Wednesday, July 24, 2024

Transcript: Britain’s role in a changing Europe

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This is an audio transcript of the Rachman Review podcast episode: ‘Britain’s role in a changing Europe’

Gideon Rachman
Hello and welcome to the Rachman Review. I’m Gideon Rachman, chief foreign affairs commentator of the Financial Times. Before we begin, we’d love to hear a bit more about you and what you like about this show. We’re running a short survey, and anyone who takes part before August the 29th will be entered into a prize draw for a pair of Bose QuietComfort 35 wireless headphones. You can find a link to the survey and terms and conditions of the prize draw in our show notes.

This week’s podcast is about British foreign policy and the future of Europe. My guest is Charles Grant, director of the London-based think-tank the Centre for European Reform. After 14 years in government and eight years after Brexit, Britain’s Tories have finally lost power. But can the new Labour government, led by Sir Keir Starmer, reset Britain’s relations with the EU?

Keir Starmer voice clip
It is surely clear to everyone that our country needs a bigger reset, a rediscovery of who we are. Because no matter how fierce the storms of history, one of the great strengths of this nation has always been our ability to navigate a way to calmer waters. And yet this depends upon politicians, particularly those who stand for stability and moderation, as I do.

Gideon Rachman
That was Britain’s Prime Minister Keir Starmer in Downing Street on his first day in office. Starmer has a record as a strong pro-European who opposed Brexit. But he’s also said that he doesn’t think Britain will rejoin the EU or its single market within his lifetime. He’s 61 and average male life expectancy in Britain is 80. Meanwhile, on the other side of the channel, France has also just had an election. The results are a bit of a mess, with no single party or coalition apparently able to form a government. The authority of President Emmanuel Macron seems to be pretty damaged, and that will matter to Britain and the whole of Europe because Macron’s played such a leading role in shaping the European debate. So I began my conversation with Charles Grant by asking him about the new Labour government’s approach to Europe. What does Starmer and his colleagues hope to achieve?

Charles Grant
I think it’s going to start off by talking about security, because that’s something everybody agrees is a good thing to work together on. The current arrangements in the Trade and Cooperation Agreement, which is the Brexit deal that we operate under, do not have any provisions of significance for working together on foreign policy of defence. There was originally a plan to do that, but Boris Johnson vetoed that when he became prime minister. So I think there’s going to be talk about a security package, something Labour has proposed, and the EU will say yes to. What it means is not very clear at all. Already Britain obviously is committed to European security through Nato and various bilateral arrangements with France and troops in Estonia and so on. But it’ll make the Europeans feel good if we say we’re doing more for European security. So I think that’ll be the first thing that Labour will do before it gets on to try to re-examine the economic relationship.

Gideon Rachman
I mean, you know Starmer reasonably well. I think when he was working as the shadow Brexit secretary for Labour, he obviously would have concentrated on Europe. I believe he is also a near neighbour of yours in London. So what do you think his instincts are on Europe?

Charles Grant
I think his instincts are definitely sympathetic to the EU. He did try and stop Brexit happening, but he’s also very cautious and his whole electoral strategy was based on the idea that you want to win back voters to Labour in the north of England, in the Midlands, who switched to Tories in the 2019 election because the Tories promised to leave the EU and get Brexit done. So he’s been very cautious in the campaign, not saying very much about Europe because he thinks that if you talk about Europe too much or too warmly, then Leave voters will remember that they’re Leave voters and think they’ll have to vote Tory rather than Labour.

But now he’s in power, now he’s got elected, he’s got a huge majority. So I think he can be a bit bolder, and I hope he’s prepared to try and improve the relationship with the EU, because that’s what his instincts would tell him to do. But I think he’d start with security and tread very gently on the economic areas. He is committed, as you say, to not rejoining the customs union or the single market or restoring freedom of movement. But that does leave some wriggle room for him to play with. He’s not ruled out dynamic alignment with EU rules, whereby Britain would follow EU rules and regulations as they change in the EU side. He’s not ruled out a role for the Court of Justice in policing disputes with the UK. So that gives him some wriggle room, I think, to try and get closer economically.

