But the logic of the Atlantic connection does not come solely from strategic considerations. It is also grounded in political culture. The French and Germans, for well-known historic reasons, have social safety nets that have effectively become hammocks. Out of fear of the role of discontented mobs in their history, a role that has no real
parallel in the history of the English-speaking countries, France and Germany have tax and benefit systems which, at least by Anglo-American standards, subsidize unemployment and destroy the incentive to work. By British and North American standards they have semi-dysfunctional dirigist economies, with excessive levels of taxation and unemployment, largely because they are paying huge quantities of Danegeld to the urban masses and uneconomic small
farmers. Their political traditions are corporatist not liberal, arising in the case of France from such illustrious but thoroughly authoritarian figures as Richelieu, Colbert, Napoleon and de Gaulle.

As for Germany, it is a cliché to say that it was unified too late, had great difficulty determining whether it was an eastern or western-facing nation, and that whenever it set out to assure its own security it ended up making its neighbors insecure. Clichés aside, while Germany is now well unified in accepted borders, and while the extension of NATO to Poland will have the highly desirable effect that the eastern border of the Western world is not also a German border, that country still projects its own sense of historical loneliness. It is possible, and feared by some, that the German
desire for security could cause it to exert pressure on other countries to immerse themselves more completely in Europe than many of their citizens, including a strong current majority of the British, find comfortable.

In sharp contrast to Britain and the United States, none of the largest continental European countries has durably effective political institutions. Those of Germany date from 1949; France's from 1958; Spain's from 1975. The Italians are still trying to reform their constitution. It is understandable that countries so placed might feel that they are not giving up much in institutional terms by moving toward federation. Indeed, some favor federation as a way of bypassing national institutions that have become sclerotic, ineffectual and politically immobile. Most British, for good reason, do not.

The British electorate's instincts against political immersion in Europe are sensible, but to turn away from Europe altogether to embrace Britain's post-imperial solitude is to court Curzon's curse. So both the Major and Blair governments have temporized at a fundamental level, suggesting that Britain can be a political contortionist: "at the heart of Europe", at the side of the United States, and at the head of the Commonwealth, all at the same time. Both Euro-integrationists and ambivalent dissemblers of both major parties imply that Britain can cede sovereignty without surrendering it, build up Brussels and Strasbourg without reducing Westminster--in short, have its cake and eat it too.

This is the illogic of the present position of the British government, and the only way to resolve it is to imagine that there
could be a multi-speed or variable geometry Europe--in other words, a European Union flexible enough to negotiate singular relationships with a variety of its members. That, however, is not the emerging pattern either in Brussels or Strasbourg; that pattern is one of imposed uniformity, not of variety and flexibility to accommodate individual needs. To date, so-called opt-outs have been shown to be of limited value, and in all probability any further ones would only once again delay Britain's reckoning with Europe.

The Atlantic Option

It should be clear by now that Britain's options are not limited to embracing the European Union or settling for loneliness. Others are available. One is for Britain to join the European Economic Area (EEA) with Norway, Iceland and Liechtenstein. EEA membership would maintain Britain's full access to the single market, avoid further political integration, and save most of the present financial cost of the EU. Then there is the Swiss option--embracing the European Free Trade Association (EFTA) but not the EEA. This would give almost as good an access to the EU market, but would allow only free movement of goods, not of people. It would also impose delays on British citizens travelling to EU countries. Even the most ardent Euroskeptic would not regard that as progress. Britain could in any case use the existence of its veto right and its large current account deficit with the EU to negotiate complete reciprocal access of goods and people, withdrawal from the political and judicial institutions, thus emancipating itself from the herniating mass of authoritarian Euro-directives with which it has been deluged--now totaling over 230,000 pages of mind-numbing regulations.

