British Economic Interests - Essay Example

'Why has Britain traditionally resisted the idea of the European Union' Traditionally, Great Britain has opposed the idea of the European Union and integrated Europe trying to preserve national identity and sovereignty. The main claims against the European Union were based on historical, political, social, national and cultural factors which played a dominant role in uniqueness and autonomy of the state. It perceives its currency and autonomy as the 'sovereignty issue', though the debate usually has little to do with national sovereignty in strict terms of international law; identity and policy autonomy. The liberal free-trade proposed by the European Union threatens particular institutional structure for both its economy and its state. Its most prominent feature has been the importance of the financial sector, the City of London, both economically and politically. The City of London forms with the Treasury and the Bank of England an extremely powerful economic policy community that has normally been successful in shaping the policy of British governments on major economic issues. Priority has generally been given to the interests and perspectives of the City rather than those of manufacturing or the trade unions in determining the national interest (Aspinwall 2004). There was no similar test for manufacturing. The nature of the City as an international financial centre has always led it to favor a policy of openness to the markets of the whole world, not just Europe. "For Britain, therefore, deregulation, whether nationally or the European Union-inspired, has been experienced as deregulation, with the creation of legal procedures, where informal agreements generally held, and the establishment of independent regulatory bodies" (Schmidt 1997, p. 167). Also, the business cycle in the Great Britain has normally been aligned with the US economy rather than the European economy. This provides a practical obstacle to early entry; but, more than that, it symbolizes a different view as to where British economic interests lie. Politically, one reason for the hesitation was that the political class in Britain has been much more divided over the euro than the political class in other member states. Popular opposition to joining the single currency has also been strong in Denmark and Sweden, and the Danes voted narrowly in a referendum in September 2000 to stay outside. But the Danish currency is already pegged to the euro, and the Danish economy is more integrated within the Euro-Zone than the British economy is. The political class in Britain has become deeply split, with one of the two major parties, the Conservatives (Giddings & Drewry 2004). The Conservative party was initially the party of Europe, conceiving Europe as an enterprise which was very much in the security and economic interests of the British state, as well as a new external challenge to replace the Empire. It was a Conservative government under Edward Heath that narrowly secured parliamentary approval of the terms of entry in 1971 (Aspinwall 2004). It was the Labor Party whose leaders were prone to talk of 'a thousand years of history' (Aspinwall 2004, p. 56) and who were immensely distrustful of the Common Market because of the restrictions it imposed on national planning. "The erosion of the greater powers of Parliament have been cause for concern not only for members of Parliament but also for the executive, which given the lesser party discipline and the more vocal" (Schmidt 1997, p. 167). Although a majority of the Labor leadership did eventually support British membership of the European Community, a majority of trade unions and Labor Party members remained opposed because of their commitment to national economic planning. Culturally and nationally, the Great Britain tries to preserve its uniqueness keeping old traditions and social institutions unchanged. For the anti-Europeans, the European Union is a dangerous semi-sovereignty process which forces new states meets its rules and obligations. British attachment to outmoded forms of sovereignty and the resort of so many British politicians to construct Europe and Brussels as a hostile and alien against which they must maintain a national state. Cultural and national identity is always associated with the currency of a country. The pound sterling is treated as both a symbol of that sovereignty and one of the most important instruments of it. Without control over its currency a nation ceases to be a sovereign nation, in this view. This is an issue of principle that cannot easily be fudged, although it is noticeable that many of those against the euro, including the Conservative leadership, do fudge it by refusing to make it an issue of principle. The Conservative policy before the 2001 election was to rule out membership of the euro for the lifetime of the next Parliament (Giddings & Drewry 2004). The national economy is conceived as a discrete economic space that needs first to be carved out against the forces of the global market and then protected from being invaded by them. Left to themselves, global market forces will drive down costs and living standards and will erode all institutions and structures designed to promote solidarity and welfare (Aspinwall 2004). Controls over the exchange rate, interest