29th April 2015, Washington DC

Project for the Study of the 21st Century (PS21)

The UK Election Does it really matter?

Moderator: Sir Michael Leigh

Dan Roberts Washington Bureau Chief, The Guardian

Peter Foster US Editor, The Daily Telegraph

Scheherazade Rehman Professor of International

Business/Finance and International Affairs, George

Washington University

Sir Michael Leigh:

Good evening everyone. My name is Michael Lee. Im a former official of the European Commission. I

was there for many actually, in different capacities, most recently working on the enlargement of the

EU, the accession negotiations, and Im now an advisor at the German Marshall Fund here in

Washington. I work on various European themes, Britain and the EU obviously, but also external

relations and foreign policy. I follow developments in the Eurozone quite closely, so quite a range of

European issues, and being here in Washington and working for GMF, which is dedicated to trans-

Atlantic cooperation. I also look at the implications of these developments in the U.S.

Well, what I thought was: we would divide our discussion this evening into several parts. We might first

look at the situation leading up to the elections and look at the record of Mr. Camerons coalition

government and the manifestos of the different political parties. Their claims as to what they would do

if they were elected. And then, we might put our heads together and do some informed speculations as

to what the outcome of the elections could be and then consider the implications of that. If thats

agreeable to you, I suggest we begin by a few words on developments over the last five years,

particularly viewed from here in Washington. What do we think about the current state of Britain, the

achievements of Mr. Camerons coalition government, and preoccupations here in Washington? I

contributed, last week, to a piece produced by Carnegie Europe, that was looking at the state of the so-

called special relationship between the United States and the United Kingdom and a number of real

concerns were expressed on that occasion. I wont go into them right now because Id like, mainly, too

here from you, but how do things stand, from your viewpoint now, just ten days or so before the

elections. Who would like to intervene on this subject?

Dan Roberts:

Im happy to kick things off. Ive been based here for a couple of years as the bureau chief of The

Guardian here, but I used to be based in London, so I followed the beginning of the coalition, if not the

end of it. I think whats interesting from a U.S. perspective particularly, is how economically focused this

election has been and a very interesting test case in austerity economics and deficit reduction being

pushed as the primary focus of the coalition government. I dont know how many of you remember the

dark days after the banking crisis. They coincided with the last U.K. election and the coalition that was

formed between Tories and Lib-Dems was very much forged in a moment of crisis, frankly, and people

didnt quite realize how precarious the U.K.s finances were at that moment. The U.K. had been hit by

the same banking crisis that hit the U.S. The difference was that we didnt have a reserve currency and

there was a very serious risk of a run on the pound. The U.K. election happened almost at the darkest

days of that. The economy had just begun to turn the corner. The elections were too tight for any one

party to form a majority and a coalition was in the cards. The markets started to panic and there was

real sense that something had to be done very very quickly and it was all about stability.

This election, to my mind, has become a vote on whether that worked or not and whether the pain that

a lot of the country felt it had to go through was justified. The Tories have run very strongly on the idea

that we turned the corner and the job picture looks quite rosy and Labour has fought very hard on this

being unnecessary austerity and an excuse for the ripping apart of the welfare state and an ideologically

driven exercise in rolling back fifty years of welfarism in Britain. Some on the Tory right would

celebrate that. Increasingly its become a twofold exercise. One stabilizing the national finances and

one correcting what many people felt had become an overly strong state. The complication has been

the arrival of two other parties into the game.

Sir Michael Leigh:

Staying with the economy for a moment, lets pick up on some of those points that you made. So the

conservative party goes into these elections with the claim that its fiscal consolidation has succeeded. It

quite ironic that in the course of this government, Mr. Osborne, the Chancellor of the Exchequer, the

finance minister, found himself challenged by, of all institutions, the IMF, to some degree, that argued

from the more Keynesian perspective, that expansionary contraction is a contradiction in terms. There

were almost tensions between the government and the IMF. But here they are now with the economy

growing around three percent, although the last quarter showed a somewhat diminished growth rate

compared to the twelve months previously. Do you think its convincing to the electorate that these

policies are perceived as having been successful and therefore the government can go into the elections

feeling confident that the electorate will consider that they are the best-placed to handle the economy?

Scheherazade Rehman:

I think that the voters would like quicker results. Thats clear. I think we may need to step back a little

bit. What happened in the aftermath of the financial crisis that began in 2007 was very devastating. We

had a crisis here in the U.S. which was the largest crisis we had seen in eighty years. Europe not fell into

that crisis, but then had another one on its own in 2010 with the sovereign debt crisis. The U.K.,

fortunately, did crisis management a lot better than anyone else did in continental Europe, as we have

seen. Part of that has led to the success of having roughly between two and three percent growth. As

you can see, there is zero growth in most of the E.U. continental countries, negative growth in some,

and barely one percent in most others.

Austerity measures were seen by the marketplace as something that was necessary in Europe and when

there is a panic in a crisis, markets dont care whether youre Portugal, Spain, or Greece. You all look the

same. The U.K. government, by default, was almost forced to implement austerity measures, even

though what happened there was different from what happened in the rest of Europe. Having said that,

there was one thing that they did that the Europeans didnt do and that was crisis management. They

followed the U.S. and provided liquidity into the system. That liquidity forestalled more serious

repercussions in terms of investments being pulled back and here we are, seven to eight years into this,

and pound is stable. The economy is coming back. The U.K. has the largest capital markets in the world.

Financial markets are still viable. Investments are coming in. They look nothing like Italy or Spain or

some of the other countries.

Sir Michael Leigh:

They can boast that theyve done a good job yet, as in the U.S., voters dont seem completely convinced

by this. And, as in the U.S. where you have relatively low unemployment, only 5.6%, but also a lot of

low-paying jobs and growth without median incomes increasing. So, many voters are really skeptical

about this claim. How do you feel about that?