Gideon Rachman
And on the security pact — I mean reading, for example, David Lammy, his new foreign secretary’s piece in foreign affairs and I gather in the manifesto as well — they lay out a vision for the security pact that goes well beyond conventional definitions of security, including energy, climate, other issues such as migration. Do you think, in a sense, by having a very broad interpretation of security, that also opens a way to have a broader field of co-operation with the Europeans?

Charles Grant
Well, it does. They have to be a little bit careful here, because if you have a security pact that is legally binding, then if you touch on areas like energy, security, migration, climate change, AI regulation, then you’re really touching on areas that pertain to the single market, which gets difficult legally. The Court of Justice and so on becomes an issue. But I think that maybe Lammy is therefore leaning towards a non-binding declaration that could be done relatively quickly, perhaps during the Polish presidency in the first half of next year. And if it’s non-binding and it’s just a declaration, that’s fine. It doesn’t actually change very much in the real world. I think that there is a need for closer co-operation on certain foreign policy, because there’s no mechanism by which the British plug into EU foreign policy discussions. Even the Americans, the Norwegians and the Canadians have a closer relationship with the EU’s current defence and foreign policy institutions than the UK does.

I think some mechanism whereby British ministers and officials and heads of government can, on a regular basis, meet their EU counterparts. It’d be very useful for both sides. For the British point of view, that would allow us to have a little bit of influence in EU discussions, that would allow us to learn what’s going on in the room and it would allow us to help build and forge friendships and alliances. I think that’s the kind of thing that will, in hard concrete terms, come out of this in the long run.

Gideon Rachman
Yeah, and it’s already beginning to happen, isn’t it? I mean, David Lammy, I think, has accepted an invitation to attend the EU foreign ministers’ meeting.

Charles Grant
He has. Josep Borrell, the Eu’s foreign policy representative, has invited him to a meeting in September, I think. And of course, one thing that Keir Starmer might ask for is an invitation to the October European Council. If you showed up and talked about common challenges like Ukraine, migration and so on, that would show that he’s very much not Boris Johnson, I think. Let’s not forget his personality is going to be quite important in all this because in diplomacy, mood matters and personal likings and dislikings matter. And it’s a fact that the EU really didn’t like Boris Johnson at all. They’re still rather traumatised by the fact that they had to deal with him for many years. They found him very difficult to deal with because he’s threatened to tear up an international treaty after he signed it, for example. We’ve got to move on. Keir Starmer is the opposite of Boris Johnson in every respect. Whatever Boris Johnson is, Keir Starmer is not. He’s modest, diligent, hard-working, serious, little dull perhaps.

Gideon Rachman
And a lawyer. So he takes law seriously.

Charles Grant
He’s very committed to the rule of law as a lawyer. As is David Lammy, his foreign secretary. So I think that Keir Starmer’s approach and his personality will actually help to rebuild bridges quicker than people realise. And he’ll win a lot of goodwill from the EU just by being the kind of man he is. And that’ll help him to restore trust with his European partners, which will make it easier for him to get them to think again about an economic relationship being improved. Because I think, let’s be frank, when he does say, give us a better trade deal, they will initially say no. They’ll say no because they would say, we like the trade deal. We have the so-called TCA. It’s good for the EU. It’s what you Brits wanted. So you’ve got it now. We’re very busy with other stuff. Why should we reopen it? And the answer is because Britain wants it reopened and we’re going to contribute a lot to European security. And it should be in the British national interest and perhaps the European interest to keep the British happy and close to Europe as well.

Gideon Rachman
That then brings up the crucial question of the European response to all of this. And you make me feel rather optimistic that they may respond better to a new face. But Europe, of course, is a moving target. And France now has just had this election, which leaves them in something that looks like chaos domestically with no stable government. How does that affect the possibilities for the UK?

