14 December 2008

Splendid Isolation

There is an old joke about the English that makes the round now and then, and I just heard it again at a corporate Christmas party (one of the few I could not avoid). You probably know this joke, as it has quite a 'beard'. But, like most jokes, it carries a good bit of truth and reality as well.

The story goes that - back in the good old days before the Channel Tunnel - there was a very bad and thick fog over the Channel and thus the British ferries could not sail to Belgium and France. The headline in a London newspaper was: "Continent isolated".

This is an expression of attitude, often described as 'Splendid Isolation', which was for centuries part of the official political doctrine of England and then Britain.

Well, as it happens, I have seen quite a few real headlines in British newspapers that come close to the fictional one in the old joke. I also remember the year of the great British EU referendum (yes, they did hold one, back in 1975, but it has been the only one in the UK so far). The kind of speeches I heard then, and the kind of imperialistic newspaper headlines I saw, make the one in the joke look rather simple and bland.

I had just turned 18 that Spring and knew already that on July 1st I would join the Navy. (I had taken and passed the test during the mid-term holidays the previous Autumn.) Having a little time to spare, I decided to travel to London and experience British politics live and first-hand before I would go to sea. So I became an impartial but very observant witness to the UK's 1975 EU Referendum.

Harold Wilson (left), then the Prime Minister, led the YES campaign. He was supported by most of his Cabinet ministers and about half of his (Labour) party, with good additional support coming from about two thirds of the opposition Conservative Party, which had just elected its first female leader, a certain Margaret Hilda Thatcher, the MP for Finchley. At that time she was quite pro-European. But after becoming Prime Minister four years later, she turned - oh yes, she was for turning after all - and became a very strong Euro-sceptic.
The Liberal Party, the Social Democratic and Labour Party, the Alliance Party of Northern Ireland and the Vanguard Progressive Unionist Party also campaigned for a YES vote and thus for Britain to remain a member of the EU (which was then still only the EEC).

The NO campaign was a truly motley crew, with the largest contingent being the left wing of the Labour Party, including the Cabinet ministers Tony Benn, Michael Foot, Peter Shore and Barbara Castle, and many Labour backbenchers.
The far right of the Conservative Party and most of the Ulster Unionist Party (UUP) also campaigned for a NO vote.
It is worth remembering that a certain Ian Paisley of the Democratic Unionist Party (DUP) - then a minor Unionist splinter group - publicly supported the NO campaign as well and wanted the UK to leave the EU again, barely two years after joining it. (This was of course long before he enjoyed the perks that come with being an MEP, a pleasure he would never have known had his side succeeded in 1975.)
The NO campaign also attracted support from the extreme right, such as the National Front, and the extreme left such as the Communist Party of Great Britain.
The Scottish National Party (SNP) and the Welsh nationalist party Plaid Cymru joined the NO camp as well.

The referendum was called in April 1975. Since there were strong pro-Europeans and staunch anti-Europeans in Wilson's Cabinet, the Prime Minister decided to suspend the constitutional convention of collective responsibility and allowed his ministers to publicly campaign against each other, which was sometimes really funny and quite hilarious.
In total, seven of the twenty-three members of the Cabinet opposed EEC membership.

On April 9th the House of Commons voted with 396 (70%) to 170 (30%) in favour of retaining the Common Market on the new terms negotiated by Wilson's government. The main deal had actually been done in Dublin, during a meeting of the EU heads of government (what we now call a 'summit').

But the big day was June 5th, just one day before the anniversary of the famous D-Day (when Allied troops began to land in German-occupied France in 1944). If the selection of the date was a pure coincidence or if someone in 10 Downing Street with a sense for history had thought about it is not known (and has stimulated speculations ever since).

On a turnout of 64.5% eventually a solid two-thirds majority of British voters decided to stay in the EEC.
The exact numbers were 17,378,581 votes (or 67.2%) for YES, and 8,470,073 (or 32.8%) for NO (leaving the Common Market).

After such a clear decision one would expect that everyone settled down and life returned to normal. But as we all know, this did not happen. Ever since 1975 various elements of the UK's political structure - including four Prime Ministers from both major parties - have become the most serious anti-Europeans inside the EU. Whole political parties were founded on the sole manifesto promise of getting Britain out of Europe. They still exist and even have MEPs, a couple of MPs and some members in the House of Lords.

I have no problem with people who do not share my opinion. Quite the opposite, in fact. Often they make good partners for a really interesting debate.
But I do wonder how much the principles of Democracy - which are apparently so important for the British system (although not really) - are still alive in modern Britain.

In the world I grew up in it was normal that one played by the rules once one had joined a particular club. This is in fact still widely regarded as very 'English' and part of the 'British fair play' concept. The problem is that the British expect everyone else to play by their rules, while they feel entitled to break any rules at any time if they no longer suit or fulfil its purpose for them.