Peter Foster:

Its interesting, isnt it? From an American perspective, and the Americans have been on the Germans

case to invest in more infrastructure and actually to open the spigot and, in fact, from an American

perspective, the British austerity was something that never happened. Quantitative easing, interest

rates are still low, there was talk of raising them two or three years ago and here they still are at flat

rates. In lots of ways, it was the austerity that never happened. It was sold as austerity, but in lots of

ways its actually a QE-led growth story. I think whats interesting for British voters, and this is as a

result of what happened with the SNP and what happened to UKIP, is that I suspect a lot of British voters

would like to vote for the status quo which is a Tory government with a sort of Lib-Dem break, a leftish

break. But there is no way for them to do that. If you look at the SNP, the Scottish Nationalist Party,

who are going to prop up the Labour Party, and you look at their spending proposals, 170 billion pounds

and they run an 8 billion pound deficit, do British voters want that? I suspect they dont actually. I

suspect these voters are pretty clear that we couldnt live on an entirely credit based society. People

were burnt by what happened in the credit markets, and I suspect that the anti-austerity spending plans

that are being advanced by the SNP and the kind of economic fudge that would be required to prop up a

Labour government would upset a lot of English voters.

Sir Michael Leigh:

Id like to stay with record for the time being and then come to the perspectives in a few moments.

Moving on from the economy, but also with the view from Washington, what does the record look like

in terms of Britains relations with the U.S., Britains standing in the world, Britains contribution to

NATO, and Britains partnership with the U.S. in the wider sense? Viewed from Washington, is there any

continued sense in the notion of a special relationship and how has the performance of the British

government over the past five years played into that?

Peter Foster:

Ive been out of the U.K. Ive been watching the U.K. struggle from the perspective of China etc. and the

narrative, I think, is really interesting. You have Britain feeling the cold shoulder of the Obama

administration, very much a Pacific-looking administration, really feeling that in the first term, pressing

the administration to get more involved in Syria, getting very frustrated when Donilon went to all the

capitals during the elections and said its nothing doing. There was a point where Ambassador Ford,

Clinton, and Gates were kind of indicating that there would be U.S. involvement in Syria, but Obama put

the shutter down. Then Cameron failed to whip that vote in Parliament. A lot of people were surprised

by the lack of appetite among British citizens to get involved in Syria. Phillip Hammond, who was then

Defense Secretary, came here, and Dan, you were probably in that briefing, and said, You know what?

As soon as the media put pictures of children dying and writhing from gas on the screen, then there will

be a change of heart. Then we will be prepared to enforce redlines. Of course, thats not what

happened.

I think that ever since then youve seen frustration in the White House. Where does Washington go

when it needs real movement on Ukraine sanctions? To Angela, not to David. He has marginalized

himself in Europe. Pulled the conservatives out of the EPP group and launched a referendum to save his

own skin, to fix a domestic problem, which is how to deal with the Euroskeptics on the right. Bundle

that together with historical problems, the failure of the British Army in Basra, the failure of the British

Army in Helmand, still strong intelligence, but there is a real sense when talking to people in Washington

of how the Brits are drifting away and you look at the French who are doing stuff in Mali, who still have

an ability and a willingness to project power, although ironically with a socialist Prime Minister. You can

see how the Brits are starting to get marginalized. I will say this: its a two-way street. The Obama

administration, clearly in the Middle East, is buying into an any man for itself world. A G-0 world.

They can skin the cat any way they like, but basic policy is increasingly that its any man for itself. You

could argue, for example, when the Brits joined the Asian Development Bank, it infuriated Washington.

But, in a world where its every man for himself, can the Brits be blamed for making a self-interested

decision about their trade?

Sir Michael Leigh:

Well, I think there was a moment where the tactics around that grabbed a lot of attention because the

Brits wanted to be the first to join, in fact, they were the second because Luxembourg jumped in first,

but then all the other major member states of the EU also indicated that they were going to join.

Peter Foster:

Traditionally, we wouldnt have done that. In the world that existed before Obama I just cant see how,

from a politics point of view.

Sir Michael Leigh:

Clearly, there is a big disparity over China. Cameron had been criticized to some extent for dropping all

the values issues, the human rights issues vis--vis China and going with large delegations of business

people and not even raising some of this issues. The U.S., on the other hand, through TPP and other

means is more intent on isolating China and perhaps the golden mean is somewhere in between. But,

certainly there is a big divergence between Washington and London on how to handle China. I think

thats one of the things that has emerged over the past few years. Another huge challenge right now for

Europe, of course, and the U.S. as well is the developments in Eastern Europe, particularly Ukraine and

the first time weve really seen open warfare in Europe since the war in Yugoslavia. One of the main

comments that has been made during this period has been the absence of the Brits from the scene. Do

you think that is something that is felt in Washington?

Scheherazade Rehman:

You mentioned that its every man for himself. Quite frankly, when the financial crisis hit, it was

everyman for himself in Europe, in the U.S., and in the U.K. because the crisis was so deep that people

did retract. When youve got the middle class taking a 40% hit in wealth across the board, their appetite

to go to war or engage overseas diminishes. You have to pander to that. We know that in both

countries, here and across the pond, this issue of income inequality is taking front page news and the

joblessness numbers, no matter how good they are, we know they are erroneous in the sense that there

is hidden unemployment in the system or underemployment in the system on both sides.

Sir Michael Leigh:

There is an irony in that many European states have been hit very hard, harder than Britain, by the

economic crisis, but not all have lost the appetite for foreign policy to the same degree. The Minsk

process, for what its worth, certainly the Germans and the French have been very active and, from time

to time, the Poles have participated. But Britain has been really notable by its absence.

Peter Foster:

When I was China, from 2008 onwards, the Brits were in lockstep on the values stuff with the Chinese

and the Chinese did what they always do. Obama saw the Dalai Lama and they literally put the Brits into

deep freeze and they did it full on. The diplomats hardly got meetings. They dont dare do that to the

Americans. There was a time when American value leadership, American determination to see China

grow as a responsible actor and not to isolate them, to create the conditions that would see China grow

responsibly. It required people, reliably like the Brits, to not make selfish short-term economic decisions

in order to set longer-term rules of the road that guaranteed global prosperity which will not happen

without China. Its about helping China get rich before it gets old. Such a symptom of where Obamas

taken the world, and how Britains reacted to it, we of all countries, Britain and America are not in

lockstep about that issue.

