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Reinvesting in Europe in the Wake of the British Departure?

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Jonathan Eyal is International Director at the Royal United Services Institute (RUSI). You may follow him on Twitter @JEyal_RUSI.

 

Britain’s decision to leave the European Union is the biggest political blow to the European project of forging greater unity since World War II. It is also a leap into a legal dark hole: a journey through an unchartered period in European history. Although some guidance as to what needs to happen in the ‘divorce’ deal between Britain and the European Union is specified by existing EU treaties, the broader questions of what should be discussed and what should be included in the deal will have to be improvised. Two conclusions are, however, already evident: first, what is agreed between Britain and the rest of the continent will shape Europe’s character for a long time; second, that one wrong move by either side could well doom Europe to further mayhem.

 

A Very British Revolution

European leaders were always bewildered by the hang-ups the British seem to have about the EU: “The UK has always been a reluctant bride, ever since it joined,” remarked Alexander Stubb, a former prime minister of Finland, and a noted Anglophile. But, historically, the British reluctance is easily explainable.

As a trading island, the British economy did not depend on Europe, but rather on global trade: Britain forged the biggest empire the world has ever known by simply ignoring Europe. As far as generations of Britons were concerned, Europe was the continent where military coups were mounted, kings beheaded, and property rights trampled underfoot; the wisest policy for any British government, therefore, was to keep out of European affairs whenever possible. Of course, that did not prevent generations of Britons from taking their holidays in Europe, or from admiring the cuisine, art, or culture of other European nations. But liking such things was never the same as viewing Britain as part of them; to this day, Europe is referred by most Britons as “the continent”—an amorphous mass which is just “over there.”

Winston Churchill, arguably Britain’s greatest prime minister during the past century, summed up this complex relationship back in 1930 when he ruled out the possibility that Great Britain could ever be part of a future European alliance: “we have our own dream and our own task. We are with Europe, but not of it. We are linked, but not comprised. We are interested and associated, but not absorbed.”

Britain ignored, or set aside, Churchill’s advice and joined the EU in 1973—almost two decades after the organization was established—only because it exhausted all other options. Rightly or wrongly, for the Brits the EU has never been about vision, but about practicalities such as facilitating trade; if Britain had its way, the EU would have still been called the “Common Market,” as it was in the 1970s. And for the overwhelming majority of the Brits, there are few things which the EU can do better than their government in London; unlike almost any other nation in Europe, the Brits do not believe that the EU is a necessity, but merely view it as a burden which, at best, should be endured.

The result is that all British political parties have suffered from euroscepticism. Decades ago, it was the Labour Party which tore itself apart over Europe; today it is the turn of the ruling Conservative Party to do so. As such, the referendum over EU membership, which the Labour Party organized back in 1975, and the referendum which the Conservative government held in June this year, had an identical purpose: they were not intended as a verdict on Europe, but were only designed to paper over domestic political cracks in the United Kingdom.

In theory, the example of the first EU referendum should have been encouraging for Prime Minister David Cameron in 2016. When Harold Wilson, the then-prime minister, ordered the referendum in early 1975, opinion polls indicated that two-thirds of the electorate intended to vote against continued EU membership. Yet when the ballots closed on June 5th, 1975, no less than 67 percent of voters were persuaded by campaigning politicians that Britain should stay in Europe. This had led Cameron to believe that he could repeat the feat in the second referendum that took place this year.

Still, comparisons with 1975 were always misleading. The EU during the 1970s had little impact on the lives of ordinary Britons, which made it easier to present the case for Britain to stay in Europe. Today though, EU regulations are everywhere. Four decades ago, Britain was a nation suffering from low esteem and poor economic growth, and so had nowhere to go; today, it remains—even after the Brexit verdict—one of Europe’s best-performing and most dynamic economies with global aspirations. China and the rest of Asia were not considered major players at that time; today, their rise allowed anti-EU campaigners to argue that by staying in Europe, Britain is merely siding with history’s losers.

Furthermore, the subject of migration, currently one of Europe’s most toxic political issues, was entirely absent in the 1975 referendum; most UK leaders at that time worried about losing British workers to “the continent” rather than about accommodating millions coming in.

