plaything are entirely unconvincing. The issue is far too big and much too important for Mr Johnson's games.

We really can do without them – and him.


Richard North 06/08/2014

 Brexit: Johnson does fantasy politics again

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I can scarce bring myself to review the latest effluvia in the Sunday Times. It includes a reference in a front page story to a report by one of Boris Johnson's minions, which concludes that "quitting the EU would be much better for Britain than remaining in on the current terms".

This, in the pathetic hyperbole which the media insist on using, is "seen as a throwing down of the gauntlet" to David Cameron, and represents an attempt to carve out a unique position for the Mayor of London on the European Union, prior to his return to Westminster – and his leadership bid when Cameron fails to form a government.

It seems though that Johnson wants to be different from Mr Cameron, but not too different. He is still peddling the reform meme, but adds that the UK should "not be frightened" of quitting the EU if the negotiations fail, this being a ploy to encourage the "colleagues" to play ball, on the basis that they will be more willing to deal if we threaten to leave.

In this, Johnson, apparently, is relying on a report by his chief economic adviser, Gerard Lyons, who in turns is relying on modelled by the independent economics consultancy Volterra. As yet unpublished, it will tell us that if eight key reforms are attained, then the UK will be better off.

This is expressed in employment terms, with the status quo would yielding just 200,000 jobs, a reformed EU could generating one million new jobs in London over the next two decades, while leaving the EU and maintaining an outward looking approach to trade with the rest of the world would create 900,000 jobs. By contrast, a fourth scenario - leaving and retreating into isolation - would cost 1.2 million jobs [in London] over 20 years.

Lyons is a former chief economist with both Swiss Bank and Standard Chartered and has thereby concluded that "the best scenario for Britain is to be in a reformed European Union".

But one can tell that this is not serious politics when he says that a "very, very close second" would be for the UK to leave the EU and strike a new deal along the lines of those enjoyed by countries like Norway and Switzerland. "Britain", he says, "is in a much stronger position” than those countries to strike a new deal on advantageous terms outside the EU".

Discounting the obvious catch – that there cannot be any meaningful negotiation, no matter how much we threaten and bluster – the obvious problem here is that the deals enjoyed by Norway and Switzerland are mutually antithetical. Furthermore, neither are particularly advantageous to the UK, and neither would probably offer any longer-term economic advantage.

More specifically, in terms of negotiating more "advantageous terms", Lyons clearly has not addressed the realities of the Article 50 scenario, in which time pressures and other constraints would drastically limit our options.

Furthermore, the economic modelling on which Lyons relies probably has about as much validity as the climate models on which the warmists rely, and without taking into account a realistic exit scenario, makes this yet another exercise in fantasy politics – in which Mr Johnson excels, and the mind-numbingly shallow media so loves.

The most important mistake Lyons makes, though – as do so many – is to focus the exit terms in relation to the immediate deal negotiated with the EU. What almost everybody fails to do is understand that the benefits of leaving the EU do not come not with the exit deal.

What we are looking at here is not only the unravelling of forty years of political and economic integration – which is going to take time – but also the suppression of UK national interests and the support of a "European" world view.

Where Britain will score will be in the ability to engage afresh in the global community, and in gaining the chance to reshape the moribund global trading settlement – already suffering a fresh blow from the Indian veto of the latest WTO deal – freed from the dead hand of EU protectionism.

The point here is that the eventual outcome is almost impossible to predict, as are the economic benefits. But then, when Britain sought to join the EEC in the '60s, no official attempt was made to quantify the economic benefits. There were too many imponderables.

Learning from this, we need to be concentrating far more on the post-exit scenario, the one which will develop in the decades after leaving the EU. We need to spend proportionately less time on the immediate exit agreement, which is just the mechanism for securing our departure.

This distinction separates the amateurs and the fantasists from the professionals, and there aren't many of the latter about. And nor is gritty realism attractive to a media which is more interested in entertainment than it is real analysis. Thus, we are going to have to suffer the triviality of the pundits, while the real work goes on apace, unregarded.

Our very great danger is that, when it comes to a referendum campaign – if it comes to that – the shallow nostrums will get the exposure, leaving the Europhiles to sweep the board with their predictions of doom. And, one suspects, Mr Johnson will be right there, muddying the waters.

We need a counterweight, someone who knows how to do serious politics.


Richard North 03/08/2014

 Trade agreements: is "unbundling" the future?

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A little while ago, the Financial Times ran a piece by Alan Beattie on UKIP's trade policy (above), who argued that it "would leave Britain isolated and vulnerable". I didn't write a review then, as there was more to the issue which Beattie was raising.  He chose to confine it to what he termed "Farage's dream of prosperity" which is to be "born of a US treaty". This, Beattie thought, was "a dangerous fantasy".

The points he made, however, went far beyond UKIP's trade policy, and could have been raised without reference to "Farage's dream", one that comes with a promise of a new trade deal "as soon as Britain's exit liberates the UK from the dead hand of European protectionism".

To the unjaundiced eye, writes Beattie, this (UKIP's policy) looks great. But he then observes: "Sadly, such agreements with the US have progressively less to do with free trade and more with restricting competition at the behest of well-organised American industry lobbies".

This is actually the substantive point. It isn't just UKIP which is being led astray. Trade agreements across the board are not what they used to be. For instance, Beattie suggests that, if we attempted a deal with the United States, first up would be the US pharmaceutical industry targeting the National Health Service, the very name of which makes American drug lobbyists visibly bristle.

The centralised NHS procurement system holds down the price of drugs based on the service's own assessments of value for money. This has far-reaching consequences: a quarter of all government purchases of medication worldwide use NHS reference prices, according to estimates by the Office of Fair Trading. That does not suit American pharmaceutical companies, which prefer procurement prices based on markets rigged by restrictive, litigious patent regimes.

The inference, which Beattie develops in his piece, is that trade deals have become encumbered with all sorts of side issues, which extend far beyond the simple necessities for international trade, and move into the area of harmonising domestic policies.

Then, on Monday last, this same theme was picked up by Martin Khor, an executive director of the South Centre, a research centre of 51 developing countries, based in Geneva.

Khor writes of "overloaded 'trade deals'", opening his piece by declaring: "Once upon a time, trade agreements were just about trade. The negotiator's principle was: I'll allow some of your products to enter my market if you allow some of mine to sell in yours". He adds: "Both countries could estimate what the benefits would be for them, and if it was mutually satisfactory, a good deal was made".

Today, though, Khor continues: "trade deals are not mainly about trade any more". The trend, he says, started when intellectual property, services and investment measures entered into the system of trade rules when the old GATT (General Agreement on Tariffs and Trade) was transformed into the WTO (World Trade Organisation).

By way of example, Khor offers companies' patent rights. If they are not "respected", it permits the aggrieved nation to impose extra tariffs on imported products, blocking them as punishment.

This, we are told, has complicated the rules of trade since non-trade issues invaded the system. But this complication at the WTO is minor compared to the bilateral free trade agreements (FTAs) involving the United States and the EU, he says.

A prime example is the Trans Pacific Partnership Agreement negotiations, involving Malaysia and eleven other countries. Under the leadership of the United States, the TPPA includes chapters on many non-trade issues including intellectual property (with standards far higher than in the WTO), rules on investment liberalisation, a system where foreign investors can sue the host states in an international tribunal, and opening up of services sectors to foreign ownership.

Then there are the two issues that directly intrude into the way the government operates. Government procurement, or the rules on how the state decides to award contracts for goods, services and projects, is to be opened to foreigners as if they were locals.

And government-owned enterprises, including private companies in which the state has a share, are to be governed by rules that prevent them from having advantages. The way they buy and sell goods and services are also to be opened to foreigners as if they were locals.

In other words, says Khor, the "free trade agreement" has gone far beyond the terms of importing and exporting goods, and penetrated deep into the structure of the domestic economy, including how local businesses are allowed or disallowed from benefiting from government policies, and how the government conducts its business.

Central to this process is the concept of "regulatory convergence", not dissimilar to the harmonisation of rules that has been a core feature of the EU's Single Market, so much so that when the EU sets the parameters for third countries to join the European Common Aviation Area (ECAA), it writes of its neighbours "linked to regulatory convergence through gradual implementation of EU rules".

Despite the pervasive influence of this concept, to be found as much in the current Transatlantic Trade and Investment Partnership (TTIP) negotiations, too many of the more superficial pundits – Farage included – still believe that current trade deals are a way of cutting back the burden of regulation. As both Beattie and Khor testify, it has precisely the opposite effect.