Dan Roberts:

I agree with your description of how the special relationship feels frayed at the moment, but I do think

that its not just Britain that the U.S. is realigning itself with. There are a lot of other traditional allies,

whether its Israel, whether its Saudi Arabia, whether its Pakistan, who also feel slightly bewildered by

the Obama foreign policy. I think the Obama foreign policy is a very pragmatic one rather than a loyal

one. Traditionally, the Western alliance was a very static thing and you knew which side you stood on,

and I think the way Obama is approaching Iran or Cuba or Syria is very much an ad-hoc lets fix some

problems that need fixing, but its not about youre on my side and youre on the other side. That is a

bewildering thing for a lot of diplomats in Washington, a lot of traditional allies. I think it reflects the

multipolar world were moving in. The West is broke, to your point. The West doesnt have the

appetite for fighting endless wars. This particular administration is doubly determined not to be the

global policeman. Everybody is searching for a role. Britain is not unique in that. Britain is probably

fairly typical.

Peter Foster:

I totally get that our public dont have the appetite. We cant afford it. The difference is, I think, for

Britain, and this goes to the election, in a G-0 world, in a world where everyone is retrenching, and

America prospers in that world, it may not prosper in the same way that it did, but America will prosper

because it has a big diversified economy, it has a younger population, it has immigration, it has a tech

base, its traditional allies, Japan, Israel, as you say, Britain, its strategic raison detre rested on

American coattails, we suffer. I dont think the public, because theres been no discussion of it in the

election, gets the cost downstream of whats going on.

Sir Michael Leigh:

Its very unusual for foreign policy to be a major issue in an election, here to for that matter, unless it

affects the daily lives of the electorate to some extent. In the last few days, the Labour leader Ed

Miliband, has tried to inject foreign policy into the debate, mainly talking about the debacle in Libya. Do

you think this will succeed? Do you think he will be able to convince the electorate that the Tories are

mishandling foreign policy or do you think this looks just too much like an electoral gambit?

Scheherazade Rehman:

Hes definitely picking up on the whole immigration/asylum issue because we know that a lot of this has

to do with the chaotic situation in Libya which has really fast-forwarded this whole immigration issue.

On April 19th, 700 people died. This makes headlines and hes probably going to make that link that they

had something to do with the resulting immigration/asylum issues at this point.

Sir Michael Leigh:

British journalists, who are famous for their hard talk, pushed Miliband and asked, Are you claiming

that the Prime Minister has blood on his hands? He refused to answer that but, how do you think this

will play out?

Dan Roberts:

I think its a very legitimate point to make. The specifics of Libyan refugees are very different from the

broader economic drive that is forcing immigration across the rest of Africa and we basically screwed up

that country. There was a very poorly executed intervention after the third, fourth, fifth intervention in

a Muslim country in as many years that was equally poorly executed. I think we fail to learn our lesson

which is: you go into these countries expecting to clean up a mess by dropping bombs, but instead

youre making an even bigger mess. You have to look at Iraq and Afghanistan to see not learning from

our lessons. One of Milibands claims to fame was that he stopped the vote that would have led to the

same thing in Syria. I think youre right, the Americans that I spoke to at the time were bewildered

because it came out of left field and there was no warning of that. But, it got Obama out of a hole as

well. It gave him reason to pause. He was going to lose a vote in Congress.

Peter Foster:

This is exactly the desperate situation were in. It got Obama out of a narrow little domestic political

hole.

Dan Roberts:

It stopped another dreadful Western intervention.

Peter Foster:

Or it aided the absolutely historic dissolving of red lines. You have a situation where there have been

chemical weapons treaties since the First World War, where the president of the U.S. says, If we see a

mass use of chemical weapons, there will be reprisals. Nothing happens. That is the beginning of the

rise of Putin. Obama tied himself in knots. Kerry made a throwaway line at a press conference, which

after the event was sold as strategy. It was nothing of the kind. This is the president of the U.S. Ed

Miliband, of all the people Cameron would have had blood on his hands if hed sat back and watched

Gadhafi massacre a city. In a nutshell, its rich coming from Miliband. Hes right, but its rich coming

from Miliband, the man who stabbed Cameron in the back with the Syria vote. Cameron tried to show

leadership on foreign policy and Ed stabbed him in the back and then he comes out and says, How dare

you

Sir Michael Leigh:

Im sure we could have a long debate about this, but lets bring it back to the elections. Will these issues

play out at all, do you think, in voters minds? You suggested it would be through the migration issue or

is all of this just too far away for most voters to pay attention?

Dan Roberts:

I dont think foreign policy has been, apart from this one point you make about the Libyan migration, an

issue in this election.

Scheherazade Rehman:

I didnt mean the migration. I meant the Libyans facilitating excessive migration and human trafficking.

Sir Michael Leigh:

The trafficking was there before, but with the breakdown of the regime, the controls are now infinitely

weaker. You see these terrible tragic incidents because law and order has simply broken down in Libya

and one could argue, to some extent, that the government shares some responsibility for that, but I

agree that this is not likely to be a very salient issue for the electorate. What about the economic

relationship between Britain and the U.S. with the mutual trade and investment? The negotiations are

fitfully underway for the trans-Atlantic trade and investment partnership. Is this something that could

attract anyones interest and attention or is this also taking place behind closed doors and too uncertain

for the time being to be an issue in the record of this government that some voters might pay a little

attention too?

