Sir Stephen Wall spent 35 years in the British diplomatic service, the last 20 years of which were devoted to Europe. From 1993 he was Britain’s ambassador to Portugal, then for five years from 1995 he was the permanent representative to the EU, the most senior civil-service diplomatic position. Then he returned to London and served as Tony Blair’s advisor on Europe until 2004.
Now retired from the civil service, the 72-year-old has just published the third volume of the Official History of Britain and the European Community, covering the period from 1975 to 1985. It begins with the UK’s previous referendum, where a two-thirds majority voted to remain in the European Community, as it was called at the time, and ends just before the Single European Act 1986, which set the path for the Single Market. Incidentally, the official histories are part of a government program subjected to the current government’s austerity cuts, and so Britain’s relationship to the EU ends in 1985—according to the history books anyway.
Quartz spoke to Sir Stephen about Britain’s tumultuous relationship with the EU and what might happen next.
Quartz: To say the least, the UK’s relationship with the EU is very complicated. How would you describe it?
Sir Stephen: I don’t think we’ve ever really come to terms with the implications of being part of the European Union. I always refer to it as a distress purchase.
Over quite a long period, from 1945 up to 1961 when we first applied to join, we looked at all the alternatives. The post-war world under first the Labour government and then the Churchill government was shaped by having the Empire, or at least the Commonwealth. There was a system of trade based on Commonwealth preference, and up until the mid-1950s, our largest export market was Australia. Now it’s hard to imagine this country of 10 million people being a larger market than the United States, let alone the rest of Europe.
Though we weren’t disengaged from the continent. The Labour government of the late 1940s was interested in the idea of some kind of customs union with the rest of Europe but it was never supposed to be at the expense of Commonwealth trade.
Before applying to join the European Economic Community 1, the UK was part of and led the European Free Trade Area 2. It seems that for a long time the UK thought it could get what it wanted out of a European project without necessarily being part of that core EEC group by having this alternative arrangement.
One of the factors in British minds for quite a long time was the feeling that these six countries were unreliable. Germany was unreliable because it was a danger. France was unreliable too and communism was quite a powerful force in France at the time.
But it was also partly a mistaken belief that if we set up something that was a rival, that would force the six, as they then were, to compromise. It’s not unlike the situation we’ve been facing now over the Brexit negotiations. For the six to set up the European Economic Community it’d been very difficult. And so for them, keeping their unity was much more important than negotiating with the British.
Why does the UK change its mind and apply to join?
Harold Macmillan became prime minister and was forced to the view that this was what needed to be done, in part because economically the UK was being outstripped. Macmillan could see that the world was a world of two superpowers, the Soviet Union and the United States. Britain was no longer in that league. If we were going to exercise influence in the world, we had to join.
But France vetos that application not once but twice in the 1960s. Why?
This is very much Charles De Gaulle, and I think it’s partly personal. De Gaulle wasn’t president yet when the European Community was created, and he didn’t like it because of the supranational parts. But De Gaulle quickly realized that it could be used as a vehicle for French leadership in Europe. And in particular he got the Common Agricultural Policy constructed in a way that it basically became a subsidization mechanism for French farmers. French farming was about 17% of French GDP and massively the most important political force in right wing French politics.
What was the British threat to the Common Agriculture Policy that spurred the veto?
It was partly because of the Commonwealth. De Gaulle saw Britain as a sort of maritime imperial power. The system of Commonwealth preference would threaten the structure of European agriculture and agricultural imports from the Commonwealth might threaten French agriculture. He was also beginning to see himself somehow as creating a kind of Europe that would stand equally between the US and the Soviet Union. This was a bit of a delusion on his part. But if Britain joined, France would no longer be the leader of this.
So then what changes? How does the UK eventually get in in 1972?
We eventually get in because De Gaulle loses power.
But critically, the French say, before we open negotiations with Britain we have to work out the definitive financing arrangements for the European Community. These end up being very disadvantageous to the UK.
Skipping ahead over two elections and a lot of political divisions over European membership in the UK, we get to the 1975 referendum. Despite being won 2-to-1 to remain in the European Community, it doesn’t really resolve much.
The divisions in the Labour party start up again almost immediately. Harold Wilson 3 retires in 1976 and is succeeded by Jim Callaghan who is faced with all those issues, along with the near collapse of the British economy. The IMF is called in 1976. There’s another election in 1979 and Margaret Thatcher is elected.
But before then Callaghan has started to raise the issue of the British financial contribution to the European Community.
The issue is that it’s too much?
Among the six, there are only two countries poorer than the UK on a per-capita basis, Italy and Ireland. And yet, Britain, along with Germany, are the only net contributors to the European budget.
When Margaret Thatcher comes in she latches onto this issue very, very quickly. In the end, we don’t get back as much in a rebate as we wanted, but in a rather complicated formula, she gets 66%. And that’s the deal—with some amendments—that survives to this day. Her big achievement is that she constantly holds out for something durable. She’s always being fobbed off with something that’s going to be temporary. But she says no, if you want Britain to be comfortable with its membership of the European Community you’ve got to deal with this issue.
To some extent, she was right. After that, there is a period of relative quietude in our relationship.
Was the Maastricht Treaty in 1992 4 a pivotal moment in the UK?
