Europe's World

The European Fund for Strategic Investments (EFSI), commonly referred to as the Juncker Plan, is off to a good start, stimulating pledges from not only European but also non-EU countries like China.

The plan is to raise a considerable sum of €315bn over three years by working with the European Investment Bank (EIB), which will issue bonds to finance projects that develop energy and other infrastructure projects, as well as improve funding for SMEs. This is indeed the right way to leverage a relatively small sum into an ambitious pool of money. In detail, the EU has itself invested €8bn on top of an existing €8bn budget as well as a further €5bn put in by the EIB. The top AAA-rated EIB can then issue bonds, taking advantage of record-low interest rates, to leverage the initial €21bn into a fund large enough to make a difference in jump-starting European growth.

The EFSI ambitiously seeks to encourage private companies to make the investment, thereby largely reducing the impact of the plan on government fiscal positions. But that means a reliance on public-private partnerships, which have a mixed record when it comes to maintaining long-term infrastructure projects such as railways. Nevertheless, the debate over whether governments should be borrowing so as to invest is a separate one.

“The EFSI means a reliance on public-private partnerships, which have a mixed record on long-term infrastructure projects”

The focus on investment, with the usual caveats, should be welcome in Europe. After all, it’s well established that rich countries could use a rejuvenation of their infrastructure. During the last recession, it was public investment that was slashed as a part of austerity programmes, bringing large hits to infrastructure. Investment in the eurozone is still around 15% below its pre-crisis level. Yet ratings agency S&P have estimated that a 1%-of-GDP increase in government spending on infrastructure would translate into a bigger bang, increasing the eurozone economy by 1.4%. Their estimate is even bigger for rich countries like Britain, where GDP would expand by 2.5%. The OECD goes further to stress that increases in public investment would boost economic growth and thus cut government debt. So why has it been so difficult to raise investment since the crisis?

The main constraint has been the imposition of fiscal austerity by governments that have been too focused on the budget deficit. It’s only in the very recent past that economic growth has come back into focus. That largely explains the public side, but private investment has also dropped sharply since the recession. German companies, for instance, have doubled their retained cash in the past decade, and others have followed suit. The puzzle as to why these companies don’t invest is key to understanding how one of the pillars of growth hasn’t delivered during the recovery.

Government and consumer spending were hit hard and slow to recover, leaving deficient demand, both public and private, that hasn’t given companies the impetus to invest. The sharpness and the duration of the Great Recession also created uncertainty over whether or not to commit funds for investment stretching well into the future. European economies are now largely back on their feet. And the recent focus on growth not just by the European Commission but also national governments offers more opportunity. The opening up of strategic sectors like energy to private investors could offer stable returns at a time when it’s challenging to put your money to work.

The low returns of the post-crisis environment affected infrastructure investments because there were other, more enticing, places to put your cash. Stocks, for instance, were pushed to sky-high levels by cheap money and zero interest rates across major markets such as Germany’s Dax. But global stock markets are now deflating from their heady heights while interest rates are still rock bottom in Europe, so fixed income investments continue to generate low returns.

“Investing in roads or energy doesn’t reward a high return though does tend to be stable”

And there’s now an uncertainty from the divergence between the tightening, or normalisation, of rates in America while the European Central Bank continues to inject cheap cash and has even set negative deposit rates for the banking system. This makes an investment with fixed returns, such as in infrastructure, relatively more attractive. Traditionally, investing in roads or energy doesn’t reward a high return though does tend to be stable. Usually set by regulators, yields from infrastructure such as utilities and toll roads range from 3-4%. In the current low-rate environment, that’s not a bad return.

Indeed, BlackRock estimates that insurers are putting 15% of their investment portfolios, double the pre-crisis figure, into infrastructure. And they’re not the only ones. Chinese businesses have also recently invested in European utilities such as water for a predictable long-term return. There are, then, good reasons to have confidence in the Juncker Plan.  Aside from China, other countries such as those in the Middle East as well as private companies sitting on cash may well consider putting some of their funds into Europe.

There’s no shortage of projects being proposed by EU member states for investors to choose from. The potential gains from the investment may well outweigh the downsides of public-private partnerships at present. Another upside is how much the European economy could be boosted by greater investment. Growth in the world’s largest economic entity would undoubtedly be welcome to the rest of the world.

IMAGE CREDIT: landio/Bigstock.com

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European Union leaders may not have the time or inclination to dwell on the global ramifications of Brexit. They should find a moment. Britain’s decision to leave the EU is sending tremors across the world.

The market turmoil triggered by a falling pound has prompted some of Asia’s biggest economies to warn that Brexit could cast a shadow over the world economy for years to come.

US Secretary of State John Kerry’s visit to London and Brussels is a high-profile indication of Washington’s worries as regards the future of the EU and a possible impact of the British decision on NATO. Meanwhile, global business leaders are already rethinking their export and investment strategies to take account of Britain’s imminent departure from the EU.

“Global business leaders are already rethinking their export and investment strategies”

More is at stake, however. The EU has long inspired nations across the globe with its message of reconciliation among former adversaries and as a project for peace and stability. In varying ways and to varying degrees, many have also looked to Europe in their own quest for regional integration and cooperation.

That reputation has now taken a body blow. Both Britain and the EU appear diminished to a closely-watching world. Those opposed to regional cooperation are likely to take heart from the EU’s difficulties. But it would be unfortunate if the EU crisis puts the brakes on other regions’ plans for integration.

Significantly, none of the EU’s foreign partners – except Donald Trump, the presumptive Republican nominee for US president and possibly Russian President Vladimir Putin – is applauding.

EU leaders may insist that the 27 member states will push ahead as planned or even speed up integration now that the perennial argumentative nay-sayer has abandoned ship. But as the bickering begins on Europe’s future direction and the speed of Brexit, nobody is fooled about Europe’s shattered unity.

“Europe’s important partners have invested heavily in Britain as a ‘gateway’ to Europe”

The world knows that the Union, which was already on flimsy ground over its messy response to the refugee crisis, the rise of populist leaders and governments and difficulties in the eurozone, has cracked. The EU as an inspiration for other countries seeking to work together for peace and prosperity has taken a possibly fatal beating. And as uncertainty over the future of both Britain and the EU looks set to continue, many have been left wondering if Europe – and the world – will ever be the same again.

That will depend on how British and EU leaders conduct themselves over the coming weeks and months. Britain’s pro-Leave campaigners have already sullied the country’s reputation by misinforming and misleading their citizens and by fanning the fires of hatred and racism. It will be tough to correct their mistakes – if that is indeed what the next British Brexit government intends to do.

EU leaders, meanwhile, face a stark choice: they can either listen to and respond to the real concerns of their citizens, including on immigration, and seek a dignified response to the latest crisis. Or – as many fear – they can engage in yet more squabbling over Europe’s future direction. The route they take will determine whether or not other eurosceptic movements will become even stronger in the days ahead and present their own blueprints for an EU exit.

Europe’s response will be watched carefully not just by the US where fears are growing of a Trump victory in the November presidential elections but also by China, India, Japan and Europe’s other important partners which have invested heavily in Britain as a “gateway” to Europe.

“The EU is a much larger trading bloc than Britain – and will continue to count for more on the world stage”

No responsible global power wanted Britain to leave the EU, and today no major country wants the EU to unravel. True, some countries may want to negotiate new trade pacts with Britain – but as the US and India have warned, such discussions will not be their top priority. The EU is a much larger trading bloc than Britain – and will continue to count for more on the world stage.

For Europe’s trading partners, Britain’s absence will be especially felt in EU discussions on trade agreements, whether bilateral free trade accords such as the Transatlantic Trade and Investment Partnership (TTIP) or the wider multilateral trading system. London has taken a strong stance in favour of granting Market Economy Status to China. It has also been among the lead players in the EU’s trade relations with many South Asian countries, including India, Pakistan and Afghanistan.

The departure of Britain as the EU’s prime military power is going to hit hard at a time when Europe is trying to push its security credentials, especially in Asia. A new EU “global strategy” which cannot rely on and use Britain’s wide network of global partners will appear less impressive.

In the end, however, once the market turmoil is over and the reality of Brexit sinks in, it is the blow to the EU’s reputation as an agent for change and transformation which will resonate most strongly across the world.

IMAGE CREDIT: CC / FLICKR – Ian

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Fuelled by mounting public concern at the fast-growing number of asylum-seekers and migrants crossing Europe’s borders, the second half of 2015 saw a surge in support for illiberal parties, politicians and policies.

The refugee crisis has been an opportunity to showcase the xenophobia and nativism that is central to illiberalism. Political parties on both the right and the left, and at all points of Europe’s geographic compass, seized the crisis as a chance to build political support. Among many examples, Slovakia’s left-wing prime minister Robert Fico allegedly called migration the ‘ritual slaughter’ of Europe’s nations, while two Alternative für Deutschland MEPs called for police to shoot at refugees entering Germany illegally.

Recent opinion polls show that the radical-right populist Sweden Democrats, who polled 13% in the 2014 parliamentary election, would now win 20% of the vote, just a few percentage points behind the centre-right Moderates and the Social Democrats that have long dominated Swedish politics. The Netherlands’ Geert Wilders – who has called for Islamic male refugees to be locked in camps to prevent a ‘sexual jihad’ – has seen his anti-Islamic Freedom Party surge to 29% support. As well as the publicity offered by the Brexit referendum campaign, fears about rising immigration also gave the United Kingdom Independence Party (UKIP) and its leader Nigel Farage a new lease of life after the party’s disappointing election results last May.

“The refugee crisis was an opportunity to showcase xenophobia and nativism”

Fears about the impact of refugees on Poland’s culture helped the Law and Justice party to power in last October’s election. Poland’s new government was welcomed into office by Hungary’s Viktor Orbán, who dedicated part of his Independence Day speech to lauding Poland’s new illiberal leaders, telling them that ‘we are with you, and we send this message to Brussels: more respect to the Polish people, more respect to Poland!’ Poland’s new leaders followed the Hungarian model immediately, with constitutional amendments limiting the independence of both the courts and the media. After the terrorist attacks in Brussels in late March, the Polish government also announced that it was reversing its initial agreement to take in 7,000 refugees as a part of the EU’s relocation plan.

Similar, albeit milder, limits to democratic freedoms are being deliberated elsewhere. In Latvia, the parliament has debated controversial amendments to the Criminal Code that would make public discussion of changes to the Latvian constitutional order a criminal offense with a prison sentence of up to five years.

This illiberal turn is not a new phenomenon – in 2007, Eurozine debated the rise of ‘Illiberal Europe’. But back then, illiberalism was largely limited to the new east-central European member states of the European Union. Now, though, driven by the refugee crisis, illiberalism has expanded further afield. Indeed, Donald Trump’s campaign for the US presidency has been powered by unexpectedly broad public support for illiberal language and policies such as promises to build a wall between Mexico and the US, and threats to ban Muslims from entering the country.