For this reason, and a complex of others, resistance to the current range of negotiations is building. It is getting harder to reach agreement, and taking longer, so much so that many believe that the day of the comprehensive FTA is over. There are simply too many obstacles.

As an alternative, we are now suggesting in Flexcit a process called "unbundling". Rather than relying on ambitious free trade agreements that promise much but are often able to deliver little, the idea is to go for sector-specific (or even product-specific) solutions, on a multi-lateral or even global level.

Sometimes known as the "single undertaking" approach, they are easier to negotiate and can yield results relatively quickly. They also pose less of a challenge to sovereign entities, which makes them less of a threat to small nations.

An example is the initiative on the classification, packaging and labelling of dangerous substances, which emerged as the Globally Harmonised System of Classification and Labelling of Chemicals (GHS). The first version of the code was formally approved in December 2002 and published in 2003.

This very small step exactly typified "unbundling". Globally negotiated rather than geographically anchored, this was a multilateral rather than a bilateral agreement with a very narrow but vital effect on one particular sector.

Labelling of hazardous materials – more particularly difference in labelling – has been an important non-tariff barrier, restricting trade in a major industrial sector. The entirely uncontentious initiative eases the flow of goods for negligible cost, without any of the baggage we see in contemporary free trade agreements. 

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But what gives this a topical "hook" is that yesterday the EU, together with 13 other WTO members (Australia, Canada, China, Costa Rica, Chinese Taipei, Hong Kong (China), Japan, Korea, New Zealand, Norway, Switzerland, Singapore and the US), seem – without actually labelling it thus - to have discovered "unbundling" (above).

These fourteen formally opened "plurilateral negotiations" in the WTO on liberalisation of trade in so-called "green goods". At the first stage, the members of this initiative will aim to eliminate tariffs or customs duties on a broad list of goods that help clean the air and water, help manage waste, are energy efficient, control air pollution, and help generate renewable energy like solar, wind, or hydroelectric.

At the second stage, the negotiations could also address non-tariff barriers and environmental services. The EU is particularly keen to reduce barriers to trade in services ancillary to goods exported. It cites an example of producing wind energy. It is not enough just to buy the wind turbine: companies also need to have access to the maintenance and engineering services necessary to keep it running smoothly.

It is a great pity that such a noble venture as a trade agreement should be addressed to such a base area of commerce, but the negotiations which are about to start are very much worth watching. Compared with the progress of TTIP, my guess is that we will get more sooner, potentially re-writing the book on international trade.

One thing which should already be lodged, though, is the realisation that free trade areas are not a single, constant type of entity, but a highly varied and continually evolving form of international agreement.

When thus, we see people extol the virtues of FTAs, one needs to ask "what kind"? And, as it stands, for many types of agreement, there are more disadvantages than advantages. Here then, there is more than one "dangerous fantasy". Merely to assume that all FTAs are the same and all work equally well is another one. We have to be more specific.


Richard North 10/07/2014

 EU politics: dolling out the money

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Both Bishop Hill and M E Synon on Breitbart have picked up the EU funding story, and there is much more to come. Total funds dispersed in 2013 to third party beneficiaries amount to €19.34bn, with 33,720 "commitments" averaging €573,571 each.

Staying with the climate change theme, we see that the University of East Anglia was given €4,761,336 in grants, and the Met Office got a relatively modest €2,629,541.

Of the many interesting things emerging, though, are the country spends. One wonders why the United States is so needy that the EU finds it necessary to give it €72,647,859 million (towards 390 recipients). A partial explanation is that some of the money goes to United Nations organisations based in the US, including the UN Development Programme, which gets over €12 million.

In this, though, the UN contributions only account for €27,604,832, leaving over €45 million paid to a diverse range of other needy causes, including – strangely - €8,828,462 given to 45 university recipients. But why the EU should be paying, for instance, the Pennsylvania State University €155,184 for research in violent online political extremism, is something of a mystery.

Other puzzles are why the EU is paying the OECD in Paris €2,669,612 or the TUC €28,439. More sinister than puzzling is why the European Trade Union Institute was paid €10,611,000 and I am distinctly less than impressed with €4,000,000 having been spent on: "Facilitating India's Transition towards low carbon development by supporting implementation of national policies and programmes for offshore wind".

On a more positive note, however, we can put to bed one of the lazy Europhile claims regarding Norway's EU contributions, paid as a result of its EEA participation. The estimated EFTA contribution for the 2007-2013 multi-annual period was in the order of €1.7 billion – averaging approximately €250 million a year. Norway carried 95.77 percent of that cost (€1.63bn).

However, from the Financial Transparency system, we find that Norwegian beneficiaries over the same period were paid €1,01bn from EU funds, making the seven-year net contribution in the order of €620m, or about €90 million net contribution per year.

If the same pro-rate basis was applied to the UK after it had left the EU, it might be expected to find about €1.1bn annually in net payments, which is rather less than some pundits are claiming.

Still, the EU is not all such serious stuff. If you fancy watching a film, you will be pleased to know that the EU has paid a handsome €10,800,000 for the networking of cinemas screening European films, paid to the Association of Europa Cinemas in France.

Never let it be said that "Europe" doesn't do anything for you.


Richard North 09/07/2014

 Global governance: funding the NGO monster

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With no fanfare at all, the European Commission has slipped out the 2013 figures for its Financial Transparency System, a searchable database of grant funding to third parties, including NGOs.

The database is a goldmine of information, telling us, for instance, that the EU paid the BBC €6,100,987 last year, Friends of the Earth (in all its incarnations) €4,188,230, WWF €5,344,641 and the RSPB €3,802,544. What is also of very great interest is that the EU subsidised UN institutions to the tune of nearly €140 million.

All this and much will be the subject of further reporting and analysis, but once again it brings to light the huge amount of taxpayer funding going to unaccountable NGOs, and especially (but not exclusively) climate change advocacy groups. 

In 2013, though, there is a new entrant to the listings – one which has not appeared before on the EU list of recipients. This is the World Resources Institute (WRI), which has been given €1,500,000 of our money for "designing the 2015 global climate change agreement".

What is especially interesting about this is that the WRI is a United States organisation, established in 1982 under Delaware tax laws, with its head office in Washington DC. But, despite a considerable amount of its activity being devoted to lobbying the US government, it has a huge international dimension, receiving most of its multi-million income from governments, their agencies and from multi-national corporations.

Of its $51,595,932 income for 2013, in addition to the EU finding, it gets $8,600,000 from the Ministry of Foreign Affairs of the Netherlands, $4,918,421 from the Agency for Development Cooperation of Norway, $4,890,000 from the US Agency for International Development, $2,987,337 from the Ministry of Foreign Affairs of Denmark, $2,041,263 from the Federal Ministry for the Environment of Germany and $2,000,000 from the Agency for Development and Cooperation of Switzerland.

We also see the Ministry of Foreign Affairs of Norway donating $488,188, the Agency for International Cooperation of Germany giving $372,455, the Development Agency of France giving $262,160, the Department of Foreign Affairs and Trade of Ireland offering $514,155 and the US Department of Energy $375,000.

Not to be left out, we also see the UK's aid ministry, DFID give $2,041,246 to WRI, adding to our contribution via the EU, while the FCO tops up the funding with another $240,351. Including our contribution via the EU, that brings the UK total to about €2.5 million.

Interestingly, Big Oil is right in there as well, with the Shell Foundation contributing $1,000,000, topped up by the Shell Oil Company USA with another $350,000. Other corporates are represented, with the United Technologies Corporation giving $300,000, FedEx, $850,000, KPMG East Africa Limited giving $865,390, McKinsey & Company, Inc, $270,000 and Goldman Sachs $250,000.

But illustrating the incestuous relationship between the NGO "community", we see several of the "usual suspects" on the list. The European Climate Foundation turns up with $879,317, the ClimateWorks Foundation with $533,842, the Energy Foundation with $330,000, the Alliance for Sustainable Energy, LLC with $325,000, Climate and Development Knowledge Network with $251,911, the Climate and Land Use Alliance with $497,941 and Water Conservation International $249,697.

Of global agencies, the United Nations Environment Programme is also represented, contributing $542,990. The World Bank gives $366,076. Charities are also represented, with the Robertson Foundation giving $500,000 and the Rockefeller Foundation $326,000.

Altogether, the top 43 donors – governments, corporates, charities and NGOS, contribute $43,688,366, amounting to 85 percent of the 2013 revenue.

