Why It Was Right to Allow Poles into UK in 2004

Polish Citizens and UK in 2004 Letter in Guardian 30 March 2015
Labour was right not to leave the hundreds of thousands of Poles and other eastern European citizens hidden in the black labour market after 2004 (How immigration came to haunt Labour, 24 August). Ryanair and easyJet were flying back and forth to main Polish cities well before 2004, as Poles replaced the Irish as cheaper labour, well before EU accession. The Labour government decision at the time of a booming, full-employment economy meant any incoming workers paid national and local taxes and national insurance, rented property legally, started their own small businesses such as shops, and some joined unions.
Most other EU member states which applied a seven-year transition period on labour-market access after 2004 quietly shelved it, as people could travel freely and simply worked in the black labour market. Italy and Spain have more than 750,000 Romanian immigrants, but Poles, thanks to a dense network of Polish communities in the UK since 1945, headed here. The decision not to continue the black labour market in 2004 was the right one. I sat in the cabinet committee and it is to the honour of David Blunkett and the then cabinet minister, Andrew Smith, that they opted for the sensible economic and tax-generating decision rather than surrender to populist anti-foreign prejudice.
However, what might have made a difference would have been the adoption of the EU agency workers directive, which would have stopped employment agencies coming along offering cheaper labour to firms if they got rid of staff and hired agency workers without rights. However, the Treasury opposed tooth and nail this or other measures such as social-partnership training obligations, which would have helped British workers. The awful BNP slogan of “British jobs for British workers” should have been replaced by EU workplace rights for British workers, but, sadly, the Treasury team were opposed to such measures.
Dr Denis Macshane

Is EU Right to Grant More Flexibility to France on Budget

This is published by Carnegie Endowment Europe


Denis MacShaneFormer UK minister for Europe

France compares itself with two nations in the EU. Across the Rhine, Germany. Across the Channel, Britain. In German, the word for debt and guilt is the same:Schuld. In French, as in most other languages, there are two separate words. The view that to be in debt is to be guilty belongs to Germany, not to France or Britain.

In fact, France must look with longing at the guilt-free manner in which Britain has run up debt and deficits and ordered the Bank of England to print more money under the euphemism of quantitative easing. The result is clear: the UK’s levels of growth, employment, and tax revenues are better than France’s.

With Britain decoupling from the EU’s Common Foreign and Security Policy, France now shoulders most of the burden for EU defense within NATO—unlike Germany, which spends half as much as France does, as a share of GDP, on common security and defense.

Moreover, Berlin’s vision of virtue is one in which every nation exports and enjoys massive trade and current account surpluses. But without indebted, importing nations like France, who buys German goods? The EU is waking up to the fact that bleeding a patient until he dies is not successful medicine, whatever the textbook says.

Western Europe 1945-1965, Western Balkans 1995-2015

The Globalist: 23 March 2015

The Western Balkans: Europe’s Forgotten Region
The Balkans are still posed to plague the 21st century.
By Denis MacShane

This summer sees the 20th anniversary of the massacre of Srebrenica. Eight thousand Europeans were taken outside, their hands carefully tied behind their backs and Serbian soldiers shot them all in cold blood.
The mass graves had been dug, the exact amount of ammunition to carry out the executions given out, and food and drink brought for the soldiers carrying out this mass murder.
It was the worst single massacre by armed security forces of unarmed prisoners since the days of Katyn or the mass killings by Germans in World War II.

Twenty years after 1945, Germany was at peace with its neighbors, had normal diplomatic relations with the countries it once occupied or had annexed like Austria, and was at the heart of both NATO and the European Economic Community.
Thanks to bold political leadership, the dreadful crimes of 1940-1945 faded into history, even if vivid in memory. Compare the 20th anniversary of 1945 to the 20th anniversary of 1995 in the Western Balkans, the region from Croatia to Greece, where no final settlement is in sight.
Greece’s counter-productive diplomatic policy
Greece’s current Eurozone problems need no elaboration but Greece has not helped itself with its counter-productive diplomatic policy of refusing to give normal diplomatic status to its two northern neighbors, Macedonia and Kosovo.
Croatia remains plagued by accusations of corruption and clientelism. Sixty thousand Croatians took out mortgages in Swiss francs. They now face a crippling increase in repayments following the dramatic revaluation of the Swiss franc, when the Swiss National Bank decided to abolish the peg of €1:CHF1.20 at the end of January.
Bosnia remains without common state institutions, as its Serbian community in the Republika Srpska simply refuses to live jointly under a common nation-state rule with Bosniaks and Croatians.