Dan Roberts:

I think it will erupt in British politics. I think were slightly behind the curve compared to America. I

think there is already a very vigorous debate in Congress about whether trade for trades sake is good

for all Americans. Theres no doubt that, economically, trade helps, but the distribution, I think, is

becoming a big issue. There is a feeling that free trade agreements generally benefit the rich and

businesses. That is getting a good airing in Washington. I dont think that has yet to get a good airing in

the U.K., but it will over time. I think people are recently feeling that, especially after the banking crisis,

the game is rigged. I think the expression youre seeing of that is actually popping up in these fringe

parties, popping up in the increasing socialist-sounding SNP. This rage, this sense that the game is

rigged is echoed on U.S. politics on the right and the left, whether its the Rand Pauls or the Elizabeth

Warrens. I think our equivalent of the Rand Pauls and the Warrens is the SNP and UKIP. Everybody is

going, Wait a minute. We bailed these banker out. We have a broken system and nothing is changing.

I think that anger, whether its with trade or other issues, is going to bubble up. Its not going to go

away.

Scheherazade Rehman:

I think its a no-win either way for British investments because if Cameron wins, then hes promising a

referendum thats going to scare the investors in terms of investment coming into the U.K. Banks will

simply move to locations like Frankfurt or Paris. On the other hand, if youve got the Labour Party

coming in, again, youre talking about budgetary issues, youre talking about, perhaps, a slow-down in

the economy. We dont know at this juncture.

Sir Michael Leigh:

Perhaps for the benefit of those in the U.S. who are following this discussion, what are we to think about

the different partys programs as they go into the elections? Is there little to choose? Is there me too-

ism with differences between Labour and Conservative only on the margins? We could cover, perhaps,

the smaller parties a little later on. What are the salient feature of the programs of the two main parties

that differentiate them the most?

Dan Roberts:

Theres the perception and theres the reality. The perception is that Labour stands for spending and

Tories stand for austerity. I think the reality is that the Tories have been tracking back quite rapidly in

the last few weeks. The polls show them slipping behind. George Osborne, the Chancellor, is suddenly

finding another five billion or so for the NHS in a back packet that hed forgotten about. I think theres a

lot on the Left in the U.K. who would say that Labour has been far too mealy-mouthed and not very

forceful in expressing the alternative. These are two parties scrapping it out over tiny differences in

spending levels. Again, I think thats one of the reasons why youre seeing the rise of these alternative

parties.

Peter Foster:

Its one of the driving forces of homogenization in politics. There is so little fiscal wiggle room that even

if you elected the raving lunatic party, you couldnt do much different from the other guys. In this

country, there isnt that much fiscal wiggle room either, but you have a bifurcation of politics on social

issues and on racial issues that you dont have in the U.K. When I grew up, Margaret Thatcher was

knocking it out and the unions were being brushed and Britain was becoming a modern country and it

was the Left and Right. That also contributes to public apathy because, actually, the needle doesnt

move that far depending on who you vote for and the rise of fringe parties, the end of two-party politics.

Its interesting that we consider ourselves a two-party system because last time there was a four day

hiatus and a coalition. This time, I think its very likely that well see minority governments. We thought

that channel protected from being like the rest of Europe and we wake up now and discover that, like

lots of the rest of Europe, were in the thrall of minor parties. The thrall of a breaking up and a chop in

surface politics. If you go back to the trade agreement, you have a situation where it looks like the TPP

is going to happen. We talked to people up on the Hill about the negotiations with the Europeans. The

trans-Atlantic deal is going nowhere and people up on the Hill see very little appetite from the Germans

and the French. The French actually more-so than the Germans.

Sir Michael Leigh:

Obama said he hoped to reach an outline of agreement at least by the end of this year, but lets wait

and see.

Peter Foster:

Does Europe want it? Does Europe appreciate what a world will look like without TPP?

Sir Michael Leigh:

I agree. This is an important issue.

Scheherazade Rehman:

Can I add something? Youre forgetting that the U.S. is almost an eight trillion dollar economy. The U.K.

is less than three trillion. We understand history and where the U.K. was. Both candidates are giving

the impression that theyre big enough to sit at the table by themselves and perhaps that may not be

the case without the E.U. I think that is a reality check that they are trying to give the persona that we

are big enough to sit at the table. There may be a coalition government, but the issues are roughly the

same with the two-party system here. One party promises never to raise taxes, so that we can help you

because you got hurt recently.

Sir Michael Leigh:

The conservatives are even now promising to enact a law.

Scheherazade Rehman:

Thats exactly right, with no new taxes. Income tax, insurance tax, and the VAT.

Sir Michael Leigh:

No Read my lips.

Scheherazade Rehman:

Thats exactly right. On the other hand, the Labour party is saying, We know youve been hurting.

Were here to help. We understand the hurt that happened after this crisis. Basically approaching the

same constituency from different angles.

Dan Roberts:

One of the big things that worries me, going into next Thursday, is that we dont have a constitution

ready for coalition politics. We have an incredibly archaic system where the queen invites a prime

minister to form a government and everybody assumes that that would be the party with the largest

number of seats, but none of it is ever agreed in advance.

Sir Michael Leigh:

Its a fascinating moment. We live in constitutional monarchy, but there is a very narrow area of

discretion at this point that the monarch can exercise. This is probably the one remaining area where

the queen still has, if not power, at least influence.

Dan Roberts:

What really worries me is that its going to be incredibly messy. Labour has already said they dont want

to form a formal coalition with the SNP, who may have the balance of seats. They also ruled out a less

formal coalition which would basically avoid a vote of no confidence. They may well try to form a

minority government, which is a government that cant pass laws without persuading member of other

parties to join them on an ad-hoc day-by-day basis. This government may just limp through for six

months and may have to force another election. Were in totally uncharted constitutional territory.

Sir Michael Leigh:

Before we get into that, and I would like to get into that in just a few moments, but for the sake of our

American and other international participants and people listening in, could you just briefly characterize

the smaller parties? Who are we talking about? Were talking about the Liberal-Democrats. Were

talking about the Scottish Nationalists. Were talking about the United Kingdom Independence Party.

Maybe Ulster Nationalists. Could you briefly characterize these parties? What do they stand for? Are

they just minority protest parties?

Peter Foster:

On a left-right spectrum, we have the Conservative party who, are themselves on the spectrum between

centrist conservatives, David Cameron would be one, but they have the perennial problem of their anti-

European right wing whove been appeased by this promise for a referendum in 2017 if David Cameron

gets it.