The question is, of course, is why these bodies, with so many governments involved, are giving money to a private US charity, for activities which include preparing the ground for an inter-governmental agreement in 2015, fronted by the UN Framework Convention on Climate Change secretariat.

Accountable to no-one but the US tax authorities, established under Delaware state law, this "charity" should have no role whatsoever in framing agreements between governments the nature of which potentially cost taxpayers billions, the beneficiaries of which are charities of this nature.

In particular, our government and the EU have no business funding such organisations, their very existence representing the darker side of globalisation, where our collective fates are increasingly determined by such unaccountable, faceless bodies, exerting more power and influence than even governments themselves.


Richard North 07/07/2014

 Brexit: the path to ego-driven perdition

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An interesting new blog here, called Politics Satellite,  draws a parallel between the Scottish and EU referendums, with the current campaign looking increasingly like a pilot production for the main event that might come in 2017.

There are many similarities that can be taken from the Scottish referendum campaign and overlaid on a potential EU "in-out" one, from the arguments used to the approaches both sides are utilising to win supporters.

The quintessential issue, though, is that Salmond does not have a detailed, fully worked-out exit plan and, as PS illustrates, this is having a telling effect on the "out" campaign. People – and especially women voters - are asking questions about what might happen if Scotland leaves the Union, and they want answers.

That is the one big similarity that could be a lesson for Eurosceptics to learn, concerning how detail, or the lack of it, is being received by voters.

Says PS, there needs to be a plan and there needs to be details so that when questioned the Eurosceptics can reassure voters that leaving the EU can be done without pain. We won't all be taking a giant leap into a great unknown. Otherwise it looks like, as in Scotland, the women will vote to stay where we are.

However, we are beginning to get to the stage where the anti-EU movement is troubled not by the absence of a plan, but a surfeit of them, with each little groupescule determinedly advocating their own little brainchild, with what looks like an equal determination to ignore other options.

That is one of the very strange things about the situation. If there is a debate about the merits of rival options, occurs largely in the Europhile communities. The "eurosceptic" factions each set up their stalls in isolation, and peddle their wares in grand isolation, each pretending no-one else exists.

Even this weekend, we thus have Alan Murad, Acting Campaign Manager of Get Britain Out, blithely telling us that, "it is important Eurosceptics present viable alternatives to EU membership, something they are often criticised for failing to do".

Without even recognising that there are other workers in the field, he then goes on to promote his favourite little hobby-horse, the idea of "closer ties with the Commonwealth countries", as a substitute for EU membership, something which is very far from being a viable alternative to EU membership. 

Then, engaged in his own personal battle on Twitter, is Campbell-Bannerman - now safely returned as a Tory MEP, after his brief sojourn as a UKIP MEP and his brush with Farage. He is still trying to flog his idea of an "EEA-lite", without the first idea of how that might pan out in the time-limited context of Article 50 negotiations.

As Con O'Neill decided more than forty years ago, when he took us into the Common Market as lead negotiator, the only way to maintain the momentum was to "swallow it whole" – to accept the treaties unchanged. The moment the treaties were put on the table for discussion, the fruits of hard-won compromise would unravel, and any chance of a swift resolution would evaporate.

Similarly, if we are to go to the table with the hope of agreeing a speedy exit plan based on continued participation in the EA Agreement, we need to "swallow it whole". Once we are out, we can then revisit the agreement, making "Brexit" a process rather than a single event. That is, in fact, where Flexcit takes us, a co-operative, online venture that concludes that no single "plan" is workable, thus requiring a flexible response, and then continuous development, probably over many decades.

Such candour is not for the likes of Hannan, though. Relentlessly beating his own drum, he has seamlessly graduated from Norway and EFTA to the Swiss option, without so much as a blush.

But in his typical, High Tory way, Hannan eschews any co-operative approach. His is the top-down down plan which is being looked at by "brilliant" lawyers and which will be revealed to us plebs when he's ready, for us to admire and adore. In his own way, Hannan is as centrist and authoritarian as the "colleagues" he would seek to replace.

Certainly, Hannan the dictator is no debater. His role is to descend from the mountain to hand down the tablets and instruct us mere mortals on the path to righteousness. He will never accept that there could be possibly any flaws in his grand design, a "Swiss option" that even the Swiss have been unable to make work and which the EU has already said (many times), it would not be prepared to repeat.

Whether he is the inspiration for this in the Telegraph remains to be seen, but despite the need to break away from an EU-centric approach, all we get is an unnamed Tory. This source says: "We want to be in a position where we trade with the European Union and cooperate on the issues we choose to cooperate on. Basically the rest of Europe is then a European eurozone that wants deeper and closer union".

Thus we are told: "You end up with the two rings of Europe. The inner ring, which is euro-obsessed, and the next ring around which, although is not in the euro, are still in the European Union but have a looser arrangement".

Clearly, this man was not listening to Prodi last week, who averred of such an arrangement that, "you will not be in the core but the periphery". Prodi thus went on to say: "As you did with the euro, you can be out on the periphery … if you are interested in a loser relationship with Brussels, you will get less and less power".

Altogether, what the eurosceptic community seems to be intent on doing is frittering away its energies on further and further fragmentation of effort, each faction determined to be the proud owners of their own unique plan, to add to those who believe we should not have a plan anyway.

Only the Europhiles, it seems, think it necessary to work together. For us, there is not the slightest attempt even to consider a consensus view, or any thought as to why the europhiles have been so successful and euroscpeticism has been a consistent and dismal failure.

In the meantime, it comes as no great surprise to have Andrew Stuttaford tell us that, for the immediate future, we can only expect a Cameron defeat at the polls next year, which will mean his replacement by a europhile Labour government, and a stake through Brexit.

That, in a way, is encouraging news. As I lurch from mild optimism to extreme pessimism, I am more and more convinced that a referendum campaign will see rival "out" groups vying for attention, with not one of them able to come up with a credible exit plan, leading us down a path of ego-driven perdition.

On that basis, the longer we can delay a referendum campaign, the longer we have before losing it.


Richard North 06/07/2014

 EU referendum: vultures circling the corpse

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Blogged by Purple Scorpion we learn of the doings of Dominic Cummings, more than a decade ago campaign director of Business for Sterling, now emerging to tell us how to run the coming EU referendum "no" campaign.

In a report for Business for Britain, "reformists" and wannabe leaders of the "no" campaign, Cummings reverts to exactly the device which probably lost the Conservatives the last two elections – the infamous "focus group". It was devises such as those which had election campaigners chasing after the supposed opinions of "swing groups" in order to decide how to pitch their messages.

The fact is, of course, is that there are no defined "swing voters" in a potential EU referendum. The last time we had one was in 1975, so one can hardly look at a single group and see what, if anything might have changed their mind since last time.

What Cummings has done, therefore, is take "swing voters" who voted for Mr Cameron in 2010 and might change their mind, using them as a litmus test of how to gauge the message to potential voters in a referendum which we might see in 2017.

In terms of campaign design, of course, this exercise has almost no value. This cohort cannot be taken as representative of the nation as a whole. Nor does it have any particular relevance to a national referendum. We are not talking about a limited number of marginal seats on which elections will turn, but the sum of all the votes cast by the nation, where it is the majority option that counts.

Thus, all we are getting is verbatim extracts of opinions given by people collected to talk about a referendum, giving some colour to an otherwise drab subject. More importantly, it provides a re-launch platform for Mr Cummings, which will stand him in good stead when he, Matthew Elliott and his London gang of think-tankers make their bid for the campaign millions on offer from the Electoral Commission.

This is what they did with the North-East region referendum, swanning up from London to Hoover up the money. While the locals had to fight the campaign unaided, the maestros schmoozed with the donors, telling them how lucky they all were to have them, then writing books to tell everyone how clever they were in winning the poll.

Now history is set to repeat itself. As a referendum begins to look a likely proposition, the smell of money and kudos is enough to bring the gold-diggers and careerists out into the open, the pack leaders adorning themselves with the "CEO" title to mark their own importance. Bless!

Unfortunately,  these are the people, if we let them, who are going to lose us the referendum. Not one of them has the first idea of what they are fighting for or how to pitch a winning campaign.

Cummings, with the benefit of his magical mystery focus group, for instance, tells us that "the combination of immigration, benefits, and human rights dominates all discussion of politics in general and the EU in particular". 

