‘Compelling economic arguments are made for the UK’s membership of the European Union, not least the importance of the Single Market in which we do almost half our trade. But equally compelling are the strategic, security and diplomatic interests served by UK membership, interests that would be seriously jeopardised were we to leave the EU.’ Sir David Manning, ambassador to Washington 2003-7.

‘It has been argued that British Diplomacy boxes above our weight. Surely, departure from the EU would deprive us of the major ring in which to box?’ Lord Wright, Head of the Diplomatic Service 1986-91.

These two quotes, taken from David Charter’s excellent book Europe: In or Out get to the heart of why we should stay in the EU. Since the end of the Second World War we have slowly but surely been lulled into a false sense that the prospect of a major war on the Continent has all but disappeared. But as the crisis over the Ukraine is demonstrating, the original purpose of the Union – the avoidance of war – should not be forgotten. Beyond the Ukraine, can we be confident that the former Soviet satellite states of Estonia, Latvia and Lithuania, all EU members, won’t be next? And do we really want to be marginalised in such circumstances? Russia spends 4% of its GDP on defence and has approximately 3 million troops. We spend 1.7-1.8% of GDP and can call on 240,000 soldiers – an order of magnitude less. Soft power we have, though. For now.

In preparing this first piece on the EU, I drew mainly on two books that I think work well together. The first, the aforementioned Europe: In or Out by David Charter, and Roger Bootle’s The Trouble with Europe. The latter book, though not limited to finance, does a good job of explaining the economic challenges within the Eurozone, in particular how the adoption of the Euro prior to a concerted fiscal and political integration has led to the loss of the currency devaluation pressure relief valve for the peripheral nations. ‘Currencies and states belong together’ as the book puts it. Is the recent high level of unemployment in countries such as Spain and Greece at least partly down to the constraints of the Euro? Is the Euro a modern-day form of gold standard? To go back to the security argument, it is also fair to say that structurally poor economics can also lead to war, given that peace and prosperity are not unconnected.

One idea to overcome this structural problem is to split the Euro into a northern and southern zone. This would allow the southern Euro to find a level at which its members could remain competitive. The reduction in economies of scale argument against is countered by numerous examples of small but prosperous states such as Qatar, Luxembourg, Singapore and Norway. Singapore took off when it left the Malaysian Foundation in 1965. It seems right that there needs to be a greater degree of political and fiscal similarity than currently exists across all EU member states in order to share a currency.

If the Eurozone could be restored to health with ideas such as the north/south Euro split, we should remember that the UK is the EU’s top destination for Foreign Direct Investment (FDI), securing 20% of new projects. We are seen as the gateway to the Single Market. Our car industry – now mostly foreign owned – accounts for 10% of our exports and factories are big, long-term commitments. Can we be confident that car industry FDI decisions wouldn’t be tipped at the margin if we left the EU? It’s already difficult enough to convince foreign boards of directors. As the National Institute of Economic and Social Research (NIESR) estimated in 2000, a breakdown in EU trade relations could mean a drop of approximately 33% in manufacturing FDI and 10% in services. Businesses need stability.

It is probably wrong, however, to scaremonger too much about the long-term loss of jobs that our departure from the EU might cause. A figure of 3 million jobs is often cited but though this represents the employment related to EU trade, it is wrong to think that most of these jobs would disappear. Britain could likely negotiate a fairly wide-ranging Free Trade Agreement were we to leave.

Two important groups want us to stay in the EU: the City and the US. It’s important to the City from both the perspective of the Square Mile as a financial centre and the increased level of UK trade and business. And it’s important to the US mainly in terms of Britain’s soft power within the EU. As Joe Biden put it: “We believe that the United Kingdom is stronger as a result of its membership. And we believe the EU is stronger with the UK’s involvement. That’s our view.”

UK businesses are also generally in favour of EU membership, but are increasingly demanding a renegotiated position. This leads us to David Cameron’s Bloomberg speech, which indicated five main elements to the negotiations: competitiveness; flexibility; a transfer of powers back to member states; a bigger role for national parliaments and fairness.

One of the commonly used examples of an EU drag on the UK is the Common Agricultural Policy. It is perhaps not seen as quite such a problem by the farmers themselves, however. As Paul Kendall, President of National Farmers Union said “British Farmers are, by and large, more favourable to the European Union than the generality of the British Public.” The key issue is equality of treatment – a similar subsidy for all to make competition fair.

In conclusion, though there are good arguments on both sides, I think Mr Putin’s recent escapades show that the original idea of ‘a United States of Europe’ to offer peace and security should be front and centre of our thoughts. Though EU membership does not affect our position within Nato, the idea of a heavyweight state departing the EU and taking with it its significant soft power and influence seems wrong given the challenges posed by both Russia and Isil. We should think of the negatives of EU membership as part of our defence budget.