Charles Grant
It probably doesn’t help very much. I mean, France, even with a strong government led by Emmanuel Macron and Gabriel Attal until recently, was going to be difficult for the UK because there are different opinions in the EU on how to react to a UK request for a better trade deal. The hardliners are led by the French and the European Commission as well, and perhaps some people in Germany who say, don’t reopen the deal.

But there are people in the EU — the Poles, Nordics, Baltics, for example — who are much more willing to reopen the deal with the UK because they want to draw the UK close and they like what the UK is doing on Ukraine. The French were gonna be difficult anyway, and having a weak government now, we assume that either they’ll be a weak-coalition government of the more moderate forces in the French National Assembly, or there’ll be just a caretaker government for a year or so. Whatever kind of government it is, it’s going to be weaker, and that won’t help the British persuade the French to give up some of their entrenched national interests when it comes to renegotiating the deal with the EU.

Gideon Rachman
I’ll come back to the internal dynamics in Europe in a minute. But just a couple more questions on Britain. I mean, you lay out all the things that Starmer can still do, despite the red lines that he’s had on the customs union, the single market and so on. On the other hand, this is a government that says economic growth and restoring economic growth is absolutely central to everything that they want to do. Can they really do that with the ball and chain of not being inside the European single market still around their ankle?

Charles Grant
Well, I agree with you that it is a ball and chain holding them back. And I think from purely economic growth perspective, it would be better if they abandon their red lines. But they’re not going to do that, at least not in the current parliament. I think there’s quite a lot they can do to get a better deal. I think in the Labour party leadership, there are kind of two schools of thought. There are the incrementalist, who want to move slowly and gradually, they don’t want to frighten the horses. They want a little bit of change here, a little bit of change there. That is the predominant school at the moment.

But there is another school of thought which is actually saying: to get economic growth, you have to be bigger and bolder and go for a more radical rethink of the deal with the EU. My own view is in the long run, Britain could get closer to parts of the single market sector by sector. They probably say it will do so for plant and animal health, with a veterinary agreement. That would remove a lot of the border controls on plants and animals and food coming in and out of the UK across the Channel. Why not extend that idea to energy, where Britain has a lot of things that you want, like cheap wind power or chemicals where there is too.

Now at a certain point you would say, hang on, you’re cherry picking. You have got to be in the whole market or not at all. But the truth is, the EU wants to pick some of its own shares. It’s desperate for a deal on fish because come 2026, the current arrangements on fish expire and the EU has no right to a long-term agreement to fish in British waters. It wants a deal on youth mobility. It wants Britain to rejoin Erasmus. So I predict in the long run there’ll be a set of bargaining and trade-offs where the UK will want certain things, the EU will want certain things, and it won’t remove all the economic damage caused by Brexit, but it could remove quite a bit of it if we can reduce friction at the border, particularly for manufactured goods.

Gideon Rachman
And you said that Britain’s key attraction at the moment, particularly with a war raging in Ukraine, is that we are regarded as a serious military power and as one that’s provided proper help to Ukraine and so on. And yet you also hear quite disquieting things, almost on a bipartisan basis, that Britain’s defences are more threadbare than they should be, that if we were — God forbid — ever in a real war with Russia, we’d run out of ammunition really quite quickly, and that will demand big increases in defence spending. Do you think that’s becoming a consensus, and is there any money there to do that?

Charles Grant
I think you raise a very important question. I mean, Keir Starmer has committed to raising British defence spending to 2.5 per cent of GDP. He hasn’t yet said when he’ll do that, but my guess is he’ll actually give a date quite soon because he just needs to demonstrate leadership on Ukraine and demonstrate that Britain is prepared to lead on security questions. The British armed forces are in a pretty dreadful state. The army is the smallest it’s been since before the Napoleonic Wars. It’s down to about 70,000 troops. So if we wanted to contribute a lot more troops to Europe, we don’t really have very many troops. We’ve got a thousand or so in Estonia, but we couldn’t send that division to Europe to help defend Europeans at all. So much money is being spent on the nuclear submarines. There isn’t a lot left for other things. I think Labour will have to find the money to spend more on defence. I think it will do so. And if it doesn’t, then its credibility in trying to lead Europe on this will be seriously affected.

