The United Kingdom, the European Union, and our place in the world
Thank you. Today I want to talk about the United Kingdom, our place in the world and our membership of the European Union.
But before I start, I want to make clear that - as you can see - this is not a rally. It will not be an attack or even a criticism of people who take a different view to me. It will simply be my analysis of the rights and wrongs, the opportunities and risks, of our membership of the EU.
Sovereignty and membership of multilateral institutions
In essence, the question the country has to answer on 23 June - whether to leave or remain - is about how we maximise Britain’s security, prosperity and influence in the world, and how we maximise our sovereignty: that is, the control we have over our own affairs in future.
I use the word ‘maximise’ advisedly, because no country or empire in world history has ever been totally sovereign, completely in control of its destiny. Even at the height of their power, the Roman Empire, Imperial China, the Ottomans, the British Empire, the Soviet Union, modern-day America, were never able to have everything their own way. At different points, military rivals, economic crises, diplomatic manoeuvring, competing philosophies and emerging technologies all played their part in inflicting defeats and hardships, and necessitated compromises even for states as powerful as these.
Today, those factors continue to have their effect on the sovereignty of nations large and small, rich and poor. But there is now an additional complication. International, multilateral institutions exist to try to systematise negotiations between nations, promote trade, ensure co-operation on matters like cross-border crime, and create rules and norms that reduce the risk of conflict.
These institutions invite member states to make a trade-off: to pool and therefore cede some sovereignty in a controlled way, to prevent a greater loss of sovereignty in an uncontrolled way, through for example military conflict or economic decline.
Article 5 of NATO’s Washington Treaty is a good example of how this principle works: NATO member countries, Britain included, have agreed to be bound by the principle of collective defence. An attack on any single member will, according to the treaty, be interpreted as an attack on all members, and collective defence measures - including full military action - can be triggered. Britain could find itself bound to go to war because of a dispute involving a different country - a clear and dramatic loss of control of our foreign policy - but on the other hand, NATO membership means we are far more secure from attack by hostile states - which increases our control of our destiny. This is an institutionalised trade-off that the vast majority of the public - and most political leaders - think is worthwhile.
Looking back at history - and not very distant history at that - we know what a world without international, multilateral institutions looks like. Any student of the way in which Europe stumbled its way to war in 1914 knows that the confused lines of communications between states, the ambiguity of nations’ commitments to one another, and the absence of any system to de-escalate tension and conflict were key factors in the origins of the First World War. The United Nations may be a flawed organisation that has failed to prevent conflict on many occasions, but nobody should want an end to a rules-based international system and - so long as they have the right remits - institutions that try to promote peace and trade.
How we reconcile those institutions and their rules with democratic government - and the need for politicians to be accountable to the public - remains one of the great challenges of this century. And the organisations of which the United Kingdom should become - and remain - a member will be a matter of constant judgement for our leaders and the public for many years to come.
Principles for Britain’s membership of international institutions
We need, therefore, to establish clear principles for Britain’s membership of these institutions. Does it make us more influential beyond our own shores? Does it make us more secure? Does it make us more prosperous? Can we control or influence the direction of the organisation in question? To what extent does membership bind the hands of Parliament?
If membership of an international institution can pass these tests, then I believe it will be in our national interest to join or remain a member of it. And on this basis, the case for Britain remaining a member of organisations such as NATO, the World Trade Organisation and the United Nations, for example, is clear.
But as I have said before, the case for remaining a signatory of the European Convention on Human Rights - which means Britain is subject to the jurisdiction of the European Court of Human Rights - is not clear. Because, despite what people sometimes think, it wasn’t the European Union that delayed for years the extradition of Abu Hamza, almost stopped the deportation of Abu Qatada, and tried to tell Parliament that - however we voted - we could not deprive prisoners of the vote. It was the European Convention on Human Rights (ECHR).
The ECHR can bind the hands of Parliament, adds nothing to our prosperity, makes us less secure by preventing the deportation of dangerous foreign nationals - and does nothing to change the attitudes of governments like Russia’s when it comes to human rights. So regardless of the EU referendum, my view is this. If we want to reform human rights laws in this country, it isn’t the EU we should leave but the ECHR and the jurisdiction of its court.