Scheherazade Rehman:

The British Tea Party, right?

Peter Foster:

They are. Now, to the right of that conservative party spectrum, the UKIP, which is an anti-European

party. Kind of our equivalent of pitchfork politics. Its old, white, pot-bellied Britain who, like a lot of the

Tea Parties, in a fairly incoherent way, feel fed up with the world thats moved on and not really taken it

with them. It comprises some Tory anti-Europeans. They might only get one seat or two seats, but they

will poll nearly ten percent. Nearly three million voters will vote for UKIP, which is an amazing thing

actually. UKIP made a big mistake in talking about four or five seats, and, because of our first-past-the-

post system, might only get one seat. But they may well get ten million votes. Ten million pitchfork

politics votes. A mixture of Tories, who are disaffected with the Tories for not being anti-Europe

enough, and what used to be the British National Party, which is old fashioned Marie la Penne, Front

Nationale, pretty racist old Britain. Theres a horseshoe there, isnt there? Between disgruntled blue

collar Labour Voters and disgruntled Tory voters who meet around the other end.

Sir Michael Leigh:

Maybe a little less toxic than the National Front, in that they have issue. The racism aspect is less strong

Peter Foster:

Nigel Farage, the UKIP leader, one of his big things is, We put the BNP out of business. If you talk with

Midlands MP, where I was born, and he will tell that the UKIP members of his constituency, which is

half rural and half failed urban constituency, he said that if you talk to UKIP members in the rural areas

and theyre Tories who want the end of Europe, but when you get into the old ex-industrial areas, kind

of like your Midwest I guess, you get in there and they are basically previous BNP members. Thats why

the party gets so much trouble. Nigel tries to have a sort of pint and cigarettes.

Sir Michael Leigh:

So theyre not entirely a single issue party, but its mainly arguing for, these days, withdrawing from the

E.U., but it shades into the extreme right, with aspects of nationalism and even, youre suggesting, some

form of extreme right-wing?

Dan Roberts:

I have a slightly more charitable view in that I think theyre a protest party and I think theyre a protest

at both Labour and Tories. There are aspects of them that are particularly unpleasant, but I dont think

its necessarily fair to compare them with Front Nationale in France. They were born out of a concern

about uncontrolled boom in immigration, a concern that quite a large part of the spectrum now shares.

It was a broken immigration to the extent that it took everybody by surprise.

Peter Foster:

But it does contain those elements. Nigel Farage was talking about his HIV statement. Pretty nasty dog-

whistle politics, that.

Dan Roberts:

Like the Ted Cruz of British politics.

Sir Michael Leigh:

On that note, the liberal democrats, what do they represent in the political spectrum?

Dan Roberts:

I think the trouble was their high point was about two months before the last election when Nick Clegg,

this face from nowhere, suddenly performed very well in debates, which was the first time debates

played a big role in British elections. They were an import from America and they slightly upset the

apple cart because people latched on to this new interesting figure in the middle. He appealed to

Labour who were actually to the left of Labour on many issues and ended up surprising many people by

forming a coalition with Tories mainly because the arithmetic wouldnt allow a Lib-Lab coalition, and as a

result, when the Tory government became associated in many peoples eyes with this very austere

ripping apart of the welfare state, a lot of people blamed Clegg on the left for not checking that enough,

and a lot of people on the right in Tories found it irritating because they felt he was a check on their

agenda. He ended up this tragic figure who may well lose three quarters of his seats, I think.

Sir Michael Leigh:

Is that because hes taken such a distance from his base? He seemed to abandon some of them.

Dan Roberts:

I think the trouble is the expectation of a junior partys power in a coalition and reality are so out of

step. The thing is that, even in the last election, they won fifty eight seats, so although Cameron had to

make him deputy Prime Minister, its a bit like Joe Biden. This man is not full of power.

Sir Michael Leigh:

I remember a comment about the powers of the Vice President. I wont repeat it in polite company.

Lets move on to the Scottish Nationalists. The title of the party would give the impression that, they

too, were a single issue party, but that turns out not quite to be the case. Theyre being described now

increasingly as left-wing party with some of their domestic policies as well as some of their foreign

policies and positions on defense. Who would like to jump in to characterize the SNP for the sale of our

participants?

Dan Roberts:

I have a slightly less charitable view in that I think that they are analogous to UKIP in the sense that

theyre the Scottish version of English Nationalism. I do think that nationalism is the overriding feature

and that most of the rest of their politics is largely opportunist. And I say that because, for a long time

were, after the Thatcher government and the Tories got wiped out of Scotland, the Labour party in

Scotland and were seen as, more like UKIP, a party of small businessmen and people who wanted a shot

at London, but were no rabid socialists. They were the Labour Party. I think, in the run-up to the

independence referendum, they very smartly realized that, actually, there was an awful lot of rage and

anger about the economy that you could tap into if you tacked to the left. They ran a very campaign, I

think, as radical party that would promise the earth if there was independence. Theyd be able to live

off the North Sea forever and build a thousand hospitals a day and it would all be peace and harmony.

That didnt quite work, but almost worked and shocked everybody. It frightened everybody. Having lost

the referendum, I think there is now almost like a wrecking tactic going on. A sort of, We havent been

able to get independence, but were going to bring down Westminster. There is a very cavalier view.

Nichola Sturgeon, who is a very effective politician, who has been the star of this campaign, this

election, who is the new head of the SNP. Shes not a Westminster MP. Shes not standing in this

election herself, but she runs a party that may, nevertheless, have the deciding vote. She may well be

the Nick Clegg of the next coalition, although she wont be able to be in it herself because shes not an

MP. They have an enormous opportunity to generally be mischievous and I think, having lost the

independence referendum in quite bitter circumstances.

Sir Michael Leigh:

Do you share this rather critical view?

Scheherazade Rehman:

You mentioned the Queen, so let me mention a kingmaker. The SNP might very well be the nest

kingmaker. We know this race is going to be very close between the two major parties and we know

that their leaning a little bit to the left. Its a little bit of an advantage. I think they ran a campaign that

tapped, as you said, the rage. Thats something not to be ignored. They are a force to be reckoned with

in this election.