“Europe’s illiberal parties have been around for several decades pilfering votes from the left and the right”

Is this the end of the liberal democratic consensus that has shaped Europe since 1945? Liberal democracy has protected individual liberties such as the freedoms of speech, assembly and religion. It is underpinned by the laws and norms adopted by key European institutions such as the Council of Europe and Organisation for Security and Cooperation in Europe (OSCE). But these liberal values are not a necessary or a core part of democracy. States could be less liberal but remain democratic, as leaders like Orbán advocate. Such a consolidation of illiberalism, though, is unlikely for three reasons.

First, Europe’s illiberal parties have been around for several decades but remain relatively small. Their default position is opposition rather than government. They have become an established part of the party systems of many European states by pilfering votes from both parties of the left and the right through their appeal to the economic losers of globalisation – typically working-class men in post-industrial towns – as well as those left bewildered and alienated by the broad cultural shift towards secularism and tolerance of diversity. Except for some central European states, even where support for illiberals has swelled – as it has in the Netherlands – on the back of the refugee crisis, it is still some way short of a majority.

Second, there are significant differences between illiberal politicians in the east and west. Hungary and Poland are generally pro-EU, while Britain’s UKIP exists to be pro-Brexit and Marine Le Pen would withdraw France from not just the EU but also NATO. There are also significant east-west differences in attitudes to drugs, gay rights and other values issues. Illiberals are, well, illiberal – they find it difficult to cooperate with others. Hence, the long-standing problems in forming a stable illiberal – or radical-right populist – party group in the European Parliament. A broad pan-European coalition or movement of anti-refugee parties is unlikely.

Finally, the migrant issue will eventually fade. As the flow of refugees slows down – whether this year or next – the public fear and rage of ‘the other’ that has fuelled illiberal parties and attitudes will diminish. Mainstream parties of the left and right will roll-back the illiberal language they partially stole from the political fringes, and European politics will return to its liberal democratic default. This refugee crisis is an episode of European politics, not the beginning of a return to the institutionalised illiberal politics of the inter-war era.

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After declaring that Hungary ‘will not be a colony’ and won’t ‘live according to the commands of foreign powers’, Hungarian Prime Minister Viktor Orbán announced that he is instead building an ‘illiberal democracy’ based on states like China, Russia, Turkey and Singapore. He has curtailed the independence of the judiciary, purged the civil service of those who are not his ardent supporters, introduced new election rules to give himself the advantage and launched a wholesale assault on the freedom of the press. When some of his new laws – such as those criminalising homelessness and ruling-out the possibility of gay marriage – were criticised as unconstitutional, he simply changed the constitution. In his reaction to the refugee crisis, he assumed a position of rabid nationalism, prosecuting asylum-seekers entering Hungary, building razor-wire fences on the borders and flouting the 1951 Geneva Convention on refugees.

The European Union seems absolutely helpless in dealing with these infringements of democracy. When you cannot correct the situation, it seems the best way out is to pretend the problem does not exist. Last December, the EU’s justice commissioner Věra Jourová made it clear this was the case by saying in the European Parliament that Hungary’s illiberal ways are not actually a problem.

The Polish general election in October was won by the extreme populist Law and Justice Party (PiS), which is both on the far right and left because while being positioned on the extreme right of the political spectrum, its economic policies are state-orientated and its behaviour towards opponents is highly authoritarian – strongly reminiscent of the pre-1989 ruling communist party. The PiS has quickly followed in Orbán’s footsteps, paralysing the Polish constitutional court and enfeebling the media. Its assault on democracy has been strongly criticised by the Venice Commission, an advisory body of the Council of Europe, which has decreed that an ongoing constitutional crisis in Poland poses a danger to the rule of law, democracy and human rights. But, as in the case of Hungary, Brussels is more or less powerless.

There have been no such anti-democratic constitutional changes in the other two countries of ‘New Europe’, the Czech Republic and Slovakia, but even these countries have found themselves in the grip of irrational eurosceptic, anti-Muslim and anti-refugee xenophobia over the past year. Slovakia’s (allegedly) social democratic prime minister Robert Fico peddled so much fear and loathing against refugees, of which there are none in Slovakia, that he emerged seriously weakened from the general election on 6th March. Slovak voters did not vote for him, and because of his scare campaign instead put their confidence in extreme right-wing parties. An openly neo-Nazi party has entered the Slovak parliament with 14 seats as a result. In the Czech Republic, too, President Miloš Zeman systematically makes strongly fearmongering statements using factually incorrect information, and the public love him for it. The leader of the Czech “Anti-Islamic Bloc” was even invited to sing the national anthem with the president at a public event last November. The finance minister and first deputy prime minister Andrej Babiš, a powerful oligarch, supports Zeman in this and has also expressed his admiration for Donald Trump’s ‘solution to the immigration problem’.

It is quite remarkable that there is such unity defying liberal, humanitarian and pan-European solutions to the refugee crisis in central and eastern Europe. This includes some of former East Germany, because in Saxony-Anhalt, the anti-Islamist and anti-refugee party Alternative für Deutschland gained more than 24% of the popular vote in the regional elections on 13th March, and Saxony is the birthplace of the anti-Islamic movement Pegida. Large numbers of Czechs, Slovaks, Poles, Hungarians and East Germans now express open defiance towards European values. But what are the sources of this widespread illiberalism?

It is of course well known that since the mass murder of Jews during the Second World War and the wholesale deportation of Germans after 1945, central and eastern European societies have been extremely homogeneous, predominantly white, and have not experienced the multiculturalism that has been common in western Europe for decades. Fear of the unknown is somewhat understandable, especially when unscrupulous media outlets create the impression that Middle Eastern refugees are no different from Daesh terrorists. Social networks such as Facebook are in large part to blame for this as vehicles for the dissemination of alarmist ‘news’ and racist hoaxes. Facebook rarely removes racist hate speech, especially when it is published in eastern European languages, and this has greatly contributed to the normalisation of what was unacceptable only a few years ago. Trapped in an echo-chamber of self-generated fear and hate, most central and eastern Europeans feel that they are genuinely threatened by the unknown ‘other’, and so they grasp for illiberal solutions.

Social and economic frustration is another important factor in illiberalism’s success. Economic development across central and eastern Europe is very uneven, and there are areas that remain very poor. Most of the inhabitants of such regions are in opposition to the political and media elites in their capitals. They disdain the mainstream media, hate Brussels and fully believe all the hoaxes disseminated on Facebook, helping Islamophobic material to quickly go viral. It is this kind of frustration that brought the PiS to power in Poland, that is the source of Czech President Zeman’s high popularity, that has brought neo-Nazis into the Slovak parliament and that sustains Viktor Orbán’s power. After 25 years of low pay, the rule of multinational companies and lecturing from the West, many central and eastern Europeans are fed up. They have assumed the role of a defiant pupil of the West. They no longer want to listen, Czech political scientist Ondřej Slačálek has said, and so they have reverted to nationalism and illiberal values.

There are rough times ahead for the European Union. Nationalist populism is on the rise in both the east and the west, and it is advisable to resist nationalist pressures and defend civic principles at all cost. Maybe it is at this point fitting to think of the predicament of the former Yugoslavia. The moment Yugoslavia abandoned the civic principle after 1989, the whipping up of nationalism on all sides for political advantage led to the brutal war of the 1990s. Is this the same story we will someday be telling about the EU?

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When China joined the World Trade Organisation (WTO) at the end of 2001, its Accession Protocol stated, though ambiguously, that China would be removed from the list of non-market-economy countries by the end of 2016. During those 15 years, China and other WTO members have been free to reach bilateral agreements so that market economy status (MES) could be granted early.

China has always been especially eager to get MES treatment from the EU, its largest trading partner. From 2002 to 2012, Wen Jiabao as the Chinese Premier pushed the EU with all available means to recognise China as a market economy, but failed. Facing heavy pressure from China in this period, the EU created five market-economy criteria and inspected the Chinese situation carefully, but the conclusion in 2008 was that China only met one of the five criteria. Nevertheless, the EU was still prepared to recognise China’s MES after the 15-year transitional period came to an end. The EU’s then trade commissioner Karel De Gucht said in a speech to the European Parliament in November 2013 that ‘in 2016, China will receive market economy status’.

A turning point has come in the last three years. Inspired by the US position, some of the EU’s lawyers started to pay more attention to the wording under Article 15 in China’s WTO Accession Protocol, and challenged the EU’s original automatic recognition at the end of 2016. In the meantime, fearing that MES treatment for China would make the EU’s trade tools less effective when dealing with anti-dumping cases targeted at Chinese imports, European manufacturers – steel producers in particular – launched powerful lobbying campaigns in Brussels as well as in member states. As a result, the current trade commissioner Cecilia Malmström has stated that there is ‘no automaticity’ in granting China MES this year.

“The whole debacle demonstrates that the mutually-beneficial nature of Chinese trade relations is in doubt”

The Chinese side has dropped its request for MES from the EU, but insists that the EU follow the WTO provisions and treat China as a normal country after 15 years of its accession. Its argument is that reform has been carried out for more than 35 years in China to great success. China is no longer, as some Europeans have accused, a planned economy; the market now plays an important role in stimulating Chinese economic growth. China also argues that when the European Commission calculates dumping margins against some of its trade to the EU, the analogue country is often the United States, which is unfair because China and the US are not at the same economic level and there is a big difference between the two countries’ production costs.

When dealing with China’s MES, the EU needs to take into consideration at least three pivotal questions. First, how should the EU revise its own legislation to avoid violating the provisions of the WTO? Of the four points under Article 15, point one’s second sub-section will definitely expire on 11th December. This will require adjustments to EU law, in particular Council Regulation No. 1225/2009, or Europe may risk conflicting with the WTO rule. But the problem is the difficulty of achieving a common position in the Council and the Parliament. As a matter of fact, it is not impossible to maintain trade defence measures against Chinese imports, including anti-subsidy and countervailing measures. Even if in anti-dumping investigations, where China is selected as the analogue country, the EU has the possibility of introducing higher import tax against those Chinese enterprises that dump in the European market by removing the ‘lesser duty rule’, but of course, this may need the approval of the legislative bodies first.

The EU must secondly consider how to balance different interest groups within Europe. In other words, not only the voices of stakeholders in the steel industry, but also those who benefit from free trade should be taken into account. It is of course not an easy task to deal with the different positions of member states, so it will be a big challenge for the EU to align the interests of transnational industrial sectors with those of the 28 member states.

“A ‘no’ to China’s MES will most probably initiate a series of steps taken by Beijing to punish Brussels”

Last but not least, how should the EU take care of its overall relationship with China? The decision taken by the EU will have a direct impact on EU-China relations at least in the short term. Although China has not specified its plan of revenge yet, a ‘no’ to China’s MES will most probably initiate a series of steps taken by Beijing to punish Brussels by, for example, withdrawing Chinese investment from the Juncker Plan, suspending the purchase agreement with Airbus, slowing down negotiations on the Bilateral Investment Agreement, dividing the EU by exploring bilateral cooperation projects with some member states that are more favourable to granting China MES.

