Friday, February 28, 2020

15 years of Open Europe – the think tank at the forefront of the UK’s relationship with the EU

In this article, for @GlobalVision_UK, published here, I look back at 15 years of Open Europe – the think tank at the forefront of the UK’s relationship with the EU:

Just after Brexit finally happened, British EU affairs think tank Open Europe ended its operations after almost fifteen years. At this occasion, I would like to take the opportunity to write a history of this organization at the forefront of the EU-UK relationship, which I have been representing in Brussels for almost twelve years. Looking at its activities truly reminds of the political events ultimately resulting in Brexit. 
Open Europe was founded in 2005 to “make the case for radical reform of the EU, based on economic liberalisation, a looser and more flexible structure, and greater transparency and accountability”. 
Behind Open Europe, which has always avoided any taxpayer funding, was a group of business people around the late Rodney Leach, a senior British merchant banker who was a director of Jardine Matheson, the Hong Kong trading group.
At the occasion of the launch, a report was presented which concluded that “bringing down the EU’s trade barriers and phasing out the EU’s Common Agricultural Policy (CAP) could boost UK GDP by 1.8 %.” Already from the start, it was understood that making the case to those on the other side of the Channel was important, as the report also highlighted that “EU GDP as a whole would rise by over 2 %” and that “France could actually gain more from phasing out the CAP than Britain, because it currently devotes more resources to agriculture.”
Half a year before Open Europe was founded, there were the Dutch and the French referendums rejecting the “EU Constitution”, another EU Treaty aimed at transferring more power and money to the Brussels level. Specifically for the UK, this meant that the referendum Tony Blair had promised on the EU Constitution would no longer be held. The prospect of this had electrified Britain’s Eurosceptic movement, so it was unclear what was next. 
Open Europe Chairman Rodney Leach stated at the think tank’s launch in October 2005: “The drive towards deeper integration and more centralisation is continuing. We think the EU needs a radical change of direction if it is to survive.” These words appeared prophetic. 
It didn’t take long for the EU to repackage the rejected EU Constitution into the Lisbon Treaty. The key driver behind this was German Chancellor Angela Merkel, even if she herself had to deal with concerns by Germany’s Constitutional Court in 2006.   
Gordon Brown did not promise to submit the Lisbon Treaty to a referendum and even made up an excuse to miss the signing ceremony in December 2007. During that time, Open Europe was very effective in countering the narrative that the Lisbon Treaty differs from the democratically rejected EU Constitution, when Open Europe Director Neil O’Brien, now a Conservative MP, published the first comparative text, making it obvious that the “new” treaty was essentially identical to the rejected Constitution. 
This was all very embarrassing for the Labour government, also because former French President Valéry Giscard d’Estaing, who had chaired the “Convention” which drafted the EU Constitution, openly stated that “The EU Treaty is the same as the Constitution”.  
In 2008, the Irish rejected the Lisbon Treaty in a referendum, before they were made to vote again on the same text one year later. It paved the way for David Cameron as Conservative opposition leader urging Czech President Václav Klaus not to sign the Lisbon Treaty in 2009 until the Tories were in power. This further reinforced the sentiment among UK eurosceptics that they had been denied their rightful referendum. In 2009, Cameron could just get away with not promising to hold a referendum on the Lisbon Treaty, despite a lot of pressure, with also Open Europe under its Director Lorraine Mullally campaigning for this. Cameron ultimately did not need to block anything at the EU level, as Klaus folded before the Tories entered power. In 2013 however, amid the success of UKIP, Cameron ultimately promised a referendum on membership. 
Since 2005, Open Europe has been wading deeply into EU policy, delivering hard-hitting research on virtually every policy area, EU spending, EU energy and environment policies, tradefinancial services regulationopening up the EU’s internal market for services and the eurocrisiscutting unnecessary bureaucracy, promoting decentralisation and highlighting the broken promises EU policy makers made with regards to the euro. Open Europe’s work on EU spending not only focused on the dysfunctional common agricultural policy and considerable waste, but also included a proposal to make huge savings by focusing EU regional funds only on the poorest member states, allowing richer countries to decide for themselves to what extent their own poorer regions ought to be supported. It was quite influential, as it was also adopted as official government policy by the Dutch government in 2013.
Open Europe thoroughly investigated the high cost of EU regulation, whereby it was concluded that around two thirds of the impact from regulation in the U.K. and the other member states stems from the EU level, on the basis of an extensive analysis of regulatory impact assessments. 
When Open Europe claimed in 2009 there was a problem with the comparatively burdensome impact of EU regulation, many in the Brussels think tank community, which is largely funded by the subject it is supposed to scrutinize – the EU- even denied there was a problem with “out of control” EU regulation. In 2014, however, the European Commission admitted guilt itself by launching its “better regulation” programme, which despite its meager results has the merit to have recognized that there was an issue. 
