In a much discussed piece in today's Sunday Times (behind paywall, but a summary here), Niall Ferguson apologizes for supporting the REMAIN side in last June's vote. He now announces he is switching to the LEAVE aside.
[This is not the first time he has switched sides. He was in favour of the Iraq War, then--in a move that would make Donald Trump proud--claimed (in his ST column of June 2016) he was always agin it: a forgetful claim, since he had written this back in 2003:
"Let me come clean. I am a fully paid up member of the neoimperialist gang. Twelve years ago—when it was not fashionable to say so—I was already arguing that it would be “desirable for the United States to depose” tyrants like Saddam Hussein. “Capitalism and democracy,” I wrote, “are not naturally occurring, but require strong institutional foundations of law and order. The proper role of an Imperial America is to establish these institutions where they are lacking, if necessary by military force.” Today this argument is in danger of becoming a commonplace…. Max Boot has gone so far as to say the United States should provide places like Afghanistan and other troubled countries with 'the sort of enlightened foreign administration once provided by self-confident Englishmen in jodhpurs and pith helmets.' I agree."] The New York Times Magazine (April 27, 2003)
He apologizes for getting his Brexit vote wrong, and justifies his error on the grounds that he was supporting his friends (Cameron and Osbourne) and had been bamboozled by living in pro-EU America for 14 years.
But now he sees the light and advances 4 arguments sufficient, in his view, to justify BREXIT:
1. The EMU doesn't work and "has made it extremely difficult for Southern Europe to recover from the financial crisis."
2. Europe's "supposed foreign policy has been a failure," as shown by the Arab Spring--"European governments intervened just enough to make the Islamist winter worse." Ditto wrt Ukraine.
3. European institutions mishandled the financial crisis--evidence: "the crisis drags on in Italy."
4. EU leaders --esp Merkl-- "made a disastrous mess of the refugee crisis precipitated by the Syrian civil war, turning it into a mass migration crisis. They wholly failed to secure the EU's external border. Finally, they utterly read the mounting public dissatisfaction...with the consequences of unfettered free population movement."
I agree with him that the EMU was a bad idea. The EU needs to jettison the sneaky Monnet/Delors project of using economic integration to drive forward political integration. I've argued that political integration--openly discussed with the public and respecting a sensible form of "subsidiarity"--ought to precede economic integration. That said, it is worth bearing in mind the following counterarguments:
1. Italy's problems have very little to do with the EMU. The Italian Crisis--very low productivity and growth--precedes the appearance of the EMU. I share Martin Sandbu's view (here and esp. here) that devaluation will not work for Italy. (See also Daniel Gros who doubts there is anything that Germany/EU can do to save Italy.) In fact. the root of Italy's economic problems is (as Giavazzi and others have noted) a misallocation of capital, which itself can only be understood in terms of a failure of the capital and credit markets in that country. Simply stated, Italian banks allocate money in a way that starves the productive sectors of sufficient funds. This problem has nothing to do with the EMU; it would persist even if the Euro were abolished.
2. Europe's foreign policy failures in the Arab Spring were largely the fault of Cameron and (esp.) Sarkozy, who facilitated the demise of Gaddafi without a plan for his succession. This failure had very little to do with the EU. EU action on Ukraine has not been as bad as people suggest. The EU's existence has helped stimulate a freedom movement in Western Ukraine, which has proven a thorn in the side of Russia, which--despite its power and interests in this region--has not been able to bring under full control the one country that it considers absolutely crucial to its own security.
3. The financial crisis was largely a consequence of the badly-regulated derivative market in the US. The current Italian banking crisis--basically Monte dei Paschi and a few others-- is a function of Italy (not the EU's) failure to reform its quasi-medieval banking structure, which allows Fondazione (amateur political appointees for the most part) to meddle in business decisions. (See here for an account of how PD politicians screwed up MPS and were duped by Bolin's Santander into overpaying for Banca Antonveneta in 2007; see also this article by Veron).
4. Ferguson is right to criticize the EU for not policing its Southern Med. border properly and for dropping Greece and Italy in it. But he is wrong to complain about Merkel's decision to admit refugees. She deserves praise for recognizing her humanitarian duties to rescue a bunch of people fleeing from ISIS, which itself is partly a consequence of the disastrous Iraq War that Ferguson himself-- in his pith-helmet phase--supported.
More generally, even if NF were right on all four points--and he isn't--this does not justify BREXIT. Britain isn't in the Eurozone, so points one and three are irrelevant. Britain has the strongest military in Europe and is very well-represented in EU foreign policy circles. Britain could easily veto any major European foreign policy it disliked. The EU, for better or worse, acts largely through consensus, especially in the foreign policy area, where the EU lacks any independent "federal" means for action.
The only argument that bears on Brexit is the refugee argument and immigration. But here I think Merkel is right. Europe has a humanitarian duty to Middle Eastern refugees--especially Britain, whose foreign policy has done more than most to reduce the region to a zone of insecurity and misery.
4. Ferguson is right to criticize the EU for not policing its Southern Med. border properly and for dropping Greece and Italy in it. But he is wrong to complain about Merkel's decision to admit refugees. She deserves praise for recognizing her humanitarian duties to rescue a bunch of people fleeing from ISIS, which itself is partly a consequence of the disastrous Iraq War that Ferguson himself-- in his pith-helmet phase--supported.
More generally, even if NF were right on all four points--and he isn't--this does not justify BREXIT. Britain isn't in the Eurozone, so points one and three are irrelevant. Britain has the strongest military in Europe and is very well-represented in EU foreign policy circles. Britain could easily veto any major European foreign policy it disliked. The EU, for better or worse, acts largely through consensus, especially in the foreign policy area, where the EU lacks any independent "federal" means for action.
The only argument that bears on Brexit is the refugee argument and immigration. But here I think Merkel is right. Europe has a humanitarian duty to Middle Eastern refugees--especially Britain, whose foreign policy has done more than most to reduce the region to a zone of insecurity and misery.
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