It is quite a seminal moment in terms of the Conservative Party. There are people now in opposition to Europe, especially in the form created by the Maastricht Treaty because it became synonymous with loyalty to the fallen leader, Margaret Thatcher. She was opposed to it. But not necessarily in terms of British public opinion, generally.
Does any other EU member have an arrangement as bespoke as what the UK had?
No. The UK had that opt-out from joining the euro. It also had a special arrangement with opt-outs and opt-ins on Justice and Home Affairs issues.
Does the UK’s attitude towards Europe feature as heavily on the minds of anyone else? In Brussels? In other European capitals?
We’ve always been seen as a block on what you might call institutional development. We don’t like further moves towards European union. In fairness to successive prime ministers—and this is not something which has varied much between governments—it has always presented difficulties getting those treaties through the House of Commons. Hence John Major 5 spent a huge amount of effort getting the word federal out of the Maastricht Treaty.
It also got to the point before the election in 1997, when I was the permanent representative, where there was virtually nothing that we could accept in the proposed Amsterdam Treaty 6, because of the situation in the British Parliament, when our partners were beginning to think, is Britain actually going to stay in the European community at all?
Given all of this history, was the referendum, and I don’t mean the result, but having the vote, was it inevitable?
Yes, I think so.
I don’t think David Cameron 7 was very canny in the way he did it. The changes that he got weren’t actually insignificant, but they were written off in a way that was rather a shock to him.
They weren’t insignificant but maybe it felt that way in comparison to what he suggested he could get.
Yes, that too.
I haven’t had any dealings with David Cameron since I worked for John Major and he was a young man working for Tory central office, but everybody who worked within his system said he’s the supreme tactician, but not a strategist. And I think he was very overconfident.
The only time there’s been a significant majority in the opinion polls in Britain in favor of staying in was just after the Single European Act in 1986, when there was a big television advertising campaign to raise awareness. Otherwise it’s always been about 50-50, a little bit like in favor of leaving, or a little bit in favor of staying, but never much more than that.
Brussels is often presented as being this kind of nameless, faceless bureaucracy that’s controlling our lives. What is it actually like to be working at the heart of the European project?
This to me is one of the sadnesses really, that the popular image is very far removed from the reality. First of all, on the issue of democracy, it’s not democracy in the sense that we know it nationally. You have a European Commission and they have the right of initiative. But the end result of their legislative initiative is approval first of all in the Council of Ministers, which is democratically elected politicians in each of the member states, and in the European Parliament, which is directly elected politicians from all of the member states. So there is democratic control.
Secondly, the ability of member states to influence the process is very great. The European Commission is very open to influence. Most of the financial regulation that’s come in in the EU has been heavily influenced by London and not just by the official machine but by the banking industry too. The Commission is much more open than the British bureaucracy.
Also, most of time Britain voted with the majority on legislation. But in your five years, were there ever times when the UK wasn’t voting with the majority or getting what it wanted?
We had a very difficult time in 1996 over mad cow disease. When mad cow disease was identified, which is basically because we’d been feeding chopped up sheep parts to cows and they went mad, the European Commission quite rightly put a ban on British exports of beef and byproducts to the rest of the European community.
That was perfectly legitimate and sensible, but it became a vehicle for the anti-Europeans to say this is a great attack on Britain. And the John Major government, being very weak at that time, imposed this policy of non co-operation, which meant that anything that required unanimity, we would veto.
Were there a lot of these decisions?
There were quite a lot of decisions. For example, Michael Howard was then the Home Secretary and he came out to a meeting of the interior ministers and had to veto a proposal that originated with him in the first place. It was was ludicrous.
But when the ban lifted it shows the European Union working for you. The French maintained the ban, largely for protectionist reasons, and the European Commission took them to court.
It was a very good example of how European mechanisms can actually work because otherwise, what do you do? You get into a trade war.
Today, how will the impasse be broken to get a deal to leave the EU? Is the government again promising things that are difficult to achieve?
Because the backstop isn’t invented by the European Union. The backstop is the logical consequence of the Good Friday Agreement and geography.
What does the history of the UK’s relationship to Europe tell us about what the future relationship to the EU will be like on the outside?
A lot depends on what happens to the rest of the European Union. Our departure will have more damaging effects for the other member states than are being thought about at the moment. It won’t be immediate and sudden, but we have been a big force against protectionist policies. We’ve also been a major force in terms of the evolution of European foreign policy and despite our reservations, security policy.
For the UK, it’s going to be difficult in the short term and maybe even the medium term to replicate what we have now. Even if we could get a reasonably favorable deal on trade in goods, nothing to me suggests that we’re going to get a favorable deal on trade in services, let alone financial services. Why would we? Because that’s where we have the advantage and why would our partners give it to us?
In terms of international influence, the fact that we are no longer part of the EU and therefore have no part in all the common actions of the EU takes in trade and foreign policy generally, that’s a huge disadvantage.
How open would the EU be to the UK trying to influence policy from the outside?
I’ve said to former colleagues in the civil service, the first thing that will happen when we leave is your phones will stop ringing because 99% of the business of the European Union is legislation and why would our partners have any interest in calling us when we have no say in that legislation? We’ll be calling them because we’ll be lobbying but we will be lobbying as outsiders.
This interview has been condensed and lightly edited for clarity.