Gisela Stuart, Chair, Change Britain – The Importance of Anniversaries

Anniversaries are helpful to put things into context. Give or take a year or two it’s 100 years since world war one started, 50 years since Winston Churchill died, 40 years since the UK joined the then Common Market and its been just over 25 years since the Berlin Wall fell.

After that the Soviet Union disintegrated, the Cold War ended, and eleven former communist countries have not just become NATO members, but also joined the European Union. Prague, the home of Europe’s first university is back in its rightful place, at the heart of Europe.

But there is now a whole generation of young people who take all this for granted. They don’t know that peace is something that has to be fought for and requires strong defence capabilities. And there are is also their parent’s generation, many of whom still cling on to an outdated European dream.

Putin’s Russia has not become the strategic partner we had hoped for.   When his thugs invaded the Crimea, he unilaterally redrew internationally agreed boundaries. This has not happened since the end of World War 2. He wants to do away with a country’s right to self-determination and go back to spheres of influence. What did we do? For the moment, all we and our EU partners can agree on are economic sanctions and stepping up military exercises near the eastern borders.

The North Atlantic Treaty Organisation provides a collective security umbrella in case of an attack on one of its member states. If Putin were to overstep the mark, and for example attack one of the Baltic States, military action would have to follow.  But we have become complacent and cut back on defence. The Europeans continue to rely heavily on the Americans who have to providing the backbone of any large operation. Most member states still don’t spend the 2% of GDP on defence, as they are supposed to.  Even the UK has gone from 2.5% in 2010 to 2% now and is likely to drop below in years to come. We should be worried about the signals this sends to our enemies. From Putin’s Russia in the East, to Syria, Iran and North Africa, Europe faces an arch of uncertainty and tension which we are ill equipped to deal with.

In 1957 France, Germany, Italy and the Benelux countries come together to form the Common Market. An overtly economic project, underpinned by the desire to bring about such a level of political integration that it would simply become impossible for France and Germany every go to war again.

Today this has grown to become the European Union. 28 member states, representing over 500 mil people, and a list of countries waiting to join. 19 of them share a single currency, the euro, representing a collective GDP of some 9.5 trillion euros. Indeed, today, the geographical term Europe is often used to mean the European Union. Countries like Norway, which are not formally members, are nevertheless deeply integrated by trade agreements, free movement of people arrangement and the absence of border controls with their neighbours.

But the EU as an institution faces three major challenges, quite apart from the waning support from voters.

First, a single currency requires a degree of economic convergence and/or a willingness to make year on year transfer payments from one part of the Union to another. The European Central Bank doesn’t have the political structures needed to underpin this degree of integration.

Let’s take Greece as an example. Severe austerity measures imposed from outside and deeply resented by the people is creating political instability. There is talk of yet another bailout package. All designed to avoid the prospect that Greece could leave the euro and return to the Drachma. We don’t yet know if the collective will of the EU institutions will prevail over the wishes of the Greek people

Second, the problem of economic stagnation and unemployment. France and Germany together accounted for around 50% of Eurozone growth, whilst others stagnated. Unemployment rates across the Eurozone averages at 11%, with countries like Spain and Greece peaking well above 20%.

These are structural problems. Germany’s success is export lead. Real wages have not gone up and domestic consumption is slack. So even if every other euro country became like Germany the problem would not be solved. Here in the UK average incomes may have returned to the levels before the big crash in 2008, but overall productivity refuses to go up.  

This editorial has not been published in full.