Four decades ago, what politicians said mattered; voters respected authority and took seriously recommendations from government ministers. Today, however, voters relish defying authority; one of the most grievous mistakes Prime Minister Cameron made during the 2016 referendum was to stuff the pro-EU campaign with establishment figures who simply turned people off, regardless of what they said.

Cameron was aware of these pitfalls. By concluding what he claimed was a “special deal” with Europe—which allowed Britain to pay less in welfare support to incoming EU migrants as well as gain protection from further integration efforts—the former British premier believed that he had succeeded in taking the sting out of the anti-EU campaigners. And for a while, the anti-EU campaign looked led and badly-organized; it included both right-wingers and dreamers taken by the notion of the resurrection of the old British Empire, as well as extreme left-wingers who viewed the EU as the last remaining obstacle to the construction of the supposedly-inevitable ‘Socialist Paradise.’

But it was a mistake for Cameron to dismiss the anti-EU campaign as a collection of crackpots. Instead of holding a vote that would supposedly settle “for at least a generation” a debate which had overshadowed British political life for decades—and would stop his government colleagues from “banging on” about Europe, as Cameron put it at that time—he got instead Britain’s departure from the EU, an even greater debate about Europe (which is guaranteed to rumble on for years), and the destruction of the his own political career. A more comprehensive own-goal can hardly be imagined. And all because neither Cameron nor many of Britain’s other politicians ever understood the sheer scale of the popular rebellion facing them.

The opinion pollsters who followed the 10 week-long referendum campaign predicted for some time that the outcome would be close, with the Brexiters, as those advocating Britain’s departure from the EU are known, almost evenly-matched with EU supporters. However, what the pollsters failed to predict is how powerful was the loathing for the EU among certain segments of the electorate, and how determined the Brexiters were to be heard by going out and voting.

The outcome was a fairly fundamental split: in some parts of London, such as the leafy northern suburb of Islington or the super-expensive area of Kensington and Chelsea, over two-thirds of the electorate voted for Britain to stay in the EU. But most of England’s countryside voted “no,” and in some of the industrial parts of northern England, rejection of the EU surpassed 70 percent of the electorate. Furthermore, the four component nations of the United Kingdom also split on this topic. England and Wales rejected the EU, while Scotland and Northern Ireland expressed their overall support for Britain’s continued EU membership.

An even more significant factor was the turnout. In urban areas such as Lambeth in south London, where an astonishing 79 percent of the ballots were in favor of the EU, turnout was a respectable but unremarkable 67 percent of those entitled to vote. But in northern areas of England, where hostility to the EU was intense, turnout was as high as 75 to 80 percent of the electorate. In British parliamentary elections, high turnouts do not matter since MPs fight in constituencies, and whether an MP is elected by a majority of one vote or a majority of 10,000 makes no difference. But in a referendum, where the votes are counted nationally rather than by constituencies, each vote cast counts towards the final result; the Brexiters were simply better at galvanizing their voters and in getting them out to vote in larger numbers.

That is explained by the fact that the referendum was not only about Europe; it was, in effect, a typical British revolution: one without violence or bloodshed, but still inspired by a deep sense of frustration and executed with swift brutality. Those who voted against the EU were largely white working-class voters: people for whom the European Union is regarded not as an opportunity, but as a threat (workers saw their jobs taken away by the hundreds of thousands of migrants from Central and Eastern Europe who poured into Britain over the past few years).

For employers and businessmen throughout Britain, this influx of relatively well-educated and highly-motivated European workers was a huge advantage. They also made life easier for anyone living in Britain’s big cities, since EU migrants depressed wages and generated new opportunities in service industries. After all, it is always nicer to be served in a restaurant by a fresh-faced, smiling waiter from Poland than by a surly English worker, often with an attitude problem.

But while life inside the EU was good for Britain’s upwardly mobile urban families, the story was different for working class households—particularly for single white young males with lower education levels. In older days, such people could still hope to gain employment in the unskilled labor market. Today, however, Britain’s unemployed are often unemployable, replaced by EU workers willing to take up any job and happy to get low pay (what in Britain is just a minimum wage is still a small fortune in, say, Romania).