No matter what decision the EU takes, and especially if no decision is reached by the time limit, the whole debacle demonstrates that the mutually-beneficial nature of Chinese trade relations is in doubt. Unfortunately for China, some economic problems have appeared with poor timing – signs of stagnation and its huge overcapacity for steel production have seriously lowered international optimism over the Chinese economy, which have worried Europeans about the possibility of increased trade disputes with China in the coming years. The common understanding of the EU-China relationship now tends to lean towards the view of a zero-sum game.

The EU needs to hurry up and form a policy as soon as possible, otherwise the WTO dispute mechanism may interfere when the deadline expires. But who knows, maybe a final WTO ruling is the best solution. In this way, the EU does not need to face what is probably ‘mission impossible’ for its institutions.

IMAGE CREDIT: FLICKR/CC – European External Action Service

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In the end, it was the Little Englanders who determined the outcome – believing in Brexit as a route to ‘take back their country’. Yet if they were worried about the UK’s lack of influence in the EU and the wider world, the impact within three short days on global stock markets, currencies and risk indicators should already tell them they were wrong.

UK politics is in turmoil. The only political leader prepared for a Brexit outcome appeared to be Nicola Sturgeon in Scotland, who, on Friday morning, made a well-prepared, sharp speech, moving rapidly to take the advantage, arguing for a potential second independence referendum.

As the Tories and Labour descend into desperate in-fighting and recrimination, the UK public – or rather the English and Welsh public – is split like never before.

There are many stories to tell on which social group voted which way – the most pro-EU, but with the lowest turn-out by far, being the 18-25 year olds. Yet despite the valid recriminations against Jeremy Corbyn for his half-hearted and almost invisible presence in the campaign, in the end it was the Tories that determined the outcome.

“The UK has voted to put its own existence as a state at risk”

Tory voters, according to a post-referendum poll carried out by Lord Ashcroft, split 58% to 42% for Brexit. Apart from UKIP, all the other parties – Labour, the Liberal-Democrats, Greens and Scottish National Party – had close to two-thirds to three-quarter majorities for remaining in the EU.

David Cameron, a Tory Prime Minister, called a referendum he didn’t have to call, and failed to persuade his own Tory voters to back him. His resignation was a foregone conclusion.

What comes next is unclear. The UK has voted to put its own existence as a state at risk. It has chosen to undermine its economy, its domestic politics and its influence in Europe and the world. It has also damaged the EU, and impacted negatively on the wider world. It is historic folly on an unimaginable level.

The economic impacts will unfold in the days, weeks and months ahead – the immediate falls in the pound, the euro and other currencies, and in stock markets, were predictable. Already, reports are coming in of financial players – banks, hedge funds and others – looking to move staff and operations out of the UK. Foreign direct investment into the UK is bound to fall.

The political outcomes will reverberate in unpredictable ways in the months and years ahead. Much attention now is on Scotland – a poll on Sunday suggested a big shift to 59% support for independence. Also on Sunday, Nicola Sturgeon said the Scottish Parliament might block any legislative consent needed as part of the UK’s Brexit process.

This is just the beginning of a major political, constitutional and economic crisis in the UK. Within hours of the result, in the early hours of Friday morning, Sinn Fein had called for a vote on reunifying Ireland, Spain called for joint control of Gibraltar – while, predictably, far-right leaders in France and the Netherlands called for their own referendums on leaving the EU.

The Tory Brexit side – Boris Johnson and Michael Gove are in disarray. While Johnson could be the UK’s Prime Minister by early autumn, unless stopped by an alternative candidate such as Theresa May, the Brexit leaders never had a clear story as to what voters would get instead of the EU.

With the scaremongering over immigration pushing Brexit over the finishing line in the referendum, it is hard to see any deal that keeps full access to the Single Market – the EEA option always looked like a hard sell after a ‘Leave’ vote. Yet Westminster has a majority of MPs who support staying in the EU – what sort of deal they might vote for is quite unclear.

“Scotland – a poll on Sunday suggested a big shift to 59% support for independence”

The EU now has to deal with the Brexit mess, along with its other huge challenges – both in the eurozone and the refugee crisis. The EU’s leaders are right to push for a rapid move on Article 50, allowing at least some sense of control and attempts at reducing uncertainty to begin. But the political disarray in the UK means that this may take a few months rather than days.

Scotland will want some clear answers from the EU as to the basis on which, if it became an independent state, it could remain in the EU, negotiating its status as a new member state. Unlike the scaremongering at the time of the 2014 independence referendum, the EU owes Scotland some clear answers – without taking a position on the desirability of Scottish independence or not.

In the end, Cameron was hoist by his own petard. He called the Brexit side ‘Little Englanders’ but he had presided for six years over a eurosceptic government that had seen the UK’s influence in the EU slide, and that had led the UK’s wider foreign policy to be almost invisible. That, and the UK’s failure to play a major, constructive role in any of the EU’s current challenges during his premiership, meant Cameron could not make a strategic and broad case for EU membership, arguing the benefits of solidarity, stability, rights and values.

As the EU struggles to find its own way forward now, it should heed this lesson. The EU’s ‘Fortress Europe’ approach to the refugee crisis, its abandoning of the values underpinning its enlargement process in its EU-Turkey deal, and its lack of urgency or weight in dealing with the levels of youth unemployment across the EU, point to an EU that has lost its sense of solidarity, and has no idea how to tackle the disaffection of much of the EU public.

The EU in its own way is also at risk of becoming a ‘Little Europe’. The UK currently lacks – outside of Scotland – any strategic, high-level political leadership. The EU has to show it can provide strategic, high-level and creative leadership at this critical time. Business as usual will not do.

IMAGE CREDIT: CC / FLICKR – frankieleon

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I was recently advising a start-up offering job opportunities to individuals willing to relocate across the world. In one case, a Dutch chef working in a hotel in the Caribbean signed a contract with a new hotel chain in Georgia. Mobility is the key word in today’s labour market, but it doesn’t solve all the problems.

In my country, Greece, the CEO of a large multinational corporation will still find it hard to recruit for an entry-level position while at the same time youth unemployment rates are over 50%. Such peculiar observations are traditionally seen as a problem, but are now being taken by some as an opportunity. People often talk about ‘brain drain’ killing Europe’s best, while others, like the founders of the start-up I have been advising, see it as more of an opportunity, describing the phenomenon instead as ‘brain circulation’.

Ever since its establishment in 1997, the European Employment Strategy (EES) has been trying to set common objectives and goals regarding employment policies in order to make life easier for jobseekers. A lot has been achieved, including a fight against the number of administrative barriers within member states that often prevented the free movement of workers in the EU. People today find it much easier to look for a job abroad than before, and are also given indirect opportunities to kick-start their career in a foreign country through study programmes like Erasmus and Leonardo, which guide them into different cities.

All of this is good provided you actually secure a job at the end of the programme; otherwise you’re doomed to the eternal search many are still faced with. Here in Greece, when someone graduates as a chemical engineer, he or she has a couple of years of grace to find decent work. If the graduate doesn’t find work immediately, they will most likely end up supporting their family by working in a completely irrelevant sector – it wouldn’t be unusual for such a person to become a bartender on a Greek island. Even worse, they may have to continue in this job for long enough that when the right opportunity finally arises, there is nothing to boost their candidacy besides a well-framed, and now slightly dusty, degree. That, in practice, is driving people out of the market, making little to no use of the investment that they themselves, their families and their countries put into educating them.

“People often talk about ‘brain drain’ killing Europe’s best, while others see it as more of an opportunity”

But this description of the problem is a picture only in black and white, and is probably unfair and certainly lacks imagination. We need at the very least to add some grey – policies that will bridge the gap between the unemployed and the employed, not just matching the unemployed with whatever jobs are available at any given time.

My answer to the problem is the launch of a massive programme for paid, enterprise-based internships within the EU. I am an advocate of using paid internships, for what should be their primary role, to bring new talent into a company, not as a way of finding cheap labour. Internships can also be used by candidates to explore a number of potential job markets besides those in closest proximity to either their location or field of study. Traditionally, only a few sectors asked for student internships such as medicine, the law and sometimes accounting. All other sectors are more or less left without an established internship culture.

Companies are very selective, and once they pick someone they tend to stick with their investment. A good enough candidate working as an intern has considerably more chance of staying on to work for the company as opposed to an unknown competitor for the permanent position from outside. This is not a theoretical remark but a practical observation. The institution I work for, The Hellenic Initiative, has been one of the main sponsors of such a programme in Greece called ‘Regeneration’.

“An intern has considerably more chance of staying on to work for the company as opposed to an unknown competitor”

The programme, launched a couple of years ago, has so far had an overwhelmingly positive response from the participating companies, and the number of applications received and placements offered has nearly doubled since launch. Even with the dire macroeconomic factors surrounding Greece today, participating companies were asked to pay their interns the minimum wage for six months, and in return we guaranteed after a tough selection and training process to assign them the best fits for their vacancies. This small-scale experiment had a 78% success rate when it came to interns getting their contracts renewed and being hired as full-time employees.

I am sure that many can think of different alternatives to this idea, like for example having students involved in such programmes as part of their course and not waiting until after they graduate to gain work experience. But the main idea remains quite simple and is easy to implement. We need to bridge the gap between what universities offer and what companies need, and a good way of doing so is to spend as much time as possible in both worlds.

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On the 23rd of June, the British people voted to leave the European Union. Against all odds and, above all, against all reason, one of Europe’s most moderate and pragmatic of peoples has decided to disregard overwhelming evidence that such a decision would have negative consequences for the country.

Almost the entirety of the country’s intellectual, economic and political establishment had explicitly opposed Brexit. There had been letters by Nobel laureates detailing the cost to UK research of a ‘Leave’ vote, a public statement by over 250 academics to the same effect, the official opposition of most British businesses as well as an avalanche of expert reports indicating the significant economic cost of leaving the world’s largest single market. In political terms, the ‘Remain’ campaign had the formal support of the country’s four largest political parties, the Tory-led national government and that of a plethora of international leaders, including the President of the United States. But as Michael Gove, a Brexit supporter, recently said: “people in this country have had enough of experts”. He was, of course, right. The fact that Gove is an Oxford-educated politician who recently led the UK’s Department of Education, an institution dedicated precisely to producing experts, seems to have been inconsequential.

“If illiberal populism takes hold, the European Union will be a particularly easy victim in large part because it is an elite-driven project”

The British are not alone in their rejection of their elites. Over the past few months, there have been numerous indications that many other Western societies are following a similar path. The presumptive nomination of Donald Trump as Republican candidate for the US Presidency is perhaps the most significant case. Trump’s nomination was not only something very few had predicted but also a significant blow to the Republican Party’s establishment, which opposed it en masse. Bernie Sanders’ almost successful run for the Democratic nomination, and in particular his results in caucuses (i.e. primaries in which party elites had less control over the outcome), points in the same direction. Spain is about to vote in a historic general election that is going to see close to a third of the vote go to Unidos-Podemos, a far-left coalition composed of former communists and a newly-born anti-establishment party. In the case of Austria, it was the far-right that almost won the presidency only a few weeks ago. And in Italy, a party founded only in 2009 by a comedian in protest against the political class recently won the mayoralty of Rome.

