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Home Opinion The risk of Brexit: an opportunity for the EU?
Brexit • EU • National Sovereignty

The risk of Brexit: an opportunity for the EU?

Jo Ritzen and Klaus F Zimmermann - 11 February 2016

As the threat of fragmentation looms, the EU must seize a chance to redefine itself. There is a case for greater cooperation, but with less infringement on national sovereignty

We propose that the current Dutch presidency of the EU takes the initiative before waiting for a possible Brexit in order to address concerns rising in various member states. A way to meet the challenge is to create both more and less Europe. We need both less bureaucratic interference in matters that can be done and should be done by national governments and their parliaments. And we need to deepen essential parts of Europe like the common market, solid solidarity and reciprocity foundations, and a sense of common European identity.

When Prime Minister Cameron announced a referendum on UK membership of the EU in February 2014, it was felt to bring about the beginnings of a crisis in Europe [1]. The subsequent Greek financial crisis, followed by the refugee crisis, then the terror sown in Paris, all make such an EU crisis more likely. We ask ourselves here the ‘what if Brexit’ question, in order to see how the draft agreement between the UK and the EU put forward by Donald Tusk last month should be expanded to reduce the risk of Brexit as well as the cascade of events that might follow.

Brexit – a plausible risk

Cameron’s announcement of the referendum let the genie out of the bottle. No UK-EU renegotiation outcome is likely to put it back in. Polls in September 2015 showed an almost even number of voters in favour as against the UK’s EU membership, and recent polls give the leave camp the upper hand. The Lisbon treaty of 2009 allowed for a legal exit. Brexit is therefore a serious possibility.

A UK exit would leave a different EU behind. The EU would lose 12.5 per cent of its population and 14.6 per cent of its earnings. The EU voting balance between the north and the south would be seriously affected. At present the northern European countries as well as the Mediterranean countries have a blocking minority vote. A UK exit would cause the northern European countries to lose that position, while at the same time Germany would lose a major northern partner. The northern European countries remaining in the EU would face an increased bill for transfers to the lesser endowed south and east. The consequences might be catastrophic if other European countries followed the UK example and if the remaining Europe simply became a selection of states without a common vision. There are reasons, as we shall explore further, to believe that this is not unthinkable.

If Britain’s referendum does not go as it should, then we must look for the next best possible outcome. Other EU countries should take control of their own destiny by using the UK renegotiation as a point of departure for a new Europe. A Europe with less transfer of sovereignty in many non-economic realms but yet with more security and stronger governance. Here we outline a charter for a vibrant EU centred on values, which might help the present EU to flourish again, and which would make the Brexit referendum in the present form superfluous. This is a way for progressive political parties to use the UK referendum to regain initiative. It requires action at the European level. The present EU presidency (the Dutch) should call for a discussion to outline a new European charter, in order to prevent a cascade of negative developments, despite all the positive results it has brought European citizens in the decades before the financial crisis. [2]

The UK dilemma

The choice of the Conservative party in the 2015 UK election campaign to promise a referendum on UK-EU membership was understandable as a means to contain the UK Independence party’s threat. However, this was a very risky bet. Ever since the Eurobarometer measurements of EU public opinion began, the UK has been the most Eurosceptic country. [3] As Sofia Vasilopoulou states in her Policy Network paper on Britons’ mixed feelings towards the EU, “British support for membership has been persistently low over time and much lower than the EU-wide average.” [4]

Figure 1 : Image of the EU, UK and EU-wide average compared, 2003-2014


Source: Mixed feelings: Britain's conflicted attitudes to the EU before the referendum (2015)

It is not entirely clear why people believe the EU is “a bad thing” for them. In the old EU of 15 members, one could see that people were more likely to believe that the EU was bad for their country if unemployment was high, economic growth was low, and income differences were greater. [5] In the expanded EU with 28 member countries, a negative answer appears to increasingly be a reflection of uncertainty of financial position. [6]

Identity may play a role in making the UK an outlier in terms of its Euroscepticism. [7] Fewer Britons identify themselves as European (not excluding other identities) than in most other countries. The UK was also the first EU country to have a political party (Ukip) that has mostly campaigned on an anti-European platform since its inception. In comparison, Geert Wilders’ party in the Netherlands started as an anti-Muslim and anti-immigration party only to turn anti-EU around 2013.

