8586 CER bulletin aug-sept 2012 26/07/2012 12:06 Page 1
Forthcoming events 24 September
30 September
9 October
CER/BNE/Open Europe fringe event at the Liberal Democrats conference ‘Europe, from crisis to growth’ Speakers include: The Rt Hon David Laws MP and Vicky Pryce 18.15-19.45, Hilton Metropole Hotel, Brighton CER/BNE/Open Europe fringe event at the Labour Party conference ‘Europe, from crisis to growth’ Speakers include: The Rt Hon Douglas Alexander MP and Chris Leslie MP 17.45-18.45, Exchange 2-3, Manchester Central CER/BNE/Open Europe fringe event at the Conservative Party conference ‘Europe, from crisis to growth’ Speakers include: Jo Johnson MP and The Rt Hon David Lidington MP (tbc) 19.30-21.00, ICC, Birmingham
Forthcoming publications Modernising Europe’s energy infrastructure Stephen Tindale
Can the EU hold together? Hugo Brady, Simon Tilford, Philip Whyte & Tomas Valasek Britain and EU police and justice policy: Will Cameron pull out in 2014? Hugo Brady Europe’s legitimacy problem Charles Grant
Recent publications Britain, Europe and the City of London: Can the triangle be managed? Philip Whyte Europe’s External Action Service: Ten steps towards a credible EU foreign policy Edward Burke Saving emissions trading from irrelevance Stephen Tindale Britain must defend the single market Jo Johnson The continent or the open sea: Does Britain have a European future? David Rennie five
★ A banking union – it is necessary, but is it likely?
by Tomas Valasek
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N 2010, FRANCE AND BRITAIN agreed to strengthen defence collaboration, mainly to save money through common research and acquisition of military equipment. The economic crisis forced their hand: they needed greater economies of scale to preserve certain capabilities in the face of smaller defence budgets (which Britain cut two years ago and France is poised to do soon). However, London and Paris no longer agree on the nature of their relationship. Britain’s coalition government would like it to be exclusive, as did former President Nicolas Sarkozy. But President François Hollande wants bilateral co-operation with the UK to form the core of a broader European effort. Hollande’s Socialist party believes that as many EU countries as possible should integrate their armed forces. On the campaign trail, Hollande and his now defence minister, Jean-Yves Le Drian, mildly praised collaboration with the UK, and committed themselves to respecting the 50year treaty that France’s previous government signed with Britain. But many French Socialists see the partnership, with its whiff of exclusivity, as counter to the idea of pan-European forces. Hollande’s solution has been to invite other countries to join the Franco-British partnership. In June, he signed an agreement with Berlin on broad defence co-operation, including on a new generation of ‘drones’ (which France had previously agreed to develop with Britain). The British government has responded by restating its preference for keeping cooperation with France exclusive. Meanwhile, the Defence Secretary Philip Hammond has described military ties with Paris as in “drift”. The French also worry that the UK may not remain in the EU for much longer, and that it is not taking co-operation with France seriously enough. In May 2012, Britain abandoned plans to fit its aircraft carriers with catapults and traps, which would have allowed French planes to land on them. The UK found the upgrades too expensive, and defence officials say that they were never central to co-operation with France. But the volte-face gave ammunition to critics of Franco-British cooperation in Paris. In July, Britain also launched an ‘audit’ of EU competences, with an eye to opting out of several areas of EU co-operation sometime after 2014. A pressure group close to the Conservatives, ‘Fresh Start’, has questioned whether Britain should remain in the EU’s common security and defence policy (CSDP). This
set off warning bells in Paris: how, the French ask, can Franco-British cooperation become the core of European defence if Britain leaves CSDP – and perhaps the EU – altogether? THE ANSWER IS STRAIGHTFORWARD. If Paris and London need to deploy forces together – which they probably will, since they are Europe’s leading military powers and the US is shifting its attention to Asia – NATO can lead (as it did in Libya). Alternatively, if the EU is in command, it has the option of involving non-members (there are US police under EU command in Kosovo). A Britain outside the EU could take part in such operations provided it is given a role in the command chain: loose military alliances are de rigeur these days. The French Socialists are also wrong to worry that Franco-British collaboration may not be compatible with strong European defence. Most EU countries, including federalist-minded ones like Belgium, are building small regional defence groupings rather than a panEuropean force. They have found that differences between national strategic cultures, equipment needs and replacement timelines make it nearly impossible to agree common procurement among 27 countries. Smaller ‘islands of co-operation’, such as the Benelux or Visegrad, can still achieve economies of scale while minimising the risk that different expectations will delay delivery and increase costs. The UK and France should be seen as one such island of co-operation. If, as intended, it helps Europe's top two militaries save capabilities despite budget cuts, EU defence will have benefitted. Instead of arguing about whether to keep their co-operation exclusive, Paris and London should encourage others, especially the laggards in Europe’s south and east, to form more regional defence groupings. The UK and France should start sharing tips with them on which approaches work and which do not. Where other countries make a credible case, Paris and London should help cover the start-up costs of collaborative projects. France and the UK have a strong interest in not allowing other EU states to hollow out their forces (even if the task can sometimes seem hopeless). If other militaries do not shape up, the next time Europe needs to use force, Paris and London may find that they lead, but no one follows.