Massive air and ground NATO intervention, following the decision of President Bill Clinton to reverse his 1992 election pledge not to get involved in the Balkans, stopped the Serbian assault on Sarajevo in 1995.
Four years later, in Kosovo, NATO planes and soldiers intervened when Serb militias ran amok in a rampage of murder and ethnic cleansing of Albanian Kosovans.
No violence, but no settlement either
But if full-on violence is a thing of the past, there is no settlement to produce open borders or regional economic integration, or to oblige nations to accept their war crimes, as Germany did after 1945.
Five European member states – Spain, Slovakia, Romania, Greece and Cyprus – refuse to recognize the independent status of Kosovo. Each may have its own reasons.
Spain has enclaves in Morocco, resents British presence in Gibraltar and frets over the idea of Catalan secession. Slovakia and Romania are angry at Hungarian insistence that Hungarian minorities owe a loyalty to Budapest, not to the nations of citizenship.
Greece and Cyprus have Orthodox Church loyalties to orthodox Serbia.
Russia and Serbia spend significant diplomatic resources trying to stop Kosovo from being recognized as a UN member state, despite 120 of the world governments now accepting Kosovo’s status as an independent nation.
Macedonia is plagued by bitter political division with credible reports of vote rigging to keep the current government in power. The idea of alternating governments or power sharing is unknown in the Western Balkans where winner-takes-all clientalist politics rules.

The only hope appears to be EU integration. Yet Serbia’s Prime Minister Alexsandar Vucic gave an aggressive interview to the Neue Zürcher Zeitung on March 10, 2015, in which he said, “We are not ready to recognize Kosovo as an independent state. I hope Brussels is not waiting for any concessions from Serbia.”
Precisely what the EU wants
Prime Mnister Vucic could not be more wrong. That is precisely the concession that the EU wants. An acceptance that Kosovo is no longer a province or region of Serbia, as the surreal Serbian constitution asserts, would prove that Serbia is serious about accepting the responsibilities of being a normal EU member state.
Vucic rejected the view that Kosovo was de facto an independent state. He showed a flash of anger that the Swiss journalists would even ask him.
Yet in the same interview, he offers no support to Serbian hardliners in Bosnia stating, “We respect the territorial integrity of Bosnia-Herzogovina with no if’s or but’s. Republika Srpska belongs to Bosnia.”
There is clearly a contradiction between Vucic telling Serbs in Bosnia that they owe allegiance to the post-Yugoslav state, but refusing to do the same to Serbs in Kosovo.
Under EU pressure, relations between Belgrade and Pristina have improved. Kosovans can now travel into and out of Serbia using Kosovo identity papers but not a Kosovan passport.
There is regular dialogue between Pristina and Belgrade. But as long as Kosovo is unable to join major international institutions like the UN because of Serb opposition, the country cannot seek investment and foreign trade as the post-1950 countries of Western Europe could.
Meanwhile, the Russians are hovering
Of course, the Serbian opposition is backed by the Kremlin, which has still not forgiven the 1999 NATO intervention that ended the power of the client Slobodan Milošević.

The Western Balkans continue to have too many fault lines – three religions with a dreadful history of war and treating other faiths as mortal enemies combine with no clear distinction between government and business, so that money-making is as important for politicians as good government.
The Greek crisis is the most visible problem plaguing Europe. Russia hovers, waiting to exploit opportunities by offering political and diplomatic support to Greeks, Serbs, and Montenegrins, as well as dangling energy and banking concessions to anyone who will switch from the EU to Putin.
Greece and Serbia could transform their negative image in the main EU capitals as well as in Brussels by promoting grown-up diplomacy and recognizing Kosovo.
There is no evidence this will happen. The 21st century will be as plagued by the Western Balkans as were the 19th and 20th centuries.
Denis MacShane is the UK’s former Minister for Europe. He is author of Why Kosovo Still Matters (Haus Publishing 2011) His latest book is Brexit : How Britain Will Leave the European Union (IB Tauris)

The Italians Book Review

Tribune 20 March 2015


Uncovering the priorities of the land that gave birth to Berlusconi

Written By: Denis MacShane

Published: March 20, 2015


I once sat at a European Council lunch – bad food, worse wine and everyone was allowed to smoke – as Silvio Berlusconi ranted on and on and on about the importance of some minor European Union subsidy for milk produced in Lombardy.

For the dodgy (that good but untranslatable English word now brilliantly resurrected by Ed Miliband to describe the Tory Party financing by tax dodgers and sleazy casino capitalists) Italian prime minister, the importance of cosseting his northern Italian cows was elevated into a central question of the very existence of Italy and the EU.