Opposing elites is not necessarily a negative development in itself. However, it so happens that the elites being opposed are precisely the ones that support the fundamental values and institutions of the Western liberal-cosmopolitan order. Therefore, this convulsion will see the reconfiguration of the classical left-right political axis into one composed of liberal cosmopolitanism versus anti-liberal populism. If this illiberal populism takes hold, anti-trade, anti-immigration and anti-capitalist policies will proliferate. The European Union will be a particularly easy victim of this new mood, in large part because it is an elite-driven project. The benefits of being a member of the EU are mostly understood by intellectual, business and political elites. If those elites are unable to carry the support of the broader European population, the project will be in dire straits. More pressure will be placed on politicians to detach themselves from European integration or to call for a referendum on membership – results in such elections and plebiscites will be very difficult to predict. Uncertainty will be the name of the game. Marine Le Pen has now called for an EU membership referendum in France, and the latest Ipsos Mori poll in Italy shows that 60% of Italians want the same, with 48% saying they would vote to leave the Union.

Free trade and globalisation more broadly will be other casualties of the upcoming illiberal era. Trade is a technical matter that requires experts to arrive at deals that are not understood by those of us who do not dedicate our lives to such matters. Again, if trust in elites is not there, we are bound to see simplistic messages take hold and suspicion of free trade grow. The prospects of the Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Partnership (TPP) being signed and ratified look slimmer by the day. Ultimately, anti-capitalist and, perhaps, anti-democratic movements will emerge. We know, for example, that many of Europe’s far-left parties have in the past questioned capitalism as a system, or that far-right parties bring with them strong anti-democratic tendencies. Immigration and multiculturalism in general will also be questioned, and already are in Europe and America. Minorities and others are normally victims of populist movements because they are seen as bearers of problems, as stealing people’s jobs or as security threats.

“From the 1970s to today, we have gained productivity without increasing wages, which means labour income has ceased to function”

Why is this happening? And why now? Some have said it is a consequence of globalisation, free trade and immigration. These factors surely play a role but I would like to suggest that the lion in the grass, or the hidden threat, is rapid technological development and its impact on labour markets and wealth distribution. Middle-class workers are today competing not just with cheap labour in the developing world but also with machines and algorithms that are ever cheaper and ever better. This structural process is producing large amounts of material prosperity, but it is undermining the middle class in the process through the destruction of jobs. We have never been wealthier in terms of total output of goods and services, but the US and Europe have seen a steady rise in inequality over the past two decades. We know that from the 1970s to today, productivity and labour income have decoupled; we have gained productivity without increasing wages, which means that our most important redistribution tool, labour income, has ceased to function. Wealth concentration in the US has now reached dramatic levels. And people are losing faith in a system that produces aggregate wealth but fails to distribute it.

Now, the barbarians are at the gates. Populists come to break the system and in the process destroy a great deal of wealth. Hopefully it is only wealth that is lost in this convulsion. The liberal cosmopolitan elites of the world need to diagnose this problem quickly and effectively, and start thinking about the new equilibrium after the upheaval. How do we build an inclusive economic system in which entrepreneurship, innovation and private enterprise are still driving growth but do not produce politically-unstable levels of inequality? What is to be the future role of governments and corporations in an environment of high productivity but lower employment? These questions will need to be answered in the next decades if we want to arrive at a politically-sustainable arrangement. The current model built by our elites is not. And we shall all pay the price for it.

IMAGE CREDIT: CC / FLICKR – diamond geezer

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Nations have long relied on one another to balance the supply and demand of energy. This is particularly true for Europe. Italy and Malta, for example, rely on imports for over 75% of their energy needs, while Denmark produces enough energy to be a net exporter.

The stable output from fossil fuel and nuclear power stations previously dominated the trade of energy across Europe. This made managing supply relatively straightforward regardless of differences between national energy policies. But the continued growth in renewable generation and move away from fossil fuels is changing this picture. European countries are now becoming more reliant on each other for a more balanced supply of electricity and the need for shared energy policies across Europe is increasing in importance.

Europe has for decades had common policies on a huge range of areas including agriculture, defence and border controls. But the first comprehensive Europe-wide energy strategy – formally called the ‘Energy Union Strategy’ – was only launched early last year, by which time it had become clear that establishing more secure, competitive and cleaner energy across Europe was no longer optional.

“After a decade without progress, member states have realised that resistance to shared policies doesn’t work”

The motivation behind the Energy Union Strategy’s approval was not much of a secret. Europe is highly dependent on Russian energy, importing over a third of its crude oil and nearly 40% of its total gas from the country in 2013. Uncertainty over Russian energy contracts following Russia’s annexation of Crimea in early 2014 and the subsequent risk of disruption to gas supplies from Russia highlighted the fragility of Europe’s energy infrastructure.

Not a lot can change in the short term. Every year until the mid-2020s, Europe is contractually obliged to buy the equivalent of around 75% of the gas it imported from Russia in 2013. Despite this, Europe recognises the need to work together to ensure it has tangible alternatives to Russian imports in the medium to longer term. Renewables aren’t the only option; others include increasing investment for liquefied natural gas (LNG) infrastructure and decreasing demand for energy by improving efficiency measures. With geopolitical events acting as a catalyst, EU member states suddenly found themselves able to put the finishing touches to a common strategy for energy that had been without any real traction for years.

Thankfully, there is also a positive reason why European countries are working together. The EU’s leadership in climate change mitigation means a shared commitment to reduce emissions by 40% by 2030 from a 1990 baseline. This led to a shared target of generating 20% of energy from renewable sources by 2020. Having common targets for both emissions reductions and renewable generation lends much greater force to collaborative efforts.

Agreeing a common energy strategy is one thing, but successfully implementing it is another challenge altogether. Fortunately, European research is already highly collaborative among member states, with much pooling of resources to increase efficiency and to avoid duplication of efforts. Joint work on energy innovation has been happening for decades, and now provides the underpinnings that will enable the common strategy to succeed.

Just one example can be found in collaborative projects on the electricity grid. Interconnectivity of grid systems is of course critical to efficiently balance energy across borders and a headline target of the Energy Union is for all countries to achieve 10% of electricity interconnection by 2020. For some, this is already being achieved. When high winds mean Danish wind turbines alone produce more energy than meets the country’s electricity needs, the excess power can be shared with neighbouring countries for use or, in the case of Norway, stored for later use.

A recent collaborative research project involving 18 member states made significant advances in helping Europe to become more connected by a ‘smart grid’ – a dynamic system in which electricity can flow to meet localised changes in supply and demand. Several months of real-world observations tested the impact of renewables on power quality across different weather conditions and seasonal load changes. The collaboration has provided significant insights into the effect of renewables on power quality and led to the development of cost-effective methods to ensure fair trading of energy between countries.

“Having common targets for both emissions reductions and renewable generation lends much greater force to collaborative efforts”

For others, the target is more challenging. Some states like Cyprus or Malta have little to no interconnectivity capacity, and being an island makes plugging into the European grid much more expensive. Proposals like the ‘EuroAsia Interconnector’ propose linking Greek, Cypriot and Israeli grids, but will cost upwards of €1.5bn and won’t be fully implemented until at least 2022. Clearly, a successful energy union needs to recognise that there is no ‘one-size-fits-all’ solution and consider differing regional challenges.

As well as collaborative research, other joint programmes have built on existing Europe-wide standards to create a level playing field for new innovations. One example is the EU’s Environmental Technology Verification (ETV) scheme, which provides independent testing to verify performance claims so that SMEs can prove their technology to customers and investors. Being able to complete a single verification that is then valid across the whole of Europe reduces the costs to innovative European SMEs and accelerates the commercialisation of their products.

After a decade without progress on a common European energy policy, member states have realised that resistance to shared policies doesn’t work in the new environment. The need to tackle climate change, create a healthy and competitive market and ensure security of supply rely on collaboration beyond the sharing of ideas and occasional peeks over the garden fence.

But as well as adjusting to a shifting geopolitical landscape and climate concerns, energy union provides an opportunity for Europe. Collaborative research has already shown that innovation and efficiency is cultivated by cross-border research. By working together strategically, Europe can ensure that the whole becomes much more than the sum of its parts.

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“All changed, changed utterly,” wrote the celebrated Irish poet W.B. Yeats of the 1916 Easter Rising in Dublin, adding “a terrible beauty is born!” A century later, he might well have been writing about the result of Britain’s referendum on EU membership.

Radical change has been the dream of the UK’s triumphant Brexiteers, but what, beautiful or not, will be born? An absence of clarity about the impact of Brexit on the UK, the rest of Europe and worldwide will last for a decade at least. The notion that Britain can neatly cut the links binding it to continental Europe will quickly prove absurd, as will the idea that the surgery will be painless and only local.

To return to that ‘terrible beauty’; the referendum result suggests that a majority of British voters believe they have freed themselves of the cumbersome diktats of the EU ‘superstate’, and that the UK will be able to rediscover its former glory. They see the British lion again standing rampant at the centre of an international trading system wider than Europe, with the strength to impose some benign new form of Pax Britannica whenever troubles threaten.

The picture is beguiling but misleading. It is impossible to predict how the 27 remaining EU member states will react, but right now it seems likely that next week’s scheduled meeting of the European Council grouping national leaders will be a subdued affair.

David Cameron’s successor will presumably attend as Britain’s prime minister, and the appropriate courtesies will be extended to him, along with commiserations for having lost the referendum.

Once the dampening effects of shock wear off, though, the pain will come flooding in. This summer will see the beginning of a tumultuous political crisis that will probably set many EU member states against one another, and will certainly reverberate around the world.

It is too soon even to guess at the immediate consequences of the vote for Brexit. The pound sterling will probably tumble, stocks and shares slide and the global financial system will be severely shaken. But what goes down can also come back up, so the more important question is the longer term political outlook for the EU and for the 60-year process of European integration.

Will Britain’s exit trigger a wave of copycat pressures across the Union, as many fear? The European Union’s global credibility is going to suffer, and the further risk is that voters in other European countries will demand special treatment that could, unless satisfied, prompt fresh demands to leave the EU.

The arguments raging so fiercely in recent months inside the UK have been followed closely elsewhere, not least by Europe’s eurosceptic populists. The established centre-right and centre-left mainstream parties that in effect govern the EU’s choices and direction know that their reactions to the Brexit decision must avoid strengthening their hand.

That leaves the EU and its member governments with a difficult balancing act. They must avoid panicking and permitting the UK’s withdrawal negotiations to exacerbate euroscepticism elsewhere. And they must at the same time create a more positive climate so as to move the European project forward.

A first step would be to stop pretending that the EU’s lack of accountability is no problem. Eurosceptics are not the only ones to question the secrecy surrounding Council of Ministers’ meetings that produce no public record of who said what, along with the unelected character of the European Commission.

