Internationale Politikanalyse Europäische Politik, Juni 2005 Denis MacShane* Britain’s Presidency of the European Union. Internal Crisis, External Strength, Economic Movement B ritain did not wish for still less expect to take over the presidency of the EU at a moment of considerable tension, if not crisis, for the new EU of 25 member states. When Britain first held the Presidency in 1977, there were just 9 EU member states and Britain was seen as the“sick man” of Europe with a poor economy, arrogant, over-mighty trade unions who sought to dictate the policy of the then Labour government, and an elderly prime minister on the eve of handing power over to the long 18-year hegemonic rule of the Thatcher-led Conservative Party. ∗ Britain held the presidency in 1981, 1986 and 1992 under the Conservatives. It again held the presidency in January-June 1998 when Tony Blair had been Prime Minister for the first few months. Even then there were tensions between the UK’s refusal to seek to prepare to join the Euro at a time when the new currency was seen as the definition of true Europeanness. A year later, in 1999, the social democratic domination of European governments was complete – Blair, Jospin, Schröder, D’Alema, Persson, Rasmussen, Kok, Gutierres et al with Romano Prodi in Brussels and Bill Clinton in the White House. Never in European history have so many heads of government come from the Party of European Socialists. Their cumulative failure to come together and fashion a common European Union reformist agenda and apply it with determination is one of the lost chances of social democratic history. Today 19 of the 25 governments in the EU are headed by European People’s Party(EPP) centre-right or conservative politicians. It is against this background that the freshly re-elected Labour government, headed by Tony Blair with the longest serving experience of any Labour prime minister takes over the presidency of the European Union on 1 st July 2005. The Constitutional Crisis Britain’s Presidency of the EU comes at a crucial time in EU history. The‘No’ votes in France and the Netherlands reveal a democratic disconnect between the ideals and institutions of the EU and the mass of voters in two important countries. Although the noble name “Constitution” was applied to the new Treaty, it is an international treaty and requires ratification by all signatories. The declaration requiring the European Council to consider what happens if five or more EU member states reject the Treaty was written in to provide for maverick or special interest rejections in small member states. No-one envisaged republican, statist, centralised France and the Atlanticist, liberal, kingdom of the Netherlands – both founding EU members – to deliver a decisive‘No’ in a referendum. Unless and until France and the Netherlands agree to hold second referendums the Treaty cannot be ratified. If it is modified the entire ratification process has to begin again. The debate over the Treaty will continue during the UK Presidency. In addition to the declaration made at the June Council meeting each member state will have to decide how to respond to the French-Dutch‘No’ votes. Those countries that have not yet ratified will have to decide whether to proceed. The EU will look foolish if there are successive No votes on a Treaty that, in any event, cannot be ratified. Britain has decided, at this stage, not to initiate a long and complex parliamentary process to adopt a law on the Treaty and a referendum. The process is only suspended and can come back to Parliament at some future stage. But until France and the Netherlands ratify the Treaty there is no appetite for a difficult parliamentary and referendum debate. ∗ The Right Honourable Dr Denis MacShane MP is the Labour MP for Rotherham and was Europe Minister in the British government 2002-2005

Denis MacShane Britain’s Presidency of the European Union. Internal Crisis, External Strength, Economic Movement Europäische Politik (06/2005) 2 Rebate Debate and New Leadership in and from estagswahl will be the dominant political event in the Germany? second half of 2005. Britain has good relations with Poland strengthened by Blair’s decision in 2004 to alThe British Presidency will also be overshadowed by low Polish workers to come and work in the UK labour the German Bundestagswahl and the question of the market. EU’s budget or financial perspective 2007-2013. On Angela Merkel, the opposition’s chancellorthe latter, it is hoped that the Luxembourg presidency candidate, has visited London and CDU experts regucan find a compromise. British tax-payers pay nearly larly visit Westminster and Whitehall. There is regret in three times per capita to the EU budget in comparison London that Gerhard Schröder’s reform programme with France. If the famous rebate was abolished, each has met such opposition from German trade unions, British citizen would pay 12 times what each French opposition parties in the Bundesrat, employer federacitizen pays to the EU budget. This is because of the tions and members of the SPD itself. Blair has sought well-known distortion that has€45 billion – nearly half to establish good personal relations with Schröder but the total EU budget- paid out in agro-industry subsithere remains puzzlement in London at Berlin’s emdies which do not benefit the UK. phasis on the Paris-Berlin axis at a time when the From a German, Dutch or Swedish perspective, the Europe of 25 is no longer interested or willing to be UK rebate may no longer be fully justified. Unfortuunder the aegis of just two EU member states, and nately, British public and political opinion tends to two which have such unhappy economic performances compare the UK to France. It would be political suicide