Nicholas (nwhyte) wrote,

EU Referendum Reaction

I'm too heartbroken to write something original. This is what my colleague Theo and I put together earlier today. Comment there or here.

The UK’s vote to leave the EU will have a number of implications, although the specific, detailed consequences of this unprecedented choice are uncertain. For some it is a brave new world, for others the end of the world, but for all it is terra incognita.

What happens next, from the perspective of Brussels and the wider EU? Even before the vote there were very clear signals from significant European leaders that out would mean out. From early soundings here in Brussels, itself caught in an almost complete (and perhaps symbolic) public transport strike, there is zero appetite to try and renegotiate another deal that might tempt the British back again.

The Council Will be Key

The European Council is the key player in the departure that now seems inevitable. The collected leaders of the EU’s member states, headed by Donald Tusk, hold the reins. There is a meeting of the Council scheduled for Monday and Tuesday, in Brussels. Spaces left in the early draft conclusions of this meeting will need to be filled by something relating to Thursday's referendum but the question is by what? In part this will be determined by the UK’s actions in the next few hours and over the weekend. The UK will need to bring around governments that may feel threatened by what the result means for their own domestic political futures and it will need to manage the almost inevitable demand that Britain not be allowed to have an easy ride. The realities of the assurances by Leave campaigners that Europe will have to be reasonable will be put to the test within as little as 72 hours. If nothing else the British Prime Minister (or whoever replaces him), possibly bereft of existing relationships with other European leaders, will have to overcome the anger of those on the Council who spent considerable energy and political capital in creating the deal David Cameron brought back, and which the UK has rejected. More likely, and more troubling, is the real feeling in Brussels that Chancellor Merkel of Germany and President Hollande of France, both having elections next year, will not profit politically by “being nice” to the British, and that other major countries such as Italy and Spain will not hold themselves back either (notably Gibraltar could be a flash point for Madrid).

Uncertainty in the European Parliament

For British Members of the European Parliament (MEPs) the future is currently uncertain. The expectation is that they will serve out their time but there are no real precedents to fall back on. The Parliament is always keen to show its relevance (and power, such as it is), and in the absence of a clear role in the Brexit negotiations that the Council will lead, it is not beyond the realm of possibility that some MEPs will be moved to ensure they don’t see Nigel Farage and UKIP sitting across from them for much longer. This could take the form of UK MEPs losing their committee posts and other roles in the mid-term reallocation, due later this year. What is certain is that the political parties within the Parliament will consolidate around the existing power blocks of the EPP, ALDE and S&D. The right of centre EPP will swallow some of what will remain of the British Conservative-led ECR, whilst the UKIP-led EFD might dissolve itself or otherwise break up, in light of its own success, allowing for a realignment of anti-EU MEPs, possibly around Marine Le Pen’s ENF. It seems the current tendency to “grand coalition” solutions and to de fact “back room deals” will go on, and the German perspective will remain the most influential force in the Parliament, by virtue of its strong position in both the EPP and the S&D.

Which Way Out?

The process of exit will hang on when and/or if the UK invokes Article 50 of the Lisbon Treaty or, as some have suggested, tries some other route out of the EU. The two-year time limit of Article 50 is very short. When Greenland left the then EEC, it took five years from referendum to exit. Two years might well be long enough to disentangle the UK from the EU institutions, but quite possibly not from the single market or trade arrangements. (Apart from anything else, no UK government official has negotiated a trade agreement since the 1970s.) The departure of the UK also adds a further headache to leaders already wrestling with migration, Greece (still), the fate of the Euro and the dearth of economic growth. Whilst there are certainly medium-term opportunities in relation to lure businesses out of the UK and into the EU, these will take time to realise. One EU official yesterday estimated that the full process of resolving the Brexit will be a huge drain on the time and energy of Europe and the UK for a full decade.

Impact on Other European Countries

For the Republic of Ireland the UK’s departure is an immediate blow. If border control is to be at the heart of the new UK, the land border on the island of Ireland will be its most noticeable manifestation. The psychological as well as commercial impact could be profound. However, in the medium term the fact is that Dublin, already home to many international companies, will be the largest Anglophone city in the EU with a skilled workforce, competitive tax rates and a proven ability to overcome economic crisis. Paris may find it harder to compete for bankers than it thinks.

It will be particularly interesting to see how the EU handles Switzerland in light of the Leave vote. Since 2014’s referendum on limiting immigration, including the newest EU member state of Croatia, the Swiss have been on a collision course with Brussels. The issue was largely put on ice ahead of the UK’s referendum but will Brussels, driven by worries of seeming weak, now be harsh with Switzerland, or will the consequences of another relationship breakdown seem too much to bear?

Long-Term Outlook

Looking at the longer term, the shape of the European Union is going to change considerably in the coming years. Those pro-business member states, focused on jobs and growth in a competitive global marketplace, have lost their champion. The UK’s role as a brake on centralisation and federalisation will vanish, and the natural inclination of certain parts of the European Project to see “more Europe” as the answer to every crisis will be unchecked. Increasingly common budgets, harmonised tax regimes, perhaps even a European army will be quicker to emerge and their implementation deeper and broader. At the same time there are calls for reform of the EU, a restructuring that will somehow lance the rising boil of nationalism and Euroscepticism that isn’t simply confined to one side of the Channel. What form this will take is uncertain, especially as many of the less committed member states were rather hoping the UK would be leading part of this process (not least through its planned but now unlikely Presidency of the European Council in 2017).

Amongst some commentators here in Brussels the referendum has been seen as an odd moment on a somewhat fixed course. Remain would have put the UK back in the EU but not at its heart; as other member states came closer together, the UK would probably have worked hard to stay as it is, effectively becoming an "associate" member of the EU in the coming decades. With a Leave win, the UK may well spend the next few decades slowly reincorporating itself with the EU, if only to access the single market in the only way the EU will allow, thereby becoming in effect an "associate" as well. The difference is of course, that the Remain vote would have kept the UK on the inside of the EU decision-making that will inevitably effect it.

An Uncertain Future

For the leaders of other would be anti-EU referenda, and for their opponents in governments across Europe, the lesson of Thursday 23rd June is that the economic harm of leaving the EU is not the most powerful argument available. It can be countered by driving emotional responses, using issues such as immigration. This clash was characterised as "Project Fear" vs. “Project Hate" in the UK. How this will manifest itself in other states is yet to be seen. President of the European Council Donald Tusk has stated of Brexit “What does not kill us makes us stronger”. He may be right but at the moment in Brussels it is hard to say that the EU is stronger for what has just happened.
Tags: eu

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