No one can predict the sort of more open, democratic and transparent EU decision-making structure that might emerge from a re-think. The EU and the national leaders who in truth are responsible for its policies would, however, be very unwise to ignore the pressures for reform. Not the sort of narrow, self-serving ‘reforms’ that Britain’s prime minister David Cameron attempted to secure earlier this year, but imaginative improvements that could restore the EU’s credibility and popularity.

IMAGE CREDIT: CC / FLICKR – Dave Kellam

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Europeans are scared, angry, lost. Their world is in turmoil, their children’s future suddenly uncertain, their way of living under threat. Europe’s politicians need to listen, tell hard truths and rise to the challenge, offering a way forward if Europe is to avoid the undoing of its post-WWII achievements and legacy: peace and prosperity. Austria’s recent presidential election sent ripples of concern across the continent and beyond, and while there was an audible sigh of relief at the final outcome, the final 30,000-vote lead for Green party candidate Alexander Van der Bellen over his right-wing populist opponent wasn’t exactly a comfortable margin.

This populist surge was not just an Austrian issue, but yet another sign of rising economic, ethnic and social tensions across the continent. And Europe’s political class is largely responsible. Throughout much of the EU, resurgent right-wing populist movements rally throngs around anti-immigration and eurosceptic slogans, finding strong electoral support in Denmark, France, Germany, Greece, Hungary, Italy, the Netherlands and Sweden. France’s Front National is today an ‘established brand’ after over 30 years during which the Le Pens were an exception in Europe – it is no longer so. The spectacular results obtained by Alternative für Deutschland (AfD) last March shook up Germany’s political landscape, dramatically upping the stakes by entering three state parliaments for the first time. This breakthrough – from a party that did not even exist little more than three years ago – is arguably the most striking element of these elections.

“‘Overwhelming majorities disapprove of the way the EU has handled the current migration crisis”

If the refugee and migration crisis has clearly fuelled a backlash against traditional political parties, the current pan-European wave of discontent also taps into long-standing fears about globalisation, jihadi terrorism, as well as a dilution of national identity and traditional structures. Unresolved issues following the 2008 economic downturn, consistently-high unemployment, uncontrolled migration and failed integration, the euro and the perceived impotence of traditional parties have contributed to making the bread-and-butter issues of hard-right populist movements acceptable if not mainstream.

While I do not believe this swing to the far right means Europe is about to succumb to its old demons, I feel we should certainly take our cues and learn from the continent’s past. Europe’s politicians need to squarely confront the profound and understandable angst that is gripping the peoples of Europe. They need to give them a sense of being heard and of seeing their fears and concerns addressed. They also have to credibly and courageously chart a course that allows the EU to overcome its challenges and preserve its decades-long achievements while still remaining faithful to its values.

In 1952, Jean Monnet, one of the EU’s founding fathers, wrote that ‘Europe’s nations should be guided towards the super-state without their people understanding what is happening, […] by successive steps, […] which will eventually and irreversibly lead to federation.’ This ‘leadership by stealth’ is no longer accepted, nor acceptable.

The results of a Pew survey released on 7th June – of more than 10,000 participants – showed strong disgruntlement with the Union is on the rise across the continent. Only 51% of those polled expressed a positive view of the Brussels-based institutions, while 42% expressed the desire to have certain powers restored to their national governments. The poll data indicates ‘overwhelming majorities’ in each of the 10 countries surveyed disapprove of the way the EU has handled the current migration crisis. Furthermore, the EU’s management of economic issues was seen as ‘another huge source of disaffection with the institution.’ Quite clearly, Brussels needs to be much more attentive and responsive to the messages sent back by Europe’s peoples. Actions such as circumnavigating the loud and clear ‘Nay’ votes in 2005 from the Dutch and the French on the European Constitution by rolling out the Lisbon Treaty, or forcing the Irish to vote twice on that very treaty because the results of the first referendum were unfavourable, do little to help Europeans feel heard.

“While European elites may see themselves as citizens of a globalised world, the great majority of Europeans have longstanding emotional ties with their nations”

The EU, or rather its ancestors the Coal and Steel Community and then the European Economic Community, was created to make war between its member states impossible. But to achieve this, Brussels constantly denigrated patriotism and national pride, offering in its stead a post-modern vision of the world in which such national identities were a parochial relic to be stamped out or relegated to the football pitches. While European elites may see themselves as citizens of a globalised world, the great majority of Europeans have longstanding emotional ties with their nations and to this day still primarily define themselves through their affiliation to their home country.

Mass migration – not just the Syrian refugee crisis, but the movement that started decades ago – is seen by many as changing the face of Europe in a radical way. Since 2014, nearly 2 million refugees have entered Europe – less than 0.5% of the EU’s population, but a formidable number nonetheless. Denying the impact and the challenges this movement of people presents is at the root of Europe’s populist test. Indeed, many in Europe feel that changes affecting their lives have been imposed on them without ever having been discussed. And if they were, it was either under the caveat that questioning or opposing immigration meant that you had to be racist and were, therefore, disqualified from any debate, or that Europe’s ageing societies needed immigration to self-sustain and preserve its welfare-state, and that was that.

The lack of debate as to what these changes mean, and the lack of any serious discussion as to an arrangement between newcomers and their host societies – such as the recent Integration Law in Germany – have steadily fuelled the rise of populism. The EU’s motto, ‘unity in diversity’, may be very appealing, but it has to translate into more than pretty rhetoric and good intentions for the EU to remain stitched together. While Europe certainly needs immigration for its labour markets and social systems to function or to protect its prosperity, it also has to be able to debate and to address issues raised by largely unassimilated and disaffected immigrant communities – many of whom are Muslims. European countries in general have done a poor job of ensuring that immigrants integrate and of proposing a clear set of rights and duties for both immigrants and host countries. Islamophobia has no place in Europe, no more than anti-Semitism or any other form of religious, ethnic or sexual-orientation prejudice. But ‘unity in diversity’ also means we need to agree on a set of core values that represent our shared understanding of the world and bind us together, and for those wanting to live in Europe to embrace them and abide by them.

Brussels also needs to focus more on what will help create a better life for the Union’s citizens. This means economic growth and jobs, especially for Europe’s youth. European growth rates are anaemic at best and socio-economic inequality is on the rise. The newer members of Central and Eastern Europe, even relatively successful Poland, have failed to bridge the income gap with the richer half of the continent. Youth unemployment remains catastrophically high, and the activity rates of senior workers are just as depressingly low across much of the EU. Europe’s ailments are deeply embedded in economies that lag behind on investment, innovation and competitiveness. There is a consensus, however, on how to fix these issues, even if it means difficult and painful reforms in the short term. Such growth-orientated reforms, including lowering taxes, opening up labour markets and offering a more supportive environment for risk taking, are well-known. But it will take courageous politicians, in Brussels and in member states, to lay open the hard truths and map a clear course forward.

“Europe’s politicians need to squarely confront the profound angst gripping the peoples of Europe”

Brussels should lead Europe on the issues that are best or can only be tackled together, such as migration, commercial agreements, and common economic and financial policies. Countries that want to pool more sovereignty on these issues must be able to do so. But let’s also make sure the famous ‘subsidiarity principle’, as defined in Article 5 of the Treaty on European Union, is put back at the core of the European project. Decisions need to be taken as closely as possible to the citizens, and the EU should not take action (except in the areas that fall within its exclusive competence), unless it is more effective than action taken at national, regional or local level.

After decades of European integration, the role of the nation-state as the heart of political life remains unchanged. Brussels needs to both acknowledge this and celebrate much more forcefully the extraordinary achievements of the European Union: for the first time in history, close to 30 countries and 500 million people have come together without anyone coercing them to do so. As we remember the centenary of the battles of Verdun and the Somme, as we think of the 60 million lives lost in two world wars, it is important to realise that the citizens of the European Union live in the safest place on Earth. The EU can boast one of the world’s lowest violent crime rates, its governments abolished the death penalty, and it has renounced war within its borders. For now, it may look as if the limits of integration have been reached. But if the peoples of Europe feel they are being heard by Brussels, and its responses are of relevance to their daily lives, then, and then only, some of Europe’s nations may yet return to the path of ever-closer union.

IMAGE CREDIT: CC / FLICKR – European Parliament

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Goslar is a central German town on the northern edge of the Harz Mountains. For a thousand years, its wealth was provided by the mineral deposits of the Rammelsberg Mountain, and today it is a UNESCO World Heritage site with many medium-sized businesses, year-round tourism and major industrial enterprises. But Goslar has been affected by demographic change and structural weakness.

The town’s population of approximately 50,000 is declining; in the ten years from 2003 to 2013, Goslar lost around 4,000 inhabitants. We have had to react to this demographic decline by exploring two possibilities. The first is to downsize administrations, which is something we have already done in Goslar. To further downsize would affect the town’s infrastructure – schools, museums and public swimming pools could no longer be well maintained by even fewer people. Furthermore, to continue downsizing would only lead to a greater population decline, and the downward spiral would accelerate – a bleak scenario indeed!

“It is economic nonsense to build container villages while flats and houses elsewhere lie vacant”

I therefore tend to favour the second alternative: to keep the number of inhabitants as stable as possible. We need people for our social activities, in voluntary work and in our clubs and associations. But we also need them for our economy. The Employment Agency in our area lists about 43,000 employed people, of which 14,500 are aged between 50-64. This means that over the next 20 years, 14,500 roles will become vacant. Who can we find to take these places?

When I talk with the entrepreneurs of this region, I often hear of their concerns that there will not be a sufficient workforce available in the coming years. Frequent questions are ‘Will I find enough staff?’, ‘Will I find enough young people that I can train?’ and ‘Should I invest in a shrinking town or should I relocate my business elsewhere?’. If the latter actually happens, it would mean that investment will no longer come to Goslar, and then this town’s history of more than a thousand years will come to an end. Goslar’s 1,700 timbered houses and 3,000 monuments will be little more than open-air museum pieces.

This is not just a problem for Goslar, or even just for Germany. The entire European community is facing a change. Statisticians think that today’s German population of 81 million people will grow slightly in the coming 5-7 years, but will then drop dramatically. In 2030, almost 5 million people more than today will be aged 65 or older. This group will represent around a third of the population, according to the Max Planck Institute. The United Nations has forecast a decline in Europe’s overall population of 8.3%, or approximately 50 million inhabitants, by 2050. The European Statistical Office Eurostat has the opinion that immigration will be the only solution for three-quarters of European regions.

“The big cities cannot by themselves provide either the accommodation or the integration of refugees”

I am of course aware that our society has some vastly differing opinions when it comes to refugees and migrants. But as early as the Autumn of 2014, I took a very clear position on the issue. I said that the big cities cannot by themselves provide either the accommodation or the integration of refugees, and I have also spoken of the big opportunity for the town of Goslar. Back then, I asked, ‘Why don’t we focus more intensively on the talents of those who come to our country?’