I can already hear certain people saying this means I’m against human rights. But human rights were not invented in 1950, when the convention was drafted, or in 1998, when it was incorporated into our law through the Human Rights Act. This is Great Britain - the country of Magna Carta, Parliamentary democracy and the fairest courts in the world - and we can protect human rights ourselves in a way that doesn’t jeopardise national security or bind the hands of Parliament. A true British Bill of Rights - decided by Parliament and amended by Parliament - would protect not only the rights set out in the convention but could include traditional British rights not protected by the ECHR, such as the right to trial by jury.
I also know that others will say there is little point in leaving the ECHR if we remain members of the EU, with its Charter of Fundamental Rights and its Court of Justice. And I am no fan of the charter or of many of the rulings of the court. But there are several problems that do apply to the Court of Human Rights in Strasbourg, yet do not apply to the Court of Justice in Luxembourg. Strasbourg is in effect a final appeals court; Luxembourg doesn’t have that role. Strasbourg can issue orders preventing the deportation of foreign nationals; Luxembourg has no such power. Unlike the European Convention on Human Rights, the European Treaties are clear: ‘national security,’ they say, ‘remains the sole responsibility of each member state’.
And unlike the ECHR, which is a relatively narrow human rights convention, our membership of the EU involves co-operation - and, yes, rules and obligations - on a much wider range of issues. The country’s decision in the referendum is therefore a much more complex undertaking. So I want to spend some time to go through the most important issues we need to consider.
Arguments that do not count
But before I do that, I want to deal with several arguments that should not count. The first is that, in the 21st century, Britain is too small a country to cope outside the European Union. That is nonsense. We are the fifth biggest economy in the world, we are growing faster than any economy in the G7, and we attract nearly a fifth of all foreign investment in the EU. We have a military capable of projecting its power around the world, intelligence services that are second to none, and friendships and alliances that go far beyond Europe. We have the greatest soft power in the world, we sit in exactly the right time zone for global trade, and our language is the world’s language. Of course Britain could cope outside the European Union. But the question is not whether we could survive without the EU, but whether we are better off, in or out.
Neither is it true that the EU is the only reason the continent has been largely peaceful since the end of the Second World War. Nor is it about ‘the kind of country we want to be’, as the cliche is usually put. Nor is the decision we face anything to do with our shared cultural heritage with Europe. Of course we are a European country, but that in itself is not a reason to be an EU member state.
And nor is this debate about the past. Really, I cannot emphasise this enough. We are not in 1940, when Europe’s liberty was in peril and Britain stood alone. We are not in 1957, when the Treaty of Rome was agreed, Europe was a Group of Six and the Cold War was a generation away from its conclusion. We are not in 1973, when Britain was the ‘sick man of Europe’ and saw the European Economic Community as its way out of trouble. We are not even in 1992, when Maastricht was signed and the reunification of Germany had only just taken place.
We are in 2016, and when we make this important decision, we need to look ahead to the challenges we will face - and the rest of Europe will face - over the next ten, twenty, thirty years and more. Those challenges - about security, trade and the economy - are serious, complex and deserve a mature debate. We need our decision to be the result of a hard-headed analysis of what is in our national interest. There are certainly problems that are caused by EU membership, but of course there are advantages too. Our decision must come down to whether, after serious thought about the pros and the cons, we believe there is more in the credit column than in the debit column for remaining on the inside.
So I want to talk now about those 3 big, future challenges - security, trade and the economy.
A lot has been said already during this referendum campaign about security. But I want to set out the arguments as I see them. If we were not members of the European Union, of course we would still have our relationship with America. We would still be part of the Five Eyes, the closest international intelligence-sharing arrangement in the world. We would still have our first-rate security and intelligence agencies. We would still share intelligence about terrorism and crime with our European allies, and they would do the same with us.