It doesn't, of course. But this is a man that thinks the "biggest change in the EU debate since Brown announced in 2003 that we would not join the euro" is that "people now spontaneously connect the issue of immigration and the EU". It is no coincidence, though, that Cummings is the man that walked away from his paid position in Business for Sterling in 2002, and has taken little interest in the EU ever since. 

He is evidently a man who seems to have missed out on the Lisbon Treaty altogether. But now there is a whiff of money, he's back, ready to take is place in the ranks of the paid CEOs, prepared to fight to the last expense account.  

Setting up his pitch, the born-again Cummings now rushes to give us the benefit of his newly found wisdom, gravely telling us that an "out" campaign would "not have to focus on immigration". It is a massive factor that needs no reinforcement, he says. Rather, the campaign would need to neutralise the fear of leaving and focus on what could be done with the money saved by leaving, both as a positive message and as an answer to the fear of lost trade.

So, from the giant intellect of this great campaigning genius, this is what we get: "neutralise the fear of leaving". Yet, if Mr Cummings had read our lowly blog (which he is far too grand to do), he would have discovered, with not a CEO in sight, that we had managed to work this out over eighteen months ago, all by ourselves. A successful campaign, we said, would be:
…. exploiting the status quo effect and the perceived importance to British economy of the totemic Single Market. In this context, the "out" campaign will only succeed in a referendum if it is able to neutralise the FUD.
This, we said at the time, is a sine qua non, having raised the issue of FUD in January 2013 and pursued it ever since, even labelling the phenomenon with the "FUD" buzzword, something that Cummings hasn't invented yet - although he will.

Some 18 months after the event, therefore, we have a Jonny-come-lately waltz in to tell us what must be done. Sadly though, it is only in the way an exasperated England fan might instruct his team how to win: score more goals than the oppostion, stupid.  But when it comes to exactly what needs to be done, all we get from the maestro is: "There are various ways in which this could be done but these lie outside the scope of this report". Clearly, the fee was insufficient and needs topping up.

That is actually classic Cummings. In fact, it is characteristic device of the golden boys. They swan around the London circuit oozing supercilious confidence, blithely informing their sponsors that the answer is soooo simple - something must be done, dressed up with vacuous jargon and last decade's marketing buzz-words. And they are the ones to do it, for a fee of course.

In respect of the EU referendum campaign, though, there is an inbuilt trap which none of these golden boys have even began to realise exists. Much less have they any idea what to do about it, .

The problem is the very real conflict between the need to get out quickly, preferably within the initial two years afforded by Article 50, and the overwhelming requirement to protect the Single Market – the only way we are going to neutralise the FUD – by continuing to participate in the EEA.

Here, the trap is, of course, Freedom of Movement, which is an integral part of the EEA. Forget trying to release ourselves from it. It is entirely non-negotiable. Thus, on the face of it, we can either deal with immigration or we can "neutralise the fear of leaving". But, on the basis of what we are being offered by the likes of UKIP, we can't do both.

If fact, we can have our cake and eat it. Freedom of Movement is a red herring. The idea of "regaining control of our borders" is an empty mantra. Unless we are to adopt a North Korean style of government, with totally sealed borders, restrictions on immigration would be subverted by illegal immigration, asylum seekers and family reunification, none of which are resolved by leaving the EU. And then, none of those already here can be sent back.

With that, of course, we have not yet officially started the campaign. And, as we know from 1975, sentiment can not only change, it can completely reverse. With a huge humanitarian crisis in the making, where more than 5,000 migrants have been picked up by the Italian navy in the past 48 hours in several rescue operations between Sicily and North Africa, the sentiment can change here as well.

There are those who would sink the boats of migrants, coldly committing murder in the process, or return desperate men, women and children from whence they came, only for them to perish en route or be locked away in camps when they make landfall. But that is to invite a backlash which could leave the "no" campaign flat-footed. The immigration card needs to be played with the very greatest of care.

On the other hand, there is a way of squaring the circle. That is what this post, this one, this and this are all about, options which some readers are too stupid to understand. We avoid the simplistic, empty mantras and address the "push-pull" factors, dealing with the causes rather than the symptoms. Migration is a symptom. Let's deal with the causes.

All of this, necessarily, requires a far more  greater knowledge and understanding of the issues than we have seen to date, and a more sophisticated campaign, with a. But the likes of Cummings play down the need for  knowledge – if only because they lack any grasp of detail. 

Mr Cummings thus stresses that the tiny cohort with whom he chose to spend his time, "know almost nothing about the mechanisms of international trade, the EU's Single Market, the EU's Customs Union, and the interaction of all these complex systems with global regulation".

This means, he says, that discussions about the relative merits of the EU's or EFTA/EEA trading arrangements are not only distinctly foggy in Westminster - they are completely unintelligible to these people, who have not heard of EFTA or the EEA.

In his own condescending way, he tells us that the arguments that are discussed among the tiny number of genuinely knowledgeable people - "the sort of arguments analysed by those who entered the IEA competition" - have no grip on these people, who have none of the knowledge necessary to make sense of them.

In Mr Cumming's tiny little world, therefore: "All discussion of these issues rapidly runs into the sand and talk returns to immigration".

However, as I have already pointed out, the campaign has not even started yet. And in the 1975 campaign, many people very quickly understood what the three initials EEC meant. By the same token, by the time the 2017 campaign is over, a similar number of people will become familiar with the EEA, and the related concept of the "Norway Option".

Where Cummings and his London friends fall down, of course, is that they rely on what they read in the legacy media. And because the "smart set" can't get their brains round complex issues, they think the electorate is going to be similarly vacuous. They will want a "Janet and John" campaign that insults the intelligence, and deals with none of the substantive issues.

What will be needed, though, is for the case to be fully worked out. That is what Flexcit is for. Not one in a thousand will read it, any more than the average Christian reads the Bible, or the average football fan reads the 148-page FIFA manual on the laws of the game. But, if FIFA needs 148 pages to play football, to deal with something as complex as leaving the EU is going to need a lot more.

Then, and only then, will we know where we stand, and have the wherewithal to devise a strategy. And only then can we simplify the case. But having a full version as backup means we will have all the important angles worked out. We will rarely, if ever, be caught out and, as far as the Europhiles go, we will be ahead of the game. Meanwhile, campaigners will benefit from the knowledge that their campaign has substance, and will derive their confidence and will to win from that.

All Cummings can offer, by way of an "obvious idea" though, is "to develop a roadmap and the framework for a new UK-EU Treaty 'Wiki-style'". Such decentralised movements have achieved astonishing things in science and could in politics, he says.

This again is typical of the breed. Apparently plausible, especially to those who have no experience of campaigning in the real world, any such device would immediately become a target for opposition hackers and trolls. Massive effort would have to go into defending something which, by the time it had been savaged and disrupted, would not be worth defending anyway.

Nevertheless, that is not going to make any difference to the "smart set". The referendum is a game for them to play, with careers and names to make, and money to dribble through their fingers as they play. The only thing that won't worry them is whether they win or lose. The game is simply for playing - for as long as the cheques roll in.


Richard North 01/07/2014

 EU politics: a waste of our time and everybody else's

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Matthew Elliott's Meal Ticket (MEMT), aka Business for Britain, has convinced the Sunday Times to carry its usual scam, publishing a scary letter in support of its EU "renegotiation" agenda. The excuse for this proposition is that his fellow travellers in the financial services industry are "extremely concerned" about Britain's current difficulties in preventing the introduction of certain measures by the European Union.

They list the financial transaction tax, the alternative investment fund managers' directive, the prospectus directive, bonus caps, bans on short selling and the restriction of euroclearing to eurozone clearing houses. Each of these things, they say, "will continue to erode Britain's competitiveness in markets in which it has unique global standing".

That empowers Mr Elliott to tell Conservative Home that: "The time has come to take powers back from the EU". Adds our Matthew, "We need new protections against bad and dangerous laws that the EU is proposing. A future renegotiation team needs to go to Brussels and demand new safeguards to protect the City. Business is clear: the City should ultimately be controlled by those in the UK, not EU officials".

One could hardly disagree with the idea that we need protection against big, bad Brussels, but harnessing this to a renegotiation agenda is getting more than a little tiresome. If we are to see any material change, then it will be by invoking Article 50 and then agreeing an exit package.

At his last fundraising bash, though – where Matthew passed round the begging bowl for £50,000 to keep the show on the road – witnesses were appalled by the shallowness of the MEMT approach, with not the least recognition of the global agenda, and the way it is gradually squeezing the EU out of the regulatory game.