My basic idea was that it should be possible for regions with shrinking populations to take more refugees. The use of empty housing and lower rents, as is prescribed by the allocation formula, would help to alleviate pressure from big city hotspots. The aim is a decentralised accommodation for the people who come to us. This does not mean accommodating refugees together in a big hotel or a barracks that stands empty. It especially does not mean tents, containers or ghettos in big cities. It is economic nonsense to build container villages while flats and houses elsewhere lie vacant.

My statements in 2014 triggered quite a controversy, and the reality of today has more than outrun us. The problem now is that I do not know how many people will come in 2016 in need of social and economic care. But I am sure that solutions can and will be found. It is imperative that we not only accommodate refugees but that we offer them German language courses and provide them with everything they need to live in comfort. It is envisaged that they will stay here – in the medium-sized towns and in rural areas – for good, and will not leave us after a few months to head for the larger cities.

“Successful integration requires relationships between people and quick access to the local population and community”

However, I have not yet found a clear remedy, but if we succeed in keeping the refugees here and integrate them well, we will enrich our society and have at the same time the chance to oppose the prospect of demographic crisis. In 2015, the District of Goslar, which as a region has approximately 130,000 inhabitants, received approximately 1,540 refugees. This year, we are expecting about 1,600 new arrivals. All these people are to be accommodated in a ‘dispersed’ way. They will be accommodated in flats where there will be welcomed as neighbours, as successful integration requires relationships between people and quick access to the local population and community.

A brief look to the past tells us that integrating refugees can work. Historically, immigrants have always enriched their societies. The United States without the innovative power of immigrants would have no Silicon Valley; without its immigrant workers of the 19th century, there would be no American railways; and without the refugees and expelled persons taken in after the Second World War, there would have been no economic miracle.

The civil war in Syria has lasted for five years and yet everybody was completely astonished to find Syrian people knocking on Europe’s door as refugees. Europe is facing its first major performance test, and to pass, European policymakers have to stand together and introduce basic change. The continent will become a melting pot of cultures: younger, more intelligent and more vivid. The United States of America continues today to take their strength from this model. We too can achieve that. It is up to us whether we succeed in organising language and education, accommodation and work for the refugees and their children. As a result, Germany and Europe can only benefit, and will develop stronger than ever on a moral level, as well as economically and culturally.

Europeans must welcome and integrate refugees, accepting that they are not a burden but a great opportunity. We have to keep sight of the most essential issue: to support refugees is our most fundamental humanitarian duty.

IMAGE CREDIT: CC / FLICKR – Ralf Naegele

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I must confess to something of a bias when it comes to the Johnsons, because I rather like them. All of the Johnson family behave as if they feel obliged to be bright, and are often exuberant but with the typical nonchalance of the British upper class. I am a friend and former colleague of Stanley Johnson, Boris’s father and a convinced European. And I later had the opportunity to know Boris while he worked in Brussels as a reporter for the Telegraph. He was popular, exceedingly amusing and a uniquely colourful character in what is often a very grey setting.

“The problem with the Brexit supporters is not their vision of Europe, but their vision of Britain”

Many commentators have condemned his support for Brexit as mere opportunism, but I don’t agree. In taking this stand, he must of course have had his political future in mind. But I do think his decision is sincere, as his scathing view of Europe has old roots. Brussels often leaves a strong impression on those who become involved in European affairs. Some, like the late Lord Cockfield, arrive sceptical and leave passionate Europeans. Others are favourably disposed but leave disappointed. Nothing of that sort seems to have happened to Boris. As the person who led the work of the European Commission on the single market, I strongly resented some of his pieces, such as those on euro-standard condoms or the threat to Britain’s prawn cocktail-favoured crisps. I soon realised it was useless trying to explain to him that these stories were all rubbish; he knew it, but he was merely expressing his contempt for a construction he didn’t care to understand.

Boris says that he loves Europe and Brussels, but his ‘love’ reminds me of the condescending British aristocrats who in the 18th Century took a grand tour of the continent, daydreamt in front of old ruins, enjoyed the music, acquired a few paintings by the great masters and went home ever convinced that they should keep their island politically disengaged with the continent. So his position is hardly surprising. The Boris ‘manifesto’ in the Telegraph is long and convoluted, strangely so for such a sharp mind. Perhaps this was because he wanted to introduce an element of intellectual sophistication to a side of the debate that is frequently accused of offering nought but an expression of guts feelings. He must know, though, that a referendum is to a large extent a matter of guts, and his bet may sadly be the winning one.

“Self-delusion is not the stuff with which greatness is made”

Maybe the problem with the Brexit supporters is not their vision of Europe, but their vision of Britain. Many that I have met are little Englanders with the imperial dream of the country ready to defy Napoleon, Hitler and the entire world, for they dislike the Americans as much as they dislike us. For them, forty years of involvement with the continent has only been a source of endless compromises, and they hate compromises when the foreigners happen to be in a stronger position. One could respect, even admire, them if it wasn’t for their blind complacency about the state of a country that no longer rules the waves, or indeed anything else. Self-delusion is not the stuff with which greatness is made.

If the British vote to leave the EU, we on the continent shall feel regret not only for the turmoil that follows, but also because we shall lose the contribution of the best diplomatic service in Europe and possibly the world. All we can do is tell Boris Johnson that if he loves Europe, as he claims, we in turn love Britain: the country with a splendid past and an uncertain future at best. The continent does not only love Britain for its historic democracy and all that, but also for the legacy of the Beatles, the Stones and others among the best musicians of recent times. Incidentally, they were not upper class at all.

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As Barack Obama brought the recent US-ASEAN summit in California to a close, the US President explained how the two sides had advanced their ‘shared vision of a regional order where international rules and norms, including freedom of navigation, are upheld and where disputes are resolved through peaceful, legal means.’ His implicit reference to the South China Sea was no less than a declaration that the United States will not stand idly by as China unilaterally changes the maritime order. Such a statement has only strained tensions further.

It’s no surprise there are anxieties about the dispute in South China Sea; the stakes are very high. Though unlikely, the global economic chaos created by a war in East and Southeast Asia would be unimaginable, and would result in decades of human tragedy. Even a brief conflict could bring world trade – 50% of which passes through the region – to a jarring halt. To many in Washington and Beijing, the South China Sea dispute has become a proxy battle for influence over Asia. But ASEAN, arguably the world’s second most successful regional organisation after the European Union, has a pivotal role to play in this contest. It will take careful engagements from all three parties to resolve the disputes peacefully. Ultimately, the South China Sea dispute presents these players with three distinct tests, on the rules and norms, on resource management and an operational test.

“America’s credibility in advocating freedom of navigation and the law of the sea is reduced when Washington itself refuses to be party to the convention”

The rules and norms test requires that China respect international law when addressing the South China Sea dispute. As a peaceful and responsible permanent member of the Security Council, China – which has judges sitting in the International Court of Justice and the International Tribunal for the Law of the Sea – must not turn to the threat or use of force as a resolution to the maritime dispute. The world needs assurance that the newly-built islands in the South China Sea are not being militarised and are not to be used for power projection in the region.

The United States, which promotes freedom of navigation and adherence to global norms, must lead by example. The most effective way for the country to do this would be by ratifying the United Nations Convention on the Law of the Sea (UNCLOS). America’s credibility in advocating that nations abide by the principle of freedom of navigation and the law of the sea is reduced when Washington itself refuses to be party to the convention. The deteriorating situation in the South China Sea provides a much-needed push for the United States to get its act together.

ASEAN members involved in the dispute must also shore up the importance of rules and norms – smaller nations dealing with larger ones must rely on international norms and rules to advocate for themselves. To accomplish this, parties in the South China Sea dispute that have not done so need to streamline their claims under international law. They must clearly state the features, the names, the exact location and the legal basis of their claims. Practices incompatible with UNCLOS, such as Vietnam’s excessive baselines, need to be ended.

“The six countries of the Coral Triangle Initiative have demonstrated that collaboration is possible without having settled maritime boundaries”

The resource management test requires the individual claimants themselves, the greater ASEAN community and possibly the United States to collaborate on the conservation of marine resources in the South China Sea. The absence of a regional fisheries management organisation in the disputed area has led to there being no information on the depletion of fish stocks or the deterioration of the sea’s health. This could lead to food insecurity, increase the poverty of coastal communities and increase illegal, unreported and unregulated fishing.

While the idea of joint development of mineral resources is wishful thinking, the six countries of the Coral Triangle Initiative – two of which, Malaysia and the Philippines, are South China Sea claimants – have demonstrated that collaboration to manage the health of the largest coral reef on Earth is possible without having settled maritime boundaries. The security, safety and environmental management of the Straits of Malacca and Singapore do not require a definitive maritime boundary or even the successful settlement of sovereignty disputes.

“No one country can handle the myriad of global threats or the burden of international order”

The operational test requires the United States, ASEAN and China to devise a mechanism to reduce the risk of collision or conflict at sea. The ASEAN Defence Ministers’ Meeting would be an excellent platform to establish a practical mechanism aimed at defusing tensions, preventing escalation, managing maritime emergencies and increasing operational safety. The three parties could establish sub-regional naval collaboration for joint exercises and joint operations other than war to create, strengthen and maintain trust. The sharing of experiences in regional maritime law enforcement could also create the needed trust.

Each of these three tests will need to be passed by all those involved if they are to avoid the South China Sea dispute becoming an historic tragedy. No one country can handle the myriad of global threats or the burden of international order by acting unilaterally; not even the collective power of the five permanent members of the Security Council can do so. International challenges require international cooperation and solutions.

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At the height of last summer’s refugee crisis, people across Europe took many personal actions to help. They donated food, blankets and sanitary products to those in need on our doorsteps. Uber drivers, for instance, offered to pick up items for free through UberGiving. Such was the goodwill that aid charities in Brussels even asked people to stop donating clothes, as they could not be sorted fast enough.

Since then, the conflation between economic migrants and refugees has raised questions about how public services can cope, how housing can be found, and how people fleeing to Europe can be better integrated into our communities. There are of course some actions that the state can take, but far more effective will be the thousands of initiatives taken at the community level. If we want individuals and communities to reach out, though, governments should begin by restoring some of the confidence and trust that has been lost.

I fear that many people across the EU have grown more sceptical of refugees following the Paris attacks in November and the crimes that took place in places like Cologne on New Year’s Eve. It is sadly inevitable that the acts of a small number of people are seriously harming the perception of the majority of refugees. In addition, a failure to properly process asylum applications to distinguish between genuine refugees who deserve our help and economic migrants who should be returned to apply through legal migration channels is leading us to struggle. If we can restore trust in the system, so that the people coming to Europe are bona fide refugees, and not a free-for-all of anyone prepared to risk their life, then I believe individuals and communities will want to do more to help.