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Tomas Valasek is director of foreign policy and defence at the CER.
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Philip Whyte
★ Is the Franco-British defence treaty in trouble? 6
Tomas Valasek
Europe needs a Rooseveltian break with fear by Hugo Brady
T Issue 85 ★ August / September 2012
Priorities for the single market John Springford
In this issue
Is the Franco-British defence treaty in trouble?
CER 14 Great College Street London, SW1P 3RX www.cer.org.uk info@cer.org.uk T +44 20 7233 1199 F +44 20 7233 1117
HE EU HAS FOUR FREEDOMS – for the movement of goods, services, capital and people. Today, it needs a fifth: the freedom from fear. The euro has become a political doomsday machine, a time-bomb that threatens to destroy the great achievements of European integration: peace, political stability and the creation of the world’s largest single market. The global economy is also a hostage to the uncertain fate of the single currency. So too is Europe’s credibility as a responsible power. The euro is a Frankenstein which could destroy its creator, the EU. The currency’s dissolution would reap economic chaos, political division and social schism throughout Europe. Eurozone countries share a monetary union but not a treasury, lender of last resort or federal institutions to raise tax and transfer receipts between members. Critics say this unnatural arrangement cannot go on unless euro countries establish an economic – and therefore, political – union that incorporates some or all of these missing elements. But they have yet to explain to Germany’s chancellor, Angela Merkel, or other leaders how to sell this to their electorates. They know full well that voters will find the idea unacceptable and dangerous. The markets will therefore continue to attack the euro – with occasional respites – until either a politically viable solution is found or the single currency collapses under the weight of its own contradictions. How to break this cycle without giving in to the tyranny of extremes? Eurozone leaders should create a fifteen-year political union, set to expire in 2029. This would incorporate current ideas to stabilise the
single currency, such as a banking union, but also include the creation of some common eurozone debt. Concurrently, the European Commission would gain powers to push through ‘Merkel I’ reforms, otherwise known as the EU’s 2020 agenda, to boost long-term economic growth and employment, especially across the south of the eurozone. Painful adjustments would be cushioned by long-term ‘war’ loans from more prosperous euro countries and funds from the EU’s budget. AT PRESENT, EUROZONE VOTERS neither want a collapse of the euro (which would be a calamity) nor a federal super-state. But they might be persuaded of the merits of a third option – a temporary loss of economic sovereignty for three electoral cycles, which could secure their living standards for a generation. This would buy the kind of time from the markets that governments really need to fix Europe’s broken banking system, re-design the common currency and realise the slowburning benefits of wide-ranging economic reform. It would boost the confidence of businesses, banks and consumers in Europe that are currently too scared to invest, lend and spend as normal. And it would help free the global economy from introspection, in turn creating new export demand to brighten Europe’s growth outlook and make its debt burden more manageable. A New Deal for the euro would need to be a new beginning for the EU and a ‘European street’ that has grown increasingly disenchanted with the Union. Voters are unsentimental about the conviction of their parents’ generation that integration, however imperfect, is the only alternative to conflict in Europe.
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