As we point out in our Flexcit plan, the role of international agreement origin is no more evident than in the financial sector. Interestingly, there is still a two-way flow. For instance, in a few cases, the EU "uploads" its financial rules, so that they become the basis of international agreements. But, in many cases - and increasingly so - it "downloads" its regulation from international bodies.

A good example of this is the EU's Capital Requirements Directive, the so-called CR IV Package on the adequacy of banking capital. The original source is the Basel III agreement, crafted by the Basel Committee on Banking Supervision (BCBS).

The EU regulation also applies to the EEA so we would keep it on the statute book  it if we adopted the "Norway option". But, even outside the EU/EEA, the essence of the CR IV package would still apply to Britain. It is a party to the Basel III agreement. It would "download" it directly, rather than via the EU.

The process is rarely visible to the popular media, almost entirely unknown to the general public and – apparently – completely beyond the likes of Matthew Elliott. This is perhaps unsurprising. Only very occasionally does a hint of the real power emerge, as in January 2014 when the Basel Committee ruled on leverage ratios for banking loans, the issue at the heart of the 2008 banking crisis.

The picture, however, is extremely mixed. Regulation does not follow a single template. For instance, "over the counter” derivative trading is regulated by the EU's European Markets Infrastructure Regulation. But even this does not work in isolation.

The regulatory package stems from a commitment made in April 2009 by the G20 nations to "promote the standardisation and resilience of credit derivatives markets, in particular through the establishment of central clearing counterparties subject to effective regulation and supervision".

Thus, in an industry of global reach, the EU regulation combines with elements "downloaded" from the US Dodd-Frank Act and from Basel III. There is no single author and, outside the EU, Britain would "download" from similar sources. Its regulatory package would look very little different from what it is now.

On the other hand, the Alternative Investment Fund Managers Directive (AIFMD), of which Mr Elliott and his cronies complain, is indeed largely of EU origin. Quite rightly, it is seen as a building block of "Fortress Europe" – a more protective European market sheltered from competition.

Tellingly, a recent survey had 68 percent of respondents believing that AIFMD will lead to fewer non-EU managers operating in the EU. Some 72 percent viewed the Directive as a business threat. As an EEA member, if we chose to go down that route, Britain would have to retain its provisions. But that is one of the many reasons why EEA membership can only be regarded as a temporary solution.

Nevertheless, simply to attribute cost to additional regulation, and then to "renegotiate" a better deal from the EU, is not a realistic approach to the problem.

In September 2013, Deloitte recorded that new regulations had cost the European insurance industry as much as €9bn since 2010, with each of the top 40 insurers having spent more than €200m on compliance. Of regulation deemed to have a major impact, 36 percent was of national origin. The rest came from the EU or international sources.

Instruments such as the "Solvency II" package, on capital requirements, have international dimensions. Specifically, Directive 2009/138/EC implements recommendations from the International Association of Insurance Supervisors, the International Accounting Standards Board, the International Actuarial Association and nine other agencies alongside the World Bank and the IMF.

At a European level, all of these work with the EU's Frankfurt-based European Insurance and Occupational Pension Authority, and with Member State regulatory bodies.

This has interesting implication for Brexit. Global dimensions mean that leaving the EU, per se, would not afford any significant relief from these provisions. Costs would still be incurred. But it also means that renegotiation with the EU would be a waste of time. We would be talking to the wrong people.

Because of this, an alternative stratagem has been suggested by the consultancy KPMG. It argues that significant costs arise from duplication and the lack of a consistent measure of insurers' financial solvency. Thus, rather than targeting to remove regulation, it suggests the global industry could save up to $25 billion per year from harmonised, consistent regulation.

In this context, rather than a negative, Solvency II is seen as a start of a long process of improving and rationalising the law. But it is also part of a global initiative alongside the Solvency Modernisation Initiative in the US and recent ERM enhancements in China.

Indicative of future expectations was a commentary in Reuters. It complained that one of the great disappointments in the raft of regulatory changes emerging from the financial crisis of 2008 had been the failure of regulators to agree a common framework.

In an attempt to achieve this, a greater role was proposed for the International Organisation of Securities Commissions (IOSCO), the acknowledged global standard-setter for the securities sector.

The way forward was seen as this organisation promoting and facilitating regulatory convergence, something which was regarded as inevitable for global markets. Whatever European issues currently apply, the eventual ambition is to have harmonised global legislation for what is, after all, a global industry.

And for all the wittering from the likes of Elliott, UK regulators are not ill-disposed to this idea. The chief executive of the Financial Conduct Authority, Martin Wheatley, states that his authority intends to "reflect on and embrace" the international nature of markets.

He talks of a "new regulatory landscape" and of driving changes in regulation, infrastructure and culture, as a body at the "heart of international regulation". His view is that the regulator exists "to drive forward a changing global agenda". "You will witness first-hand how we share priorities with our EU and US counterparts, and how we are at the forefront of discussions to address cross-border risks", he says.

Such discussions require access at the highest level, well above the narrow sub-regional entity that is the EU. Despite it being positioned as such by David Cameron, the "top table" is quite simply not the EU.

Occupying that position globally is the G20. Thus, when the EU sought to adopt its Financial Transaction Tax (FTT) – about which Elliott also complains - against British wishes, invoking the enhanced co-operation procedure, it was to the G20 that the financial markets representative bodies turned.

Now, on financial matters, the key body is becoming the G20. But it works through the Financial Stability Board (FSB), founded in April 2009, with a mandate "to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies". It brings together national authorities, international financial institutions, sector-specific international groupings of regulators and supervisors and committees of central bank experts.

It counts as its members the Basel Committee on Banking Supervision (BCBS); the Committee on the Global Financial System (CGFS); the Committee on Payment and Settlement Systems (CPSS); the International Association of Insurance Supervisors (IAIS); the International Accounting Standards Board (IASB) and the International Organization of Securities Commissions (IOSCO). This is, in effect, the standards setters' standards setter.

Significantly, the FSB is chaired by Mark Carney, Governor of the Bank of England. You want the "top table"?  Well, this is it, and our man chairs the meetings.

And guess what? The FSB secretariat is hosted by the Bank for International Settlements in Basel, Switzerland. This institution shifts the focus of power to Basel, where the global agenda is monitored and steered, with regular cross references to its sponsoring body, the G20. The UK is well placed to influence that agenda, working not through Brussels but through Basel, where Mr Carney can talk to the Governor of the Bank of England about what regulations we need. 

All of this, therefore, makes Mr Elliott's prattle about "renegotiation" an unnecessary distraction. For what little advantage he and his shallow friends would gain, they would miss out on the huge opportunities afforded to us as members of the global community, where we properly belong.

The point is that we do not need the EU – it simply gets in the way. And we don't need Mr Elliott confusing the issues, adding another fatuous call for "renegotiation", to add to the cacophony. He is wasting our time and everybody else's.


Richard North 23/06/2014

 Brexit: another nail in the coffin?

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On offer from the Financial Times today is a preview of an as-yet unpublished report from the Centre for European Reform (CER), to be launched on Wednesday. The report is by their grandiose "Commission" set up last year to explore the implications of Britain's exit from the European Union.

We have already had a foretaste of its work with a report on the effect of Brexit on the City of London, on which basis, we can expect the same wearily predictable Europhile drone. The problem is that the CER exudes "prestige". Furthermore, the professional presentation of its work offers a stark contrast to the laughably amateurish style of the IEA "Brexit prize" finalists, and the thrashing of lightweight dilettantes such as Hannan, each pushing their pet nostrums without any concessions to reality.

According to the FT, the CER is going to tell us is that EU membership has been a "boon" for the UK economy, lifting its goods trade with other members by 55 percent, generating increased inward investment and boosting the City of London. Then, entirely predictably, it finds that many of the purported benefits of leaving are "illusory".

We are to be led to believe that, "even within the rule-bound EU", Britain has managed to preserve the second most lightly regulated product market in the developed world, as well as levels of employment protection that are only marginally more restrictive than in the US or Canada – and well below those in France or Spain.

The CER will also tell us that some of the most controversial EU rules – such as the working time directive – have had only a "marginal" effect on the labour market. In other areas, notably financial regulation, it will say, Britain has voluntarily gone further than EU minimum standards.

Thus, it will maintain, "A bonfire of European rules would not transform Britain's economic prospects". According to its report, "The idea that the UK would be freer outside the EU is based on a series of misconceptions".