Gideon Rachman
One other agenda item for Starmer that comes up very quickly — as we speak, I think he’s arriving in Washington for the Nato summit — he also has the European Political Community meeting in Britain later this month. Explain what the EPC is. And how much of an opportunity is it for Britain and for Europe?

Charles Grant
I think it’s a great opportunity for Britain. The EPC was invented by Emmanuel Macron two years ago as a political club where everybody in Europe, except for Russia and Belarus, could come along and chat about common challenges, and particularly the Ukraine war and how to cope with Russia. So it’s an opportunity for the British and the Norwegians and the Turks and the Swiss and the Azerbaijanis and the Armenians and the Georgians and people like that, and the North Macedonians to come along if they’re not in the EU and still join the club and talk about common challenges. It’s just a talking shop. There’s no structure, institutions.

And Liz Truss, when she was prime minister briefly two years ago, she actually did a good thing. She decided to go to the EPC in Prague because she was persuaded by her officials it was a good idea, it would give Britain the chance to develop contacts and personal relationships with other European leaders, so it suits the British very well. The next meeting’s in Blenheim in a few days’ time, I think it is a great opportunity for Keir Starmer to give some signal to his European partners, those in the EU and those outside the EU, what he intends to do with Europe. If he could give a sort of a rough outline of his plans for Britain’s relations with Europe and security in particular, but others too, that would be a great opportunity to start building some of those personal contacts he needs to develop, which Labour doesn’t really have at the moment.

Gideon Rachman
You said it was Macron’s idea. Do you think other Europeans are seized of the idea, or is this just another meeting on their agenda?

Charles Grant
Well, I think the jury’s out. The Germans have always been unenthusiastic and went along to keep Macron happy rather than because they believed in it. Some of the European federalists, those who want a much more integrated Europe, don’t like it because it’s intergovernmentalist, not organised by the European Commission and the European institutions. There hasn’t been universal enthusiasm for it. But I think so long as the Ukraine war continues, the idea of having one place where everybody can get together and chat about migration or Ukraine or energy problems is a good idea. There isn’t another format where you can really do that. So I think even if Macron is a much weaker figure, it will continue so long as the Ukraine war continues. When the war’s over, I’m not sure it’ll go on.

Gideon Rachman
Yeah, and you say Macron is a much weaker figure. That seems pretty undeniable. That does seem to leave a kind of leadership gap in Europe, doesn’t it? Because Olaf Scholz, the chancellor of Germany, really hasn’t made a splash in Europe. So who does the leadership devolve to? Is it maybe Ursula von der Leyen, who’s just come back?

Charles Grant
Well, it’s a very good question. I mean, Macron has been the pre-eminent leader in recent years because he’s got lots of ideas, lots of energy, and he’s very pushy and pushes French interest very, very hard. And because the British have left and because Scholz has been a weak leader who’s tied up with his own coalition management problems and is perhaps not very interested in the EU anyway and isn’t a very talkative fellow like Macron is. And the Italians and the Spanish have traditionally underperformed in leadership roles as well. So Macron has been pre-eminent, but he’s going to be weakened. It’ll be harder for him to assert leadership because of his domestic travails.

I think von der Leyen may fill some of the gap. She’s almost certainly going to be reappointed to a second term as European Commission president. She has to win a vote in the European parliament, but it is likely they’re not absolutely certain she’ll do that. She is quite a strong figure. She’s quite bossy, she’s quite dominant, she’s quite autocratic in the way she runs the commission. She’s come with a big dossier very well like sanctions against Russia, starting membership talks with Ukraine for EU accession, and some of the Covid stuff, the vaccines business to deal with. She’s got a good reputation, though a lot of people resent her autocratic methods. I think she can give some leadership.