With the financial crisis gradually phasing out in 2014, one might have expected Euroscepticism to decline as uncertainty about the financial future decreased. Eurobarometer ceased to repeat the above question after 2011, but still has a question on “trust” in the EU; in terms of “trust in the EU” there is some improvement since 2014.

In 2014 Euroscepticism in the UK was at the highest it has ever been in the last 20 years: [8] more than one third of Britons wanted to leave the EU. The British Social Attitudes Survey found that a majority of almost 60 per cent wanted to remain, but some two thirds of those wanting to stay in would have liked to see the EU’s powers reduced. Cameron’s backing for greater sovereignty therefore seems well-rooted in the opinions of Britons.

Less immigration is also on Cameron’s UK-EU renegotiation list. Ukip is founded on an anti-EU platform with particularly strong views against the EU’s freedom of movement, alleging that EU immigration undermines the UK culture and its economy. But UK citizens enjoy having the freedom to live and work elsewhere in Europe: 69 per cent think it is important that British people are free to work in other EU countries. [9] The pre-referendum negotiations on this point have shown that other countries are reluctant to allow the UK to do what the UK forbids them to do, namely the right to limit EU migrants’ access to in-work benefits for up to four years after entry in the UK.

Present room for maneuver

The Cameron referendum has put the EU in a highly uncomfortable position. Very few citizens of EU countries would like to see the UK leave the EU. There is an overall appreciation in the EU for the UK presence in and contribution to the European council, the European parliament and the European commission. The UK has always been a strong negotiating party in budget discussions (‘a smaller EU budget’) and on its contribution (Margaret Thatcher’s: ‘I want my money back’). The EU has also often experienced a strong ‘we’ and ‘they’ idea from the side of the UK. [10] 

Yet the UK’s demands for an ever more special status come at a time when terrorism and the refugee crisis call for more from Europe as a whole, and less national sovereignty. Europe needs more burden-sharing, more migrants to deal with aging societies, more labour mobility to increase welfare, but smaller risks of exploitation of national security systems.

We have also observed that some EU countries are less and less inclined to respect European principles of good governance, such as an independent justice and freedom of the press. Hungary is a case in point: it has been turned into a mafia state according to close observers. [11] Greece and Italy have also seriously slipped on all essential governance indicators, like the rule of law and control of corruption. [12] Recently Poland has replaced independent judges by political appointees. This erosion in good governance is not sustainable. It undermines the EU’s credibility and is likely to drive further segments of the population into the hands of Eurosceptics and anti-Europeans. If the EU does not develop a credible countervailing power against EU countries that slip in terms of governance, there is no future beyond a loose group of states devoted to a free market.

It is therefore essential to make the referendum a starting point for a new charter for Europe. The priority is to lay solid ground for a security union, and for a union of good governance, in which corruption decreases and the rule of law (including an independent justice) is self-evident.

The risk of a domino effect

The outcome of referenda in Europe has shown to be highly uncertain, depending on mood swings in the short period preceding the elections. [13] Whatever is concluded in the negotiations and however fierce Cameron campaigns for the pro-Europe vote, the UK could vote to exit the EU. Even if one thinks it unlikely, it is important to take possible Brexit effects into account from now on.

Most EU member states have followed the UK with serious anti-European political parties. In northwestern Europe non-euro countries like Denmark and Sweden have been seen to be somewhat envious of the Norwegian position (not only because of the rich oil deposits, but also because Norway is outside the EU yet included in everything that counts for socioeconomic development). Anti-European political parties in these countries are receiving increasingly popular support. The legal provision of the Lisbon treaty to exit also applies to them.

In Denmark, voters (narrowly) decided on 3 December 2015 to continue the opt-out from EU cooperation in justice and home affairs, banning Denmark from Europol. It was seen as a great victory for the Eurosceptics. The present Rasmussen government, elected in June 2015, leans on the support of the Eurosceptic Danish People’s party (who control 21 per cent of seats). Brexit would only reinforce Denmark’s case for continued opt-outs. 