Sir Michael Leigh:

Do any of the other small parties merit a mention?

Dan Roberts:

The Greens are interesting, not because theyll be decisive in any particular way, they may lose their one

seat, because they also had a moment in the sun. There was some media interest and idealism on the

left, which I think is just interesting because it shows how bored everyone is with Labour and

Conservative. People are willing to entertain some pretty kooky candidates.

Peter Foster:

The SNP phenomenon is that nobody quite saw it coming. They lost the independence referendum by

ten points. What happened was, they ended up absorbing all of the independence votes, whereas the

side that won, its machine was fractured between the Tories and the Labour Party. Everybody suddenly

woke up to the fact that the SNP had this machine and had an axe to grind. This is why theyre

decimating Labour, and why they may win fifty seats. A lot of big Labour fish are going to find

themselves on the beach. A lot of the old Labour, which would be the more left-leaning, were really

upset with what happened in the referendum. You had all these new Labour types coming in from

London and screwing up their independence hopes. They all transferred to the SNP. Its one of

Camerons great wheezes. The referendum created a monster. If there is a wrecking ball socialist-

leaning SNP keeping Ed in Number Ten, in a minority government, doing economic deals that require

English people to subsidize Scotland, there is real recipe for English nationalism.

Dan Roberts:

I hope he will avoid that.

Peter Foster:

As someone who believes in the union, and actually, speaking of the Balkanization of Europe and the

U.K. punching its weight, it would be a disaster if the U.K. broke up.

Sir Michael Leigh:

Before we jump into that, and thank you for characterizing the different players in this election, let us

now some, hopefully informed, speculation as to what the outcome of the election might be. And lets

do a little table round amongst us. What is our best guess as to the outcome of the election in light of

the opinion polls, the debate, and the discussion? Its often said that there will be no winner, that its

most unlikely that any party will have a majority. Lets, each of us, say a few words about what seems to

us to be the most likely outcome that we might expect.

Dan Roberts:

I think the most likely outcome will be wrong. It is one where are the scenarios are within the margin of

polling error so that is the first thing to be said. The second thing is, and I have a sneaking suspicion,

that Labour wont do quite as badly as suspected. My own reason for saying that is that a lot the polling

before the referendum said that the SNP were going to win and they didnt. Im a little skeptical about

the polling accuracy in Scotland. Having said that, I think Labour will probably just hit the Tories in terms

of actual number of seats and be faced with this unpalatable prospect. There are three scenarios. One

is a formal coalition, on the assumption that the Dems get largely wiped out, with the SNP. Or they form

this sort of coalition lite, they call this confidence and supply, where they agree to back the government

in tow scenarios. One: if there is a vote of no confidence in the House. And two: on budgetary matters.

This is seen as just enough to let the government limp along. Any other bills, an education bill, a

defense bill, whatever, would be free for all and Labour would have to rely on the Tories to prop them

up. That would be very unstable. There is an even more unstable scenario, which is a minority

government, where they dont join the Scots try to do it on their own and try to persuade Tories to join

them, bill by bill. In a way, more like the U.S. system. There is a great fear about this in the U.K. because

weve have years and years of prime ministers doing basically whatever they wanted because they had

big majorities. I think were moving into a scenario where Parliament will become a low unto itself,

literally.

Sir Michael Leigh:

You said that the Liberal-Democrats would be wiped out, but maybe they will retain some votes, some

seats, maybe twenty, maybe fifteen, maybe ten. Couldnt the arithmetic work out that that might make

all the difference?

Dan Roberts:

Its conceivable that they could form a coalition with the Lib-Dems and still be five or ten short of an

outright majority. I havent seen any scenarios suggesting a Lib-Lab coalition will be big enough to form

a majority government.

Sir Michael Leigh:

Would you agree with this?

Peter Foster:

Were getting into a great wave of hypotheticals. I wouldnt disagree with anything Dan has said, if you

look at the polls. You could get a Tory minority government. Historically, because people dont like to

admit to pollsters that they vote Tory, they tend to outperform where they were on polling day. Right

now, for the two main parties 324 is the magic number for a majority. Lets say the Tories get to 287

and you have a situation where the Lib-Dems, and no one quite knows how the UKIP vote will hold up

when its really confronted on polling day I do think the Tories have a good point. The English dont

like the Scots. If you look at a map of the England, the Labour bits are in London and the urban northern

pockets. The rest of the map, in Scotland, is the SNP.

Ed Milibands ratings have risen, but hes still under water. Politicians go into office on a wave of

popularity and we watch them decline. Hes not a man whom the British public want to be prime

minister. Ed Miliband propped up by a Scottish nationalist government, frankly, just gets up the nose of

most English people. Its a pretty unpalatable prospect. I just advance the idea that youll end up with a

minority Tory government where the Lib-Dems get thirty seats, not fifteen. The Tories get 286. And

then youve got UKIP. Honestly, the Lib-Dems will not go into a coalition with UKIP. I do think that Ed

Miliband will be in a weak position, morally speaking, to form a government.

Sir Michael Leigh:

Just to understand this hypothesis: this would be a minority conservative government with the smaller

parties making up to the necessary majority of 326. Will it remain a minority government?

Peter Foster:

It might well remain a minority government. If the Tories have significantly won the most seats, lets say

the Tories get 290, and Labour gets wiped out on Scotland and gets 265-270. That puts Ed Miliband, an

unpopular prime ministerial figure, in a really tough position when it comes to laying moral claims to be

the Prime Minister of Britain. We still live in a world internally, us Brits, where the Prime Minister is the

leader of the country. We dont have a presidential system of government or politics. Hes still the

leader of the country.

Dan Roberts:

This is where I think our constitutional weakness could result in a very very nasty situation because I

think that ambiguity puts a huge onus on the Palace in a way that people will be very suspicious of.

