Category Archives: European Union

European Union, Foreign Affairs, Government, Politics, Russia, Society, Ukraine

Ukraine and the difficulties ahead…

UKRAINE

Over the past two weeks events in Ukraine have moved fast. No day over the last fortnight has past in which something critical has happened. Following the ferocious rioting that led to 88 deaths, Viktor Yanukovych, the country’s former president, was dramatically dethroned. Events in Kiev, Ukraine’s capital, are being perceived as one of the most epochal developments in central Europe since the end of the Second World War. Disruption is far from over.

Ukraine is deeply divided, with half of the population in support of joining the European Union. These people see the benefits brought to Poland, a country of similar size to the Ukraine, that is now firmly embedded within the EU and Nato. Poland’s GDP is now three times what it once was and people there enjoy living standards that are envied by those Ukrainians who wish to see their country afforded similar benefits. The other half, though, are deeply loyal to Russia’s Vladimir Putin and aim to see Ukraine integrated as part of Putin’s wider Eurasia Union, a new and emerging federation of countries aligned to the political aspirations of Moscow.

Ukraine’s future leadership and direction is far from settled. With no clear coalescence around an alternative leader, Ukraine remains more representative of a volcano that has erupted with extraordinary violence and with the after-effects still yet to be felt. Russia has been a dominant force over much of Ukraine’s history, and the world awaits to see how Putin will play his hand.

Hidden from view in the confrontation that has ensued in the centre of Kiev is a chronic economic and financial crisis. Whoever replaces Mr Yanukovych will need to tackle pressing issues to secure continued Russian funding of the country’s debt. Without this, a more widespread collapse beckons.

For its part, the EU needs to look critically at its mooted trade agreements with the country to ensure a fair balance of reciprocal benefits. A major criticism at the present is that these favour EU exports over Ukraine’s well-endowed agricultural sector. Given this delicate economic situation, it is not just Russia but also the West that needs to proceed with great caution before the election of a new government in Ukraine.

The great fear for Western leaders is that Russia will intervene militarily in the affairs of its most important geopolitical neighbour. Such a threat cannot be ruled out. Putin will view this kind of struggle as a matter of personal prestige – he has a renowned reputation in humiliating his rivals, rather than a record of striking appeasement and deals with them. While in power, Mr Yanukovych, became one of Russia’s main allies.

That Mr Putin may act rashly in the days ahead was one of the ‘many dangers’ that William Hague, the British Foreign Secretary, has alluded to. Mr Hague also highlighted the possibility of renewed violence, or that ethnically Russian parts of the country, such as Crimea, will attempt to secede. This situation represents more of a direct challenge to the EU in particular, which has been attempting to woo Ukraine with a trade deal worth hundreds of millions of euros a year. Such a deal is not the same as membership of the EU, but for many it will not be far off. It would, for example, offer Ukraine guaranteed entry into a huge and developed market on its doorstep. Unlike Mr Putin’s recent offers and bribes to his neighbour of cheap gas and serviceable debt, the EU deal has few strings attached.

Ukraine needs a government, and elections will be held in May. In the coming days and weeks, Western leaders must do everything they can to promote a working economy in Ukraine so that its institutions can be free from corruption and outside interference.

Setting out a path to normalisation will be difficult, not least because the opposition forces in Ukraine are deeply divided. Hatred of Viktor Yanukovych masks profound differences in belief and ideology. An early and sympathetic engagement is vital if Ukraine’s open revolt and revolution is not to shatter the country even further and spark dangerous unrest across the entire region.

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Britain, Economic, European Union, Government, Politics, Society

Addressing corruption in the EU is an urgent matter…

EUROPEAN UNION

Intro: Corruption throughout the EU is endemic. It needs urgent and effective attention

In southern and eastern European countries corruption is much more widespread than it is in Britain.

Cecilia Malmström, the EU’s Home Affairs commissioner, estimates that across the EU, the amount of money paid in bribes and racketeering may add up to more than a £100 billion.

This is a staggering sum of money. The estimate given is based on surveys of people who were asked whether they knew about specific cases of having to pay a bribe and what their general perceptions of the problems of corruption in their country were.

In the UK, less than 0.5 per cent of people had either experienced, or knew of, an instance of bribery, the lowest percentage in the EU’s member states. This compares extremely favourably to respondents in Croatia, the Czech Republic, Lithuania, Bulgaria, Romania and Greece, where between 6 and 29 per cent of those questioned indicated  that they were asked or had been expected to pay a bribe in the last 12 months.

Yet, the perceived rates of blackmail and extortion related activities in the UK compared to others in the EU are much closer. Even in Britain, where the actual rates are deemed low, 64 per cent of people think corruption is widespread. Across the EU, an average of 74 per cent believes this is the case. In Greece, the perceived rate rises to an astonishing 99 per cent.

