After Brexit: Roadmap for a leap in the dark
BRUSSELS (Reuters) – Dawn, Friday, June 24. The votes are in. The British have spoken in their EU membership referendum and they want out. It is a scenario European leaders are now planning for in earnest while praying it never happens.
Secret meetings in Brussels and across Europe reveal huge uncertainty, officials and diplomats familiar with the proceedings say, over what would follow a vote that British Prime Minister David Cameron calls a “leap in the dark” – and also no little concern about what happens if Britain stays on.
This is a rough roadmap to Europe after June 23, based on conversations with many diplomats and officials, few of whom speak of it in public for fear of inflaming debate in Britain:
DAY 1 Friday, June 24 – The Three R’s, or more
Polls close at 10 p.m. No mainstream exit polls are planned but overnight counts should give a result by around the time the midsummer sun is coming up over Brussels.
Aside from the result itself, there are already several big imponderables. Cameron says he will notify the EU “immediately” if Britain is leaving. But he may take at least a few days. If he has lost he will be under huge pressure from his divided Conservative party to resign. He might also be, even if he wins.
Money markets will be volatile. The Bank of England and European Central Bank, with global allies, are assumed to have contingency plans to deal with a “Brexit shock” to sterling.
Expect joint statements from EU founders Germany and France and from EU institutions. Look for a mantra of Three Rs: Regret – at losing nearly a fifth of the EU economy and more of its military and global clout; Respect – for the will of the British people; and Resolve – to forge ahead with European integration.
“The show must go on,” one senior EU official said.
There may be a fourth message. Call it Reprisal, perhaps, though Britons should not take it personally; warnings of woe for those leaving will aim to discourage others from following suit. “Don’t try this at home,” was how one senior EU diplomat summed up the idea. There may be an element of spite, too.
Some Europeans, sotto voce, may also feel Relief. Some in France fret at British blocking of federalist ideas and fear a British vote to remain could unleash a new push for a free-market EU.
DAY 3 Sunday, June 26 – Rallying round the EU flag
After a Brexit vote, EU Commission President Jean-Claude Juncker will chair an emergency meeting of the executive’s “college” of 28 commissioners, including Britain’s Jonathan Hill, officials say. The Commission will be responsible for negotiating the divorce settlement between London and Brussels.
EU officials insist there is no “Plan B” in place for Brexit. But, recalling the same denials during last summer’s narrowly avoided Grexit during the Greek debt crisis, one speaks of a “Room B”, where a fire-fighting team of EU lawyers and experts will be ready. “The idea is to have everything ready for Monday,” the EU official said.
The start of a new week on global financial markets will see investors and voters demanding answers on where Britain and the EU are heading. Expect both to offer assurances of orderly talks, while nothing changes immediately, for firms or citizens.
DAY 5 Tuesday, June 28 – ‘David, are you leaving now?’
A 24-hour EU summit is scheduled. After a Brexit vote, his political career may be over but Cameron would likely stay on at least until his deeply divided party elects a successor. He would be expected to appear for dinner in Brussels. Big question – would he notify summit chair Donald Tusk that he is triggering Article 50 of the EU, the legal basis for Britain to leave the Union? In London, pro-Brexit would-be successors may try to play for time.
Until Britain declares its hand, the EU would stall, though many would be impatient to make clear there will be no new talks to try and keep it in. If Cameron secures a referendum win, the summit will discuss quickly enacting the reform package he won in March to give Britain a special deal to stem EU immigration.
DAY 6 Wednesday, June 29 – ‘Please wait outside, David’
Day Two of the summit and, if it is to be Brexit, leaders of the 27 other states will confer without Cameron in the room – a pattern Britons will have to get used to. Article 50 sets a two-year limit on divorce talks. The EU must fill a Britain-sized hole in its budget and reassure millions of EU citizens living in Britain and Britons on the continent of their future rights.
EU leaders, notably Germany and France, may push for a quick show of unity on more integration. Divisions between Berlin and Paris on managing the euro zone probably rule out a big move on that front before both hold elections in 2017. Closer EU defense cooperation, without skeptical Britain, may be revived. A major EU security policy review is already on the summit agenda.
Other initiatives, aimed at blunting Marine Le Pen’s far-right, euroskeptic bid for the French presidency in 2017, could include a push to stimulate job creation, especially among the young.
“Brexit or not, we have to think about what comes next,” French Finance Minister Michel Sapin told Reuters. “France will speak. Germany expects us to. We’ll need to... work together and not alienate the others from a Franco-German initiative.”
The Council of EU leaders must give the executive Commission a negotiating mandate. Some in Britain see exit discussions lasting longer than two years. But an extension requires an EU unanimity that few in Brussels expect.
Some suggest talks with Britain on its future trade terms can run in parallel to the exit talks. Juncker, who spoke to reporters over lunch in Paris on Tuesday, ruled that out: “After the two years, we’ll negotiate relations with a blank slate,” he said.
FROM DAY 7 Nothing (and everything) changes; Hello Estonia
After a Brexit vote, all EU laws apply in Britain until two years after London starts the process to leave. Then none would apply. Meanwhile, British lawmakers sit in the EU parliament, Hill in the Commission, thousands of Britons would go on working as EU civil servants and British ministers sit in EU councils. But they will have no real voice and Britain plans to renounce its EU presidency in the second half of 2017; Estonia would come forward to start its first stint in the chair six months early.
Some also see heavy pressure to exclude British MEPs from a say on EU laws and to deprive Hill, a Cameron appointee, of his sensitive portfolio overseeing financial services regulation.
Whatever the referendum’s outcome, a host of other EU plans, shelved for fear of alienating British voters, will come out of cold storage, including energy-saving rules to limit the power of toasters and kettles. Dealing with the fallout from a Swiss referendum on EU migration and a Dutch rejection of the EU trade deal with Ukraine will get back on track, as will a review of the EU’s seven-year budget.
If Britain votes to stay in, some, notably in France, fear a new British-led push to free up EU markets and rein in regulation. Others doubt that Cameron, if he survives at all, would have much appetite for deeper EU engagement amid post-referendum Conservative blood-letting.
A post-Brexit relationship between Britain and the EU is the great unknown. Many EU leaders, wary of euroskeptic voters at home, are determined Britain cannot have access to EU trade and financial markets if it wants to keep out EU workers. “All four freedoms, or none,” is how EU officials refer to free movement of goods, services, capital and labor in the EU treaty. Others put it more even starkly: “Out means out.”
New trade barriers would hurt both sides’ economies. But the EU fears a political “domino effect” would cost more longterm. Brexit would “break a taboo”, Juncker says: “If others open the door, inspired by the British model, we’ll see a stream of referendums, depriving the European project of all credibility.”
End of the road?
Leaders have much else on their plates to distract them from negotiating with Britain, including Russia, the euro, jobs and refugees. London may have other priorities, too, not least the likelihood europhile Scotland would bid again to break away.
There is a “Brussels consensus” that Britain would face a chilly future, cast out after two years to perhaps talk its way back later into some kind of trade access in return for many of the things – notably free migration from inside the bloc and contributions to the EU budget – which Brexit voters want to end. But cautious diplomats do not rule out surprise turns.
EU law may seem clear but EU leaders, German Chancellor Angela Merkel included, are loath to see Britain go and may yet seek a way to keep it in, whatever the vote on June 23.
“Will Merkel really shut the door?” a senior EU diplomat said. “It may seem clear-cut in Brussels. But in politics, never say never.”