Again, we may part company on this. I think it puts an enormous amount of power in the hands of the

media, who are already very very shrill on the warnings of the dangers of this. Lets not forget on of the

big divisions on press regulation where Ed Miliband was one of the few British politicians who to my

mind with the balls to stand up to Murdoch during the phone hacking situation and whose promised

regulation. You will have the Daily Mail and the Murdoch empires, and others, screaming blue murder

in those days after the election.

Peter Foster:

Its an English media. This is the U.K., but Dan is right about that. Its an English media and the English

do not want a weak prime minister in Ed Miliband, both numerically and personally, as he is being

perceived, being wagged by a wrecking ball SNP. I do think that is a recipe for real rancor, in a way that

you havent actually seen in British politics. Real rancor.

Dan Roberts:

Only to be matched by the rancor if that Fleet Street coalition puts a minority Tory government in

power.

Scheherazade Rehman:

Perhaps Labour is being led by the wrong Miliband. David Miliband had a lot more political oomph, as

one might put it. The bottom line here is that no single party is going to win a majority. Both your

scenarios are right. This is a difficult situation. I think the only certainty here is increased market risk

because of this. There is going to be uncertainty and volatility because no party is going to win a

majority.

Peter Foster:

It hasnt affect the market now, has it? The market is sanguine as we speak.

Scheherazade Rehman:

Hopefully this show will raise the awareness of that.

Sir Michael Leigh:

Lets now look at the implications of these outcomes. Lets look at an issue that weve only referred to

indirectly. Having spent some thirty-four years of my life in Brussels, Im not uninterested in it. We

know that Europe is an issue that divides parties and is not very salient to the electorate. It comes

towards the bottom of the list of issues that the electorate is concerned with. I would say, of all the

issues perhaps, it is the one that seems to distinguish the parties the most clearly. What would actually

happen if we had, for example, a conservative minority government? We know that Cameron has

promised if hes the next prime minister, he will hold a so-called in-out referendum on E.U.

membership inn 2017. My first question is: if he is a leader of a minority government, will he be in a

position to honor this pledge at all? We he be able to get an act through Parliament providing for a

referendum at all? If not, would be perhaps secretly welcome this as a way out or would he,

nonetheless, hold a referendum? What is likely to be the drift of events if he is able to hold a

referendum? We can come to the other hypothesis in a moment with a Labour government, but how

would you see things panning out on this issue?

Scheherazade Rehman:

Major disruptions, I would say. If hes able to hold a referendum, and thats a big if, and lets say if the

referendum falls in favor of leaving the E.U., which I doubt it will because it will put enormous negative

pressure on exporters, from automobiles to pharmaceuticals, not to mention investments coming in and

banks leaving London and reorganizing themselves somewhere else, you have to ask yourself why

theyre doing this. Theyre doing this because there are so many other pressures: the immigration

pressure, the bureaucracy of the E.U., and this whole issue of open borders where U.K. jobs are taken.

There is a political dimension to the referendum. Looking from the outside in, a referendum to leave

the E.U. is just, in my mind, a dumb one.

Dan Roberts:

Im more sanguine, mainly because I cant see it happening. This is a function of internal Tory party

politics more so than a groundswell from the country to leave. This is a reaction to the rise of UKIP.

They were bounced into this promise at a time of weakness. I think the Scottish referendum showed us

that British voters are naturally risk averse when it comes to a major constitutional change.

Peter Foster:

You dont think theyll vote to leave or you dont think there will be a referendum?

Dan Roberts:

Neither, to be honest. I think that Cameron will do absolutely everything in his power to avoid one, and

youre right, a minority government would be a good excuse to avoid it. I think the thing it might play a

role in is if Cameron loses. If Cameron isnt the next prime minister, there is going to be a Tory

leadership challenge from Boris Johnson which may well divide down the lines.

Peter Foster:

Regardless of whether there is a referendum, Cameron promised the referendum to get himself out of a

hole with his own party. If there is a Labour government, or minority government, the issue festers.

There is no referendum and the Tory party even splits. If were going to enter a world where the British

public are more accustomed to minority politics, you could see a world where the Tory party splits and

you get a Euroskeptic wing of the Tory party called, say, Tories for Britain. You end up with a rump

Cameronite wet Tories and Blairite new Labour in coalitions. In a minority government, Cameron has an

excuse not to have a referendum. Does that shut up the one-third of his party?

Dan Roberts:

I think it depends on how UKIP polls. One of the determining factors would be, as you say, its not down

to the number of seats they get, but if they get a large amount of votes and become a political force,

then I think the pressure will be back on the Tories to adopt this.

Scheherazade Rehman:

Youve got a situation where nobody wants a referendum here and even if they do hold one Imagine a

world where youve got China sitting here, the U.S. sitting here, the E.U. sitting here, and in this little

seat youve got the U.K.

Sir Michael Leigh:

I think that before we take this as read that we will be in that situation, I think all the new MPs who are

elected through the selection process are likely to be strongly euroskeptical so arent we likely to have a

House of Commons where the conservative party overwhelmingly are euroskeptical? Would there be a

significant rump of pro-Europeans.

Dan Roberts:

The last couple of elections have seen of younger euroskeptic Tory MPs coming through. Just to play

devils advocate, and, I think, justify some of the euroskepticism, they have looked at the performance

of Europe over the past five years with horror. It wasnt that long ago that we were weeks, months

away from taking us into the single currency and you can look at whats happened since. Many people

are grateful it didnt happen. The euroskepticism of old was a slightly Little England, recapturing the

empire and go it alone. I think the more modern euroskepticism is born out of a genuine feeling that

the project is quite badly eroded.

Scheherazade Rehman:

Yes, but there is difference between joining a single currency and keeping the pound and joining the E.U.

for trade issues.

Dan Roberts:

I would agree. George Osborne deciding to sign up to the Asian Investment Bank, I think, is a classic

example of a type of Tory that would much prefer to be more flexible. Not a Tory that thinks Britain is

going to recapture and conquer the waves, but a Britain that forms its own strategic alliances.