I have listed these options for the sake of completeness, but none of them is commensurate with the scale of Britain's problem--which is to find for itself a place in the world that is appropriate to its history, its political culture, its economic interest and its strategic needs. The alternatives listed either embrace isolation or simply associate Britain with other relatively isolated countries. There is another option, however, that does meet the test of proportionality, and that builds from long-standing strategic and economic realities--and that is the Atlantic option.

As to economic reality, Britain is already deeply enmeshed commercially with the United States and Canada. In percentage terms, Britain trades almost twice as much with North America as do the other EU countries as a group. At the same time, Britain's share of trade with the EU has actually declined recently. If exports shipped on to non-EU destinations through Rotterdam and other European ports are included, together with overseas investment earnings, the EU's share of British exports is probably about 40 percent--which amounts to less than 10 percent of the United Kingdom's GDP. Conversely, the exports of a number of countries to the EU, including those of the United States, have risen considerably more rapidly than have Britain's in recent years, showing that EU membership is not entirely necessary for access to the European market. Over the last ten years, direct net investment in the United Kingdom from the United States and Canada has been one and a half times the corresponding figure for EU investment in Great Britain. As well, U.K. net direct investment in North America has been more than double its investment in the EU. These trends are continuing, impervious to EU preferences.

Now that the World Trade Organization is administering the Uruguay Round of trade liberalization agreements, the EU's common external tariff has fallen from 5.7 percent to 3.6 percent. This should not constitute a prohibitive barrier even to a Britain that was not in the EU, given its more bearable social costs and provided it retained control of its own currency. The fear of being frozen out of Europe by vindictive community bureaucrats is now, I believe, a complete fraud, though one would not know it to listen to the alarmist comments of many of Britain's political leaders and much of its media.

Indeed, the facts suggest that it is rather the other way around. The annual cost of Britain's adherence to the EU is nearly £10 billion in gross budgetary contributions. While almost half of this is returned in EU spending, it is spent, as former Chancellor of the Exchequer Norman Lamont has pointed out, "on things which the U.K. government would not choose to spend money on." Higher food prices in the U.K. because of the Common Agricultural Policy cost Britain rather more than £6 billion annually, though again about half of that is rebated directly to British farmers. The overall cost of the EU to Britain then is between £8 and £12 billion, or around 1.5 percent of GDP. There are in addition the significant costs imposed by EU regulation, and the heavy political price of eroding sovereignty--which includes the tacit encouragement of provincial separatism, as Scottish and Welsh nationalists envision receiving the sort of direct grants enjoyed by Ireland.

Despite these costs, and the £3 billion annual trade deficit the U.K. runs with the EU, there are still those who deflect such unpleasantries with the noble hope that Britain will ultimately Thatcherize Europe rather than be de-Thatcherized by it. The truth is, however, that the United Kingdom could now probably assert a stronger and more positive influence on the European Union from outside than it could by going further into it. Free from its costs and interferences, Britain could export successfully into it, thus demonstrating the superior competitiveness of the so-called Anglo-Saxon model. For since the Uruguay Round, attempts by the EU to limit imports from non-members can only be sustained if they are unanimously upheld by multi-national trade panels, which is very unlikely.

As a consequence of all this, it would be logical for Britain to negotiate entry into NAFTA, which will probably be renamed and which is already negotiating with the European Economic Area and European Free Trade Association, as well as with Chile. Such an expanding NAFTA would have every commercial advantage over the EU. It is based on the Anglo-American free-market model of relatively restrained taxation and social spending, which is the principal reason why, over the last fifteen years, the United States and Canada together have created a net average of two million more new jobs per year than have the countries of the European Union. NAFTA, as its name implies, is a free-trade area only. The United States will not make any significant concessions of sovereignty and does not expect other countries to do so. A trading bloc based on NAFTA and the more advanced South American countries could also expand into eastern Europe faster than the EU. Such a bloc, after all, would not be encumbered by such impediments as the EU's Common Agricultural Policy, and its powerful urge to protect onerous French and German social costs.

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