recently. There are no illusions in London that a for a British Prime Minister to ask his citizens to pay so Merkel-led Germany would instantly overcome the inmuch more than their French equivalents to the unstitutional blockages to necessary reform. Britain will popular bureaucracy of Brussels. If some countries feel seek to work positively with any government that they pay to Britain, all British taxpayers, Labour, Conemerges from the Bundestagswahl but undoubtedly servative and Liberal-Democratic, believe that for years the presidency will be overshadowed by the German their taxes have gone to subsidise the French farmers election. and agro-multinationals as well as over-subsidised farmers in other EU member states. Therefore, if there is no Luxemburg deal on the budget it is hard to see the A Modest Presidency but G8 at Same Time UK presidency having room to move on this issue. The German election and the possibility of a change Government preparations for the UK Presidency began in government in Germany will occupy the first period in 2003 with the efficient UK government coordination of the British Presidency – up to end-September. Britmachinery preparing the ground competently. The ain, as the rest of Europe, will be watching to see what Prime Minister ordered that the EU presidency should kind of language is used by Schröder and Merkel, as not be ostentatious. Britain simultaneously holds the well as by the Greens and the FDP. G8 presidency and will host the usual gathering of EU How will EU themes play into the election? Will the and other world leaders at the Scottish luxury golf reTurkish start date for EU negotiations of 3 rd October be sort of Gleneagles on July 8 th . The EU Presidency events a big theme in the Bundestagswahl? The UK has been will not have the same grandeur. a leader in supporting Turkey’s EU ambitions. It is a At the planning stage it was assumed that the UK strategic goal of British policy to have a stable, Muslim government would have to fight and win a difficult Turkey living under the rule of law and EU values and referendum on the EU constitutional treaty. The presimoving over time to full EU member status. This posidency would thus have been a good occasion to tion is shared by all the political class in the UK, includ“show-case” Europe and increase public awareness ing Eurosceptic Conservatives. It will be painful for and information levels of what the EU is, what it does, London if the German election makes Turkey’s EU and how EU membership benefits Britain. The presihopes a major and divisive issue. dency now is the beginning of the“pause for reflecAlthough an EU Presidency has to serve impartially tion” which Blair has suggested the EU needs as it diall 25 member states with their regular calendar of egests the rejection of the proposed constitution. lections(Poland, for example, will have parliamentary The UK presidency is unlikely to see any major deand presidential elections in September and October) a velopments on the political or philosophical definitions regime change election in one of the big EU econoof the EU. Instead it will focus, in a typically British mies, such might happen after the German Bundfashion, on limited pragmatic goals. Britain wants to

Internationale Politikanalyse International Policy Analysis Unit see the EU develop as a strong foreign policy player – on the basis of intergovernmental cooperation – and this aspect of EU work will also be stressed. Team Presidency The UK Presidency is not a stand-alone six months. Instead Britain has supported the 2004-2006 Multiannual Strategic Programme which is a 3-year programme covering the Irish, Dutch, Luxembourg, UK, Austrian and Finnish presidencies. It is no coincidence that all six member states are the most liberal in economic thinking and the keenest on economic reform and budget discipline. They also happen to be in the top third of EU member states by GDP per capita. These countries have already undertaken important economic reforms, such as reducing state subsidies for industry. In contrast, Germany, for example, gives four times as much in tax-payers’ money to industry and France twice as much as the UK.(Germany,€16.3 bn; France €8.8bn; Italy€7.1bn; UK€4.2 bn in 2003, according to the European Commission.) So the UK will support Commissioner Nellie Kroes in her plea to Germany, France and Italy to reduce state subsidies to 19 th and 20 th century traditional industries, or help to prop up companies unable to meet world competition and to refocus the€53 bn of EU public spending in this area on research and innovation in the new sectors of 21 st century economic activity. strom, Antonio Vittorino and Pedro Solbes. The campaign against the Services Directive launched by communists, Trotskyists and President Chirac in France earlier this year caught the new Barroso Commission by surprise. Given that France is the largest exporter of services in the EU, there seemed a lack of Cartesian logic in denouncing a directive that would only benefit French economic actors. The UK would like to see a re-launch of a“sellable” services directive in order to counter the strengthening protectionist and populist forces that are now threatening to stop any more opening up of EU economic activity. Less but better regulation The UK will emphasise the need for better regulations and cutting red tape. There is a widespread sense in Europe that Brussels produces regulations for the sake of producing regulations. There is a bureaucratic imperative which is self-sustaining. For the UK new legislation should only be introduced if it is accompanied by a credible impact assessment and European competitiveness is not undermined. Work is already under way with the Commission and the Council