But of course we have to really wait for Germany because in 15 months’ time there’s going to be a new chancellor. Looks like being Friedrich Merz, the leader of the Christian Democrats, who may turn out to be a stronger figure than Olaf Scholz has been. It’s not certain, of course, but he looks quite likely to win the election in Germany in the autumn of 2025. So Germany may become more important than it has been in recent years. It hasn’t been very bold and dominant since Angela Merkel retired, so Germany can fill some of the gap.

I’m sure Macron, being Macron, would try and say, I’m still a leader in Europe. I’m still going to do what I want. He’ll just find it much harder because the French economy, even before recent problems in France, was heading in the wrong direction, and that weakens him in the EU. The fact that France is under an excessive deficit procedure, it’s borrowed too much, it’s public debt is out of control. It’s 110 per cent of GDP so that weakens him anyway, and he’s going to be even weak enough for the next few years.

Gideon Rachman
And do you think if Donald Trump wins the US presidency, that will of course shake up Europe in many ways? Might it also mean that another bunch of European leaders begin to assume importance? I’m thinking particularly of Giorgia Meloni in Italy, who has ties to the Republican right in America, and maybe even Viktor Orbán of Hungary, who we’ve seen trying to play a kind of global role. He’s just been in Moscow, he’s been in Beijing. He clearly sees himself as a global figure.

Charles Grant
If Donald Trump comes back for a second term, I think he will split the EU. At the moment, the far-right EU leaders like Orbán have been on the fringes of the EU. But if Meloni, who’s been more moderate than Orbán, has been quite respectable in that the way she’s handled her prime ministership flips over to the other side, and she’s slightly tempted to do so. She’s been rather mistreated by the men who run the EU at the moment, and the recent deal on jobs with the EU, the Christian Democrats, the Social Democrats and the Liberals got together and excluded her from any say in who got the top job. She’s a bit pissed off, and I think that at the moment she’s behaving very responsibly, not teaming up with Viktor Orbán or Marine Le Pen or indeed Donald Trump, as far as I can see.

But if she flips over to the other side, then you do have a group of four or five European countries that would be sympathetic to Trump, not just Hungary, but possibly the Netherlands in some respects, France if Marine Le Pen wins in 2027, possibly Italy, Slovakia, maybe one or two other countries too. So then I think the EU has quite a large group of Eurosceptic nationalist governments. That puts the brake on further European integration essentially.

Gideon Rachman
Yeah. And it also makes it possibly much harder for a Keir Starmer government here in Britain, which would look to the sort of centrist parties in the EU as their natural partners. If the EU begins to head off into the populist right direction, Britain’s in an odd situation.

Charles Grant
Well, yes, but I think the majority of EU governments are clearly going to be centrist: centre left, centre right or centre centre liberal. So I think in that sense the mainstream, despite what I just said, would still be fairly easy for Starmer to deal with. But in one respect, the return of Trump could help Keir Starmer, I think assuming that the far right don’t take over the French state and Le Pen doesn’t win the French presidency, because people are very worried about the way the world is going. The world has become very dark since the Brexit referendum. China is a threat in many ways. It wasn’t before. Russia is a threat. Migration is a threat. And if Trump comes back and really worries the centrist mainstream of European politics, it’ll make European governments think, gosh, we need to hug the British close. It’ll make them very keen to grab the British and collaborate with them, because the British do share their interests and values in many respects, and that would actually make them more willing to give the British a better trade deal. So it could actually help the UK if Trump returns to power.

Gideon Rachman
And perhaps it also creates an opening for Starmer in a domestic context to say, well, all sorts of things that I said I’m not going to do, maybe we have to start considering because the world’s changed very fundamentally.

Charles Grant
I think it’ll make it easier for him to put up defence spending, which I think he’s going to do.