rates, and taxation are regarded as essential tools of stabilization policy and among the most tangible signs of the ability of a government to plan the national economy, setting its own targets and choosing the most appropriate means of achieving them. From this perspective the main problem with the euro is that it surrenders this control to an unelected and unaccountable ECB. Following Goodeve (2005) "The idea of doling out sovereignty to a greater power is a harrowing concept for many. In short, many of the skeptical politicians often underscore the sanctity of the traditional independence of Iceland to further their case against EU integration" (p. 85). There is a similar concern to preserve the capacity of national governments to manage the economy in a discretionary way, but the objects to which the discretion should be applied are very different. The chief objection on the right to joining the euro is not that it will inhibit national planning but that it will lead to the imposition of an economic policy regime that will destroy the policy regime built up under Conservative governments since 1979 and largely continued by Labor (Giddings & Drewry 2004). This regime is characterized by low taxes, flexible labor markets, privatization, and deregulation (Stephen 1990). If Britain were to join the euro, the possibility of the British people choosing that kind of policy regime and maintaining Britain's comparative advantage against other European states would be lost. It is, therefore, the implications of economic integration for harmonization of taxes, of labor-market regulation, and of corporate governance that are regarded as most deleterious, rather than the European Union institutions themselves, whose insulation from popular politics many on the right would normally be expected to applaud (Stephen 1990). As indicated earlier, this position is not a national protectionist position, but the idea that there is an alternative internationalism or global project which Britain could be part of, one much superior to the European Union. On the left, this takes the form of various kinds of international solidarity but based always on firm local democratic control of national economies. On the right, it takes the form of seeing Britain as a global investor and trader whose interests are only partially engaged in Europe and the European economy (Giddings & Drewry 2004). To take full advantage of Britain's position in the global market, one built up over three centuries, Britain needs to be free of entanglement in an economic policy regime which does not suit it. The corporatist and interventionist policies of other member states of the European Union are regarded as a straitjacket from which Britain needs to escape (Stephen 1990). The European Union has a role as a trading association but little beyond. On this view, reclaiming British sovereignty requires a renegotiation of the treaties to take back many sovereign powers already surrendered and resistance to the loss of any more. According to Schmidt (1997): "Today, however, great Britain faces major institutional choices with regard to further integration while Germany confronts major economic strains" (p. 167). At the level of the member states there is, on the one hand, considerable pressure for convergence in terms of macroeconomic management and corporate governance practices but, on the other, there are the intense bottom-line pressures of political legitimacy in terms of social policies, national identities and the role of national democracy in an increasingly integrated economic unit. The Euro-Zone encounters its share of disagreements among its members as the economic development process yields differentiated distributional consequences across the national economies (Waever, 1995). In sum, the idea of the European Union threatens apolitical and economic discourses and identity the British state had pursued in the past. The new political union would be transformative for the Great Britain, which is why most politicians as well as the economic policy community have so far shied away from it. The idea of sovereignty and national uniqueness is the key factor of the British state. Economic benefits and opportunities proposed by the European Union would not compensate for the loss of national identity and control of a people over the own state. The European Union can cause a redefinition of the state identity and embrace destabilization. Bibliography 1. Aspinwall, M. Rethinking Britain and Europe: Plurality Elections, Party Management and British Policy in European Integration. Manchester University Press, 2004. 2. George, Stephen. 1984, An Awkward Partner: Britain and the European Community, Oxford: Oxford University Press. 3. Schmidt, V.A. 1997, Discourse and (Dis)integration in Europe: The Cases of France, Germany and Great Britain. Daedalus, vol/ 126, iss. 3, p. 167 4. Waever, O. 1995, Identity, Integration and Security: Solving the Sovereignty Puzzle in E.U. Studies. Journal of International Affairs vol. 48, iss.2, pp. 389-431. 5. Goodeve, E.D. 2005, Iceland and the European Union: An In-Depth Analysis of One of Iceland's Most Controversial Debates. Scandinavian Studies, vol. 77, iss. 1, p. 85. 6. Giddings, Oh., Drewry, G. 2004, Britain in the European Union: Law, Policy and Parliament. Palgrave Macmillan. Read More