rational geekery

Anatole Kaletsky has written a convincing piece in today’s Times urging Blair to relinquish Britain’s £2bn EU rebate:

The very existence of the British rebate has harmed the country in two related, but distinct, ways. First, the need to defend the rebate has distracted British politicians from much more important European issues, often at crucial turning points in EU negotiations. Arguments over the rebate weakened Mrs Thatcher when she was trying to block the European exchange-rate mechanism and distracted John Major when he should have been focusing on the flaws in the Maastricht treaty; but the clearest example arose at the disastrous October 2002 summit, which created the conditions for the present budget crisis. Just before this summit President Chirac did a private deal with Germany to postpone any serious cutbacks in the CAP until 2014. This deal breached a string of agreements among EU leaders and could have been vetoed by Tony Blair, but Chirac was able to distract the Prime Minister’s attention by simultaneously mounting a diversionary attack on the British rebate.

Mr Blair’s success in defending the rebate was another pyrrhic victory, won at the cost of the infinitely more important abandonment of CAP reform. So while Britain will continue to receive its £2 billion a year rebate, it must also continue to bear the costs of the agricultural policy, estimated at roughly £6 billion annually, before allowing for the even greater losses from the diversion of public resources to agriculture from more productive uses such as infrastructure investment, education and research.

The gross disproportion between the size of the British rebate and the costs of mismanagement by the EU brings me to the second, and even more important reason, why Mr Blair should abandon this totem. The existence of the rebate has lulled British politicians, diplomats and voters into complacency about the functioning of the EU. The rebate created the illusion that Britain could win special protection from the costs of the CAP, which was the EU’s most damaging and expensive inanity (at least until the creation of the European Central Bank). This, in turn, has encouraged a sense of world-weary semi-detachment among politicians and voters, rather than moral outrage at the damage done by the CAP to developing countries and its grotesque redistribution of income from the poorest urban consumers to the richest landowners, especially in France.

I thoroughly agree with Kaletsky’s opinion that the rebate should be sacrificed, to enable Britain to join similarly economically liberal Eastern European countries in a coalition to squeeze the French on farm subsidies.

On Breakfast news on the BBC this morning they interviewed a French farmer; 40% of his revenue consisted of subsidies. Subsidies that not only pervert internal EU markets - making EU farmers uncompetitive and inefficient - but also effectively close them to external suppliers; some of these suppliers are from the world’s poorest developing countries.

While the UK enjoys this rebate it is seen as a pariah in discussions and deliberately ostracised by the wily and lupine Chirac. With an economic liberal in the Reichstag - in Angela Merkel - Britain has the opportunity to create a consensus for progressive change, to create a more dynamic European economy. Forget the constitution, that was a waste of time, the real question is about improving European competitiveness and economic stability.

How about this - in a leaked email, published in Saturdays Times - from Britain’s ambassador to Poland Charles Crawford:

[The CAP is] the most stupid, immoral state-subsidised policy in human history, give or take communism

The French position should be seen for what it is: self-serving, cosseted, unrealistic, and backward.