For Britain’s marginalized communities, warnings from the Remain campaign that a departure from the European Union would reduce investment, depress the value of the pound sterling, or reduce Britain’s influence on the world stage were simply irrelevant. What such unemployed workers wanted was to put a stop to the ready supply of European labor and a recovery of their own sense of identity—a reassurance that Britain is still their country. It was always pointless for British politicians to avoid discussing the question of immigration during the referendum campaign, since for most voters the EU was all about unrestricted migration.

Britain’s EU referendum was not a revolution just against Europe, but also one against Britain’s established parties, none of which have proven able to address the growing sense of resentment in Britain’s rural communities or decaying post-industrial towns. Finally, the British vote was also a rebellion against globalization—a reminder that while the forces of global markets have created winners, they have also created many losers. The losers have votes too, and are ready to use them.

lthough Cameron had to resign after losing his referendum gamble, it is not the ruling Conservative Party that has most to fear from this political uprising, but rather the opposition Labour Party. Most of the Brexit votes came from areas which are rock-solid Labour parliamentary constituencies, where people now feel that Labour is no longer their standard bearer. The party will find it difficult to regain these marginalized voters’ trust, for there is another political movement now competing for their loyalty. The UK Independence Party (UKIP) was created to fight for Britain’s withdrawal from the EU. With that objective now achieved, UKIP could morph into a broader social justice movement, one based on largely English nationalism and objecting to both globalization and immigration.

In short, what began as just an anti-EU vote in Britain could well turn into a broader realignment of British politics, and a tsunami or popular revolt in other EU countries which are often exposed to similar problems.

 

The Impact onthe Rest of Europe

The frustration of EU leaders at these facts is understandable. The main concern now is to ensure that the British example does not inspire populists in other European countries to ask for similar referenda, and to show that the European project not only continues, but results in an even tighter Union. That means that Britain must be seen to be “punished” for its decision to leave, and that the EU should initiate new projects of cooperation which bypass Britain.

There are huge dangers in this approach. To start with, the British are going to suffer from their departure anyway; the country’s economy is unaffected for the moment (in fact, according to IMF projections, it may be the best-performing among the G7 this year) but remains highly vulnerable as the Brexit process approaches and jittery foreign investment dries up. So it is unlikely that the British experience will be one which others in Europe would rush to emulate. As a result, there is no particular need to “punish” Britain at the official level.

Furthermore, creating obstacles to a friendly divorce between the EU and Britain will hurt everyone in Europe, coming as it will on top of serious political problems on the continent and continued financial difficulties.

It is a rather weird argument that the best response to the rejection of European Union integration should be more EU integration. Such an effort will only divide Europe further and actually encourage more opposition to the EU. The decision by German Foreign Minister Frank-Walter Steinmeier to call a meeting of the original six founders of the EU soon after the British referendum results were known is one of the worst possible initiatives: it has achieved absolutely nothing apart from producing a silly statement; but it has infuriated many other EU countries which are growing increasingly suspicious that, under the guise of isolating Britain, other EU Member States will also end up isolated.

Still, the real historic importance of seminal events is often only noticeable with the passage of time, and the same may be true in this case. For Brexit—as the process of Britain’s separation from the EU is now invariably called—will have a profound impact on Europe as a whole, although not necessarily in ways predicted by many political and economic analysts today.

Despite occasional hopeful headlines in some European newspapers claiming that the Brits may be regretting their decision to leave the EU, there is no evidence that British voters are experiencing such “buyers’ remorse” sentiments. All recent opinion polls indicate that over 85 percent of those belonging to either the pro- or anti-EU camps in the British electorate would be making exactly the same choice if another referendum was held now.

The truly surprising immediate reaction has not come from Britain, but rather from electorates elsewhere in Europe. In the aftermath of the British vote, senior EU officials gloomily predicted a boost for anti-European sentiments throughout the continent. In fact, precisely the opposite happened: popular support for the EU has soared. The euro, a currency now more frequently associated with austerity rather than economic stability, is also an unlikely winner from the Brexit vote—at least in the short term. The French economy may be stagnant, but 71 percent of the people of France don’t wish to contemplate a return to their old French franc. Italians blame the European currency for their current austerity, but only 43 percent of them want to restore the Italian lira.

