The MT Diary: Howard Davies

Giscard reconstitutes treaty; cross-border merger-phobia; Charter debate a damp squib.

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Last Updated: 31 Aug 2010

'The French are a very intelligent people, but they vote in a state of madness,' wrote the Duc de Broglie.

It was the former President Valery Giscard d'Estaing, who spent an evening at the LSE recently, who reminded us of this wise observation.

As the author of the constitutional treaty rejected in last year's French referendum, he might be thought to have an interest in taking this line on his compatriots' intentions. His speech was the first shot in a campaign to revive the treaty and invite the French to think again.

In Britain, the constitutional treaty is firmly in the Norwegian Blue category: a text on which the French and Dutch voters rang down the curtain and sent to join the choir invisible. But Giscard reminded us that in the absence of any constitutional change, the decision-making problem in the European Union remains. The Council of Ministers is almost incapable of reaching a view on anything. Most vividly, if nothing is done, the UK will next hold the Presidency in 13 years' time.

So prime minister Brown and prime minister Cameron will almost certainly never strut their stuff on the world stage, having to wait in line behind the next prime minister of Bulgaria.

Europe's foreign policy will remain stuck up a cul-de-sac, as the French don't call it.

So Giscard's message, delivered with great style, was that the French voters simply 'made a mistake' and after the elections next year should and will be invited to correct it. The advantage of this turn of events - not lost on Giscard - would be that the problem will come bouncing back to the UK. We could once again be the last country in Europe invited to ratify the treaty. That moment could just about coincide with Gordon Brown's arrival at 10 Downing Street. Something for him to look forward to.

In the meantime, Europe's greatest achievement, the single market, seems to be falling apart. The French government's resistance to the proposed Mittal/Arcelor merger is quite remarkable; and their response to the Enel bid for Gaz de France - an attempt to create a rival French national energy champion - takes us back 30 years.

After Italian attempts to resist banking takeovers, led by the late unlamented Governor Fazio, Berlusconi's outrage at this gambit had to raise a smile. But he is essentially correct. What I don't understand is why he has not asked David Mills to sort it out. Surely an offshore vehicle, secured on a bit of property in Kentish Town, could cut through all this controversy.

The principle of the free movement of capital is not doing so well on the other side of the Atlantic either. There was a remarkable reaction among New York politicians, including Senator Hillary Clinton, to the Dubai takeover of P&O.

New York's politicians and labour unions have been responsible for the downfall of that city's ports. The state of the West Side of Manhattan is a tribute to their resistance to change. Almost all that is left in the docks is a rusting aircraft carrier, doing service as a floating museum.

The story is lovingly chronicled in a fascinating new book called The Box by Marc Levinson, a history of the growth of container shipping.

I know, I know. One has to be pretty sad, as my sons would put it, to get off on a history of the container. But it shows vividly how resistance to technological change caused shipping movements to migrate away from the Hudson river to other East Coast ports. Maybe Dubai should just quietly close New York's remaining facilities, which would solve the security problem once and for all.

Perhaps David Mills' Italian entanglements are a reason why the BBC's White Paper has been so long emerging from the Department for Culture, Media and Sport.

The Government's hope seems to be that they can slip through what promises to be a very disappointing outcome to Charter Review with as little debate as possible. In Parliament, Lord (Norman) Fowler was almost alone in trying to raise the profile of the remarkable licence fee proposals, by which the fee would rise to £180 in the next few years, under a scheme that provides no incentive for increased efficiency.

The other big issue is governance. What will the new BBC Trust be? Will new people be brought in, or will tired old Governors be transmogrified into spanking new trustees?

The nature of the Trust should be a matter of lively debate. It will influence the future of the Corporation for the next decade or more. But no-one else in Parliament seems very interested. Fowler's autobiography was called Ministers Decide. That seems to be about the size of it - in this case, with no useful function whatsoever for Parliament.

In the long run, what the Government are producing will prove to be a big mistake. The licence fee cannot survive the digital revolution unchanged. Once it is possible to switch individuals off, or for individuals to switch themselves off from the BBC's output, there will be trouble. Maybe someone will go to court to challenge the validity of the licence fee in those circumstances. It would be highly unsatisfactory if the BBC's future were to be decided in the courts, yet that may happen if the Government press on as they seem to intend.

- Howard Davies is the director of the London School of Economics.

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