As Britain was about to bury its EU credentials by invading Iraq, Berlusconi’s insistence that cow subsidies was the most important issue facing Europe’s decision-takers seemed more than odd.

Gerhard Schröder, the German chancellor, puffed on his Havana cigar, turned to me and asked in German how long the Italian was likely to talk. “Silvio doesn’t do silenzio”,’I replied, at which Schröder left his cigar and walked out of the room in disgust at the pantomime performance of the Italian leader.

Yet Berlusconi dominated Italian politics for 20 years – longer than a de Gaulle or a Thatcher. Today a 39-year-old reformer, Matteo Renzi, is Italy’s prime minister. Berlusconi started on the left and Renzi started on the socially-aware Christian democratic right. Let us see how he does.

“It is not impossible to govern Italy, just pointless”, observes another Italian leader quoted in John Hooper’s entrancing narrative about what Italy is and who Italians are.

Hooper is a long-standing foreign correspondent for The Guardian but since that paper gave up reporting Europe, he now pours his considerable talent into this book and writing for the Economist.

For Eurosceptics, Italy should be a model for the EU. Metternicht said Italy did not exist and was merely a “geographical expression”, much as Tory-UKIP politicians today say that the EU cannot and should not exist.

But Italy has proved its nay-sayers wrong. It remains regional, with impenetrable dialects, with its football team(s) commanding more support than the army or any leader. Its politics is corrupt, but is it worse than our belief that it is OK to make money-men legislators if they pay enough to political parties? Not even Berlusconi dared put tax-dodgers into the Italian parliament in exchange for a large cheque.

Italians worship good food, good football and their mothers. There are worse priorities for a nation to have.


Brexit Book Review

This review is by former Europe Editor of Guardian, Martin Walker

Martin Walker, former Europe editor of The Guardian review’s Brexit: How Britain Will Leave Europe by Denis MacShane (17 March 2015)

Denis Macshane was the best Minister for Europe any British government ever appointed. He knows the cultures, languages and the main political and business personalities of key countries and has probably written and certainly thought more about Europe and Britain’s role in it than anyone of his generation. This book, on the serious and growing prospect of Britain leaving the EU, is a book he probably hoped he would never have to write. But the prospect of Brexit now looms before us, and the reasons why and the price that Europe and Britain would pay for a British departure have never been so thoughtfully nor so clearly explained. A passionate pro-European, Macshane has nonetheless written a remarkably fair-minded and judicious assessment that should be read not only by Britain’s political class but by every voter who can cast a ballot in what looks like an inevitable referendum.

Unpegging the Swiss France OMFIF

Stronger Swiss franc brings advantages

End of peg will reduce current account surplus and short-term capital inflows

By Denis MacShane

The mid-January ending of the Swiss National Bank’s peg of SFr1.20 to the euro resulted in the currency initially soaring to above parity, although it has now settled down at 1.06 to the euro, a more modest Swiss franc revaluation of 13% against the initial rises of over 20%. There have been predictable complaints from exporters and hotel operators, but the country has shown strong evidence of resistance to exchange rate pressures, and the move has brought some considerable advantages.

Swiss industrial output per capita is around the highest in the world, despite the franc’s roughly 30% revaluation against the euro in the three years before the peg was introduced in 2011. The strong franc is helpful for the country’s build-up of foreign holdings, for it allow Swiss companies and asset managers to buy assets more cheaply in the euro area and further afield.

Switzerland has to find some offsetting influences to compensate for last year’s referendum decision to impose quotas on immigration from the EU. The EU made clear that the Swiss cannot benefit from full access to the single market if they reject free movement of people and the rulings of the European Court of Justice. A stronger Swiss franc leading to more euro area imports into Switzerland and fewer exports will not be unwelcome in Berlin or Brussels. Germany is resisting any targeted action to bring down its unnaturally large current account surplus of 7.5% of GDP. The Swiss surplus has averaged more than 10% of GDP in the last five years. Now that exchange rates are more realistic, it should be on the way down – showing up the Germans’ lack of movement in this area.

Imports from the euro area will be cheaper. This will help sustain living standards even if jobs and wages in Switzerland’s export and tourist industries are reduced. Destabilising short-term capital inflows from the rest of the world will now be easier to control. A decisive factor behind the ending of the peg was that, despite the country’s negative interest rates, the Swiss National Bank had to raise to unsustainable levels intervention to depress the franc, buying up around SFr100bn in foreign currency in the weeks before the peg was ended.