The uptick in support for the European Union and its institutions may not last: it appears to be largely prompted by a sheer sense of puzzlement and incomprehension throughout Europe at what the British have done, coupled with an instinctive desire of Europeans to hold on to the institutions they have out of fear that Brexit may have unforeseen negative consequences. As the novelty of the Brexit story wears off, therefore, this surge of support for the EU may wear off as well.

Still, the reaction throughout the continent is an indication that glib predictions, according to which the EU would break up in the aftermath of Britain’s departure, are fundamentally misconceived. In fact, there are good reasons for believing that no EU country will follow Britain’s example of holding a referendum on leaving the Union.

The chief explanation for this is the historic resonance which the EU has for the overwhelming majority of its Member States. For the Germans, the French, and the Italians, the Union was and remains the only way of escaping from their horrible past; from their previous national tales of dictatorships, war, and economic failure. Of course, few in Europe believe that, if the EU were to disappear today, the Germans or the Italians would get back into their military uniforms, take their boots from under their beds, and start marching across Europe; those grim days are gone forever.

Still, few Italians or Frenchmen believe that their countries would do better outside the EU than inside it. As for the Germans, the dilemma is even more acute: if the EU did not exist, another one would surely need to be invented, for the alternative is what Germany has desperately tried to avoid ever they regained their economic prosperity in the 1960s: a German leadership of Europe, with all the political and nationalist backlash which this would generate.

For the smaller nations of Western Europe as well as for the former communist countries of Eastern Europe, the EU is not just about markets, but also about security—it is about being reassured that the old ideological division of their continent is now gone forever and that smaller nations will at least have a voice.

For them, the alternative to the EU is either to be left in a no-man’s land between Russia and the West or eventually fall into a Russian sphere of influence, as has been done in one way or another throughout the past century. No prizes for guessing which option the nations of Eastern Europe would prefer. In this respect, therefore, Britain’s experience with both membership of the EU and with its departure from the EU is likely to remain unique.

It is true that, for the first time ever, mass political movements in other European countries, including parties such as France’s National Front or the Netherlands’ Party of Freedom, are touting the possibility of following the British example by taking their countries out of the EU. Although such movements are increasingly popular, they are also highly unlikely to get their wish.

Marine Le Pen, the leader of France’s National Front, is currently the single most popular leader in her country. However, given France’s two-round electoral system, she is virtually guaranteed to be defeated in the second round by whomever stands against her simply because the antipathy to her party is greater than the traditional left-right divisions in France. True, some may argue that the story of Europe over the past few years is one of the unexpected and the unlikely becoming the new reality. Still, the only way Le Pen can become the President of France is if she attracts more than 50 percent of the votes cast—something that no modern French leader since Charles de Gaulle has succeeded in achieving, and not something current opinion polls indicate she is on course of accomplishing.

A similar marginal fate awaits the Party of Freedom in the Netherlands: even if it does well in the country’s forthcoming it elections, it will never be capable to govern on its own because all post-World War II Dutch governments have been coalitions. And it goes without saying that, as the price for any coalition, the Party of Freedom would have to abandon any aspiration to hold a referendum on the Netherlands’ membership in the EU.

Still, Brexit does confront the European Union with some pretty serious, if not existential, challenges. The biggest danger is that the appetite for referenda-the one unleashed by Britain-will be used by EU Member States not so much to leave the Union, but rather to escape from duties and obligations they do not like. That is what has already happened in Hungary, which recently held a referendum on immigration, largely in response to a decision by the European Commission to distribute newly-arriving refugees between the EU Member States. That referendum technically failed, since it did not attract the participation of at least half of the electorate, as required by Hungarian law. But although Hungarian Prime Minister Viktor Orbán has lost his national referendum bid, he has actually won the battle against the EU on this matter: the European Commission has tacitly abandoned its plans to relocate refugees throughout the continent after only 6,000 out of the planned 160,000 asylum seekers which were included in the scheme last year were accepted by various EU Member States.

If the Hungarians succeed in getting away with their defiance, others are guaranteed to follow suit. There are plenty of demands in Poland to avoid some EU regulations that the country does not like. In the end, Europe may escape another Brexit-style referendum only to face the danger of multiple referenda on more limited questions—votes that can still destroy European unity.

