British Influence and the Euro by Sir John Coles, former head of the UK Diplomatic Service

Citation

Bush, J. (2000), "British Influence and the Euro by Sir John Coles, former head of the UK Diplomatic Service", European Business Review, Vol. 12 No. 2. https://doi.org/10.1108/ebr.2000.05412bab.004

British Influence and the Euro by Sir John Coles, former head of the UK Diplomatic Service

British Influence and the Euro by Sir John Coles, former head of the UK Diplomatic Service

Janet Bush

Janet Bush is Director of New Europe

Keywords: European Union, Currency

It is often assumed that the Foreign Office is overwhelmingly in favour of UK membership of the European single currency and, indeed, in favour of moves towards greater integration within the European Union. This assumption was revealed as a myth late last year when Sir John Coles, Head of the Diplomatic Service from 1994 to 1997, emerged as the most vocal member of a group of distinguished British diplomats who are both sceptical of the merits of the euro for the UK and deeply concerned about the current drive towards political union in Europe. Sir Antony Acland, Head of the Diplomatic Service from 1982 to 1986, serves together with Sir John on the Advisory Council of New Europe.

In British Influence and the Euro, a pamphlet published by New Europe in November, Sir John offers a forensic examination of the effect of joining the euro on Britain's influence in areas such as foreign affairs and defence. He refutes the argument - often used by campaigners for early UK membership of the euro - that staying out of monetary union would diminish Britain's standing in the world. One example of this tactic came from Yves-Thibault de Silguy, the European Commissioner responsible for the launch of the euro, who warned in a speech to the Corporation of London in July that Britain faced becoming a "second rank" European nation. "In the absence of the UK, the traditional Franco-German axis is gaining ground, and not just in economic and monetary affairs", he said. Sir John, by contrast, concludes that Britain will have less influence in the world, not more, and less influence over its own affairs, if it were to join the euro.

Support for this view, expressed for the first time publicly by Sir John in a speech to an Advantage Britain conference hosted by Business for Sterling and New Europe at the QEII Conference Centre in June, came from the highly respected Bagehot column of The Economist magazine in July: "How do Sir John's critics explain the mystery of a Britain that is gaining in influence (and in which foreign investors are still building their factories) while remaining outside the euro? A temporary blip, presumably. To think that Britain's influence will survive if it stays outside the 'principal economic objective' of the EU is to live in 'cloud-cuckoo-land', they say. But this is just their conjecture. Don't let it spoil a fine summer."

In British Influence and the Euro, Sir John also highlights the political implications of any decision to join the euro which are too often swept under the carpet by a Government which has sought to frame the euro question as merely one of technical economics. He describes the euro as the "most important act of political centralisation in the European Union's history" and argues that nobody now seriously contests that the single currency is a political project, designed to promote political integration.

"The process of centralisation overshadows everything. In the end, if it continues unchecked, it will indeed reduce British influence. By staying out of the euro, we shall help to slow, and hopefully stop, the process", he writes. "At the same time, we can devote our energies to creating a new and better Europe, designed to deal with today's problems, not yesterday's. If the British decision is clear and well supported in a referendum, this will become a fact of life in Europe, a reality to which our partners will adapt."

Sir John argues forcefully that Britain's ability to run an independent foreign and defence policy is now under assault. He writes: "If the centralising tendencies of the EU continue unchecked in the coming years and indeed if the Common Foreign and Security Policy moves any closer to a single European foreign policy, then the independent British voice will be increasingly muffled, with consequences for our influence in the rest of the world."

He adds: "The ability to deploy sizeable, highly professional and well-equipped armed forces is a crucial element in Britain's influence abroad. Should that ability ever become limited by the creation of European armed forces, subsuming national forces and subject to central EU direction, then British influence abroad would be sharply reduced."

National control over foreign and defence policy has, even in the short months since Sir John wrote his pamphlet, been eroded further as the EU's central bureaucracy has become ever more closely involved with these areas.

Institutional Implications of Enlargement, a report sponsored by the European Commission and published in October, proposed that the Common Foreign and Security Policy should be subject to Qualified Majority Voting "without the possibility of veto by any single Member State". Romano Prodi, President of the Commission, largely endorsed that report and is reported to be pushing for the spread of Qualified Majority Voting to all pillars of the EU, including defence and foreign policy.

New Europe opposes the spread of QMV to the Common Foreign and Security Policy and believes that any new European defence arrangement should be firmly intergovernmental, not subject to the Commission or the European Court and democratically answerable to national parliaments.

The issue of independence in foreign and defence policy was taken up by Lord Owen, Chairman of New Europe, in a New Year statement sent to the media and to all Members of Parliament. Lord Owen, former Labour Foreign Secretary and more recently EU negotiator of Former Yugoslavia,

He wrote: "It is hard to exaggerate the importance of the choices this country faces in the first quarter of the 21st century. Over that period, slowly and imperceptibly, we can easily lose our capacity to act as a self-governing nation and no longer determine our own monetary, foreign and defence policy."

After the Anglo-French St Malo agreement in 1998 which sensibly aimed to create an autonomous defence capacity within the EU, Lord Owen noted that we in Britain were promised that there would be no involvement of the European Commission, Parliament or Court. "After Helsinki, we are in danger of saddling ourselves in defence matters, as time goes on, with all three. Instead of holding out for a fourth intergovernmental pillar - which would have kept defence clearly under the control of national parliaments - we acquiesced at Helsinki in putting defence into the Common Foreign and Security Policy", he said.

"This is exactly what the EU integrationists wanted", he continued. "They will now try to 'communitarise' defence just as they have slowly brought the whole of CFSP into the orbit of the Commission. The challenge is urgent. We are due to establish the interim defence structures by March and negotiate treaty amendments by December 2000. We need to act with determination now if we are to keep defence out of the Commission's hands for all time."

Lord Owen warned that "all we need to do is to go on as at present, with our politicians edging us into an ever more integrated European Union, agonising about not being in the euro, half-promising to join and bending over backwards to diminish the very concept of the nation state in a so called post modern world".

British Influence and the Euro by Sir John Coles (£5.00) and Lord Owen's New Year statement (free) are both available from New Europe, 52, Walnut Tree Walk, London SE11 6DN. Tel: +44 (0) 171 582 1001; Fax: +44 (0) 171 582 5852; e-mail: info@new-europe.co.uk; Website: www.new-europe.co.uk