One big impact will be felt outside Switzerland. The European and national authorities have not been able to prevent hundreds of thousands of central and east Europeans from taking out mortgages in Swiss francs which now have become much more costly. There are said to be 60,000 mortgages in Swiss francs in Croatia alone, for a total SFr3.8bn, often contracted by pensioners or those on low pay. Allowing Swiss franc mortgages to be sold to citizens who erroneously assumed the euro-franc peg would last for ever was a mark of European irresponsibility.

It is now clear that the SNB had little choice in its January decision, which has received broad support from members of the Swiss parliament, government officials and bankers. The SNB and the Swiss parliament believe that sound politics and sound money are linked. The SNB’s governing council, although it took the decision in secret, is arguably linked to a broader spectrum of Socialist and trade union relationships than seen in most central banks.

In his 1993 doctoral thesis, SNB President Thomas Jordan expressed doubts about the idea of a single European currency. As long as the euro was reasonably strong, he went along with the stability of the peg. But in recent months, as the build-up the European Central bank quantitative easing and a weaker euro gained momentum, there was only one way for Jordan to go.

Denis MacShane is the UK’s former Minister of Europe and a member of the OMFIF Advisory Board. His book Brexit: How Britain Will Leave Europe is published by I.B. Tauris

Renegotiating Europe

Negotiating Britain’s future in Europe
By Denis MacShane
How does David Cameron handle negotiations with the rest of Europe if he is returned as Prime Minister and moves towards his promised In-Out referendum in 2017? There is even talk of advancing the referendum date to 2016 though how this leaves time for serious negotiations with 27 EU member states is never explained.
Indeed, one problem is that the Prime Minister has never spelt out in terms exactly what he wants to renegotiate. He has demanded unspecified ‘treaty change’ and other senior Conservatives have called for an end to free movement of EU citizens into Britain and a return to the pre-1997 era when Britain had an opt-out from the Social Chapter.
There are also demands from business for ‘completion of the single market’ to include services. But this demand – reasonable in itself – never specifies if that includes for example the biggest service sector of the GDP – health care, or broadcasting where the NHS and the BBC will not easily be opened to full private sector competition from the rest of the EU. Speaking in London (5 February) EU Commission Deputy President, Frans Timmermanns, held up the prospect of EU-wide car insurance driving down the current excessive costs in some countries, notably the UK. But service economy sectors like insurance, pensions, even hotel standards are all part of national culture under control of national laws. Britain, for example, has never had a hotel rating system as in France. Unifying all services under a single EU regime is an ambitious project but not likely to be achieved within 24 months in time for a Brexit referendum in the UK.
But the Prime Minister insists he can renegotiate a new deal with Europe. So how would a renegotiation be carried out? There is a fascinating paper published by the Eurosceptic Open Europe think tank and written by David Frost, one of the best of Whitehall’s EU specialist officials before he left to work for the Scotch Whiskey Association, itself one of the most effective lobbyists in Brussels.
Frost has made some radical suggestions. But will they work? Perhaps his most dramatic is the proposal to ‘appoint a lead negotiator (a Deputy Prime Minister for Europe), with a specific renegotiation unit to lead.’ This has long been the dream of Foreign Office European experts and of many academics writing on Europe, namely to have a high ranking cabinet minister in charge of Europe. And what could be higher ranking than a deputy prime minister?
Frost may relish having a DPM like John Prescott, Harriet Harman or Nick Clegg but it is unlikely any prime minister, and certainly not David Cameron is going to surrender political authority on the very future of the UK and Europe to anyone else. The idea has been floated for two decades or more and never taken off.
Frost then argues that ‘civil servants need to be able to act in a more political manner across all levels, interacting and influencing EU journalists, politicians and MEPs within the European Parliament.’ Again, this may work with the politicized fonctionnaires in some EU member states but goes against a century and a half’s tradition of depoliticised British civil servant norms.
Frost rightly says that two essential requirements for a successful negotiation are firstly ‘having allies’ and second ‘making what you want seem normal.’ Major German and French newspapers have recently criticized David Cameron for being absent from the Ukraine negotiations. Writers briefed in Berlin and Paris openly say that the obsession with a Brexit referendum is now seen a major negative. No-one is sure if Britain will be in the EU after Mr Cameron’s proposed plebiscite.
In a scathing comment Sir Robert Cooper, one of the most admired British diplomats of his generation and who was the most senior official to serve in the European External Action Service, writes in the Financial Times (5 March): “Britain seems without ambition or direction. In a dangerous world, Britain has know¬ledge and expertise to offer but is too small to go it alone. There are Europeans who want to work with us and Americans who will ignore us if we do not.”
As a forerunner of what may be a new isolationist Britain, the decision to withdraw from the political family of the EU centre-right, the European Peoples’ Party, in 2009 has cost Mr Cameron dear in terms of losing Britain allies.
No-one in Europe wants Britain to leave but the assumption that David Cameron has unqualified support from EU leaders is simply not true. Mrs Merkel is now in her tenth year of chancellorship and may decide to leave at the top rather than sink into the status enjoyed by Margaret Thatcher, Helmut Kohl and others who stayed on and on and on. Elsewhere in the Europe the centre-left is back with Hollande and Renzi and other government leaders without mentioning Syriza or the possible arrival of a Podemos in a post-Rajoy government in Spain.
It is hard to see where David Frost thinks the allies for a Eurosceptic David Cameron are to be found. And what is normal to a Boris Johnson, who writes in his Churchill biography of a ‘Gestapo-controlled Nazi EU’ or to Business for Britain with its call for the abolition of free movement of people may not seem normal to other EU partners.
Frost makes the point that British embassies in Europe have been run-down with British diplomats replaced by local staff. Although the UK accounts for 12.5% of total EU population Britain only has 4.3% of EU officials and only 2.5% of all applicants for fast-stream entry as most would-be future EU officials from Britain fail as they cannot pass the required tests in a foreign language.
The constant sneering and attacks on the EU by Eurosceptic politicians, think-tanks and media has worn away any enthusiasm amongst young Brits for a European career. But it means the UK is woefully under-staffed to deliver the renegotiation Frost outlines.
He also says, ‘The Government should seek maximum cross-party support for its negotiating aims.’ The polite response to a very well argued and written paper is ‘Dream On.’ A Conservative dominated government will get very little support from opposition parties or indeed from its own Eurosceptic MPs and of course UKIP with its reservoir of 25% of votes as expressed in the European and local elections last year.
There is much in Frost’s paper which reads like an elegant valedictory on the Foreign Office he served with distinction and style until he went off to the world of finest malts. Alas the days when a superb bit of drafting and some nifty advice to a Prime Minister at just the right moment in Brussels talks did the trick for the UK in its relationship with Europe are long gone. So are the brilliant FCO European corps headed by Lords David Hannay, John Kerr and Michael Jay or Sir Stephen Wall, Sir Nigel Sheinwald and Sir Kim Darroch.
A re-elected David Cameron will become increasingly unpopular as austerity bites and he enters his seventh and eight year as Prime Minister. A referendum will be much on him as on the issue of Europe. Reorganising the entire machinery of government and revitalising the Foreign Office to return it to its glory days on running the EU in UK interests is a noble ambition and a wonderful dream. But it isn’t going to happen.
Denis MacShane is the former UK Europe minister. His book Brexit:How Britain Will Leave Europe is published by IB Tauris.

