Mandelson: Eurosceptic Czech-UK alliance ‘going nowhere’

Peter Mandelson interview photo.JPG

Britain is in danger of being forgotten by its European partners as its government struggles to reconcile the eurosceptic and ‘anti-European’ sides of its main ruling party, says former EU Trade Commissioner Peter Mandelson.

Peter Mandelson, a baron and British Labour Party politician, served in a number of cabinet positions under former Tony Blair and Gordon Brown. He also served as the European commissioner for trade from 2004-2008. Mandelson now chairs the London-based strategic advisory firm Global Counsel. He spoke to’s Jan Vitásek in Prague.

At the last EU summit, things moved forward in terms of looking for new solutions to the eurozone crisis. Do you see measures adopted in June (more flexibility to the ESM, laying grounds for banking union) as a potential turning point in eurozone crisis?

I think it was an important development. I think that principles were established, the Rubicon, in a sense, was crossed but – as we have seen since – there was conditionality attached to it on which Germany insisted. Now as a result we may not see the immediate effect of that position.

I think that I quite understand Germany’s desire to see proper banking supervision in place when European resources have been used to bail out Spanish banks. All I am saying is that we need that banking supervision to be put in place quickly and effectively because if we lose or miss this opportunity of assisting Spanish banks in this way, it will not be just Spanish banks that are the casualty but the Spanish sovereign position as a whole. So we have to trade with great care.

What else do you think must be done? Before the last EU summit you had several comments on strengthening the role of the ECB, or more flexibility to the ECB as a lender of last resort…

As a part of the overhaul of the eurozone, and what I would like to see – which is an emergence of the eurozone Mark II – I believe that the role of the ECB has to evolve. But equally, I understand that if we are talking about the principle of mutualisation, whether it be in respect of banks or sovereigns in the eurozone, Germany is right to insist on new political systems and controls being put in place. Otherwise Germany, amongst others, is opening itself out to unlimited costs and liabilities in the eurozone, without being able to exercise any effective control over the situation that is becoming exposed to.

That is not politically possible. We have to be realistic here: if we are going to talk about changes in the operation of the eurozone and the principle of mutualisation – both in the banking system and sovereigns – then we have to see different rules, different methods of enforcing those rules and consequences if people ignore them. These are two sides of the single coin. And they have to go forward together.

Having one single currency with same interest rates together with different competitiveness in the core and on the periphery caused serious imbalances in the eurozone economy. Do not we need to ease the monetary policy of Germany in order to repair these imbalances?

There are many ways of looking at this. What I say is that, just as Germany is entitled to take the approach it does, everyone else is entitled to expect Germany to move with greater speed and pragmatism in order to get through this crisis.

We mentioned banking union. Currently there is a debate whether the decision of the current UK government not to be a part of it is not putting the UK within an outer ring of the EU. What do you think?

The government in the UK is doing two things. It is operating in the short-term interest, not the long-term; and secondly it is responding to the political pressures within the Conservative party, not the national interest.

I am sorry to be so precise but that is the situation. And many others in Britain, including in the financial sector, the banks, the City of London, would take a different longer-term view of Britain’s interests. I hope the British government will become more responsive to those alternative views and not simply keep thinking in terms of what is good today to the Conservative party. They have to think up what is good tomorrow for the country as a whole.

In one of your recent speeches you said that in Great Britain there are two positions towards the EU: the eurosceptic and the one which wants to keep the European Union at arm’s length, and that you would prefer a different approach. Which one would it be?

There are degrees of euroscepticism and out-and-out anti-Europeanism. By the way, you are familiar with this in the Czech Republic. It is very similar to the right-wing Conservative party and some individual people in Britain are simply anti-Europe on any terms. And you have certain individuals in the Czech Republic who are taking similar attitude.

If then you take the position of British prime minister, he would prefer not to be trapped in this debate between the eurosceptics and the anti-Europeanists. I think, ideally, he would like to take a pragmatic approach and to see Britain play a full and effective part in the affairs of the European Union. But the whole time he is being held back and this is damaging to Britain’s national interests.

And if Britain continues to follow this ambivalent route, then we are going to find partners in Europe first ignoring us, then dismissing us and then forgetting about us altogether.

We have many views on Europe that we want to see happen or to change, the decisions that we want to see taken or suit our interests, but we have less and less foothold in Europe, less and less standing in Europe to make our case, to have it heard, and the decisions to be taken as we would like them. We are, as the English expression says, cutting off our noses to spite our faces. This is the wrong way to approach Europe and you know that in the Czech Republic.

From an opposition point of view, how do you perceive this UK-Czech conservative relationship?

This is a relationship which is going nowhere. It is no more beneficial for Czech interests than it is for Britain’s. It is a product of prejudice and it is putting self before country.

You recently said that there should be referendum on the UK’s relationship with the EU. Why?

I do not rule that out. If the eurozone remakes itself and you see a European core emerging where there is greater integration and greater “federal” control over monetary and fiscal policies, then I think that Britain will need to reconsider its relationship to that inner core, otherwise it is going to be in the outer perimeter and in a position where our national interests could very well be damaged.

If we are going, though, to forge a different relationship, it is for the people of Britain to determine that, not simply the political parties. But we are talking about the emergence of a new institutional model and questions about Britain’s relationship to that model over the next five to ten years, not over the next five to ten months.

That is the difference between myself and those in the Conservative party who want an immediate referendum. They are doing so because they want to take advantage of the crisis and to get Britain out of Europe. I am the opposite. I want to take advantage of the remaking of the eurozone so that Britain can consider whether it will become a part of it, not to leave the European Union all together.

Still, given opinions in British society towards the EU and your own views, are not you afraid of a referendum?

But you do not know what the views of the Britain are going to be from five to ten years time. I know where they are now.        

Two months ago in Oxford you gave a speech in which you talked about institutional changes that could be adopted in the EU. You floated an idea of the European Commission and the Council of the European Union merging together and changing the role of the European Parliament. Can you elaborate a bit on this?

I think one of the problems in the European Union is that of political legitimacy. And there are two aspects to this. One is the efficiency of decision-making, and the second is the alliance or the convergence of the day-to-day government of the European Union, and the views and interests of the member states. Now I do not think that the system we have at the moment is perfect. I think the European Commission meeting every week with 27 people is unviable, impractical. So I would like to see a smaller executive meeting.

Shrinking the portfolios of individual commissioners?

Certainly, but I also acknowledge that every member state has to be involved in the supervision of what an executive does. So if we can find a preferable model, that is what I would like to examine, and the model of the European Central Bank – where you have executive council and a supervisory board of all 17 member states – is, I think, an interesting model.

Have you already had some opportunity to discuss these ideas with politicians?

From time to time, but nothing is simple. If there were some silver bullet that you could use – the silver bullet policy – silver bullet reforms of the eurozone, silver bullet remodelling of the European Union government, we would have employed it some time ago. It is not like this. There are trade-offs, there are consequences, and it is a very complex Rubik’s cube. And it is not easy or quick to arrive at an alternative.

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