Sweden decided 20 years ago by referendum to become a member of the European Union. Sweden is generally a pro-European member state but is virtually invisible in the EU. In 2014 the far-right Sweden Democrats, a party with a neo-Nazi history, won 13 per cent in the parliamentary vote, becoming the third largest party. It campaigns on an anti-immigrant and anti-European platform and is currently very high in the polls at nearly 20 per cent.

The cases of the Netherlands and Finland are different because they are also in the eurozone. The Maastricht treaty of 1992, which defines the euro, only has procedures for admission, not for exit. At the same time, both the Netherlands and Finland have shown a substantial increase in Euroscepticism. In 2005 the Netherlands rejected the constitutional treaty as it would infringe on sovereignty. [14] Both in Finland and in the Netherlands support for anti-EU political parties is substantial. In Finland, the Finns party now holds 19 per cent of the seats in parliament and is part of the government coalition. In the Netherlands, in the December 2015 opinion polls, Wilders’ anti-Muslim party (PVV) was the largest party, on 30 per cent projected vote. These parties are seeking an exit from the euro. Their popular support has already increased due to the Greek crisis, the refugee crisis and the terror crisis. Their support is likely to increase with any further provocations for an exit. For example long-run deviations of France from agreed levels of budget deficits or long-run deviations from good governance norms in some central and eastern European countries, like in Hungary or Poland, could be the cause for more support. In this context Brexit would exacerbate these trends in northern European countries.

Political developments in the south and east of Europe are not helpful to assuage the northern European countries’ concerns. Euro countries in the south have seen the rise of Syriza in Greece and Podemos in Spain. These parties are not trusted to respect the budget discipline, which is at the heart of the euro. Portugal has since January 2016 an anti-spending cuts Government. In France, Marine Le Pen also represents a threat to the euro.

To further complicate the crisis in the eurozone, Ireland is now enjoying a substantial boom (prediction for economic growth in 2016 is no less than six per cent) while subject to the euro interest rate of close to zero per cent. This is a recipe for another bust damaging the trust in a better European future.

In other words: EU disintegration after Brexit is a serious possibility. It is then imperative to look for a positive scenario which might pre-empt the dark clouded referendum.

A positive European scenario

A positive scenario would provide a bridge and offer hope. Hope is based on security: being able to live a decent life, having prospects of a good future for children and holding a sense of belonging to a more united Europe with respect for national diversity. Hope is strengthened by trust in good governance away from the whims of those who happen to hold political power. The Vibrant Europe Forum declaration of 2012 focused on a Europe which stands united in external security and in negotiations, while “working closely with regional and national governments, in the spirit of mutual reinforcement, where trust is restored as the leading organising principle, accountabilities are clear and transparent and executive decision-making is devolved to the maximum possible extent.”

Brexit should therefore be used to improve the current state of the European Union and thereby reduce Euroscepticism. The most direct way is to begin discussions about a fresh European charter. We propose that the current Dutch presidency of the EU takes the initiative before waiting for a possible Brexit in order to address concerns rising in various member states. A way to meet the challenge is to create both more and less Europe. We need both less bureaucratic interference in matters that can be done and should be done by national governments and their parliaments. And we need to deepen essential parts of Europe like the common market, solid solidarity and reciprocity foundations, and a sense of common European identity.

We therefore suggest reinforcing the notion of external security and internal integrity by:

•    clarifying the notion that the EU has external borders that need safeguarding;
•    creating a European defence, a European intelligence agency and a European police force for cross-border criminality;
•    and introducing labour immigration mechanisms which address the misuse of the asylum right, a core European value.

We also suggest reinforcing the notion of trust in each other by taking the EU’s principles of good governance seriously. This necessitates reinforcing the European identity while respecting national identities; and installing a process for correcting deviations from the rule of law and the freedom of press, for instance by strengthening the European Court of Human Rights, tracking funding  at member state level, creating an EU prosecutor’s office, and securing the possibility of class actions when a case is lost in the European court.