Secretariat to see if the existing 95,000 pages of EU legislation could be slimmed down. EU as Global Player Tackling Poverty, Climate Change Security, Prosperity, Sustainability While the EU is dominated by the political crisis over the constitution and the economic stagnation given The key theme for the UK Presidency is a Europe that the under-performance of the big 3 Eurozone econopromotes security, prosperity and sustainability. In the mies – France, Germany, Italy – the UK wants to use its British analysis, reducing barriers to trade and free presidency to invite the EU to lift its horizons to global movement with the Union has been the most imporchallenges. A major priority for the Blair government is tant reason since 1957 for economic growth, job creato reorganise help for poor countries and Africa, in tion and improved productivity in Europe. But there particular, which Tony Blair has called a“scar on the remain serious barriers to the free movement of workconscience of the world.” Already the EU has agreed ers, goods, capital and services. In the case of services, to ambitious target for increasing aid and to work on 70 per cent of EU economic activity is now in the serinternational debt relief. Blair has flown to Washington vices area but only 20 per cent intra-EU trade is in this to press President Bush, with some if limited success, sector. to engage the United States in this European-led proThe Prodi Commission produced a directive on serject. vices, which was supported by the then EU CommisAnother key global issue will be continuing work sion with its majority of centre-left Commissioners inon the environment. The UK wants to keep EU ambicluding the French socialist, Pascal Lamy, now head of tions on climate change focussed on delivering Kyoto the World Trade Organisation; the two German Comtargets. In particular, the UK wants to encourage the missioners from the SPD and Green parties; as well as EU to work on incorporating aviations emissions into prominent European left politicians like Margot Wallthe EU Emissions Trading Scheme. 3

Denis MacShane Britain’s Presidency of the European Union. Internal Crisis, External Strength, Economic Movement Europäische Politik (06/2005) 4 Making Enlargement Work – Turkey EU Talks to No to Super-State, Yes to Super-Power Start 3/10 Finally, the UK has always wanted to see Europe not as The UK has always seen the enlargement of the EU as a“super-state” but as a“super-power”, to quote a way of showing how European values of the rule of Tony Blair from a speech he made in Warsaw in 2000. law, democracy, open market economies and social The EU Presidency will see the London-Paris-Berlin responsibility are not the privilege of just a limited group working hard to stop Iran from becoming a fullnumber of European states but are the right of every scale nuclear arms power with destabilising conseEuropean citizen. Therefore, the UK will work with quences on the region. The UK has full confidence in partners to ensure a successful opening of negotiations the work of Javier Solana and supports his concept of with Turkey on 3 rd October. It is recognised in London “effective multilateralism” and the development of the that full EU membership for Turkey lies years in the fuEU’s defence capabilities. Sudan will remain an EU forture. But the UK believes that modernisers and reformeign policy priority under the UK Presidency. There is ers in Turkey need every encouragement and a negotiunlikely to be movement on lifting the EU arms emating process will give the EU considerable leverage bargo on China unless the Chinese make some serious over Turkey, as it seeks to achieve EU standards across effort to meet EU concerns on human rights issues. many areas where Turkish laws and administration fall The UK will want to see the EU working construcshort. tively to achieve success in the Doha Development The UK wants to see a calm entry into the EU for talks ahead of the WTO ministerial meeting in Hong Bulgaria and Romania. 10 years after the Dayton Accord on the Balkans as well as the 10 th anniversary of Kong in December. The British Trade Commissioner, Peter Mandelson, will play a crucial role in this. But the genocidal massacres at Srebrenica, it is time for the doubts remain if the deep lying agricultural protectionEU to take a lead in the Western Balkans(former Yuist politics embedded in EU thinking can be overcome. goslavia). A priority would be to start membership talks This projection of the EU as a global player will also be with Croatia once the Croatian authorities demontaken up by the UK in developing the EU’s counterstrate compliance with the International Tribunal in the terrorism work place and the new Justice and Home Hague and arrest the fugitive Ante“General” GoAffairs agenda. tovina who is accused of serious war crimes. Another priority is to begin serious talks on finding a final status for Kosovo. Belgrade still likes to pretend that Kosovo can in some way remain under Serb tutelage instead of seeking its own status as a European nation. The United States, which maintains a significant troop presence in Kosovo, wants to move forward on this dossier. The Western Balkans should take the European road to overcome their past civil wars and Milosevic heritage. The UK will be organising summits with the US and Russia. The Russian approach to Belarus and the former Soviet republics like Ukraine, Georgia and the “stans” is now a cause for concern. While personal relations between Blair and Putin are good, there is concern in the UK about the lack of democratic transparency and verifiable rule of law in Russia. This may surface in the UK Presidency though British diplomats will not want to see any negative developments in EURussia relations.