Brexit and European integration

We will soon know the final decision of British citizens on the question of the United Kingdom leaving the European Union. Brexit, if it is to happen, is not an automatic event. It is a negotiated result that will follow the referendum. EU Member States will enter into negotiations with the British government to define the terms of the exit and to agree on a new EU-UK trade deal.

Seen from the outside, there are a couple of things that are of interest:

  1. Whether the British renegotiation can be a template for other countries wanting to repatriate powers.
  2. Berlin’s influence may be reinforced by the fact that it will not be balanced out by London.

Let us consider these at some greater length.

Brexit as a template

There are many political forces across Europe that would like to follow in the British footsteps. If London receives a good post-referendum deal, the argument for what effectively is Europe à la carte will only be reinforced. We might witness calls for more referenda on Europe with the objective of redefining each country’s role in the Union. Brexit could become a template for rolling back the integration process in a stepwise fashion. That would not necessarily signal the end of the European Union per se, but would certainly entail a diminution of power for the EU as it currently stands.

European leaders may therefore try to make a tough bargain with London in hope of deterring others from following suit. The problem with this approach is that it would be inconsistent with the overarching reasoning of European integration, namely, the spirit of consensus and the tacit understanding that introducing ad hoc criteria or exceptions to the rule is a viable way forward.

Opt-outs and special treatment of a certain Member State are not foreign to European politics. They are what preserves the impression of national sovereignty in a process that otherwise is all about outsourcing authority to the supranational level, to be managed by “Brussels” or become contingent on intergovernmental decisions among all EU Member States.

The prospect of Brexit becoming a model for other “populists” to replicate need not be negative. The argument for an ever more pronounced Europe of exceptions will be raised. It will be based not just on Brexit, but on the very precedent of the European integration process. Rather than avoid the challenge and pretend that the EU is not already operating at multiple speeds, it is best to tackle it head on.

Perhaps the counter-argument will then be that the days of granting opt-outs to dissenting governments are over. As the Economic and Monetary Union or more recently the influx of migrants and refugees have shown, good governance and sound institutional arrangements at the European level cannot be reconciled with heterogeneity among national legal orders and the narrow interpretation of the “national interest” as a form of beggar-thy-neighbour agenda.

Europe has moved away from being just a regional trading block. It aspires to become a fully fledged polity, present or recent pressures for disintegration notwithstanding. To that end, the EU will eventually have to overcome a mentality of exceptionalism that is intimately linked with the modus operandi of European politics hitherto.

The scope of European integration has broadened. The needs of European politics have changed. The EU aspires to be a republic and must eventually operate as such. Yet the approach of decision-makers remains that of trade bargaining and of making backdoor “gentlemen’s agreements” between heads of state or government.

An unbalanced Europe

There is this notion that London is an antipode to the Franco-German alliance. It is plausible to think of Europe as a structure with four pillars, those being Berlin, Paris, London, and Rome. With one no longer supporting the European edifice and the other two facing various challenges, the assumption is that Germany will immediately assume an ever greater role in the event of Brexit or that Europe will no longer work as intended, if at all.

The problem with this line of thinking is that it assumes London to be an equal partner to the other three capitals in terms of its participation in the European project. The fact is that Brexit or not, the UK already is by far the least attached to the EU of all the Member States, courtesy of its opt-outs for the euro, the fiscal compact, as well as other policies pertaining to police cooperation, the Schengen Area, migration and asylum. Losing the UK would not amount to having a “pillar” removed. It would be about cutting ties with the most reluctant of the 28.

Rather than disturbing the balance of power in Europe, a Brexit may just focus minds on what has already been set in motion since the eurocrisis (and often goes unnoticed): the continued reinforcement of the legal-institutional order of Europe’s Economic and Monetary Union. Fiscal policy, state budgets, economic coordination at the supranational level, prudential powers to the European Central Bank, and a single rule-set for all of the system’s banks (a “banking union”). These are the areas of policy that have been given the greatest attention (i.e. law-making) in recent years, and where “Brussels” has become more capable at enforcing its will.

The response to the eurocrisis has not been just about arresting the economic downturn. It concerns the thoroughgoing reform of the institutional arrangements involved. The European level has gained significant powers in recent years and stands to gain even more, such as the unified representation of the euro area to the International Monetary Fund and hence the further upgraded status of the Eurogroup and its presidency.

For all its moral grandstanding and overtures about the “European values”, the EU remains an economy-first project. To put it simply, there is no equivalent of a fiscal compact for human rights and democracy, just as there is nothing like the European Stability Mechanism (ESM) for policies pertaining to fundamental rights and the rule of law.

What is important in relation to the Brexit debate is that the UK is to a large extent absent from this aspect of the integration process. It does not use the euro, is not a signatory to the fiscal compact and the treaty establishing the ESM. Put differently, the future of the EMU is not dependent on British aspirations.

This is not to suggest that Brexit will necessarily be a catalyst for further integration or that there are no risks involved. It is a reminder that we had better not overstate the importance of any one country, while underestimating the significant changes that have taken place over the last five years or so in the area of policy that matters the most to the European project: the economy.

Brexit is a British problem

The referendum on EU membership is about how little involvement the British people want in the European integration process. There may be implications for the rest of the Union but the issue continues to be an internal debate that only the Brits can settle.

Our concern as outsiders is that a final solution be delivered so that other policies may top the agenda. Besides, even if the “remain” camp wins, the UK will not suddenly become a cheerleader of European integration. There is no chance they will join the euro, the Schengen Area, and so on.

As such, there is little reason for them to contribute to any effort towards, say, enhanced economic governance or anything that may seem like the embryo of a proper European government with its own fiscal capacity.

The UK will most likely cling on to its special status and probably continue a policy of Europe à la carte, while trying to hinder any attempt to disturb the status quo.

Perhaps then the conclusion is that in the medium-to-long run, Brexit may not be to the detriment of the European Union. Whether it is harmful to the interests of the United Kingdom is for the British people to decide.