With the exception of governing the openness of the European market (including internal migration) and strengthening competition, European Union decision-making would leave ample space to national parliaments. Schengen and free labour mobility within Europe belong to the core achievements of the European Union, providing large economic and social benefits to the citizens. While recognising this, and that welfare take up by EU migrants is low, it is nevertheless possible to contain welfare tourism, while increasing mobility by strengthening cultural and economic integration, language knowledge and fostering the willingness to move.

It would be useful to further develop this positive vision in the run-up to the UK referendum. UK citizens should understand what a future, reinvigorated EU could look like and could be spared regretting a no vote in the event that the EU changes shape following their exit.

Jo Ritzen is chair of the Vibrant Europe Forum and a former president of Maastricht University

Klaus F Zimmermann is a member of the Vibrant Europe Forum, a professor at Bonn University and founding director of the Institute for the Study of Labour (IZA)

 

References:

[1] See for example: S. Alonso, NRC (Dutch Newspaper), February 7, 2014.

[2] Gill, I. S., and M. Raiser (2012), Golden growth: Restoring the lustre of the European economic model, The World Bank.

[3] This is measured in terms of negative responses to the following question: “Generally speaking, do you think that your country’s membership of the European Union is …?” with answer categories: “a good thing”, “a bad thing”, “neither good nor bad”, or “don’t know”. Negative answers (“a bad thing”) accounted for the period 2006–2011 for the EU27 with a mean of 14 per cent (with a standard deviation of 0.3 and 17 per cent for the EU as a whole). The three countries hit hardest by the financial crisis were Greece (32 per cent), Portugal (29 per cent) and Cyprus (27 per cent), and these countries topped the United Kingdom (26 per cent) in terms of Euroscepticism.

[4] Vasilopoulou, S. (2015) Mixed feelings: Britain's conflicted attitudes to the EU before the referendum, p.15

[5] Kuhn, T.,  E. Van Elsas, A. Hakhverdian, and W. van der Brug (2014), An Ever Wider Gap in an Ever Closer Union: Rising Inequalities and Euroscepticism in 12 West European Democracies, 1975–2009, Socio-Economic Review.

[6] See footnote 3. See also J. Ritzen, J., Wehner, C., and K. F. Zimmermann (2015), Euroskepticism, Income Inequality and Financial Expectations, published in The B.E. Journal of Economic Analysis and Policy.

[7] However, UK opinions also showed negative answers: almost half (42 per cent) of the surveyed Britons believe closer ties with the EU economically makes no difference, while one third think the UK would be economically stronger (but 17 per cent think the UK would be weaker). Closer links make no difference in the view of Britons in terms of their influence on the rest of the world (30 per cent more influence, 56 per cent no difference, 12 per cent less difference).

[8] But lower than in 1983 and 1984; see Curtice, J., and G. Evans (2015), Britain and Europe: Are we all Eurosceptic now? in Ormston, R. and J. Curtice (Eds.), British Social Attitudes: the 32nd report, London: NatCen Social Research.

[9] These attitudes are markedly different throughout the UK (in Scotland, Northern Ireland, Wales and England).

[10] Secretary for Education Shephard (1990s) always spoke about ‘they’ if she meant Europe and ‘we’ when she meant the UK.

[11] Balint Mayar (2014), Post-Communist Mafia State - The Case of Hungary¸, CEU Press.
  World Bank (2015), Governance Indicators, www.govindicators.org

[12] See for example: S. Seidendorf (2010), Contesting Europe: the constitutive impact of discursive dynamics on national referendum campaigns, European Political Science Review, 2(3): 423–450.

[13] Former columnist and now the Labour party’s (PvdA) interior minister, Ronald Plasterk, was part of the leadership of the campaign against the constitution.

[14] See vef.merit.unu.edu.

This is a contribution to Policy Network's work on The Future of the EU.

Tags: Jo Ritzen and Laus F Zimmermann

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The Policy Network Observatory promotes critical debate and reflection on progressive politics. It is centre-left orientated but determinedly challenges social democracy. It is pro-European but restlessly questions EU institutions and practices.

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