How UK sovereignty is still under threat from Europe

Despite 'no' votes from the French and Dutch, EU leaders are determined to go ahead with the new constitution. And it threatens to cause severe problems for Labour in the near future.

Imagine the next general election is held in 2009. David Cameron's Conservative party beats Labour by two million votes, and gains enough seats to form a majority government. But Gordon Brown refuses to go.

'I really believe that the electorate did not reject the Government,' he says. 'Unfortunately the electorate did not realise what the General Election was about. Indeed, the voters have requested more Labour policies not less. The rejection of Labour's programme was a mistake, which will have to be corrected.'

Impossible to believe? It has happened in Zimbabwe, Haiti, Uzbekistan and Belarus. Thirteen months ago, it happened on our doorstep.

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The EU constitution: ignoring the 'no' votes

In May 2005, the French and Dutch electorates rejected the EU Constitution put forward by Brussels in two separate referendums. Yet a fortnight after the 'non' and 'nej' verdicts, Luxembourg's Prime Minister, Jean- Claude Juncker, said at a press conference:

'I really believe the French and Dutch did not vote no to the Constitutional Treaty. Unfortunately the electorate did not realise that the Constitutional Treaty was specifically aimed at meeting their concerns and that's why we need to have a period of explanation for explaining this to citizens'.

Eight months on, Valerie Giscard d'Estaing, the architect of the EU Constitution, showed his contempt for the democratic process. In a lecture at the London School of Economics on 28 February 2006, he said: 'The rejection of the Constitution was a mistake which will have to be corrected. The Constitution will have to be given a second chance...If the Irish and Danes can vote yes in the end, so the French can do too. It was a mistake to use the referendum process, but when you make a mistake you can correct it.'

If you thought that was bad, three months later, the former French President told the Financial Times: 'It was not France that said no. It was 55% of the French people.'

This madness has afflicted the political classes in the other main nations of the EU, too. Italian Foreign Minister Giuliano Amato told Agence Europe that '[the no votes were] a request for more Europe not less'. In May this year the new German Chancellor, Angela Merkel,said: 'The negative results of the referendums in France and the Netherlands were a setback, but this has no bearing whatever on whether or not we need a constitution. I say yes, we need the Constitutional Treaty.'

So there you have it the contempt with which top European politicians view the popular will. They have responded to the free referenda's result with wilful self-delusion, and they certainly won't take 'no' for an answer. Hopes that the French and Dutch verdicts would trigger reform of the EU have been dashed.

Indeed, the main topic of conversation in EU circles today is how not whether to bring back the Constitution. Over the last 13 months, the supporters of an 'ever closer union' have chosen to interpret the 'no'

verdicts as a protest against economic liberalism, opposition to further enlargement of the EU, and a desire for greater powers in Brussels. In short, they have chosen any interpretation other than the obvious

one: that the people of Europe are against deeper integration of the EU. This is borne out by a recent opinion poll by BVA and Maurice de Hond. Two-thirds of voters in both France and the Netherlands want to either take back powers from the EU or leave it altogether.

What's more, several European leaders are now arguing that the Constitution is legitimate because it has been ratified by 15 states, the latest being Finland which agreed the constitution on 1 July. But only two of these states, Spain and Luxembourg, ratified the Treaty after a referendum. Nine of the member states that ratified without a referendum are actually more euro-sceptical than France or Holland. You can see how popular opinion is being ignored. Britain, meanwhile has delayed its ratification process, as did the Czech Republic, Denmark, Ireland, Poland, Portugal and Sweden.

Of course, none of this would matter if the Constitution were merely as Mr Blair describes it 'a tidying up exercise'. It will enable Europe 'to work more effectively,' he says. But let's remind ourselves what the fuss is about.

The EU constitution: what it means for Britain

The full text of the Constitution is available online, and in a reader-friendly version, at On page 3, in Article I-5a, it says, 'This constitution shall have primacy over the laws of member states'. The doctrine of the supremacy of EU law is an invention of the European Court of Justice (ECJ). Until now, it has never been recognised in a treaty. But now EU governments have effectively sided with the ECJ against their own judges. In legal terms it makes the EU a state, and this state henceforth derives its authority from its founding charter, the EU Constitution.

This point is reinforced by the next clause, Article I- 6, which enables the EU to act as a state under international law. And now look at Article I-11: 'The member states shall exercise their competence to the extent that the Union has not exercised, or has decided to cease exercising, its competence'.

Did you get that? Member states are allowed to run their own affairs, to retain sovereignty, only where the EU does not. Jurisdiction from Brussels is specified in transport, energy, trade, competition, agriculture, fisheries, space exploration, social policy, public health, employment policy, consumer protection, asylum, immigration, criminal justice and foreign affairs. No wonder our politicians waffle on about schools so much.

It's pretty much all that's left!

And when our Prime Minister tells you there will be 'no federal superstate', he is half right. The EU will be a superstate all right, equipped with all the trappings of statehood that international law recognises a defined territory, a citizenry, a legislature, a legal system and supreme court, a defence capability, a head of state, a flag, a national anthem, a national day (9 May), and finally a constitution. But it will not be a 'federal state', because member countries will have fewer powers than 'federal' implies.

There was a great deal of characteristic self- congratulation when the Prime Minister removed the F- word 'federal' from the draft. He claimed a victory over euro-fanatics. He shouldn't have bothered. In federations there is clear demarcation between central and state authority. Once the EU Constitution comes into force, member states of the EU will in some ways have less freedom of action than the federated states of the USA. They can decide, for example, whether to retain the death penalty.

The Constitution also creates an EU foreign minister and diplomatic corps. It establishes a criminal justice system, with its own prosecuting authority and police force, as well as common rules on asylum and immigration. So if a politician tells you that the Constitution is a mere tidying up exercise, he's lying.