The British EU membership since 1973 has been overshadowed by the problems the UK has to accept and live by the rules someone else has made. Personally I would not shed a tear should the UK decide to leave one day, and there would certainly be loud cheers all around Brussels. (I stopped counting how many times I have heard the phrase that "General de Gaulle was right when he blocked British EU membership. We should never have let them in...")
On the other hand, I don't mind them staying either. As Churchill said in his unique way: "It is better to have some strange people inside the tent, pissing out, than the other way round..." He had a point.

But no matter how awkward someone is, when in Rome, do like the Romans, and when in a club, play by the rules (which are the same for everyone).

One of the most crucial elements of belonging to the EU is the monetary union. When it was proposed to have a common currency called the Euro (after the working title 'Euro Dollar' was thankfully dropped long before there were actually notes and coins), the UK was immediately against it.
Apparently the British would not be able to function without their Pound Sterling.

There are even people who claim that money would not be money without the Queen's head on it. Well, we have not had any monarch's head on our money for nearly nine decades now, and we are still around. And nobody would stop the Brits from putting H.M. visage onto the coins, where we have our harp (and other countries have their symbols).

Do you remember William Hague? Also known as 'Hague the Vague'... Yes, the youthful Tory leader (elected when John Major resigned to spend more time with Cricket and Edwina Curry in the aftermath of the 1997 election) who always looked like a baby that had grown too large without changing its infant features... yes, exactly him, who wore the silly baseball cap to "appeal to the young". (The real reason was to cover his prematurely balded head.)

This William Hague, as leader of the Conservative Party, went around Britain with a lorry, carrying a huge billboard that said "Save the Pound!"
Whenever they stopped, he came out and shouted the same slogan again and again, if people wanted to hear it or not.
Actually, no-one has ever threatened the Pound Sterling, and no-one forces the UK to adopt the Euro. So the whole campaign, which happened only six years ago (and not far back in the silly seventies), was as pointless as the other election ploys the Tories came up with since Tony Blair won his first landslide victory in 1997.

Both Blair and his Chancellor - and now successor - Gordon Brown (right) were and are strong Poundistas and dislike the idea of a common EU currency. They developed a unique system of "five economic tests" that the Euro would have to pass before it could be accepted as the UK currency. And as they set the questions and parameters, it was no problem to fix the settings in a way that the Euro would never pass the 'five tests'.

Since 1997 these 'tests' have been applied three times officially, and each time the Euro fell short of the expectations in at least two of the five areas.
When the Euro - created 1999 - was eventually introduced as physical notes and coins on January 1st, 2002, twelve of the then 15 EU countries adopted it. Only Denmark, Sweden and the UK kept their independent national currencies.

At first there was a lot of grumbling against the Euro in Ireland. The notes looked apparently too similar, and the coins were too small, complained a lot of people. But they all got used to them and manage well now every day.
While the Danish and Swedish Kronas have been sinking in value to the Euro slowly but steadily over the years, the Pound Sterling had always remained strong, giving the British government ever more arguments for holding on to it.
Personally I advised my clients to buy Euros in the UK and keep them in a British Euro account (which is no problem and done all the time). I told them not to touch this money, until the Euro had risen to a strong position towards the Pound.

Over the years the Euro has indeed done so, first very slowly, but steadily and for good reasons. So once again a long-range prediction I made has been correct. Over the last few months even more so, as the Pound is at present in free-fall, thanks to the chaotic UK economy and its many unregulated or 'self-regulating' sectors.

And today comes the news that the British Pound Sterling is now worth less than the Euro on Britain's high streets. This is the first time ever since the single European currency was launched.
Exchange rates are now as low as € 1.0532 to the Pound, so with commission and a handling fee taken into account, customers changing £ 200 might receive as little as € 197.13.

Welcome to the world of real politics and harsh economics.

I bet that Gordon Brown is now regretting his tough and arrogant stance against the Euro. What would he give tonight to be in a safe financial community of - meanwhile 15 - friendly European states...

Ireland is one of the 15, and even though there is a lot going wrong here right now, especially in the economy and with our banks, at least we have one worry less this time: Our currency cannot be taken to the cleaners by some ruthless international speculators and fiscal vultures. The EU as a bloc and its common currency - the Euro - are too strong for that sort of game.

Vultures only attack what is dead or too weak to defend itself - like poor Iceland a few weeks ago.

Splendid isolation, the old phrase of the British island doctrine, has its points. But in times like these it is a lot better to have enough friends and partners. The Euro gives us that support, which the UK is lacking. It is no longer the Continent that is isolated in the fog, it is Britain and its old and battered Pound Sterling.

Perhaps it is time for Gordon Brown to put the list with his 'five economic tests' on the fire and ring the ECB in Frankfurt...

The Emerald Islander

1 comment:

Blogger said...

eToro is the #1 forex trading platform for new and advanced traders.

Post a Comment