The trouble with this is that, when I have seen the full 92-page report, in all probability I will be agreeing with the premise. As I have already set out in my own draft report, in the short- to medium-term, the idea that there are significant regulatory savings to be made is "illusory". Most of the schemes which offer such savings, "seem to be based on wishful thinking rather than rooted in reality", I note.

By offering unrealistic nostrums, though, we are allowing the Europhiles to make the running. The CER report makes great play of what it calls an "invidious choice" facing the negotiators of any split with Europe.

If Britain seeks to benefit from the single market from outside the EU, it says, it will have to play by many of the rules it is seeking to escape – while having less influence over them. The flipside would be freedom from those rules, with loss of access to the single market.

Once again, we get the same tired old mantras, but the very same that are on offer from the "eurosceptic" community - both are offering the same ideas. These options, says the CER, include a Swiss-style deal based on bilateral agreements with the EU; a customs union of the kind Turkey has with the EU; or, like Norway, membership of the EEA.

From there, the drone develops: "the UK would still have to comply with the club's rule book without having power to influence it". And, as the lies continues, we are told that the UK "could find itself continuing to pay into the EU budget; a Norwegian-style deal would lower net contributions by only nine percent, while a Swiss arrangement would cut contributions by 55 percent".

Thus, the paper concludes that "the only option" that would make sense would be for Britain to go for as deep a free-trade agreement as possible with the EU, and sign as many bilateral trade agreements with non-EU partners as can be secured.

Even then, says the CER, "an FTA would still not leave Britain with complete regulatory freedom". The EU would "make demands on labour market rules, health and safety and competition policy, as well as product standards. Including Britain's services sector in any FTA would be difficult, given the UK's large trade surplus in services with the rest of the EU".

Needless to say, none of the points made are entirely valid, but there is just suffiicient truth in them to make them plausible. But not only is the FTA "option" politically unrealistic, we would be unwise to allow the Europhiles to set the terms on what our leaving options should be.

Again, though, the problem is that, in principle, I would agree with many of the points made by the CER – as far as they go. None of the available options, including the "Norway option" are viable in the long term. None of them provide the complete solution for Britain in a post-exit environment.

This was something I was at pains to stress in our Harrogate meeting last week. There is far too much emphasis on the initial options – including the "Swiss option" and the "Norway option". We need to extend our imagination to settling what can only be an interim solution. The real plan is to buy time for the longer-term solutions (in the plural). These are the essence of any successful exit plan.

By allowing the Europhiles to set the agenda, and by refusing to devote energy to developing our own realistic exit plans, we risk conceding the game before it has even started.

We can see very clearly the CER strategy, and it's a good one. They take "our" plans and rubbish them – which is easy to do, and then set up a "straw man" option which, in the fullness of time, will be just as easy to demolish. If we allow this, at the critical moment in any referendum campaign, we will be left with no viable alternatives to EU membership, and will have voters flocking to the safety of the status quo.

The real alternative, the idea of a two-tier structure, involving a short-term interim solution, buying time for longer term solutions, is of course one that the Europhiles dare not and will not raise. Because that is the strategy that has a chance of working, they will never discuss it, and will try to ignore anyone who does.

In the absence of publicity on the workable alternative, on Wednesday, we will see the CER making the running. There will be no great drama – no front-page headlines. But, unless we start getting our act together and push for a credible alternative, this Europhile propaganda initiative will be another substantial nail in the coffin. It could be one that ensures we lose any "in-out" referendum.


Richard North 09/06/2014

 Brexit: boring the voters into exhaustion

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As advertised, the ludicrously expensive Continental Drift "In or out?" conference on the EU took place last Thursday, graced by the presence of Matthew Parris who tells us that there are three years to go before a possible referendum on Europe, and "already it's impossible to know what to think".

That is a very predictable outcome of a conference stuffed with an "authoritative line-up of experience and expertise", defined not by depth of knowledge and the breadth of their research, but by their "prestige". There was "hardly anyone on the podium who wasn't a tycoon, a knight, a lord, a professor or an über-boffin".

This, compared with our modest little workshop on Wednesday, when the fruits of some serious work will be discussed, this ensured that paying delegates were left confused and uninformed – precisely as Parris reports.

Parris, armed with the degree of profound ignorance that has become the speciality of the chatterati - believes he was "offered a glimpse of the future" at this conference when, in fact, all he got was the turgid droppings from closed minds, tired intellects and over-inflated egos.

Like some Dickensian ghost of times yet to come, the Times correspondent tells us, "Fate took me by the hand and tiptoed with me through 2015. Then 2016. Then 2017. Three long years we surveyed, Fate and I. Gloomy and appalled we watched what may lie in store for Times readers, for me, and for those millions more of our fellow citizens who will be taking an (sic) thoughtful interest in our country's direction".

The man does, of course, presume too much. On those constrained by the foetid limits determined by the pursuit of prestige above all else could believe that the experience in any way represents the future. For, what Parris saw was not an exposition but a shut down, an attempot to close down the debate.

And what he saw was it was "awful". Says Parris: "Reason fled; meaning turned to mirage; truth itself shimmered, shook and dissolved". The "impressive" day-long symposium was never boring. "Attention was held as the horror grew. We were being treated to a living demonstration of the death of objectivity: a dry run of the insanity that (assuming a 2017 referendum does take place) this three-year debate promises to become".

Then, tucked in was the ultimate objective (and successful execution) of the symposium: "Taking shape before a dismayed audience was the complete impossibility of ever reaching any conclusion", writes Parris. "Crushed beneath a tottering heap of speculative claim and counter-claim, reason, even among the reasonable, began to die".

Cutting to the chase, Parris asks what we learned that was new. "This", he says, "is, after all, only the start of three long years of argument: the debate is surely not yet exhausted?" He writes:
And what did we learn that looked capable of clinching an argument? What anchors in reality, what figures, what numbers could anyone supply? Both within and outside the hall I sensed the silent presence of an audience already weary of propaganda and hype, and hungry for hard facts. But as the day drew on, the facts melted before our eyes.
Three impressions, he adds, "had a certain freshness", for him, at least. The first was quite revealing:
Few, even among the Eurosceptics, are now trying with much conviction to sell the attractions of a Norwegian-style "trade-only" deal for a Britain outside the EU. What Vernon Bogdanor called Norway's "fax democracy" (in which a country has no place at the EU table yet still faces EU costs and regulations) sounded unsatisfactory for the UK.
There we can see where the land lies. The only option with a chance of working – albeit as an interim solution – is the one they all have to reach out and destroy.  This is why the IEA "Brexit prize" had so ruthlessly to exclude any reference to the option. This time, the coup de grace was delivered by the pompous Europhile Bognador, with the gullible Parris only too willing to soak up the propaganda, revealing nothing more than his own ignorance.

The second issue Parris identifies is the financial services industry (as represented on Thursday). It is not mightily fussed about the in-out question. Most of these voices sounded quietly hopeful that their sector could live with or without a British exit. But that is hardly surprising since most financial services legislation is coming from global bodies – not that Parris would know anything about this.

Third, this silly man was "mildly surprised" at the level of confidence that a British prime minister might bring some seriously useful gains home from the EU. Charles Grant from the Centre for European Reform suggested these:

a) Letting national parliaments police "subsidiarity" (the things nation states decide for themselves) and "yellow cards" for Brussels-based intrusion;
b) Completing the single market; liberalising services and the digital economy;
c) Further tightening benefit rules for EU migrants;
d) Streamlining and reshaping a bloated commission;
e) Single-market safeguards to protect the ten non-eurozone members from the eurozone;
f) Entrenching member states' democratic checks on "ever closer union".

This sort of BS might satisfy Parris, but he then asks where the "argument-clinchers" were. "As facts and statistics were tossed on to power-point presentations", he tells us, "a sense of the incurable subjectivity of this debate settled on us. Civitas found a three percent net loss in GDP as a result of EU membership, while the CBI found a four percent GDP net benefit".

Indicative of precisely why we should not get bogged down in micro-economic detail, or even allow the argument to be dominated by economic issues, we then have Parris tell us that, "these figures themselves dissolve into mere assertions when, digging deeper, you examine the assumptions that have to be made before a number can be posited".