But that does not mean we would be as safe as if we remain. Outside the EU, for example, we would have no access to the European Arrest Warrant, which has allowed us to extradite more than 5,000 people from Britain to Europe in the last 5 years, and bring 675 suspected or convicted wanted individuals to Britain to face justice. It has been used to get terror suspects out of the country and bring terrorists back here to face justice. In 2005, Hussain Osman - who tried to blow up the London Underground on 21/7 - was extradited from Italy using the Arrest Warrant in just 56 days. Before the Arrest Warrant existed, it took 10 long years to extradite Rachid Ramda, another terrorist, from Britain to France.
There are other advantages too. Take the passenger name records directive. This will give law enforcement agencies access to information about the movements of terrorists, organised criminals and victims of trafficking on flights between European countries and from all other countries to the EU. When I first became Home Secretary, I was told there wasn’t a chance of Britain ever getting this deal. But I won agreement in the Council of Ministers in 2012 and - thanks to Timothy Kirkhope MEP and the hard work of my Home Office team - the final directive has now been agreed by the European Parliament and Council.
Most importantly, this agreement will make us all safer. But it also shows 2 advantages of remaining inside the EU. First, without the kind of institutional framework offered by the European Union, a complex agreement like this could not have been struck across the whole continent, because bilateral deals between every single member state would have been impossible to reach. And second, without British leadership and influence, a directive would never have been on the table, let alone agreed.
These measures - the Arrest Warrant and PNR - are worthwhile because they are not about grandiose state-building and integration but because they enable practical co-operation and information sharing. Britain will never take part in a European police force, we will never sign up to a European Public Prosecutor, and 2 years ago we took Britain out of around a hundred unhelpful EU justice and home affairs measures. But when we took that decision, we also made sure that Britain remained signed up to the measures that make a positive difference in fighting crime and preventing terrorism.
The European Criminal Records Information System, financial intelligence units, the prisoner transfer framework, SIS II, joint investigation teams, Prüm. These are all agreements that enable law enforcement agencies to co-operate and share information with one another in the fight against cross-border crime and terrorism. They help us to turn foreign criminals away at the border, prevent money laundering by terrorists and criminals, get foreign criminals out of our prisons and back to their home countries, investigate cases that cross borders, and share forensic data like DNA and fingerprinting much more quickly.
In the last year, we have been able to check the criminal records of foreign nationals more than 100,000 times. Checks such as these mean we have been able to deport more than 3,000 European nationals who posed a threat to the public. The police will soon be able to check DNA records for EU nationals in just 15 minutes. Under the old system it took 143 days. Last year, the French used information exchanged through the Prüm agreement to locate one of the suspected perpetrators of the November attacks in Paris.
These are practical measures that promote effective cooperation between different European law enforcement organisations, and if we were not part of them Britain would be less safe.
Now I know some people say the EU does not make us more secure because it does not allow us to control our border. But that is not true. Free movement rules mean it is harder to control the volume of European immigration - and as I said yesterday that is clearly no good thing - but they do not mean we cannot control the border. The fact that we are not part of Schengen - the group of countries without border checks - means we have avoided the worst of the migration crisis that has hit continental Europe over the last year. It means we can conduct checks on people travelling to Britain from elsewhere in Europe. And, subject to certain rules and the availability of information, it means we can block entry for serious criminals and terrorists.
I have heard some people say - especially after the terrorist attacks in Brussels last month - that the very existence of extremists and terrorists in Belgium, France and other EU member states is reason enough to leave. But our response to Paris and Brussels cannot be to say that we should have less co-operation with countries that are not only our allies but our nearest neighbours. And anyway leaving the EU would not mean we could just close ourselves off to the world: the 9/11 attacks on New York were planned in Afghanistan. The 7/7 attackers trained in Pakistan. And most of the international terrorism casework that crosses my desk involves countries beyond Europe’s borders.
So my judgement, as Home Secretary, is that remaining a member of the European Union means we will be more secure from crime and terrorism.
But now I want to turn to the other challenges we face in the coming decades: trade and the economy.
Trade and the economy
The headline facts of Britain’s trade with Europe are clear. The EU is a single market of more than 500 million people, representing an economy of almost £11 trillion and a quarter of the world’s GDP. 44% of our goods and services exports go to the EU, compared to 5% to India and China. We have a trade surplus in services with the rest of the EU of £17 billion. And the trading relationship is more inter-related than even these figures suggest. Our exporters rely on inputs from EU companies more than firms from anywhere else: 9% of the ‘value added’ of UK exports comes from inputs from within the EU, compared to 2.7% from the United States and 1.3% from China.