The gap between actual experience of corruption and perceptions of it can be accounted for by the widespread publicity which is given to instances of political corruption and the attention which is drawn to interest and exchange-rate fixing scandals still emerging from the financial industry (such as LIBOR, the price of oil and, more worryingly, the true value of gold).

In those countries with the highest experience of financial bribery, most instances relate to healthcare. This has stemmed from the inadequacy of public health provision which has led people to bribe and blackmail doctors to secure early treatment of illness.

Ms Malmström, a Swede, asserts that stamping out corruption is not the responsibility of the European Commission. Rather, she says, that responsibility lies with national governments, on whom she is calling to do more. She is certainly right to argue that instances of bribery is not just draining resources from legal activity and feeding criminality, but that such activity is also undermining the trust that the public has in democratic institutions.

What is more, however, is that in the UK the report’s findings may well have the unintentional consequence of further eroding the fragile belief in the EU. Whilst this report makes clear that the Commission’s own anti-corruption unit is under-resourced and has a vast swathe of fraud allegations in EU spending it will never likely investigate properly, the unit has long been the subject of reports of incompetence and irregularities in the management of its own budget.

Rectifying this situation should be an EU priority. But the EU’s bribery report may well have the effect of colouring the view that many Britons already have – that it is even more corrupt than they ever thought. It is right to ask if British taxes which flow to the EU are being wasted or, worse still, whether they are being harnessed to feather criminal nests and extortion rings.

The possibility exists in the UK for an in-or-out referendum on British membership of the EU in 2017, following the pledge given by the Prime Minister since he has held office. But, this recent EU report will only confirm Eurosceptical prejudices. For Europe to be cleansed of endemic corruption, the European Commission must act with a degree of urgency and effectiveness in dealing with the issues that underpin it.

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Britain, Business, Economic, European Union, Government, Politics, Society

UK firms need direction over EU reform…

EU REFORM

Since the start of the year the row over Europe has intensified.

From speeches to signed letters, the Europhiles and Europhobes have played out and made known their disagreements in front of the press and media.

There is no doubt that renegotiation and reform of the EU is necessary. The majority of businesses are determined to see a revamped relationship.

But it has been a year now since the Prime Minister first announced his intentions on Europe, and UK firms are no clearer as to what this means in practice.

Maintaining the status quo and tinkering with some of the existing bureaucracy might seem attractive for some, but it is simply not realistic.

The eurozone, for one, is rapidly moving off in a direction of its own making. Through inter-governmental agreements – fiscal, banking and ever-greater political union – the single currency bloc is set to leave out other EU countries. Specific trading blocs between EU countries within the eurozone are likely to emerge, dismantling the free market as we understand it.

Such an outcome is hardly desirable for British firms. In a survey of over 3,000 businesses last September, only 7 per cent felt this would offer a positive future. Some 57 per cent said that re-calibrating the UK’s relationship would have the most positive impact on Britain’s business and economic interests.

On this basis, the Prime Minister has a clear mandate from business to try and rebalance Britain’s relationship with the European Union.

Even though companies are trading with the wider world, the cold hard truth is that the EU remains a significant trading partner. EU membership grants Britain advantageous access for the sale of goods and the movement of capital and people across national borders.

Firms want to remain in the single market and see it widened and strengthened, to include, for example, the services sector.

So if the Government is to succeed in reform it is vitally important we seek allies within the EU who have a similar desire for change.

It is equally important, too, that the EU knows that the UK is prepared to leave by taking its chances with faster-growing economies. A cacophony of doom regarding the consequences of exist is both irresponsible and misleading, and would undermine the negotiating position of those seeking to enact reform.

Leaving the EU is certainly not the preferred outcome for most businesses and would be very disruptive, but disruption creates opportunities as well as threats. Our ongoing trading relationship with the EU would be influenced positively by the exist negotiations, not least given the massive current deficit the UK has with the EU.

Regulations from Brussels have long been a millstone round the necks of British firms, in spite of the recent reduction in red tape.

Some will want to see action on areas such as employment law, health and safety, and regional development. Others will be hoping for changes in areas like justice and home affairs.

Whilst the Government has indicated that it is serious in its intentions, what remains in doubt, though, is what will constitute a win for the British people. So long as the Government fails to specifically announce what areas it will seek to renegotiate and what the reforms will look like, the government’s rhetoric will be perceived as an act of political opportunism right through to the 2015 general election.

UK business needs as much certainty as possible to provide the landscape on which to build long-term, sustainable growth. This is needed if a revival of our economic fortunes is to be realised.

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