Open Europe highlighting things like “the 100 most expensive EU regulations” also contributed to the awareness in the UK of the importance of being able to come up with one’s own regulations, something that is now among the UK’s top priorities post-Brexit. 
Open Europe’s predecessor was an organization called “Business for Sterling”, a campaign group which was instrumental to first convince the Confederation of British Industry (CBI) and then Tony Blair’s government not to introduce the euro. One of the people involved with this campaign was Dominic Cummings, now the top advisor to British PM Boris Johnson, who himself gave the keynote speech to celebrate ten years of Open Europe in 2015.  
Open Europe’s deep roots in the monetary policy debate would become evident again during the eurocrisis, when in 2011 it was the first think tank in Europe to come up with an estimate of the “stealth bailout” the European Central Bank had been providing to prop up struggling eurozone countries. During those years, I hosted Open Europe policy debates on the eurocrisis in Frankfurt and Berlin, with the late deputy Chairman of Open Europe, economist Derek Scott, once Tony Blair’s economic advisor, and his wife Gisela Stuart, born and raised in Bavaria, then a UK Labour MP, later the Chair of Vote Leave.
This paved the way for the founding of a German sister organization, Open Europe Berlin, in 2012, meant to support the case for EU reform in Germany. At the lauch, the European Central Bank’s former chief economist, Otmar Issing, gave the opening keynote speech, taking a critical stance which broke with German convention. He then may well have spoken prophetic words, when he warned that the euro “cannot be maintained at any cost”. He thereby also criticised the EU Commission’s “deeply absurd” rush towards establishing a banking union and considered the proposed ‘Chinese wall’ between supervision and monetary policy at the ECB as “illusionary”.  
On top of the list of Open Europe’s priorities was always EU institutional reform, from the days when the think tank challenged the Lisbon Treaty to its work on the EU-UK relationship after Brexit. In order to promote the EU reform agenda, also in the light of Cameron’s promise to hold a membership referendum, Open Europe organized the “pan-European Conference for EU reform” in London in January 2014, bringing together 300 delegates from over 30 countries, including high profile policy makers from across the Continent. 
This was all done in the spirit that sustainable reform of the EU would only be possible if done for the whole EU, and not through yet another opt-out for the UK. This path was ultimately abandoned by Cameron, given the lack of interest from the EU27 side. 
In any case, the latter can’t be blamed on Open Europe. The Economist described it as “the Eurosceptic group that controls British coverage of the EU”, also praising its wide-read daily press summary of EU news as a “must-read”. In the years before the UK’s referendum, the think tank truly was the world’s most cited EU policy think tank, achieving the same amount of coverage in the global media as its five closest competitors combined. 
After the Conservative victory in 2015 and ahead of the 2016 referendum, Open Europe produced a lot of work on which reform of the EU to ask for. This included an “EU Reform Index” containing 30 potential reforms, including for example “red cards for national parliaments”, given the shortcomings of the European Parliament. Thereby both the priorities in the UK and achievability in Europe were taken into account. Opinion polls conducted in Germany indicated strong support for some of these proposals. The think tank also highlighted to what extent EU member states would support Cameron’s plans and worked out ways how to reconcile freedom of movement with gaining greater control over social benefits, something that the UK government picked up.  
Ahead of the referendum, Open Europe took the possibility of Brexit serious. In 2015, it published the most comprehensive study of the effect of a possible Brexit, based on detailed economic modelling. The conclusion was that the impact is unlikely to be major and depends on the extent to which the UK retains market access to the EU, acquires more market access to the rest of the world and increases UK competitiveness. Five years later, the jury is still out on all of this, even if the UK has now legally left the EU, but the prospect of Brexit in itself has not yet had major economic effects so far. A “liberal guide to Brexit” was also published in April 2016, while there was huge media attention for a simulation of Brexit negotiations, to which former top politicians from across Europe took part. This simulation was dubbed “EU war games” and was hosted in 2013 and February 2016
After the 2015 elections, Open Europe’s Director Mats Persson, who had been successfully leading Open Europe since 2009, became an advisor to David Cameron to negotiate reforms with other EU member states. The countries with a great interest in trade with Britain, like Belgium, the Netherlands and Germany, did not go out of their way to make concessions. The greatest effort was made by central and eastern European countries, which gave in to modest restrictions on EU migrants’ access to welfare. 