The air of defiance against EU decisions is already spreading fast. Recently, the French government announced that it will “simply not apply” an EU regulation allowing Eastern European EU citizens to compete for domestic jobs on more favorable terms. Meanwhile, Italy has repeatedly threatened to defy EU laws in bailing out its bankrupt banks with taxpayers’ money. Although that danger now seems to have receded, seldom has national defiance of the EU been more tempting. The British have unleashed, therefore, something more profound: not the temptation for Brexit-style referenda, but a separatist movement nevertheless—one which is unlikely to go away.

And there is no question that the Brexit process will debilitate Europe in many other ways too. For the first time ever, a country has shown that the process of European integration not only goes forward, but can also be reversed. For the first time since it was established, the EU is not necessarily associated with economic progress, but with stagnation. And the EU is no longer the champion of the regional identities, of the small against the big; it is seen almost universally across the continent as a bureaucratic monster—a top-heavy structure which, as in the memorable words of Jean-Claude Juncker, President of the European Commission, proceeds along a predetermined path, regardless of what the voters may want.

Of course, this is a caricature of the real EU. But, as the referendum in Britain shows, caricatures sometimes can become all too real.

Britain’s departure from the EU has also rekindled a more perennial problem: that of Germany’s influence in Europe. There is a whole host of reasons why Germany needed Britain to remain in the EU. The British are Germany’s biggest and closest European partners in promoting free trade and the liberalization of Europe’s internal markets. The British are also one of the few European countries with truly global defense capabilities; these are now much diminished in comparison with the past, but are still considerable. A British withdrawal would effectively put paid to any pretense of a European defense capability. Britain’s intelligence services are considered among the best in the world, and are also the closest to the Americans. These are important considerations for Europe as a whole, and for Germany in particular, to confront an increasingly complex and enduring terrorism challenge.

But as far as Germany is concerned, the most important reason for wanting Britain in the EU is that the British provide a political balance to Germany’s close relationship with France—especially since the old Franco-German axis is once more coming under strain, due to France’s own deep-seated economic difficulties. The Central and Eastern Europeans, always wary of Germany and largely mistrustful of France, also see Britain as a key balancer on the continent; the current center-right government in Poland went as far as identifying Britain as one of its special and key strategic partners.

For these reasons, German Chancellor Angela Merkel bent over backwards to help Cameron earlier this year in negotiating a special deal with the European Union which, it was believed at that time, could avert Britain’s departure from the EU. But the concessions which Merkel painstakingly put together sank with nary a trace: no British politician even mentioned them during the EU referendum campaign. Merkel’s dream of a trilateral relationship in which Britain and France balance each other out but both act as Europe’s motors, is now in tatters. The Germans are thus facing precisely the dilemmas they sought to avoid: demands for a relaxation in the current austerity policies and additional German financing for bankrupt EU states such as Greece, along with suspicious glances from the Eastern Europeans who are increasingly uncomfortable with German leadership. That is not the position the Germans sought, but that is the leadership position they now have to assume, and it will not be a comfortable one.

The question is what Germany can do, now that Britain has voted to leave. One possibility touted in Berlin is that of a new Franco-German initiative to tighten EU integration; the purpose here would be to show that Europe will not be deflected by Britain’s departure. Yet, that idea may over-estimate France’s readiness for further integration. For Britain is by no means the only eurosceptic nation: according to latest opinion polls, 61 percent of the people of France have a negative view of the EU, and with presidential elections due early next year, Marine Le Pen is bound to suggest that, if the French are being asked to integrate themselves even further in Europe, they should also be given the chance to approve this in a referendum—something which will stop any Franco-German initiative dead in its tracks.

There is also no indication that other EU Member States would so easily go along with Germany’s urgings. Thus, the EU could be stuck somewhere in the middle: unable to cope with the complex talks about Britain’s departure, fighting a rear-guard action to prevent other countries from challenging the EU spirit, and increasingly being dismissed by the rest of the world as just another club of losers.

Will Britain remain a global actor in security terms, or will it seek to limit its global ambitions? Britain’s political elite still believes in the former, and strenuously denies any suggestion that the United Kingdom is in retreat, in global terms. But the public at large, and perhaps a new breed of leaders now coming through the ranks in London, may well opt for a more circumscribed role in the world. There is also the question of whether Britain can afford the spending capabilities and resources allocated in the November 2015 Strategic Defence and Security Review, given the current substantial devaluation in the value of the pound and the anticipated deterioration of the nation’s finances.