Let me illustrate, says Parris: UKIP's Tim Congdon handed out his booklet showing, he told us, that the EU costs Britain "roughly 11 percent" of our GDP. Half of this, he said, comes from the cost of EU regulation. But …
… what he cannot do, because nobody can, is give a figure for the cost of the British-made regulation that might (or might not) replace the Brussels-made regulation. Would parliament want rights of parental leave? Control of chemical food additives? Health and safety legislation? Product specification? Nobody can even guess how much EU-sourced regulation a future "unshackled" UK parliament would vote to replicate. The "cost" of EU regulation is anybody's guess.
We've tackled Congdon before, and his figures have never stacked up - even the facile Parris can see this. But our arguments do stand up, although they were never going to be heard in this venue. That is how they rig the debate – defining who speaks. Their aim is to control the debate and ensure that no workable solutions ever see the light of day.

The success of this strategy on the day was plain for all to see. Parris left the conference, as (he thinks) did most of the audience, "with the settled and dispiriting conviction that the economic argument for or against Britain's EU membership will be impossible to frame convincingly".

It is, he says, "unlikely to gain traction one way or the other, and in the years leading up to a possible referendum would confuse, exhaust and, finally, numb the voters". "He's numbed already, and there's three more years of this to go".

It is there, though, that Parris does as a service. We see the tactics of the Europhiles, and the europlastics. But we also know that they lack imagination, perception and the understanding of the issues. We're well ahead of the game and we know how to energise the debate – which is what we are doing on Wednesday.

The Parris experience is, in fact, encouraging. For £1,800 a piece, the Continental Drift marks have been fleeced. We can deliver the answers and our case gets stronger by the day. And we have no need to take people to the cleaners. The trick is to go for an economically neutral interim solution, by-pass the narrow economic debate and look at the big picture.

The "little Englanders" and the "little Europeans" have one thing in common - neither can break out of the intellectual boundaries they have set themselves. We're going to do the job for them.


Richard North 02/06/2014

 Flexcit: version twelve now available

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If in three years time we are to face an "in-out" referendum, then today we see a landmark which, in the fullness of time, will be of far more importance than the euro-elections just past. This is the completion of version twelve of our Flexcit blueprint for leaving the EU (also accessible from the "Brexit" link on the header menu).

If you believe that statement to be hyperbole, or just another example of North arrogance, you are welcome to attempt making a case. But the fact is that, faced with a choice of whether the UK should leave the EU, the electorate will be far more influenced by existence of a credible exit plan than they will be by the election of 24 UKIP MEPs.

That is very much the case when, with the passage of three years, there is a good chance that a substantial number of these MEPs will not be accepting the UKIP whip anyway and, of those who do, many like Gerald Batten and Lord Dartmouth, will prove to be an embarrassment. They will more likely driving voters into the "in" camp, than assisting with the cause.

Indeed, one of the fatal flaws of the 1975 campaign was its inability to come up with a credible alternative to (then) EEC membership. To date, the "eurosceptic" community has seemed determined to replicate that flaw, with UKIP in particular stubbornly refusing to commit the necessary time and resources to producing an exit plan.

Even the now infamous IEA "Brexit prize" turned out to be a cul-de-sac, with the six finalists, including the winning "essay", turning out to be of such poor quality that they were embarrassing. It is difficult to know which was worse – the poor quality of the work, or the fact that its authors believed they had produced anything of merit.

The one good outcome of the prize initiative, however, was to kick-start the production of this Flexit plan, easily the best and most comprehensive entry sent to the IEA but, like others, rejected because it did not meet the undeclared criteria of the judging process, advocating as it did the adoption of the so-called "Norway option".

What makes Felxcit so good is that it is a co-operative exercise. It genuinely builds on the experience and good sense of this blog's readers, and the many friends, colleagues and experts who have over a period of years offered advice and information which have gone into the current version.

As to version twelve, for the first time, the all-important psychological 200-page barrier has been breached, my personal dividing line between a lengthy pamphlet and a full-blown book. I am now at ease with the idea of calling this work a book, and have adjusted references in the manuscript accordingly.

From the original draft, which ran to 26,000 words and 98 pages in single line spacing format, the work has now added 46,000 words and another 118 pages, to bring it to 72,000 words and 216 pages, with much more yet to come.

It will continue to be, therefore, a "live document", keeping the debate alive, giving readers a much clearer idea of the options and ideas influencing the thinking of those concerned with the mechanics of leaving the European Union.

As for the main changes so far, one of the more important is the integration of material submitted in the Bruges Group's submission to the IEA. There is considerable overlap between our original submissions, but issues not covered in ours, and the special insights in the Bruges Group paper, have been absorbed. Effectively, that makes this book a joint work, incorporating the thinking of the Group.

Compared with the original submission, though, the changes are substantial. The introduction has been considerably expanded. There are additional sections on public education, deregulation and the Swiss option, rejoining EFTA, and absorptive capacity. We have also inserted extra material in many other chapters. Also, the discussions and conclusions chapter has been substantially re-written.

Material scattered through the body of the original paper has been collected together to create an entirely new chapter on what we call our eight-point programme. This is undergoing further transformation. We have considerably expanded the chapter setting out the political background to the putative referendum, work which is as yet unfinished.

We have also collected up material to make up a new chapter on globalisation and another on freedom of movement and immigration - which will be further expanded. There is another chapter on domestic reform, introducing the Harrogate Agenda, and one each on agriculture and fisheries. This brings the current number of chapters to fifteen.

What emerges particularly from the release from the word limit set by the IEA for the original paper is the restrictive effect it was having. Having to cram in technical detail, and meet the judges' requests that each exit option should be argued, meant that the text had to be unusually dense. Adding explanations and examples adds to the length of this work, but it considerably improves its readability and clarity.

In terms of the quality of the work, one of the new chapters dealing with fishing policy, is based on Owen Paterson's Fishing Green Paper, the production of which had him travelling all over the world, over a period of two years, looking at fishing systems in many of the world's major grounds.

With my desk and field research over the same period, plus years of study of the EU system, this single chapter encompasses work of unrivalled scope and depth.

It would be false modesty (and an insult to the many contributors and advisors) to assert that this was anything other than the best exit plan currently available and, by the time we have finished the definitive work in September (the current target), it will be the most comprehensive.

That said, we are under absolutely no illusions about the treatment of the work. Most – and especially the legacy media – will ignore it, many of them quite incapable of judging its value, or even understanding it.

Others will succumb to the "not invented here" syndrome, and some will labour under the false impression that other published plans are better. Still others will reject the work on ideological grounds and then there will be a large, feeble-minded constituency who will have nothing to do with it simply because it bears my name. For these people, no amount of work or quality would suffice. It will be damned by association.

Some argue that I should be more emollient and more accommodating, especially with UKIP, in order to encourage a wider readership, but this is a chicken and egg argument. The fact that there is a division between myself and UKIP stemmed from my insistence that there should be an exit plan. To this day, the current party leader has consistently rejected the idea. Therefore, it is for him to change, not me.

Fortunately, we are not dependent on such a change of heart. We have the internet and can publish the ongoing work, which is precisely what we have done, and will continue to do. It is my belief that, in the battle of ideas, quality and depth of thinking eventually prevails. 

Thus, my view is that we need (and should) make no compromises. Flexcit will eventually prevail because it is simply the best thing on offer in the field, streets ahead of the competition.


Richard North 27/05/2014

 Media: conned by the Beeboids

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I was invited  to take part in a Radio 5 Live debate on the EU scheduled for Tuesday, up against Charles Grant of the CER.  I had been extremely reluctant to do anything with the BBC, but the inquiry came via Booker, who had been extremely impressed with the researcher. When the same researcher contacted me, he promised a 25 minute slot, with assurances that it would be a grown-up debate.

After a long discussion of the issues, where the man had quite obviously done his homework, and agreed about the poor quality of the debate so far, I agreed to go to Leeds for an 11pm broadcast.

However, at the last minute, it appears (unknown to me at the time), Grant pulled out. The programme was thus postponed until yesterday night at 11pm (Wednesday). But this time, I was to be up against ex-Beeboid Lucy Thomas from BNE, and - as I was to find - an obviously biased interviewer, Phil Williams. Then, only after the programme had started and I was already in the studio, was I told there had been "a lot a breaking news". The discussion time had been cut - to an unspecified length. In the event, it was considerably less than than ten minutes.

After an introductory clip, which included a long interview with an academic from Sheffield University, clearly europhile in tenor, Williams gave the first hit to the Beeboid. Far from being a serious discussion, she trotted out the same low-grade europhile FUD that we've been getting for years - including an attack on the Norway option, with me given no time to respond. 

Thomas was then given the last word, with free passage to observe that too many people spent time listening to "people like Dr North".

