Re­vers­ing the Brexit

Financial Mirror (Cyprus) - - FRONT PAGE -

How should the Euro­pean Union re­spond to the nar­row de­ci­sion by vot­ers in the United King­dom to leave? Euro­pean lead­ers are now fo­cus­ing, rightly, on how to pre­vent other coun­tries from leav­ing the EU or the euro. The most im­por­tant coun­try to be kept in the club is Italy, which faces a ref­er­en­dum in Oc­to­ber that could pave the way for the anti-euro Five Star Move­ment to take power.

Europe’s fear of con­ta­gion is jus­ti­fied, be­cause the Brexit ref­er­en­dum’s out­come has trans­formed the pol­i­tics of EU frag­men­ta­tion. Be­fore, ad­vo­cates of leav­ing the EU or euro could be ridiculed as fan­ta­sists or de­nounced as fas­cists (or ul­tra­left­ists). This is no longer pos­si­ble.

Brexit has turned “Leave” (whether the EU or the euro) into a re­al­is­tic op­tion in ev­ery Euro­pean coun­try. Once Bri­tain gives the Union for­mal no­tice (by in­vok­ing Ar­ti­cle 50 of the Treaty of Lis­bon), that op­tion will en­ter the main­stream of po­lit­i­cal de­bate every­where. Re­search by the Euro­pean Coun­cil on For­eign Re­la­tions has found 34 anti-EU ref­er­en­dum de­mands in 18 other coun­tries. Even if each of these chal­lenges has only a 5% chance of suc­cess, the prob­a­bil­ity of at least one suc­ceed­ing is 83%.

Can the ge­nie of dis­in­te­gra­tion be put back in its bot­tle? The EU’s breakup may well prove un­stop­pable once Bri­tain leaves; but Bri­tain has not yet in­voked Ar­ti­cle 50. The bot­tle could still be sealed be­fore the ge­nie es­capes.

Un­for­tu­nately, Europe is us­ing the wrong threats and in­cen­tives to achieve this. France is de­mand­ing that Bri­tain ac­cel­er­ate its exit. Ger­many is play­ing the “good cop” by of­fer­ing ac­cess to the sin­gle mar­ket, but only in ex­change for i mmi­gra­tion rules that Bri­tain will not ac­cept. These are ex­actly the wrong sticks and car­rots.

In­stead of rush­ing Brexit, Europe’s lead­ers should be try­ing to avert it, by per­suad­ing Bri­tish vot­ers to change their minds. The aim should not be to ne­go­ti­ate the terms of de­par­ture, but to ne­go­ti­ate the terms on which most Bri­tish vot­ers would want to re­main.

An EU strat­egy to avoid Brexit, far from ig­nor­ing Bri­tish vot­ers, would show gen­uine re­spect for democ­racy. The essence of demo­cratic pol­i­tics is re­spond­ing to pub­lic dis­sat­is­fac­tion with poli­cies and ideas – and then try­ing to change the judg­ment of vot­ers. That is how nu­mer­ous ref­er­en­dum out­comes – in France, Ire­land, Den­mark, the Nether­lands, Italy, and Greece – have been re­versed, even when deeply emo­tional is­sues, such as abor­tion and di­vorce, were in­volved.

If Euro­pean lead­ers tried the same ap­proach with Bri­tain, they might be sur­prised by the favourable re­sponse. Many Leave vot­ers are al­ready hav­ing se­cond thoughts, and Prime Min­is­ter Theresa May’s un­com­pro­mis­ing ne­go­ti­at­ing po­si­tion will para­dox­i­cally ac­cel­er­ate this process, be­cause vot­ers now face a much more ex­treme ver­sion of Brexit than they were promised by the Leave cam­paign.

May has stated un­equiv­o­cally that im­mi­gra­tion con­trol is her over-rid­ing pri­or­ity and that Nor­way or Switzer­land can no longer be mod­els for Bri­tain’s re­la­tion­ship with the EU. Her new “Brexit Min­istry” has de­fined Bri­tain’s main ob­jec­tive as tar­iff-free ac­cess to Europe and free-trade agree­ments with the rest of the world. That means aban­don­ing the in­ter­ests of Bri­tain’s fi­nan­cial and busi­ness ser­vices, be­cause ser­vices are un­af­fected by tar­iffs and are ex­cluded from most free-trade deals.

