José Manuel Barroso: Why is Britain so closed to the EU?

Britain will be reduced to the role of a “Norway or Switzerland” in Europe if Eurosceptics push us into leaving the EU, warns the president of the European Commission, talking to David Miliband.

José Manuel Barroso, president of the European Commission. Credit: Dan Murrell

For 40 years, Europe has been the future. But the eurozone crisis has been an unmitigated disaster for Europeans, and especially for pro-Europeans. It has brought to the surface political, economic and cultural divisions that were buried in the good times. And it is not yet solved.

Hence the Eurosceptic claim that, far from being the future, Europe is the past: economically sclerotic, socially unstable and politically undemocratic. Britain is left in no-man’s-land. The Prime Minister does not want to lead Britain out of Europe, yet he will not defend it. So he tacks towards the sceptics in his own party – most recently in his musings about a referendum on British membership of the EU – without embracing their demand for exit. His positioning makes the situation worse. Far from satiating the Eurosceptic beast, he feeds its appetite.

This is a good time to seek answers from the president of the European Commission. If European countries, including Britain, are not to be left behind in the new Asian century, the EU is going to have to be part of the solution, not the cause of problems.

David Miliband It’s eight years since you arrived in this building [in Brussels]. You arrived at the time of boom, good times. Now it’s a really tough time. What’s your reflection on eight years?

José Manuel Barroso Never a dull moment, I can tell you. In 2009 when I was re-elected Commission president, [it was] one of those defining moments of European integration. Either we advance, and recognise that now we are in the age of globalisation we have to do things together, or we run the risk of strategic irrelevance, fragmentation and not counting more in the world, not being able to defend our values and also to protect the interests of our citizens.

Just to give a concrete example: very recently I was at the G20 summit in Los Cabos in Mexico. It was quite interesting to listen to the American president, the Chinese president, the president of Brazil. The basic message they were sending to us was: please go further in your integration.

DM I can imagine G20 leaders saying to you, “Go further, make the integration work.” Don’t they also say to you, “What have you Europeans been doing for two years?”

JMB They were so polite, not [saying] this specifically. But in fact, many of them think along those lines. That is why we also had to explain very clearly what is at stake and recognise that yes, we have some unfinished work regarding the euro area, because we have created the monetary union, but without all the instruments that should be there to support a common currency. I regret that sometimes our member states take too long but that is of course because of the democratic nature of our systems. We are a union of 27 democracies.

DM The governor of the Bank of England said there is “a great black cloud of uncertainty hanging over the global economy”. Do you agree with that?

JMB Usually I don’t comment on comments of others. My position is that there are still some problems in the euro area. It’s fair to recognise them. I hope that now member states fully understand these concerns and are ready to make the next steps. Indeed, the Commission has been proposing, and in the last European Council it was broadly accepted, [we need] the principles of a banking union, afterwards a fiscal union, and further steps for what you can call a political union. I believe this is indispensable for the common currency. So at the same time as we have short-term stabilisation measures, and we are working on them, we give the so-called markets and investors an assurance regarding the determination of the member states of the euro area to sustain its currency.

DM The markets don’t seem to believe the commitment. I mean, yield rates for Spanish and Italian bonds are higher now than before the summit. Why do you think that is?

JMB I think it was once again a problem of management of communication after the European Council. [There was] some contradiction between the statements made by the European Council at head-of-state level and the ministers of some of our governments.

DM You’re saying there are no circumstances in which a country could drop out of the euro?

JMB I’m confident that it will not happen.

DM Let’s look at one important part of what people perceive to be a banking union, which is some form of debt mutualisation.

JMB Look, the point is the following: we are in favour of the mutualisation of debt. This will be indispensable if you want to keep a common currency. The reality is that this is not feasible immediately. We have to create the conditions for this to happen.

DM A last point on the euro crisis itself. The argument that all that’s been done so far is “kick the can down the road” gets force because the problem seems to be getting bigger, not smaller. Do you accept that the problem is a bigger one than it was two years ago?

