Monthly Archives: May 2016

The Economy: why is Vote Leave so timid?

Last week, an important event happened that neither side in the EU Referendum campaign has decided to address.

An agreement was reached between “the Troika” (made up of the European Commission, the European Central Bank [ECB] and The International Monetary Fund [IMF]) and the Greek Government in its sovereign debt negotiations. What emerged from the agreement was another short term fix for what is a dangerous and pressing structural problem – namely, whether the Eurozone is viable without a substantial and costly restructuring of the entire sovereign debt of the peripheral Eurozone countries. This would, of course, have to be paid for by EU taxpayers.

For the last six years, “the Troika” and the Greek Government have been putting off the day of reckoning. The steps that have been taken over the years involve what economists call, “kicking the can down the street” – the short term financing of Greek sovereign debt as opposed to a fundamental restructuring of it. The latest agreement continues the same strategy, accomplishing the important additional goals of removing the issue from the UK Referendum campaign and allowing EU leaders to announce yet another end to the Greek sovereign debt crisis.

There is no basis for such optimism – kicking the can down the street is simply politically expedient, while being an extremely dangerous way to approach a critical supra-national economic and financial crisis. Leaked communication (see Wikileaks) between IMF officials makes clear that the European Commission’s double-dealing in this crisis should be an essential issue in the EU Referendum.

The IMF, led by Christine Lagarde, argues that the ECB must take an immediate “haircut” of Euro 52 Billion (i.e. writing off the debt) so that the Greek Government and the Greek people can make a new start with a viable future. Meanwhile, the ECB/European Commission position – enforced by Germany – has been to oppose the IMF in the sure knowledge that German tax payers (and no doubt others in the wider EU by indirect means) will have to take the hit and that is politically unpalatable. It was Chancellor Merkel who promised the German people that all loans would be paid back with interest – it was never going to happen, and many would say she knew it full well.

(And then of course, there is the fear that Spain and Portugal would seek to follow Greece’s lead in writing off some of their own sovereign debt burden as well.)

No one in the institutions of the EU has ever taken any responsibility for the naïve stupidity that led to the self-inflicted wound of the Euro crisis. So far, the debt burden has been quietly transferred from mainland European international banks (UK banks had very little exposure to Greek sovereign debt) to European taxpayers. But the problem remains – the question is not if there will be a debt “haircut” but when and who pays.

British taxpayers should be made aware that this profound problem exists, is unresolved, and has no prospect of a successful resolution by present means – and crucially when the day of reckoning comes, this is going to be incredibly expensive. The idea that the UK would be able to avoid contributing to this financial restructuring is beyond being credible.

So far, the Remain campaign has presented itself as the safe option, “Why take the risk of a Brexit?” Vote Leave can now answer that question without holding back.

I can well understand why the Remain campaign wants to bury this issue in a fog of half-baked economic analysis about the short term impact of Brexit on the British economy, but why has Vote Leave not pounced on this agreement to make clear to voters the very real and unchartered risks of remaining in the EU?

If Vote Leave wants to take on the Remain campaign on economic grounds then this is the issue and the time to do so is right now.

The ECONOMY, stupid!

If the now established EU Referendum communication pattern of competing claims and counterclaims continues, then Vote Leave will lose the referendum on 23 June.

In an environment of chaos and uncertainty, undecided voters are likely to lack the courage to vote for fundamental change – and it appears that the Remain campaign is well aware of this. The latest HM Treasury report this week that simply omitted the best case scenario for a Brexit is yet another example of the Remain campaign’s basic approach – tell the electorate loudly enough and often enough that a vote to leave will hit their wallets and they will accept it as true. The fact that the Treasury’s assumptions in its modelling are highly questionable simply gets lost in the noise and the confusion.

To win this referendum, Vote Leave has to make the economic case for Brexit. Its economic message so far has been fragmented, unfocussed and delivered by the wrong people at the wrong time. The proposition that there will be an economic shock following a vote to leave is becoming an established truth, even though there is scant evidence to support the proposition.

Vote Leave’s slogan, “If you want to save the NHS – Vote Leave” is weak. It is weak because it is not true, it doesn’t address the economic case that Remain has made and public services are not the main issue of concern for voters. In producing this slogan, Vote Leave seems to have forgotten that the Labour Party has just lost a General Election after focusing on the NHS in the face of a Conservative Party onslaught on economic competence and issues of governance.

Vote Leave has about a week to sort its economic message out. If it applies its mind to the problem, it will discover that the Remain campaign is vulnerable on the economic question because its message has already been partially discounted – though not rejected – by voters. Rather than ramping up the rhetoric about the NHS, Vote Leave needs to challenge the basic assumptions that staying in the EU with its malfunctioning Eurozone and uncompetitive single market is the risk free option.

It is long past time for Vote Leave to get its economic heavy-weights into the ring to challenge this basic assumption.

Is the Remain Campaign in trouble?

With six weeks to go before the vote, the opinion polls are too close to call. After an initial strong showing by the Remain campaign’s “shock and awe” approach (its so-called “Project Fear”), it now seems to be losing some traction.

The Remain Campaign’s early attempt to define the referendum as a purely economic decision, rather than a more complex democratic, cultural and economic choice initially met with success. Its well-organised and well-coordinated campaign of dire warnings from the political, economic and business elite really hit home with electors.

The problem that has now emerged for the Remain Campaign is that in seeking to create shock and awe, it has also parted company with any sense of balance. When David Cameron tells us that a vote to leave the EU risks a return to conflict in Europe, the claim seems outlandish, if not a touch hysterical.

The facts on this matter are clear: it is America’s military might and vast nuclear arsenal – directed through NATO rather than the EU – that has kept the peace in Europe and no balanced view of the matter could truly argue otherwise. Yet this pro-EU argument is the one that David Cameron chooses to make.

Making a weak argument weakens every argument – this is a basic principle of adversarial communication.

If we believe the dire warnings of the Remain campaign, we can only reach the conclusion that exercising our simple democratic right to self-determination will be a total catastrophe, leading to economic meltdown, political disintegration and a war in Europe.

However, once the shock and awe has passed, the Remain campaign’s lack of balance and its overblown rhetoric may herald its ultimate failure.

Lynden Alexander is a forensic communication consultant and an expert in adversarial communication.