As a re­sult, the new gov­ern­ment will soon be po­lit­i­cally vulnerable. In fact, most Bri­tish vot­ers al­ready dis­agree with its ne­go­ti­at­ing pri­or­i­ties. Post-ref­er­en­dum polls show vot­ers giv­ing pri­or­ity to sin­gle-mar­ket ac­cess over im­mi­gra­tion re­stric­tions by a two-to-one mar­gin or more. Mak­ing mat­ters worse for May, her slen­der par­lia­men­tary ma­jor­ity de­pends on dis­grun­tled “Re­main” rivals. As the Bri­tish econ­omy sinks into re­ces­sion, trade deals prove il­lu­sory, and le­gal and con­sti­tu­tional ob­sta­cles pro­lif­er­ate, May will find it hard to main­tain the par­lia­men­tary dis­ci­pline needed to de­liver Brexit.

A strat­egy to avert Brexit there­fore has a good chance of suc­cess. The EU could ad­vance this strat­egy by call­ing May’s bluff on “Brexit means Brexit.” May should be told that only two out­comes are pos­si­ble: ei­ther Bri­tain loses all sin­gle-mar­ket ac­cess and in­ter­acts with Europe solely un­der World Trade Or­gan­i­sa­tion rules, or it re­mains an EU mem­ber, af­ter ne­go­ti­at­ing re­forms that could per­suade vot­ers to re­con­sider Brexit in a gen­eral elec­tion or a se­cond ref­er­en­dum.

This bi­nary ap­proach, pro­vided EU lead­ers showed gen­uine flex­i­bil­ity in their re­form ne­go­ti­a­tions, could trans­form pub­lic at­ti­tudes in Bri­tain and across Europe. Imag­ine if the EU of­fered con­struc­tive im­mi­gra­tion re­forms – for ex­am­ple, restor­ing na­tional con­trol over wel­fare pay­ments to non-cit­i­zens and al­low­ing for an “emer­gency brake” on sud­den pop­u­la­tion move­ments – to all mem­bers. Such re­forms would demon­strate the EU’s re­spect for democ­racy in Bri­tain – and could turn the tide of anti-EU pop­ulism across north­ern Europe.

The EU has a long his­tory of adapt­ing in re­sponse to po­lit­i­cal pres­sures in im­por­tant mem­ber states. So why is this strat­egy not be­ing con­sid­ered to counter the ex­is­ten­tial threat of Brexit?

The an­swer has noth­ing to do with sup­posed re­spect for democ­racy. The Brexit vote is no more ir­re­versible than any other elec­tion or ref­er­en­dum, pro­vided the EU is will­ing to adopt some mod­est re­forms.

The real ob­sta­cle to a strat­egy of per­suad­ing Bri­tain to re­main in the EU is the EU bu­reau­cracy. The Euro­pean Com­mis­sion, once the EU’s source of vi­sion­ary cre­ativ­ity, has be­come a fa­nat­i­cal de­fender of ex­ist­ing rules and reg­u­la­tions, how­ever ir­ra­tional and de­struc­tive, on the grounds that any con­ces­sions will beget more de­mands. Con­ces­sions to Bri­tish vot­ers on im­mi­gra­tion would in­spire the south­ern coun­tries to de­mand fis­cal and bank­ing re­forms, east­ern coun­tries would seek bud­get changes, and non-euro coun­tries would de­mand an end to their se­cond-class sta­tus.

The Com­mis­sion is right to be­lieve that de­mands for EU re­form would ex­tend well be­yond Bri­tain. But is this a rea­son to re­sist all change? That type of rigid­ity broke up the Soviet Union and nearly de­stroyed the Catholic Church. It will de­stroy the EU if the bu­reau­cracy re­mains in­ca­pable of re­form.

It is time for Europe’s politi­cians to over­rule the bu­reau­crats and re-cre­ate a flex­i­ble, demo­cratic EU ca­pa­ble of re­spond­ing to its cit­i­zens and adapt­ing to a chang­ing world. Most Bri­tish vot­ers would be happy to re­main in that kind of Europe.

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