Federal Union review of 2008

Gordon Brown

The annual review I wrote this time last year took as its theme the word relief. This year, we can even allow ourselves a little hope.

The ratification process for the Lisbon treaty is back on track, the rejection in the Irish referendum in June 2008 notwithstanding. The European Council agreed a course of action that might satisfy the objections of the Irish voters whilst also respecting the pro-treaty views of the 25 other member states that have already ratified. Of course, it remains to be seen whether or not the Irish government will decide, in the end, that the concessions made by the rest of the EU are sufficient to make possible to consult the electorate again, but there is the realistic hope that they might. The fact that the Irish government was able to win those concessions is the disproof of the argument that the EU does not listen.

None of this is to say that it would not have been better if the Irish referendum had produced a Yes outcome, nor that the EU is harmed by the resulting delay in knowing where it stands. The elections to the European Parliament in June 2009 will take place under the unsatisfactory rules of the Nice treaty, for example, because the new Lisbon rules cannot come into force by then. But nevertheless, the need to make the EU institutions more effective, more democratic and more accountable remains on the agenda.

Still on the agenda in the UK is the unsolved problem of Scottish self-government. The SNP formed a minority government after the elections in 2007 and has spent the time since then trying to develop the arguments for eventual independence. The majority, unionist, parties in the Scottish parliament have set up their own rival project, the Calman Commission, to explore the ways in which Scotland can acquire more self-government short of independence itself. The problem that the Scottish unionist majority must confront is that problem faced by Scotland is really a problem faced by the United Kingdom as a whole. If their proposed changes do not form part of a wider UK settlement, they may find that their majority status does not help them.

And that UK-wide settlement does not appear much closer. Gordon Brown’s first moves as prime minister in the summer of 2007 included some nods in the direction of rational constitutional reform, dealing with the House of Lords and the English regions, among other issues. but there has been little progress since and it seems unlikely that there will be much in the coming twelve months.

If we look abroad, though, hope is easier to find. Specifically, the US presidential election was won by a candidate who made this a central campaign theme. Barack Obama will be sworn in as the 44th president of the United States weighed down by the hopes that he has talked about and the even greater hopes that the world has placed upon him.

How many of those hopes will turn out to be rewarded remains to be seen. The first challenge will come straight after his inauguration on 20 January, with the need to tackle to the crisis in Gaza. (I trust that it will be only a crisis by then, and no longer a war.) His predecessor, George W Bush, adopted a strictly hands off approach to the problems of Israel and the Palestinians. Will Barack Obama be content with a similar approach?

When it comes to the problems of the economy, he has made it clear he will be extremely hands on. The fear that the current recession might turn into a prolonged depression has sent everyone back to the history books of the Great Depression (I can recommend The Forgotten Man, by Amity Shlaes) to try to learn lessons from the past.

A crucial difference between now and then is the role that America has been playing as the world’s importer of last resort, sucking in imports and loans to pay for them. A chastened, poorer America will find it harder to continue in this role, meaning that other countries will feel the pinch even if they have run their own domestic economies impeccably.

Given this growing and unprecedented degree of economic interdependence, it is a welcome hold that the need for global economic problems to be tackled in a concerted manner is taking on the imaginations of the policy makers.

One of the last remaining hold-outs against this notion of interdependence remains, regrettably, the British attitude to the euro. Slovakia has joined the euro at the beginning of this year, the first former Warsaw Pact country to do so, but Britain remains watching and waiting. The collapse in the value of the pound against the euro and the projected surge in UK government borrowing make formal membership of the single currency impossible in the short term, but starting to take the political steps necessary would reassure the markets and show some awareness of the scale of the crisis.

However, Gordon Brown is true to his reputation as the man who kept Britain out of the euro when it was first launched and, if anything, the rhetoric of non-membership has got tougher as the economic crisis has bit. To try to restart British economic growth whilst explicitly rejecting embracing the framework that has served the rest of Europe so well is going to exacerbate the recession and increase the cost of getting out of it.

The economic crash was worse than it would have been if Britain had already been a member of the euro, and the future recovery will be less strong if Britain remains outside it. Will this lesson spread its way through British politics in 2009? We hope so.

This article was written by Richard Laming, secretary of Federal Union. The opinions expressed are those of the author and not necessarily those of Federal Union.

More information

The Forgotten Man, by Amity Shlaes

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