So the single market accounts for a huge volume of our trade, but if it is completed - so there are genuinely open markets for all services, the digital economy, energy and finance - we would see a dramatic increase in economic growth, for Britain and the rest of Europe. The Capital Markets Union - initiated and led by Britain - will allow finance to flow freely between member states: the first proposal alone could lead to £110 billion in extra lending to businesses. A completed energy single market could save up to £50 billion per year across the EU by 2030. And a digital single market is estimated to be worth up to £330 billion a year to the European economy overall. As Britain is the leading country in Europe when it comes to the digital economy, that is an enormous opportunity for us all.
These changes will mean greater economic growth in Britain, higher wages in Britain and lower prices for consumers - in Britain. But they will not happen spontaneously and they require British leadership. And that is a crucial point in this referendum: if we leave the EU it is not just that we might not have access to these parts of the single market - these parts of the single market might never be created at all.
The economic case for remaining inside the European Union isn’t therefore just about risk, but about opportunity. And it isn’t just about fear, but about optimism - optimism that Britain can take a lead and deliver more trade and economic growth inside Europe and beyond.
There are risks we need to weigh, of course. And there are risks in staying as well as leaving. There is a big question mark, for example, about whether Britain, as a member state that has not adopted the euro, risks being discriminated against as the countries inside the Eurozone integrate further. When the European Central Bank said clearing houses dealing in large volumes of euros had to be located in the Eurozone, it could have forced LCH.Clearnet to move its euro business out of London, probably to Paris. That was struck down by the EU’s General Court, but the threat was clear. And that is why it was so important that the Prime Minister’s negotiation guaranteed a principle of non-discrimination against businesses from countries outside the Eurozone.
If we were not in the European Union, however, no such deal could have been agreed. There would be little we could do to stop discriminatory policies being introduced, and London’s position as the world’s leading financial centre would be in danger. The banks may be unpopular, but this is no small risk: financial services account for more than 7% of our economic output, 13% of our exports, a trade surplus of almost £60 billion - and more than one million British jobs.
But this is all about trade with Europe. What about trade with the rest of the world? It is tempting to look at developing countries’ economies, with their high growth rates, and see them as an alternative to trade with Europe. But just look at the reality of our trading relationship with China - with its dumping policies, protective tariffs and industrial-scale industrial espionage. And look at the figures. We export more to Ireland than we do to China, almost twice as much to Belgium as we do to India, and nearly 3 times as much to Sweden as we do to Brazil. It is not realistic to think we could just replace European trade with these new markets.
And anyway, this apparent choice is a false dichotomy. We should be aiming to increase our trade with these markets in addition to the business we win in Europe. Given that British exports in goods and services to countries outside the EU are rising, one can hardly argue that the EU prevents this from happening. Leaving the EU, on the other hand, might make it considerably harder. First, we would have to replace 36 existing trade agreements we have with non-EU countries that cover 53 markets. The EU trade deals Britain has been driving - with the US, worth £10 billion per year to the UK, with Japan, worth £5 billion a year to the UK, with Canada, worth £1.3 billion a year to the UK - would be in danger of collapse. And while we could certainly negotiate our own trade agreements, there would be no guarantee that they would be on terms as good as those we enjoy now. There would also be a considerable opportunity cost given the need to replace the existing agreements - not least with the EU itself - that we would have torn up as a consequence of our departure.
Inside the EU, without Britain, the balance of power in the Council of Ministers and European Parliament would change for the worse. The liberal, free-trading countries would find themselves far below the 35% blocking threshold needed in the council, while the countries that tend towards protectionism would have an even greater percentage of votes. There would be a very real danger that the EU heads in a protectionist direction, which would damage wider international trade and affect for the worse Britain’s future trade with the EU.