“Impassioned individuals and grassroots charities are often far better able to understand local problems than top-down state programmes”

I have long been a passionate believer in non-state solutions to poverty. Impassioned individuals and grassroots charities are often far better able to understand local problems than top-down state programmes. In helping to solve some of the big challenges created by the refugee crisis, there has been a lot of talk about grand integration schemes or skills programmes, yet politicians often fail to see the good work already being carried out by charities who might just need a helping hand.

Take housing as an example. The International Federation for Housing and Planning has highlighted that many EU states face housing shortages, especially in the social and affordable sectors of the market. European governments in many cases are too financially stretched to afford to build houses. In addition, we must avoid the ‘ghettoisation’ that resulted from previous state programmes to build mass housing estates. While there may be vacant properties away from population centres, accommodating newcomers in remote areas does not help integration and may lead to stigmatisation.

Non-state solutions, though, are emerging readily. In a number of countries, we find that platforms similar to AirBnB are being used to connect refugees with people offering a home. In Germany and Austria, the platform called ‘Refugees Welcome’ has helped to place refugees in people’s spare rooms, giving them a host family. Of course, there are also good cases of the state providing assistance, such as the local authority of Solna, north of Stockholm, which has an initiative connecting minors with foster homes. Businesses have also helped. Nordic Choice Hotels, one of the largest chains in Scandinavia, have offered 5,000 free nights to refugees. Not a permanent solution perhaps, but it is a far better solution than the alternative of spending a night without any accommodation.

“We must avoid the ‘ghettoisation’ that resulted from previous state programmes to build mass housing estates”

Refugees may be lucky enough to receive housing from the state, but they cannot be given a sense of belonging by the state. That comes from being given a purpose. Projects like CUCULA, the Refugees Company for Crafts and Design, in Berlin claim to do something ‘together with’ refugees, not simply something ‘for them’. In their workshop, they teach refugees how to make furniture, and other skills. The furniture is sold, and the proceeds go towards further training and language classes.

When it comes to different cultures, we need to understand each other better. EU forums on intercultural dialogue that bring together an Imam, a Bishop and a Rabbi are better than nothing. But the best intercultural and interfaith dialogue I experienced was in my school playground, where I had friends of various faiths and of none. Through sharing our experiences and asking questions, we found out far more about each other. It is wonderful to see my children enjoying a similar experience in their playgrounds today. Projects like United Invitations have been created to achieve something similar by enabling people to host a dinner for one or two immigrants or refugees so they can come over for food and a conversation. I have always thought that the greatest cause of our problems in this world is that we do not seek to understand different points of view, so why not bring people in and talk to them?

As an MEP for London, one of the best parts of my job is being able to champion the charities and local community organisations across my home city. I work with anti-radicalisation charities like Tuffs, which uses football to prevent potential Daesh targets from being radicalised. I work with jobs clubs that don’t want a hand out from the state, but maybe an old computer that a company is throwing away. I help a charity called The Feel Good Bakery which turns ‘dope dealers into hope dealers’ using the skills that drug dealers often have in building supply chains and developing a customer base to sell sandwiches! All of these projects do fantastic work without state funding, and as politicians we should do all we can to promote their work, to connect them with people who can help them grow, and to rely on their ingenuity to find solutions.

“The best intercultural and interfaith dialogue I experienced was in my school playground, where I had friends of various faiths and of none”

Rather than complaining or waiting for the government to do something, it is heart-warming to see the many individuals and community organisations that have opened their hearts and homes to newcomers fleeing conflict and persecution. These examples show that many people want to help those who are in genuine need and have fled for their lives. We need to get a grip on the migration and refugee crisis because the “open door regardless of circumstances” approach has undermined confidence. But let us be in no doubt that even if we return economic migrants so they can apply through legal migration channels and only resettle the most vulnerable people from the refugee camps, we will still have a large number of refugees here in need of our help. The answer is not state-built ghettos and top-down integration programmes, but community-led solutions that promote dialogue and understanding.

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Indian Prime Minister Narendra Modi’s visit to Brussels for the EU-India summit on 30th March is good news. If both sides play their cards right, the summit could pave the way for a more ambitious, dynamic and adventurous EU-India relationship.

India and the EU need a new conversation, a new focus on shared interests as well as new goals and ambitions. Above all, they need to take a fresh look at each other, replacing tired misperceptions and clichés. The summit should come up with a new EU-India action plan which is short, snappy and action-oriented.

With growth rates of 7.5% according to the World Bank, India now has a more dynamic economy than China. The EU, for all its current malaise, has an interest in exporting and investing more in India and has the technology India needs for its modernisation drive. Above all, opening a new chapter in relations means moving to a ‘beyond trade’ agenda.

“India now has a more dynamic economy than China”

Modi’s high-profile visits to Britain, France and Germany show his focus on national European governments over contacts with the EU. Meanwhile, Europe has spent more time and energy on building a strategy for China than on constructing a stronger relationship with India.

Now it’s time for a more serious conversation on refugees, peace and security in Asia, Africa and the Middle East. Terrorism and the threat from ISIS are a common concern. In other areas, the focus must shift to a more practical, pragmatic and operational agenda which seeks to find common ground between Modi’s aspirational modernisation drive and EU initiatives to boost growth and jobs.

India’s new economic programme opens up fresh avenues for increased EU-India synergies that go beyond the two sides’ traditional interaction. This could include cooperation in areas where both sides have a strong economic interest such as infrastructure investments, sustainable urbanisation, renewable energy, innovation and synergies between “Digital India” and the EU’s agenda for a Digital Single Market.

Still, trade matters and negotiations on the Bilateral Trade and Investment Agreement (BTIA) or free trade agreement, under negotiation since 2007, need to restart. If some of the key blockages that brought the talks to a grinding halt in 2013 can be removed in time, the 30th March summit could mark the relaunch of the BTIA negotiations.

“Opening a new chapter in relations means moving to a ‘beyond trade’ agenda”

So far, however, the talks have been like an unending obstacle race, with new problems emerging at every twist and turn. The EU wants a reduction in India’s tariffs on cars, wines and spirits and a stronger regime for the protection of intellectual property. India is unhappy about EU restrictions on temporary movement of skilled professionals and wants data security status so that the thriving IT sector can do more business with European firms.

Such horse-trading is important and Modi and his EU counterparts must give the trade negotiations a much-needed push. But, as John Lennon sang to Yoko Ono all those years ago, having allowed their relationship to stumble and falter, it’s time that India and the EU agreed to start over.

• Friends of Europe analysis ‘MODI’S ENERGY REVOLUTION – High hopes and daunting challenges’
• Europe’s World ‘India and Modi: it’s time to start over’
• Debating Europe How can Europe and India strengthen their relationship?

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Old definitions of power and security are no longer valid in a globalised and connected world. Previously neglected actors contribute to international political processes and wield the power to disrupt agreements imposed from the top. Rather than merely consulting these individuals and groups, 21st century diplomacy must embrace the collective wisdom to establish more stable and peaceful international relations.

Power has long been based on the number of available guns, missiles, aircraft carriers and the strength of armies. Security policy was decided behind closed doors by serious-looking men in suits or uniforms using acronyms and intricate lingo. Now with cheap, instantaneous communication even in remote regions and live reporting on events via news websites and blogs, this is no longer the case.

“Gone are the days of top-down arrangements”

In today’s multipolar power structure and globalised world economy, security is as much about renewed tensions between NATO and Russia or the ongoing fighting in Syria as it is about cyber warfare, climate change, pandemics and migration. Access to natural resources, not least water, will shape the conflicts of the 21st century. Global warming is already giving rise to tensions in the Arctic, while natural disasters of increasing intensity are escalating pressure on local, regional and national first-responders as well as on NGOs. Climate change is exacerbating existing threats, and requires decisive changes in how political leaders tackle the subject and how governments and organisations manage risk. Military and civilian infrastructure (power grids) are vulnerable to cyber attacks.

The goal of security policy must be to create resilient societies, able to withstand disaster, foreign propaganda or radicalisation, while the disastrous effect of pandemics on international security, societies, political systems and economies has yet to be fully comprehended. Demographics and migration must be looked at on a global scale, avoiding the inconsistent and poorly coordinated reactions that have characterised most European nations’ response to the refugee crisis.

Security will require not only whole-of-government but whole-of-society approaches. Our 21st century security will be inclusive, or there will be no security at all. Gone are the days of top-down arrangements; local, regional and national authorities must work closely with international organisations, NGOs and civil society organisations. The 2015 Nobel Peace Prize anchored the recognition of non-governmental actors in peace processes. The empowerment of citizens through social media initially had a positive impact in enabling the Arab spring uprisings, but the fallout turned out to be messy and dangerous.

“Citizens must be listened to, inspired and empowered to develop and be part of creative solutions”

I will not join the chorus of those prophets of doom heralding a dark age of chaos. The radical changes in who contributes to the global security discussion, who decides and who is held accountable are achievements of recent years. More women are now at the table as well as on the frontlines. The aspirations of youth are being heard, as are their ideas for a more stable world. The rise of regional actors including Iran and an increasingly assertive China may seem threatening but will keep established world leaders on their toes and force a rethink of the global security architecture.

Our 21st century security requires a new type of leadership with vision, courage and tenacity. Citizens must be listened to, inspired and empowered to develop and be part of creative solutions that can bridge divides durably. As the European Union leads consultations on a new Global Strategy, NATO is gearing up to its next summit in Warsaw and the debate on reforming the UN Security Council rages on, it is time for a global conversation on security.

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Following his ‘victory’ in Brussels, UK Prime Minister David Cameron explained outside 10 Downing Street that ‘our plan gives us the best of both worlds.’ This plan not only underlined Britain’s special status, but also that in a reformed Europe, Britain would have ‘full access to the free trade single market, bringing jobs, investment and lower prices.’ The Prime Minister argued that his newly obtained special status meant that ‘we will never join the euro, we will never be part of eurozone bailouts, never be part of the passport-free no border area or a European army or a European super state.’

Crucially, Cameron argued that ‘leaving Europe would threaten our economic and national security.’ Indeed it would. For that reason, it is remarkable that his continental colleagues did not say to him, ‘Dear David, as leaving the Union threatens Britain’s security, we are not willing to discuss a new deal. This is your problem. Full stop.’ As the final deal provides a step towards the European Union’s gradual disintegration, this would have been a better strategy for the Union as a whole. For Cameron, explaining that leaving the Union threatens Britain’s economic and national security would have been a far better strategy than a symbolic deal that cannot for its contents be defended.

“A ‘Leave’ vote suggests that the disintegrated British Empire is still ruling the globe”

Why has Cameron put Britain’s national and economic security at risk? First, for historical, cultural and geographical reasons, the British have always considered themselves special. Second, a ‘Leave’ vote suggests that the disintegrated British Empire is still ruling the globe. Less than a hundred years ago, the British Empire covered a quarter of the globe’s total land area. Beginning with the very costly Boer Wars in the late 19th century, the British saw their position erode. By the start of the 20th century, the United States had begun to challenge Britain’s position. Two world wars brought the British Empire to the verge of bankruptcy, starting the process of decolonisation. What remained was a United Kingdom and a Commonwealth of Nations, a free association of independent states. Now, the United Kingdom itself is under threat. A ‘Leave’ vote will trigger a new debate on Scottish independence. What is left of the British Empire will be a rump state England.