Gideon Rachman
Yeah. One other EU appointment that intrigued me is the new foreign policy person replacing Josep Borrell. It’s going to be Kaja Kallas, the prime minister of Estonia, who’s a very able person but very outspoken on Ukraine. You know, if you’re looking for somebody who in a year’s time will say, OK, we need to sit down and negotiate with the Russians, that’s certainly not her. How much of a role do you think she is going to play?

Charles Grant
It is an interesting appointment. I think the idea in EU governments is this: there’ll be a balance between Kaja Kallas, who will be very hard on Russia, who knows eastern Europe and the Russian-speaking world very well coming from Estonia. But also Mr Costa, the former Portuguese prime minister who’s becoming European Council president, who has good relations with Latin America, Africa and some Asian countries and is close to the so-called global south. And being a southern European, he’s much softer on Russia. So I think the idea is that the balance between Costa in the European Council and Kallas running the external action service sort of balance each other out.

But you’re right, I mean, not everybody was happy about Kallas’s appointment. I was in Spain recently and they were not particularly happy about that as well. But she will be the high representative. The real question, Gideon, is whether or not Ursula von der Leyen aligns either Kallas or Costa to do very much because Ursula von der Leyen doesn’t like to run foreign policy herself. The treaties give a role to the high representative and the president of the European Council. But von der Leyen thinks she should take a lead. And for the last five years she’s kind of pushed aside Charles Michel, the president of the council, and Josep Borrell, the high rep. To some degree she was helped in doing so because Michel was quite a weak person who had an unserious reputation. And Borrell was also somebody who made a few gaffes and didn’t please everybody and was a bit stubborn. So she had some excuse for pushing them aside. But Kallas and Costa may be a different combination for her to deal with. The question is: will von der Leyen allow the other people to play any role in foreign policy at all?

Gideon Rachman
And finally, I mean, the thread throughout this conversation has been Ukraine. And you said, you know, the EPC will keep meeting as long as the Ukraine war goes on, that the Ukraine war so will help to define Britain’s relationships with the EU. Obviously, it’s impossible to tell, but I’ll ask you anyway. I mean, what do you think the coming year is going to see in the interaction between the war in Ukraine and the talk about diplomatic solutions? My sense is that slowly, people are coming round to the idea that there are going to have to be peace talks at some point, maybe next year.

Charles Grant
I think Europe is effectively split on this issue. It doesn’t really matter the split, because there’s no prospect of peace talks at the moment. A split is between those like the Poles and the Baltics and the Nordics, who think Ukraine should go on fighting till it’s recovered all its territory. And the French, the Germans, the Spanish, the Italians and the Americans who say that, as you just said, there had to be peace talks at some point and territorial compromises. Now, if Putin wanted to, he could surely split the Europeans down the middle and highlight this division. He could say, look, I’m going to pull back from most areas I’ve conquered. I want to keep Donbas, I want to keep Crimea, and then let’s do a deal and stop the killing. And if he did that, then some Europeans would say, sounds like a good deal, let’s go for it. And others would say, no, let’s keep fighting. And so Europe would be in a mess.

But Putin, as far as I can see, Gideon, doesn’t actually want to do that. I think he needs the war to maintain his domestic political support and maintain his system of rule of Russia. I see no evidence that Putin actually wants to do a compromise at the moment. I think he wants to keep fighting Ukraine. He’d like to get more of it than he’s got. Given that situation, I think the EU’s position will stay quite hard on Ukraine. I think assuming that Macron is not going to resign as president, he’s got another nearly three years to go, France will stay committed to supporting Ukraine. The French parliament will pass aid for Ukraine, I believe. The Germans and the British and the Italians will keep supporting Ukraine. So I don’t see, whatever Viktor Orbán in Hungary says, I don’t see the EU stopping its support for Ukraine or pulling back on its support for Ukraine. I think that’s solid, at least for the next few years.

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Gideon Rachman
That was Charles Grant, director of the Centre for European Reform, ending this edition of the Rachman Review. Thanks for listening and please join me again next week.

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