So, if we do vote to leave the European Union, we risk bringing the development of the single market to a halt, we risk a loss of investors and businesses to remaining EU member states driven by discriminatory EU policies, and we risk going backwards when it comes to international trade. But the big question is whether, in the event of Brexit, we would be able to negotiate a new free trade agreement with the EU and on what terms.
Some say we would strike deals that are the same as the EU’s agreements with Norway, Switzerland or even Canada. But with all due respect to those countries, we are a bigger and more powerful nation than all 3. Perhaps that means we could strike a better deal than they have. After all, Germany will still want to sell us their cars and the French will still want to sell us their wine. But in a stand-off between Britain and the EU, 44% of our exports is more important to us than 8% of the EU’s exports is to them.
With no agreement, we know that WTO rules would oblige the EU to charge 10% tariffs on UK car exports, in line with the tariffs they impose on Japan and the United States. They would be required to do the same for all other goods upon which they impose tariffs. Not all of these tariffs are as high as 10%, but some are considerably higher.
The reality is that we do not know on what terms we would have access to the single market. We do know that in a negotiation we would need to make concessions in order to access it, and those concessions could well be about accepting EU regulations, over which we would have no say, making financial contributions, just as we do now, accepting free movement rules, just as we do now, or quite possibly all 3 combined. It is not clear why other EU member states would give Britain a better deal than they themselves enjoy.
All of this would be negotiable, of course. For the reasons I listed earlier, Britain is big enough and strong enough to be a success story in or out of the EU. But the question is not whether we can survive Brexit: it is whether Brexit would make us better off. And that calculation has to include not only the medium to long-term effects but the immediate risks as well.
The union with Scotland and the other risks of Brexit
Now it is sometimes suggested that Brexit could lead to other countries seeking to leave the European Union. Some even believe that Brexit might be a fatal blow to the whole EU project. And some, I know, think that this would be a good thing. But I’m afraid I disagree. The disintegration of the EU would cause massive instability among our nearest neighbours and biggest trading partners. With the world economy in the fragile state it is, that would have real consequences for Britain.
But if Brexit isn’t fatal to the European Union, we might find that it is fatal to the union with Scotland. The SNP have already said that in the event that Britain votes to leave but Scotland votes to remain in the EU, they will press for another Scottish independence referendum. And the opinion polls show consistently that the Scottish people are more likely to be in favour of EU membership than the people of England and Wales.
If the people of Scotland are forced to choose between the United Kingdom and the European Union we do not know what the result would be. But only a little more than 18 months after the referendum that kept the United Kingdom together, I do not want to see the country I love at risk of dismemberment once more. I do not want the people of Scotland to think that English Eurosceptics put their dislike of Brussels ahead of our bond with Edinburgh and Glasgow. I do not want the European Union to cause the destruction of an older and much more precious union, the union between England and Scotland.
Brexit also risks changing our friendships and alliances from further afield. In particular, as President Obama has said, it risks changing our alliance with the United States. Now I know as well as anybody the strength and importance of that partnership - our security and intelligence agencies have the closest working relationship of any 2 countries in the world - and I know that it would certainly survive Britain leaving the EU. But the Americans would respond to Brexit by finding a new strategic partner inside the European Union, a partner on matters of trade, diplomacy, security and defence, and our relationship with the United States would inevitably change as a result. That would not, I believe, be in our national interest.
We should remain in the EU
So I want to return to the principles I set out to help us judge whether Britain should join or remain a member of international institutions. Remaining inside the European Union does make us more secure, it does make us more prosperous and it does make us more influential beyond our shores.
Of course, we don’t get anything like everything we want, and we have to put up with a lot that we do not want. And when that happens, we should be honest about it. The Common Agricultural Policy, the Common Fisheries Policy, the free movement of people: none of these things work the way we would like them to work, and we need to be smarter about how we try to change these things in future. But that does not mean we have no control over the EU. Britain can and often does lead in Europe: the creation of the single market was driven by Mrs Thatcher, the competitiveness and trade agendas now pursued by the commission were begun at the behest of Britain and Germany, and I can tell you that on matters of counter-terrorism and security, the rest of Europe instinctively looks towards us. But it shouldn’t be a notable exception when Britain leads in Europe: it should become the norm.