JMB I think that if we had had quicker decisions, more robust ones, we could have avoided these negative developments, yes.

DM Has the eurozone fleet been going at the speed of the slowest? Is that the problem?

JMB Yes. But that’s the condition of making decisions among member states. That’s one of the reasons we have advocated the need for more integrated decision-making. And in some areas it was accepted, but not in others.

DM Isn’t the problem that the economics, the technocracy, is pointing towards more Europe, more integration of decision-making at European level? But the politics is pulling towards more local decision-making?

JMB That risk exists. But one of our tasks as a political leadership is to make possible what is necessary. And I think it is necessary to go that way. For instance, the Irish people have accepted an unprecedented level of discipline and convergence in a treaty at European level. Why? Because they understood clearly that the other options were much worse for them . . . It is in times of crisis that people are ready to accept [the need to] change.

DM Notwithstanding the Irish referendum result, it must worry you that there are fringe parties on right and left in a growing number of European countries which are arguing basically an anti-European case.

JMB Yes, of course it worries me. I’ve already stated in the European Parliament that we should not forget that there are old demons in Europe – extreme nationalism, populism, xenophobia. You see in times of crisis that extremist forces, populist forces, have a better ground to oversimplify things and to manipulate feelings. Feelings of fear. Especially when there are problems of unemployment, particularly youth unemployment.

But once again, let’s be fair in our analysis: it’s not just a problem of the euro area. In some of the most advanced economies there are some reactions against globalisation and people have doubts about the future. And this is the most fertile ground for this kind of populism. That is why I am asking all leaders to show leadership.

DM Haven’t pro-Europeans like you and me failed to develop a compelling enough story about what modern Europe is about? We know that for our parents’ generation the story of Europe was the story of peace after tragedy and terror. Today the binding idea of Europe seems much less clear. What’s your binding idea?

JMB I agree. Let’s be frank and honest. Not everything in Europe is well. There are many things we can do better.

The new narrative for Europe should be about the need to have a responsible organisation, the need to be able to defend our interests and promote our values, like human rights. In the 21st century, this has not yet been able to mobilise people’s minds and hearts.

What I want to underline – and this isn’t a way of escaping my own or the Commission’s responsibility – is that, for this to succeed, it has to be done also with leaders at national level. We have to . . . make the case for explaining in a rational – but at the same time passionate – way what we have to lose, globally. And we may be in the margins of irrelevance if we don’t do things together. 

DM That’s an important phrase – “the margins of irrelevance”.

JMB Yes. That’s the danger. Where we are not united, where we have 27 different national policies, we don’t count. Or we count very little.

DM Let’s talk about the UK. The debate in the UK is often about these “monsters in Brussels” who want to take more power from Britain, or dominate decision-making. I wonder if you would echo my experience, which is that other Europeans don’t just want Britain to play a leading role in Europe, but they think Europe is better off with Britain playing a leading role.

JMB I really think that. Probably rightly, I’ve been called an Anglophile. I believe that Europe without Britain at the heart will be less reform-driven, less open, less an international Europe. That is why sometimes when I look at the debate in the UK, I ask myself: “How is it that this country is so open to the world, and apparently so closed to Europe?” It seems a contradiction.

DM The debate inside the Conservative Party is now in some ways framed by the former defence minister Liam Fox, who said there should be “no terror” for Britain in leaving the European Union. What do you think life would be like for Britain outside the EU?

JMB I will not comment on internal political matters, partisan matters of Britain. If and when there is a kind of revision, that’s up to the British to decide. What I can see from Brussels is that, and also from a European perspective I find it a little bit ironic that, some people are suggesting for Britain a role comparable to that of, say, Norway or Switzerland. Norway and Switzerland are two marvellous countries I very much admire – the most advanced countries in the world, in fact, with great qualities of life. But I think Britain is expecting a bigger role in the world than small countries.