Every time Britain is asked to sign a European Treaty, we are given assurances that our sovereignty is not under threat. And every time, we lose more autonomy to the integrationist cause. In the early 1990s Douglas Hurd called the Maastricht Treaty the 'high tide of federalism'. Now the Constitution will remove our veto in 40 areas, including immigration. At the same time it fails to return a single power to legislate back to national parliaments.

THe EU constitution: implementation by stealth

It looks as though the Constitution will be revisited in the spring of next year, when both France and Holland have national elections, and pro-Constitution Germany holds the EU presidency. Member states, including the UK, have agreed that on 25 March 2007 they will sign a document on the future of the EU called the Declaration of Berlin. The Commission has made it clear that this declaration will be the precursor to a new Treaty and will be modelled on the Messina Declaration of 1955. That led to the founding of the Common Market. EU President Barrosso has said that the document will not only set out the values and ambitions of the EU, but also embody a shared undertaking to deliver these objectives.

The EU is meanwhile pressing ahead with all kinds of integrationist projects in the interim. The European Defence Agency proposed in the Constitution has been set up. The veto on asylum issues has been abolished, while the veto on justice and home affairs legislation is in the process of being abolished. Furthermore, a recent court decision has given the EU the power to propose criminal laws which are then adopted by majority vote.

The ambitious integrationist agenda has been proceeding stealthily in other areas. While it has not been formerly renamed, the EU's diplomatic network has been expanding. EU Foreign Policy Representative Javier Solana said in May last year 'that even if the Constitution was rejected in France, I think it is suitable to keep on working on the establishment of a European External Action Service. This service will certainly come into existence sooner or later.'

This de facto implementation of the Constitution by stealth works to build momentum for a formal return of the treaty. At last month's EU summit, marking a 12- month period of reflection on the 'no' votes of France and Holland, EU leaders agreed to sign a new treaty by the end of 2008. This treaty is likely to contain many of the proposals in the rejected EU Constitution.

There is still some disagreement as to the form of the re-heated Constitution. Those member states that have already ratified want to keep the text almost exactly as it is. Others like France, Denmark and the Czech Republic want to cherry pick and come up with a new slimmed down treaty under a new name which will include many of the features of the original Constitution. And at the other end of the spectrum is the Dutch government which has gone against the grain and accepted the will of the people. The Netherlands is the only country to have described the existing text as 'dead'. Unfortunately Holland is isolated.

The EU constitution: will there be a British referendum?

The role of the UK in the debate about the future of the Constitution has been almost non-existent. The UK government is in denial and has got its head in the sand. It knows that if it holds a referendum, the verdict will be a resounding 'no'. Meanwhile, several EU leaders talked about the need to put 'pressure' on the countries resisting the Constitution.

The infamous Mr Juncker said: 'It is absolutely possible that the EU will move forward without the British if they reject the Constitution.' An editorial in Handelsblatt, the German equivalent of the Financial Times, said: 'The British will have to be confronted in the end with the alternative of approving the Constitution or leaving the EU. And there's only very few people on the Eurosceptic island who want the latter.'

Oh really? Our government is looking for the coward's way out. In April 2004 the Prime Minister confirmed that the British people would be offered a referendum on the new European Constitution. The pledge itself was a spectacular U-turn as calls for a plebiscite were gaining an unstoppable momentum. Indeed it was rumoured that Rupert Murdoch had warned Mr Blair he would not let his newspapers support Labour's re-election unless a referendum on the Constitution was offered.

Furthermore, the Prime Minister insisted at the time that a referendum would go ahead, even if the voters of other EU countries rejected the Constitution. Rupert kept his side of the bargain, but Tony has no reason other than integrity to keep his. Now the UK government has indicated it plans to drop Mr Blair's 2004 pledge to hold a referendum.

Last month, in an interview with the Financial Times, Europe Minister Geoff Hoon said: 'Britain could accept an overhaul of European Union institutions without putting the changes to a referendum'. He went on to say that allowing a referendum on changes to EU treaties would depend on 'how comprehensive and extensive they are'. But the Government's suggestion that there will be no need for a referendum in Britain, because it contains only minor tweaks, is a fantasy.

In the past Europe was an issue that divided and embarrassed the Conservative Party. Now it's New Labour's turn. The process leading to a new text for the Constitution should be well under way by the time Mr Blair leaves Downing Street. Indeed, the Prime Minister might well appreciate the irony of locking Gordon Brown into a new treaty. It will be Blair's baby, but Brown's problem.

Our next general election should be about much more than schools and hospitals. Britain's sovereignty is at stake. And although the Government wants to pull the wool over our eyes, we need an elevated debate on Europe. Not only will there be a row about the new treaty towards the end of 2008, the next European elections fall in May 2009. That could coincide with the next general election.

Before then, in December this year, the Government plans to give up Britain's veto over the police and justice system. That will be a source of embarrassment for New Labour. Then at the start of next year, the EU Budget deal passes through parliament. You may recall that last December Tony Blair brokered a seven-year budget deal at the end of Britain's EU presidency. Treasury officials claimed that Gordon Brown was dismayed at the outcome.

Britain is giving too much away. The Chancellor is now fighting a rearguard action to save money.

But when Gordon Brown finally takes over at Number 10, he will have a torrid time defending an unpopular return of the EU Constitution. A reheated meal can give you food poisoning but a reheated constitution will be fatal. Bon appetit.

Brian has contributed to MoneyWeek with his expertise in investment strategy, for example how to quadruple your dividend income and how to navigate through the stock market in the 2008 financial crisis. He’s also touched on personal finance such as the housing market and the UK economy.