Third, as the British think they are special, they tend to ignore the new geopolitical realities. Until recently, the rise of the United States compensated for Britain’s loss of global influence. But the power of the West as a whole is eroding, leaving nothing to compensate for Britain’s further loss of power. Britain outside the EU could focus more on the Commonwealth of Nations, especially India. But apart from having a seat at the United Nations Security Council, Britain – or the United Kingdom of England, Wales and Northern Ireland after Scottish independence – has little to offer.

“Almost all studies on the economic consequences of Brexit indicate a net loss to the British economy”

Feng Zhongping, the Assistant President of the China Institute of Contemporary International Relations, has argued that ‘from China’s point of view, we don’t think that the UK, or France, or Germany or any single European country can play a global role. But the EU is different. It is the biggest market, and China’s biggest trade partner. The EU is seen as a major power in the world. If the UK left, it would hurt the UK much more than the EU.’ Feng is right.

Due to budget cuts, the Falklands War of 1982 is a naval operation that cannot be repeated. The Iraq War of 2003 already demonstrated that Britain lacks the capabilities for credible expeditionary warfare. In addition, Brexit will most likely lead to economic stagnation. Almost all studies on the economic consequences of Brexit indicate a net loss to the British economy. As the global economy stagnates and the coming internet-of-things revolution has a negative impact on employment figures, the possible economic gains of a Brexit are likely to be nullified.

A vote to leave the EU threatens Britain’s economic and national security. As David Cameron pledged to hold the referendum during his electoral campaign, Brexit shows again that politicians are willing to put national security at risk for electoral purposes. Cameron can still win the referendum. But as Britain’s former Minister for Europe, Denis MacShane, rightly observed, no major referendum on Europe anywhere in the last 15 years has voted in favour. This is a sobering thought.

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The ‘Brexit’ debate has taken off in the UK in the ten days since David Cameron got his new deal at February’s European Council summit, with daily media coverage and social media from both sides swinging into gear. How the debate, and the polls, will evolve over the coming four months is unclear but so far various paradoxes are emerging.

1. Mainly an intra-government debate
To all appearances, media coverage to date suggests that the Brexit debate is essentially only a debate between two different camps in the Conservative government: a debate between mild eurosceptics in the British cabinet, including the Prime Minister, against a half dozen strong eurosceptics also in the cabinet.

The arguments between these two camps have already covered: conflicting views over the economic costs and benefits of EU membership, the legally-binding nature of Cameron’s EU renegotiation, how long it would take to establish a new UK-EU relationship after Brexit, whether there could be a second referendum, and an on-going row over whether Brexit-supporting ministers can see government papers pertaining to the referendum. Other debates are rumbling on about how long Cameron will stay as Tory leader, even in the event of a vote to stay in the EU.

The fact that this is a debate concerning the whole of the UK – all political parties and the UK public – is not one that is obvious from media coverage so far. Somewhat bizarrely, Cameron is also reported to be asking big business and big banks to hold back from expressing their support too strongly.

2. Labour voters are vital but Corbyn is absent
While Tory voters are, according to polls, broadly split on staying in or leaving the EU, Labour voters are more strongly in favour at a level of around 60%, as are the much smaller number of Liberal-Democrat supporters. Keeping Labour voters’ support and getting them to turn out on the day (so far polls suggest ‘leave’ voters are more likely to turn out) is crucial for the ‘remain’ side to prevail on 23rd June.

Yet Labour’s leader, Jeremy Corbyn, has been more notable by his absence from the debate so far than for any strongly argued speeches in favour of the EU. When Corbyn does comment, it seems so far to be more to criticise Cameron than to make strong pro-EU statements.

Labour has launched its own pro-EU campaign led by former cabinet minister Alan Johnson, but he has so far had rather little presence in the media. While Labour grassroots supporters are already campaigning, whether Corbyn will start to make a strong case for Europe – having long been seen as more eurosceptic than supportive – is an open question. Cameron, meanwhile, is reportedly wondering how and whether to make a pitch to Labour supporters on the EU.

3. Only the Scottish leader is making a genuinely European argument
Ironically, in Corbyn’s absence, the only really visible opposition leader making the pro-EU argument for the UK is the pro-independence Scottish First Minister, Nicola Sturgeon.

In a wide-ranging speech on 29th February, Sturgeon showed that she is a genuine European, concerned about the big challenges facing the EU, from the failed and failing austerity policies of the eurozone to the lack of solidarity, compassion and strategic leadership over the refugee crisis. Sturgeon’s speech combined a constructive critique of the current EU crisis with a set of social, economic and political reasons for staying in the EU.

It was the sort of speech that Cameron will not give, determined as he is to focus on the ‘special treatment’ he got for the UK, and on the economic case for remaining in. It was also the sort of speech Corbyn should give but seems unwilling and unable to.

4. The ‘Out’ side have momentum but are split
The opinion polls range from significant leads for the ‘remain’ camp – especially in phone rather than internet polls – to many suggesting the two sides are very close; the most recent poll of polls from NatCen puts it at 51% for remaining in, 49% for Brexit.

The ‘out’ side, as has been widely acknowledged, tend to have more passion and emotion. Yet for now, the ‘leave’ side remains split into two main camps: ‘Leave.EU’ supported by UKIP leader Nigel Farage, and ‘Vote Leave’, supported by UKIP’s only MP, Douglas Carswell, and also by Boris Johnson amongst other Tories.

Whether these two sides will resolve their split, and which will be recognised by the Electoral Commission as the lead campaign is unclear. The split will undermine coherence in ‘leave’ arguments and campaigning, though how much this will impact on the polls is unclear.

5. The Referendum won’t resolve Tory splits over the EU
It is widely acknowledged that David Cameron called the referendum in an attempt to handle the continuing split in the Tory party over Europe. Yet the referendum, whatever the outcome, looks like doing no such thing.

A vote to leave would probably be quite close and, in the face of ‘remain’ votes in Scotland, Northern Ireland and possibly Wales, would unleash a political and constitutional crisis across the UK. Whether the Tory party would split at this point is an open question. A vote to ‘remain’, unless it is of the order of 60%:40%, is unlikely to resolve Tory divisions on the matter and will leave an embittered party and a split cabinet.

6. Only the SNP are visibly contingency-planning for Brexit, yet ‘indyref2’ is not guaranteed
With a Brexit vote a possibility, contingency planning – both for the immediate days after such a vote and for the months ahead – would seem vital. Yet any such planning is clearly being kept closely under wraps for now, and civil servants appear to have been told not to do any such planning.

Nicola Sturgeon has said a ‘leave’ vote would make a second independence referendum, ‘indyref2’, almost a certainty, and it is clear the SNP are doing some behind-closed-doors strategising. Yet whether the SNP moves rapidly to a second referendum in such circumstances will depend on how much the polls shift towards support for independence, and on the evolution of the resulting political crisis in the UK after a Brexit vote.

For now, what Cameron or Corbyn would do in the face of a Brexit vote is quite unknown. Cameron would surely have to resign, opening the question both of who would be the new Tory leader, and what sort of future relations with the EU the Tories would argue for. Corbyn – and Labour – will also need to have a political position on what comes next, including on Scottish independence, yet if such planning is under way inside Labour, it is well hidden.

An evolving debate
The UK referendum debate has several months to go. If the paradoxes outlined here remain, it will be a debate where pro-EU political, rather than economic, arguments get little attention, and it will be a debate dominated by a split governing party with Labour struggling to be heard. Even a split ‘leave’ side can only benefit from most of these paradoxes.

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With Europeans agonising over the British EU referendum, or appalled by the US primary spectacle, there has now been a poll to bring some good news: Iranian citizens have largely backed the government led by the moderate president Hassan Rouhani, vindicating his approach to mend international ties. This provides new momentum to EU-Iran relations, but Brussels and member states should continue to tread with caution.

The twin elections for a new parliament, the Majles, and the Assembly of Experts, which will elect a new Supreme Leader once the current officeholder, Ayatollah Ali Khamenei, passes away, in effect became a referendum on the nuclear deal concluded last July. In both bodies, so-called moderates and reformers prevailed over conservatives and principalists. Thus, not only has Iran so far complied with its obligations under the Joint Comprehensive Plan of Action (JCPOA), facilitated by EU High Representative Federica Mogherini, but Iranians have reconfirmed their support for the deal’s on-going implementation.

“The election – which saw a turnout of nearly two-thirds – signalled overall popular support for the Islamic Republic”

But this was no landslide victory that will profoundly change the country. First of all, exact numbers for each camp are still hard to give due to some outstanding runoffs and generally weak – or non-existent – party allegiances. More importantly, though, ‘the system’ under the leadership of Ayatollah Khamenei will continue to balance the various political factions of the country to maintain national unity. In a way, the election – which saw a turnout of nearly two-thirds, also signalled overall popular support for the Islamic Republic, reassuring the Supreme Leader himself, who had carefully put himself behind the nuclear deal.

For Europeans hoping for a continued rapprochement with Iran, the result is of course good news. Yet no one should get overexcited about an imminent ‘normalisation’ of EU relations with the country. Even if EU officials can now dust off their decade-old plans for a trade and cooperation agreement with Tehran, which were shelved when Iran’s clandestine nuclear activities were revealed in 2002, it is useful to recall how tense relations were even at that time.

“Iranians are all too aware of what has happened in other countries in their region once ‘regime change’ became a reality”

In the short history of the Islamic Republic, Iranians have experienced a devastating war in the 1980s, a gradual recovery throughout the 1990s, an ultimately unsuccessful attempt to reform the system from within around the millennium as well as years of populism, mismanagement and corruption until 2013, interspersed by the violent suppression of the ‘green’ reform movement. By using the very circumscribed means of democracy at their disposal – the hard-line Guardian Council barred hundreds of reformist and moderate candidates from running in the elections –, the people have signalled that they prefer a change within the system rather than a change of the system. Iranians are all too aware of what has happened in other countries in their region, from Afghanistan to Iraq and Syria, once ‘regime change’ became a reality, or at least a distinct possibility.

The road to change in Iran is thus still long, and Europe has only very limited influence on events there. In the short term, there will be no major improvement of the human rights situation in Iran, nor will Tehran easily make peace with Syria. Europe can and should continue to raise these issues, but should focus most on where it can achieve more: kick-starting Iran’s economy, because the country wants and needs cooperation. Instead of allowing a free-for-all, the EU and its member states should accompany the market opening by pressing for transparent rules of the game, including through any partnership agreement.

If those citizens who voted for moderate change are to feel any positive effects of a warming of relations with Europe, the latter cannot limit itself to trading with Iran while making political charades about the lack of domestic freedoms. Instead, it is where rights and business come together that an EU built on both the rule of law and economic cooperation can have the biggest impact.

IMAGE CREDIT: CC / FLICKR – European External Action Service

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