Thus, for an hour and a half of my life taken to drive to and from Leeds and take part in the programme, all I got to do was trade a few points on two questions and slap down the fatuous Williams. His great contribution was to accuse me of "cherry picking", when I told him that we need to be operating on a global level and "little Europe" was dragging us down.

I suppose I should have known better.  This is actually typical of the BBC, who pulled me in under false pretences - as they so often do. Had I known the conditions in advance, I would not have agreed to take part. 

This is the LAST time I let the Beeb con me. They are time wasters, incapable of hosting a serious debate on any issue of consequence. If we are to rehearse these issues, it is going to have to be without the "assistance" of a wholly inadequate state broadcaster. We are actually better off without it. To be stitched on on-air is actually worse than not being there. 

Meanwhile, Complete Bastard points out that there is another thing we can do without. Between UKIP and the BBC, we are struggling to make headway. 

Life was never meant to be this complicated, and this is only a start. If we ever do have a referendum, we are going to need a powerful web presence to counteract the sheer unprofessionalism of the Beeb, and the low-grade amateurism of UKIP.


Richard North 22/05/2014

 EU referendum: closing down the options

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It has taken less than a week, according to the Observer, for a German to stick his head over the parapet and call out David Cameron over his plans to renegotiate the terms of UK membership of the EU.

This is Gunther Krichbaum, head of the German government's committee on EU affairs, one of Angela Merkel's closest allies. And he has firmly rejected David Cameron's proposal to extricate the UK from the EU's commitment to "ever closer union". Instead, he accuses the prime minister of putting it forward in a "desperate attempt to appease UKIP".

This is not the first time we've heard from Herr Krichbaum though. He stepped up to the plate in early January last year, before even David Cameron had given his famous "Europe" speech when he promised a referendum.

Even then, Krichbaum was warning David Cameron not to try to blackmail the rest of Europe. The prime minister was also told a UK referendum was a high-risk option that might paralyse Europe and end in economic disaster for Britain.

At that time, Carmeron was mooting a hijack of the expected EU treaty, threatening to block it unless the "colleagues" acceded to his demands. Krichbaum's response to that had been sharp, saying: "You cannot create a political future if you are blackmailing other states. That will not help Britain. It needs a Europe that is stable. It needs markets that are functioning".

We must further remind ourselves of what Krichbaum was also saying about the idea of a poll. "You have to ask yourself if it is wise to carry out a referendum", he said, then adding: "It is certainly possible to convince people of advantages of the EU. But there is always a risk that the referendum becomes – as Charles de Gaulle put it – less about the question asked and more about the person who's asking it".

It was also then that he urged British Eurosceptics to think through the consequences of Britain leaving the EU, or adopting the same status as Switzerland or Norway. "Some people claim that Switzerland is in a remarkable position", he said. "I highly doubt that: Switzerland needs the EU, but it cannot influence the political process within the EU. That is a big problem".

"If Britain loses the single market it would be a disaster for the British economy. If Britain left the EU, it would weaken the European Union and the idea of Europe, but it would also weaken the position of Britain vis-à-vis the EU and in the world".

Bringing the situation up-to-date, Krichbaum is now saying specifically that the other member states will not agree to the exemption of the UK from the "ever closer union" provision, which is central to the operation of the EU.

"I can't imagine that the member states would allow Britain to extricate itself from the 'ever closer union' clause. It looks to me like a desperate attempt on Cameron's behalf to appease UKIP", he says.

"'Ever closer union' is a key element in the fabric of the EU treaty, not least because it is the basis for enhanced cooperation between member states", Krichbaum adds. "For example, it allows nine members to come together and cooperate more closely, while other states can hold back. In that respect, Britain already has the opt-out that Cameron now promises: the whole thing is a phantom debate and raises the question about what Cameron really wants".

Krichbaum shows absolutely no sympathy for Camerons aspirations. "It seems his flip-flopping on Europe is now starting to hit back at him", he says. "If you want more influence in Europe, then you need closer cooperation. Britain should try to exert more influence in the EU – I for one would welcome it".

Nor is Krichbaum entirely on his own. While German government officials are not commenting officially on Cameron's plans, Axel Schäfer, deputy chairman of the SPD parliamentary group, says that Cameron was "making the people in your country go hysterical".

He adds: "Would Germany allow Britain to wiggle out of the 'ever closer union' clause in the Rome treaty? That's out of the question. How could we simply remove such a central plank from the foundation of what Europe is now, from a treaty that has been ratified 500 times by various countries across Europe? There is simply no reason to do so".

Perhaps even more worrying for our prime minister, Schäfer goes on to say, "If Mr Cameron thinks he has Germany and Mrs Merkel on his side on this question, I can assure him that he is wrong".

Another German politician into the fray is Elmar Brok, a Christian Democrat MEP, who observes: "It seems ironic that Cameron is focusing his calls for EU reforms on the phrase 'ever closer union', given that it was only put in the Maastricht treaty thanks to Britain in the first place".

"At the time", says Brock, "we would have preferred the term 'federal Europe', but in Britain that phrase was too problematic: for John Major, it implied centralisation, while for many other European countries it implies decentralisation. So the phrase was only put in thanks to Major. If Cameron is still concerned about the language, I would be open to discussions. But you can't suddenly question the basic principles".

Altogether, it would seem Mr Cameron has a problem. But then we knew that already. He was never going to get his treaty, but if ever he had any aspirations in that direction, Krichbaum has firmly put the lid on them.

Coming out so early in the game, though, this gives Mr Cameron little wriggle room. While he remains committed to his 2017, referendum, it is going to be desperately hard for him to convince voters that he has achieved any concessions at all. His options are being closed down.


Richard North 18/05/2014

 Brexit: more scary stories

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In The Times and others we have a review of a paper from the LSE's Centre for Economic Performance (CEP) claiming that a decision by Britain to leave the European Union "would be a risky gamble" that "could result in economic losses larger than those suffered at the time of the global financial crisis".

This, though, is a "worst-case scenario", the nature of which is unspecified in any of the newspaper reports. All we get is that Britain could suffer a fall of up to 9.5 percent of GDP, compared with the seven percent drop in output after the global financial crisis struck.

Only when we get to read the report do we see that the scenario on offer is that the UK leaves the EU and joins EFTA (but not the EEA, which is not mentioned). On the basis that EU members trade substantially more with other EU countries than they do with members of EFTA, the CEP estimates that our trade with the EU will fall by about a quarter.

Combining this with the estimates that a one percent decline in trade reduces income by between 0.5 and 0.75 percent, that "implies that leaving the EU (and joining EFTA) will reduce UK income by between 6.3 and 9.5 percent". That could be equivalent to a cash loss of £50 billion. Then, even at the very best, CEP projects a "optimistic" case that would result in a 2.2 per cent fall in GDP, equivalent to a "substantial" £18 billion loss.

The base assumptions here, though, are fundamentally flawed, not least because the "research" does not distinguish between EEA and non-EEA members. It appears to make the same assumptions for both. Then, while it is true that EU-EFTA trade rates are lower, this is to a very great extent due to the fact that the three main EFTA economies are very different from those in the EU, not least in terms of their protectionist attitude to agriculture – trade in which is excluded from their deals.

In the UK, however, we operate very open trade in agriculture and food (including drink and animal feed). Furthermore, this is a sector that exported about £18.2bn in 2012 of which about £9.5bn went to EU countries.

By contrast, the UK imported in the same year £37.6bn, of which more than £25bn came from the EU. With a near 3:1 disparity between import and export, therefore, the UK is in a powerful position. One might expect it to be able to cut a deal with the EU, based on current trading terms.

Similar dynamics apply to other sectors, which means that the CEP projections, based on existing EFTA arrangements, are simply not realistic. Their supposed losses are scaremongering. Given our trade scenario (with version 11 now available), the "Norway option" would be economically neutral. Trading arrangements would carry over unchanged and there would be no measurable losses.

This, however, does not stop the CEP plunging in the dagger, claiming that the "dream of splendid isolation may turn out to be a very costly one indeed". This is typical Europhile scare phrasing, tedious and predictable.

What worries, of course, is the facility with which the media trot out this low grade speculation, without the first attempt at critical analysis. In any referendum campaign, we're going to see an awful lot of this and a confused and worried public could easily be swayed by this sort of nonsense.

The antidote, of course, is to keep pushing our own analysis – Brexit will be economically neutral, leaving us open to enjoy improved democracy and the other benefits of withdrawal. The trouble is that there are plenty CEPs and no end of scary stories, so we must not allow the battle to be fought on economic grounds.


Richard North 17/05/2014