Peter Foster:

But Britain exports more to Ireland than it does to China, India, and Brazil combined. The irony of

Europe is that Europe is Balkanizing, but increasingly, in a digital economy, its never been more

important that comes together and events are driving Europe together. The euro-crisis has forced the

ECB to back European bonds. A Greek exit standoff is actually going to deepen economic integration.

The crisis in the Ukraine and Merkel and sanctions. The immigration in the Mediterranean issue. Again,

a pretty weak showing from Europe, but it only works if everyone works together moving in one

direction.

Sir Michael Leigh:

I think this is a case of half-full/half-empty. You might well be right, but one could also make the

opposite case. And on Ukraine, if you look at the all the actors, the Austrians, the Bulgarians, the

Slovaks, and others, you do see quit a diversity of view. When the sanctions come up for review in June,

I would like to bet that exactly how that will fall out. Just to stay with this for a moment, lets imagine

that Cameron is prime minister, he does find the votes to get a referendum through the House of

Commons, and then he engages in a mini renegotiation with the other member states of the E.U., what

would the outcome be? If there were a referendum in 2017, would the British vote be so conservative

or afraid of an uncertain future that when they go into the ballot box they will, nonetheless, vote against

leaving the E.U. or there is really a significant risk, or possibility, depending on your perspective that

they might vote to leave?

Scheherazade Rehman:

I think they will probably not leave because the risk is huge in terms of investments and business.

Peter Foster:

I do think there was huge gap between reality and public opinion. There was poll that showed that 75%

of Europeans thought that current corruption was rampant in the E.U., but if you look at the audit, its

about the same as the U.S. federal government. I do think people will contemplate filling in customs

forms to go on holiday to France. When they start to look at immigration as a two-way street, Brits

living in Spain, etc. Its hard to look at the freedom British businesses have because of our levels of opt-

out to hire without regulation compared to the French. One of the problems is the argument, and the

press is responsible for this because the press is infantile about Europe, if the arguments really took

place, maybe there needs to be a referendum. Maybe we actually need to think about what happens if

we leave. Back to your point about when were in a room with China and America, where does Britain

think it will be?

Dan Roberts:

Thats a positive scenario, not unlike marriage vows, which is that there is a referendum and it gets won

convincingly and comes affirmatively. A lot of peoples beef about Europe is also that it is an

undemocratic super state. The upside of a referendum would be a sense of participation.

Scheherazade Rehman:

But theyre not alone in this. Youve been in the E.U. long enough to know that any time there is

pressure in the system, and usually it is economic pressure, two entities get blamed: the E.U.

bureaucracy gets blamed and immigration gets blamed right off the bat. They just go for them.

Dan Roberts:

I think a lot of Brits feel about Europe in the same way that Americans feel about Washington. I think

most people get that it has to be there and there isnt really an alternative, but its a great whipping boy.

Its a great symbol that someone else is to blame.

Sir Michael Leigh:

Looking at a Labour government with the support of the SNP, we know that some of the position taken

by the SNP on security and defense would give cause for concern to Washington, I think. I mentioned

the little piece about the special relationship by Carnegie Europe and, in preparing for that, I spoke to a

number of people, for whom defense is a crucial issue. That fact that the U.K. is not pulling its weight

and is way below the two percent target for GDP for defense expenditure, notwithstanding increased

risks in the south and the east, but, in addition to all of this, the SNP is also in favor of getting rid of what

we used to call Britains independent nuclear deterrent. Its not renewing the Trident submarine

program. Do you think that such a government is cause for concern her in Washington, in terms of

security, defense, NATO, and so on?

Dan Roberts:

I think it will cause concern. Not sure it should. I think that a Labour government that allowed itself to

be blackmailed into giving up the nuclear deterrent would never form a government again. The Tories

would rip them to shreds and they would never come back from it. This is one of the reasons Miliband is

being very coy about refusing. The current manifesto for the SNP wants to get rid of the Tridents. There

is no way they can win another election if they let that happen. Personally, Im quite ambivalent about

Trident. Within the mainstream of British politics, it is seen as essential and it is certainly not something

that could be given away as a bargaining chip to get Labour into power because that would just backfire.

Peter Foster:

I do basically agree with that. I think its something that the nationalists can hang out there and they

can give away if there is going to be this deal it will have to be something that they have to park. They

want fiscal autonomy, but they dont actually, because if they were given fiscal autonomy theyd have to

pay their own way. I dont think that Washington will really think that the fast lane is going to be shut.

I, like you, am ambivalent in Trident since I dont think we can afford it. We need to spend the money

we spend on Trident on a deployable force that makes us relevant. If we are going to stay with a stake

in world affairs, which were rapidly losing, we need the money.

Scheherazade Rehman:

I definitely think the U.S. will have a more reluctant partner, under Labour, in engaging in its own foreign

policy agenda overseas in terms of coming on board, but given the retraction of this administration from

foreign policy, that may be not such a big issue at this point. Where it will change the debate, I believe,

is in immigration in Europe. That will change under Labour.

Sir Michael Leigh:

Id like to thank our three panelist very much indeed for your contributions. I certainly have learned a

lot from the discussion and I hope thats been true of everyone who has been listening in. I think we can

say that this will be one of the more interesting elections taking place in the U.K. We hope the British

people show wisdom in their choice. Watch this race. It will be very interesting to see the outcome the

evening of the 7th of May. Thank you very much.

Outside Question:

What kind of impacts has Boris Johnson had on the election thus far?

Sir Michael Leigh:

I have no inside track, but one thing I can say is that Boris Johnson masqueraded as a convinced

euroskeptic. I remember his father as a colleague in the European Commission. I believe he went to the

European school in Brussels. It may be opportune in British politics now to strike this pose, but I wonder

how deep it really runs? We didnt discuss whether he was likely to take over as leader of the

Conservative Party or not in the event that the conservatives lose. This might happen, but I certainly

have doubts as to whether his euroskeptical conviction run beyond populism and opportunistic benefit.

Thanks again to everybody and I look forward to another such discussion in the not-too-distant future.