English National Opera

I have been going on and off to the English National Opera for many years. Yesterday I saw the Mastersingers of Nuremberg in what was the finest production I have ever seen of that opera (including at Wagner’s Bayreuth) and I tweeted that it was the best opera on show in Europe. Earlier this year I saw Traviata and again it was one of the clearest more forceful interpretations of Verdi’s opera I have ever seen.
Yet the ENO is in special measures, placed there by the Arts Council. I know nothing of arts politics in Britain and don’t want to start learning. But I wrote the letter below to the ENO director John Berry because when one is privileged to enjoy great art thanks should be given.

John Berry
ENO London Coliseum

St Martin’s Lane


Dear Mr Berry

I just wanted to write to express my enjoyment from your Traviata and Mastersingers – the latter I tweeted to 11k followers as being probably the best opera in Europe at the moment.

I thought playing Traviata straight through was brilliant and compared to show-offy, Nazi themed Mastersingers I have seen (including at Bayreuth) I thought the ENO was one of the clearest, cleanest and best-organised which brought out the great humour and humanity not seen in other Wagner.

By the way, please pass on congrats to the director for the business at the end. I wondered how you were going to do the Deutsches Kunst stuff and for all the singers to hold up a German artist (including Jewish ones!) was so simple, so obvious and yet not done before. Sachs holding up Brecht was genius!

I know nothing of your problems and as a former minister the interface between government and what they pay for outside departmental control is fraught. But I cannot understand why given two of the best opera productions I have seen in recent years here and abroad you are in special measures or whatever the Arts Council announced. Mind you I cannot work out why Oxfordshire Council is not in special measures but Rotherham is. Remind me who is a leading Oxfordshire MP sitting in No 10?

I saw Simon Jenkins there and we said hello. I will copy this letter as he knows more about these things than most and writes so brilliantly on them. But your Mastersingers was a masterpiece as the utterly packed audience yesterday made clear. I will copy this to the Arts Council chief but to what end?