The fact that some are suggesting for Britain a role that is smaller than the one Britain already has today seems to me a little bit curious. When the Prime Minister of Britain meets the president of the United States, or the president of China, he has much stronger status and much stronger leverage because everybody knows that Britain is a country that is very influential in the shaping of Europe as the biggest integrated market in the world, the first economy in the world, the biggest donor of development assistance in the world . . .

DM So, in your estimation, the leaders in China have an enhanced relationship with Britain because they’re in the European Union?

JMB I’ll put it frankly – Britain has more influence in China than Norway or Switzerland, with all respect for the other countries. One of the reasons being that everyone in China knows that Britain is a decisive voice in European policy and that it is much bigger because of its influence and its leverage. And by the way, there is today, if you look at the last few years, not a single policy of the European Union that has not been agreed with British involvement, including in some areas where the British position is not always in, let’s say, full agreement. On all those issues the British positions have been very well reflected.

DM People say Norway gets the trade benefits without any of the burdens. Could you explain to a British audience that Norway, by embracing the single market, embraces a whole range of social and other policies, too?

JMB Norwegian legislation is more in conformity with the rules of the European Union than most member states. So they are accepting the conditions. In fact, the difference is that they don’t vote when we make legislation.

DM Do you know of any other countries, other than Britain, which are seeking to repatriate powers at the moment?

JMB There is no explicit request of this from other countries as far as I know, even if the debate is also on in some countries.

DM Moving on . . . What’s going to happen first, Britain embraces the euro, or Germany embraces eurobonds?

JMB [laughs] Interesting question. If you want my honest answer, Germany embracing eurobonds.

DM And Germany will certainly embrace eurobonds before Britain leaves the European Union.

JMB I hope so, too!

DM Let’s just wind back to where you started, because you started by essentially saying the stakes could not be higher. That there is a fork in the road, of either a more integrated and coherent European Union, or . . .

JMB Irrelevance . . .

DM Irrelevance: I think fragmentation and irre­levance. Talk about those stakes.

JMB I’ve been saying that since 2009. Just to give you an idea, if there was by disaster a problem in the euro in terms of its sustainability, we’ll be watching not only a problem with the euro, but also most likely renationalisation of policies and indeed the break-up of the internal market. So the consequences are difficult to estimate, even if there are by the way some projections. And some independent studies, some Swiss bank studies have estimated the losses in terms of GDP for Europe [at up to] 30 per cent.

So it’s very difficult to anticipate these doom scenarios, but it would indeed be extremely negative also from an economic and social point of view. Interdependence can work for the worst – contamination, for instance, between sovereign and banks, and also between countries – but it can also work for the best if we now use this opportunity to complete the unfinished work of Maastricht, to complete the European monetary union.

A point I want to underline, though, is the following. Britain has a special position here. Because there is a legal opt-out in the treaties, when I say that we have to go further in integration for Europe I don’t mean that all the member states have to do exactly the same at the same time. And we have mechanisms now in the treaties, be it through enhanced co-operation or some properly circumscribed derogation, that can take on board concerns of, for instance, Britain, which has an opt-out from the single currency.

This is why I believe we are in one of those defining moments. I’ve used an expression before, I’m sorry to say it in Latin, but “non progredi est regredi”. I mean we are not in a position where we can simply keep business as usual. And this is also because of the market pressure we are feeling regarding the euro.

But I think apart from that there is an overall real strategic [challenge], from a geopolitical and economic point of view, which is: how is Europe going to place itself between the United States and China? We will simply not have the strength, the resources, the tools, the influence, if we are fragmented – if we want to keep our values and also to protect our interests. And this is why in the end I think the decision will be positive for Europe. I’m very confident that we are going to overcome this.

DM The question I think people have about your vision would be less about whether or not it would be nice to have [it], but more who is going to make it happen?

JMB In a union of states we need a critical mass of member states to go forward. In Europe, the European institutions, the community institutions, like the Commission and the Parliament, cannot achieve projects without the strong backing of European member states. And the reality is that, so far, this combination, this convergence, has not yet been possible – even if I believe the awareness among member states of the need to go this way is growing, in a spectacular way. Let’s see now if we can rise up to the challenge.