And turning to the final test: to what extent does EU membership bind the hands of Parliament? Of course, every directive, regulation, treaty and court ruling limits our freedom to act. Yet Parliament remains sovereign: if it voted to leave the EU, we would do so. But unless and until the European Communities Act is repealed, Parliament has accepted that it can only act within the limits set by the European treaties and the judgments of the Court of Justice. The freedom to decide whether to remain a member of the EU or to leave will therefore always be in the hands of Parliament and the British people.
I do not want to stand here and insult people’s intelligence by claiming that everything about the EU is perfect, that membership of the EU is wholly good, nor do I believe those that say the sky will fall in if we vote to leave. The reality is that there are costs and benefits of our membership and, looking to the years and decades ahead, there are risks and opportunities too. The issues the country has to weigh up before this referendum are complex. But on balance, and given the tests I set earlier in my speech, I believe the case to remain a member of the European Union is strong.
A different European policy
For each of the principles I set out earlier, however, I cannot help but think there would be more still in the credit rather than debit column if Britain adopted a different approach to our engagement with the EU. Because we should be in no doubt that, if we vote to remain, our relationship with the European Union will go on changing. And that change - with new treaties on the horizon - might be for the better or worse.
And to those who say Britain cannot achieve what it needs in Europe, I say have more belief in what Britain can do. I say think about how Britain built the single market, and let’s be that ambitious - in the British national interest - once again.
Let us set clear objectives to complete the single market, to pursue new free trade deals with other countries, to reform the European economy and make it more competitive. Let’s work to ensure the countries of Europe can protect their borders from illegal immigrants, criminals and terrorists. Let’s try to make sure that more of our European allies play their part in protecting western interests abroad.
We need to have a clear strategy of engagement through the Council of Ministers, seek a bigger role for Britain inside the commission, try to stem the growth in power of the European Parliament, and work to limit the role of the Court of Justice. We need to work not only through the EU’s institutions and summits, but by also pursuing more bilateral diplomacy with other European governments.
And it is time to question some of the traditional British assumptions about our engagement with the EU. Do we stop the EU going in the wrong direction by shouting on the sidelines, or by leading and making the case for taking Europe in a better direction? And do we really still think it is in our interests to support automatically and unconditionally the EU’s further expansion? The states now negotiating to join the EU include Albania, Serbia and Turkey - countries with poor populations and serious problems with organised crime, corruption, and sometimes even terrorism. We have to ask ourselves, is it really right that the EU should just continue to expand, conferring upon all new member states all the rights of membership? Do we really think now is the time to contemplate a land border between the EU and countries like Iran, Iraq and Syria? Having agreed the end of the European principle of ‘ever closer union’, it is time to question the principle of ever wider expansion.
Stand tall and lead
So this is my analysis of the rights and wrongs, the opportunities and risks, of our membership of the EU - and the reasons I believe it is clearly in our national interest to remain a member of the European Union.
And I want to emphasise that I think we should stay inside the EU not because I think we’re too small to prosper in the world, not because I am pessimistic about Britain’s ability to get things done on the international stage. I think it’s right for us to remain precisely because I believe in Britain’s strength, in our economic, diplomatic and military clout, because I am optimistic about our future, because I believe in our ability to lead and not just follow.
But I know what a difficult decision this is going to be for a lot of people. I know, because of the conversations I have with my constituents every Saturday. Because of the discussions I’ve had with members of the public - and members of the Conservative Party - up and down the country. And because I myself have already gone through the process of carefully weighing up what is in Britain’s interests, now and in the future, before making my decision. Ultimately, this is a judgement for us all, and it’s right that people should take their time and listen to all the arguments.
So as we approach polling day, and as the country starts to weigh up its decision, let us focus on the future. Instead of debating the peripheral, the ephemeral and the trivial, let both sides of the argument debate what matters. And let us do so in a serious and mature way. Let us concentrate on Britain’s national interest. Britain’s future. Our influence around the world. Our security. And our prosperity. Let us make our decision with the great challenges of the future in mind. Let us have more confidence in our ability to get things done in Europe. This is about our future. Let us, Great Britain, stand tall and lead.