It is equally doubtful whether Britain’s government (particularly its Foreign Office) will be able to handle the sheer volume of critical national decisions that will need to be taken over the next few years. Nor is it very clear just how much of the existing security architecture in Europe can be preserved. Given imagination and good will, some of the current foreign policy cooperation structure in Europe can be maintained even after Britain leaves the EU. But it is not obvious that either the Europeans or the British have the desire to do so, regardless of the fact that this may be in their interest.

In theory, NATO remains unaffected by Britain’s decision to leave the EU. The Atlantic Alliance’s membership remains unchanged, support for NATO among both British politicians and the public remains unchanged, and the Alliance has long been accustomed to the operation of a ‘variable geometry’ in Europe, whereby not all of its members are in the EU as well, and some of its key partners are not in either of Europe’s top organizations. Still, NATO will face some critical choices in the years ahead. Can it, for instance, maintain internal cohesion in the face of suspicion from some key EU partners, such as France, that the Alliance may be used by the British as a device to prevent Europe from having its own defense capacity? Can NATO develop its cooperative relations with the EU, notwithstanding the tensions which will be generated by Britain’s departure from the Union? And would the Alliance be able to prevent “caucusing” between groups of countries such as the Baltic states or the Visegrád Four, which may be encouraged by Britain to act more independently as an antidote to the EU Common Foreign and Security Policy?

A critical—if not the most critical—actor in this changing landscape will be the President of the United States. Barack Obama invested a great deal in trying to persuade the Brits to remain in the European Union: he travelled to Britain specifically for this purpose, expressed public support for its government’s stance, warned that Britain will not be able to enjoy the same close ties with the United States if it were outside the EU, and even attempted to negotiate privately between Britain’s politicians in order to help them generate the necessary pro-EU consensus.

The gambit failed, and the United States will now have to reap the consequences from this outcome. Clearly, there is no question of ‘punishing’ the Brits for their decision, as President Obama implied in his suggestion that, outside the EU, Britain will have to join the “back of the queue” in America’s interests. Being vindictive serves no purpose for either side: it is in Washington’s interest to encourage a peaceful, speedy, and smooth British divorce from the EU, with the minimum of disruption to either Europe, the UK, or the global economy.

Still, after the initial shock wears off and the initial transition phase to the new reality is completed, Washington will have to make some serious policy decisions. Should the United States, for instance, encourage the United Kingdom to continue shadowing EU security priorities as closely as possible, or should it encourage London to take a more global view, perhaps one that pays more attention to Asia? Is Britain one of America’s key instruments in promoting cohesion and greater financial contributions inside NATO, or should this be done by other key states? And, just as importantly, does Washington need one ‘top ally’ in Europe—in which case the choice would be Germany—or should the United States desist from seeing this as a binary choice, and encourage a number of close American relationships with the United Kingdom, Germany, and, if feasible, France, as the key to promoting American interests in Europe? The sensible answer is clearly the latter, but forging such an arrangement is not necessarily in Washington’s gift, so alternatives would have to be explored as well.

None of these questions are likely to receive immediate answers. Still, a few tentative conclusions can already be drawn with a relatively high degree of certainty. First, although the British departure from the European Union will not cause it to unravel, it will administer a heavy blow to the EU, its institutions, and its legitimacy. The task for all European governments is, therefore, not only to figure out how to deal with Britain, but also how to rearrange their European structures in ways which avert similar future crises.

Secondly, while everyone in Europe talks about the merits of various arrangements that protect Europe’s internal markets and freedom of movement of people after Brexit, the discussion about Europe’s future security and military arrangements is just as urgent, though this has hardly begun.

Thirdly, Europe faces a real danger of becoming too introverted, of forgetting about the necessity to deal with its immediate neighbors and partners, and of keeping the process of future enlargement open to the nations of the Balkans and Southeastern Europe.

Finally, the United States faces a real and serious challenge of re-engaging with Europe and a European ‘pivot’ from a newly-elected American president—a pivot without which Europe may well lose its strategic bearings.

None of this is beyond the wit of the women and men running the continent today. But European history is, alas, replete with examples of good and sensible solutions which were ultimately missed.

 

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