Looking back at the “failed negotiation” in The Times, Mats commented: “We under-bid. Cameron’s brilliant 2013 Bloomberg speech envisioning sweeping EU reform was incrementally distilled down to a less ambitious opening bid in the renegotiation. Even some European leaders suggested more ambition. As one diplomat put it, ‘In Europe, we ask for 10 things in order to get 6, you ask for 4 things to get 4. Why?’”
Open Europe judged Cameron’s deal as “not trivial” but on the other hand also “not transformative”. Therefore, the think tank decided to take a neutral position in the 2016 referendum, not endorsing either “remain” or “leave”, given that a “reformed EU” was not on the ballot. 
After the 2016 referendum, Open Europe changed its mission as well as its leadership, as Simon Wolfson succeeded Rodney Leach, who had passed away just before the vote. Simon Wolfson is the chief executive of the clothing retailer Next plc and his “Wolfson Economics Prize” represents the second largest economics prize in the world after the Nobel Prize. A few years ago, it called for proposals on how to safely dismantle the Eurozone. 
From that moment on, Open Europe’s mission would broadly become to focus on securing a friendly Brexit, by “conducting rigorous analysis and produce recommendations on which to base the UK’s new relationship with the EU and its trading relationships with the rest of the world”.
As a result, the think tank has come up with research on how to minimize friction when the UK leaves the EU’s customs union, how the UK’s financial services sector can continue thriving after Brexit, how to optimise post-Brexit European security cooperation and which non-EU markets to prioritise when seeking new trade opportunities. It also conducted extensive polling analysis, showing that the UK public stands more positive towards migration than often portrayed but that it wants to see immigration controlled. 
Open Europe did support Theresa May’s deal, negotiated in 2018, but only on balance, as it continued its warnings that the great weakness of it was that it would outsource UK trade policy to Brussels indefinitely. It came up with suggestions on how to reconcile an alternative to the backstop with the Belfast Good Friday Agreement. It also estimated the consequences of “no deal” to be “manageable but material” in fall 2019, just before both the EU and Boris Johnson ultimately made concessions to secure an orderly withdrawal. With that, Open Europe’s mission of a “friendly Brexit” really had been completed, at least unless the whole thing doesn’t derail after all in 2020, when the EU and the UK need to figure out to what extent trade will be disrupted as a result of UK regulatory divergence from 2021 on. 
Open Europe’s analysis, rigorously overseen by Stephen Booth, its Research Director and later its Director, was widely read in policy circles, both in the UK and the EU, but many of its former staff also went into top government positions themselves. From 2016 until 2019, former Open Europe Director Raoul Ruparel advised Theresa May. In 2019, Henry Newman, Open Europe Director from 2017, went on to advise Michael Gove, who was made responsible for “no deal” planning by PM Boris Johnson. A former member of Open Europe’s advisory council, David Frost, was Boris Johnson’s top negotiator, when the UK secured the deal with the EU in October 2019. Frost, who published an Open Europe paper in 2015 on how to negotiate with the EU, is still in charge now as the UK’s top negotiator for the negotiations about the future relationship. 
Until the referendum, Open Europe’s mission had always been about making the case for institutional reform of the European Union, so to turn it into an organization mainly dedicated to scrapping barriers to trade. Such a more modest EU, focused on its core business and not on acquiring ever more powers and resources, may have prevented Brexit and may have made the ever more eurosceptic electorates in mainland Europe less hostile to it. 
Now that Brexit is a reality, the EU should reflect why the UK opted to leave. It should realise it is partially responsible for Brexit, as it ignored the many signals. That’s from 1988 on, when Margaret Thatcher warned in Bruges that “We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.” It’s all the way to 2014, when the UK was outvoted by the other member states apart from one, when they decided to nominate Jean-Claude Juncker, a strong supporter of a more centralized EU, for the EU Commission Presidency. 
That was the case I made when delivering a keynote speech to the European Commission’s 2017 Biennial Jean Monnet conference, which brings together the hundreds of scholars receiving EU grants to study EU policy from all over the world. It’s questionable whether the EU or the academic community that is studying it, has done much introspection into the reasons why Britain voted to leave in 2016. However, electorates in mainland Europe have steadily moved closer to Open Europe’s thinking.  Now, perhaps Brexit may yet trigger more fundamental reform of the European Union than the UK could ever have delivered from inside the club. The precedent of the UK leaving due to discontent over years of overreach will haunt every new institutional power grab and every regulatory proposal that is seen as too intrusive. I agreed with the late Open Europe Chairman Rodney Leach, when he told me the British aren’t as Eurosceptic as portrayed, and people on mainland Europe aren’t as uncritical towards it as often said. The many suggestions Open Europe has been making over the years can now serve as inspiration to those in the remaining EU member states looking for ways to reconnect the EU with its ever more eurosceptic citizenry.

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