Lord Leach and Open Europe: Only 'big picture' reform will keep Britain in the EU

Through his think-tank Open Europe, Lord Leach is at the heart of the referendum debate, consulted by both camps. He explains to Margareta Pagano why only ‘big picture’ reform will keep us in the EU

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The Independent Online

When Rodney Leach was a young classics tutor at Oxford, he started the Oxford-Hungarian relief fund, helping refugees oppressed by the Russian invasion of 1956.

He was 22 and says the experience made him feel rather as Wordsworth may have done during the early days of the French Revolution. “I hesitate to use the comparison but it must have been a similar feeling. Watching the Hungarians resisting the Russians was a revelation. Here were people longing to be free. To my surprise, I found I had a deep desire to do something real for the liberation of the human spirit.”

 How times changes. Today Hungary is closing its borders to refugees and migrants trying to escape barbaric circumstances, and the paradox is not lost on him.

“It’s awful to watch the pictures of barbed wire going up across borders. [German Chancellor] Angela Merkel made a good-hearted blunder when she said Germany would open its doors to the refugees. Predictably, she is now facing a backlash. You can understand why countries in the front line are desperate to stop a free for all.”

What’s more, Lord Leach describes as “nuts” the recent proposal from Jean-Claude Juncker, President of the European Commission, that each country in the European Union should take in a quota of 120,000 refugees. “The situation is growing seriously muddled, and dangerous, because no one knows exactly whether the people arriving are real refugees or immigrants; many are from Africa and Asia, not from the Syrian war zone. Sadly, the emoting from religious leaders and the bien pensants to open our doors to more refugees is making matters worse.”

We are talking in one of the meeting rooms at 3 Lombard Street, the London end of Jardines, the hotels to engineering to insurance trading empire controlled by the Keswick family. Lord Leach has worked for Jardines as an adviser for 32 years, helping the family business to steer its way through the Hong Kong handover and to construct the complex cross-ownership share structure that makes a hostile takeover almost impossible.

Impeccably dressed in dark blue pinstriped suit and knitted black waistcoat, he has the air of a hawk. He shoots me the most outraged stare when foolishly I ask whether he still works full-time at Jardine. He is 81. “Of course I work every day. Strategic issues never go away and Jardines is a very collaborative business.”

Lord Leach has another advisory role as chairman of Open Europe, the think-tank he founded in 2008 to put the case for reforming Britain’s relationship with the EU. He has a good track record in lobbying, having chaired the Business for Sterling campaign group 15 years ago when the Blair government was on the verge of taking the UK into the eurozone,

Such is Open Europe’s reputation for robust thinking that Mats Persson, its former chief executive, is now in the No 10 policy unit advising on the referendum. Indeed, Lord Leach says that both the “outers”, led by groups such as Business for Britain,– and the “inners, like Business for New Europe, have sought Open Europe’s co-operation to bolster the credibility of the case they put to the public.

Although a Conservative peer, he says he’s not remotely interested in party politics – only “philosophical principles”.

“What we have done is point out certain truths, explaining rationally what is going on beneath the surface, just as we did with Business for Sterling. We have a handful of brilliant policy analysts; they will always outgun a hundred or so middling economists. As think-tanks go, we live on a shoestring and spend about £700,000 a year.”

Right now, Lord Leach says the momentum is with the “No” lobby because of the migrant crisis, and before it, the eurozone crisis and Greece. “But this is changing hour by hour, even as we speak. British opinion is on a knife-edge. The public is exhausted by too many superficial polls. Our research suggests about 25 per cent is fixed for the inners, and 25 to 30 per cent for the outers. This leaves nearly half the electorate leaning this way or that but essentially still undecided.”

For him, David Cameron and George Osborne will only win if they negotiate “big picture” reform with the EU, halting the current inexorable direction of travel towards an EU superstate. “Even Otmar Issing – one of the euro’s founding fathers – warns that the latest plan for an EU-wide finance ministry with control over tax and spending is a foolhardy attempt to smuggle through political union, and breaches the basic fundamentals of modern democracy.”

There are two big changes, Lord Leach says, that would constitute a good deal. “The first step would be to redefine the EU as the Single Market, not as a vague aspiration to political union – with safeguards put in place to ensure that as the eurozone integrates, it does not write the rules for the rest of the member states.

 “We need to establish a principle that allows countries to choose whether they want to be in closer union with each other, or – like Britain and possibly some Nordic countries and Poland; those that want a Europe of nation states – inside the EU but outside the eurozone.

 “If some countries want to advance towards economic and political unity through what’s called ‘enhanced co-operation’ – whether it’s currency union, or passports, or defence, or employment or even tax – then let them. That’s fine, so long as we are not forced to.

“You could see countries like Norway and Switzerland joining such a structure and the Turkish issue would become more soluble.”

Second, he would like to pull back some powers over EU decisions to Westminster. “The best news I’ve heard for a long time is that Cameron and the new Polish president [Andrzej Duda] share similar views on national sovereignty. There has been a shameful neglect of Poland for years by previous governments and so it’s wonderful to see closer relations.”

He is sympathetic to the dreams of the EU’s founding fathers yet suggests Europe has changed so much that many of those early ideals are no longer pertinent. “Democracy failed the people during the 20th century, which was a series of economic disasters and a bloody period of history with two world wars, the Spanish civil war and then Soviet communism.

“Today Europe is very different. There has been a revival of democracy – new, legitimate states are coming out of our ears. There are now 60 proper democracies compared with 16 after the Second World War. Europe’s dynamics have changed, and so have the world’s dynamics with the massive entry of Asia into the global economy and the substitution of regional groupings by the networked international village.”

However, he says the outers who claim that reaching a favourable free trade deal with the EU will be virtually automatic – since “Europe needs us more than we need them” – are mistaken. “If they believe the EU will make it easy for the UK to negotiate new free trade agreements for services, which is Britain’s strength, they are deluded. The City would not be hit as hard as the Europhiles claim, but it would not escape unscathed.

 “In theory, agreements on physical trade are a credible alternative to the Single Market, but they would take time to negotiate and in the meantime continental manufacturers and suppliers would see no advantage in suspending their competitive instincts just to help us out.”

 As he points out, the EU has been very reluctant to embrace free markets in services, and some of the eurozone’s attacks on the City these past few years have been blatant and quite brutal. The French would not be alone in harbouring an ambition to block British financiers from ready access to EU markets.

The elephant in the room is defence, Lord Leach says. “The UK represents about half the EU’s military capacity and it’s a strong negotiating arm for us to use, particularly with the French, with whom we have similar military strength. As far as I can tell, the politicians are not playing this card and that’s a pity. Mind you, that doesn’t surprise me as most European and British politicians have enough on their plate already.”

He says Ms Merkel knows the UK leaving would be bad for her, leaving Germany on its own negotiating with the southern countries but also losing nearly 15 per cent of the EU’s budgetary contributions, its financial powerhouse and its principal channel to the Anglophone world – as well as the main opponent of protectionism.

What does he think about the recent brouhaha over the wording of the referendum question ? “It’s irrelevant; can anyone remember what the ‘Yes’ vote was for in the Scottish referendum? Was it for staying in the UK or for independence? Most people don’t remember. 

“All this fuss is hyperventilation and, frankly, I don’t give a bugger.

“ Nor do I care whether the referendum is called tomorrow or in 2017. What’s important is that we get serious concessions and the arguments are put to the British public calmly and not frantically overstated – as they are now by the two opposing camps.

“If the Government doesn’t get the right reforms then Britain is merely deferring an exit at a later stage.”