Brexit de­bate needs a more bal­anced road

The Star Early Edition - - OPINION & ANALYSIS - Hamish McRae

HOW CAN Brexit be bet­ter for Europe? From the UK per­spec­tive the whole busi­ness is about the sort of eco­nomic re­la­tion­ship the coun­try will feel com­fort­able with. The de­bate is framed as a bal­ance of pos­i­tives and nega­tives: gain­ing free­dom over bor­ders and over trade with non-EU coun­tries, but at the cost of less favourable ac­cess to the Euro­pean mar­ket.

From a Euro­pean per­spec­tive, how­ever, the de­bate has been largely framed in terms of com­pet­ing mi­nuses. By how much should the UK be pun­ished for leav­ing? It must not be al­lowed to “cher­ryp­ick”. How much dam­age might there be to Euro­pean ex­ports? There are mod­est pluses, such as the lur­ing of bank­ing jobs out of London and to­wards Dublin, Frank­furt or Paris. But, put it this way, the idea of the UK leav­ing the EU is not gen­er­ally re­garded as a pos­i­tive for the project. If you watch the re­sponse of the au­di­ence to Theresa May’s Brexit speech on Tues­day, note that the British clapped en­thu­si­as­ti­cally, but sev­eral Euro­pean am­bas­sadors re­fused to ap­plaud.

There is, how­ever, another way of look­ing at it. This in­volves see­ing how Europe might turn this to its ad­van­tage. There was some­thing of that in the prime min­is­ter’s speech, but what she says car­ries no force. What Brits think does not mat­ter. It is up to the EU. Within Europe there are a num­ber of thought­ful voices, all sound­ing rather dif­fer­ent than the knee-jerk re­ac­tions this week.

A good place to start is the Ifo In­sti­tute, the best known and most pres­ti­gious Ger­man eco­nomic re­search group. Here’s what its pres­i­dent Cle­mens Fuest said: “Europe should sign a free trade agree­ment with Bri­tain that is as com­pre­hen­sive as pos­si­ble and that also main­tains close eco­nomic in­te­gra­tion in terms of ser­vices. A tran­si­tional pe­riod of sev­eral years dur­ing which cur­rent trade rules re­main ap­pli­ca­ble should be agreed upon. The de­bate over al­leged cherry-pick­ing has to stop. It is poi­son­ing the at­mos­phere and is only cre­at­ing deeper di­vi­sions.”

Sen­si­ble stuff. But he is still see­ing this in terms of min­imis­ing the dam­age. Could there be a more pos­i­tive view? The best ar­gu­ment I have seen was made back in Au­gust in a pa­per by the Bruegel In­sti­tute in Brus­sels, one of the fore­most re­search groups on the con­ti­nent.

The pa­per has five au­thors from dif­fer­ent Euro­pean coun­tries, the British one be­ing Sir Paul Tucker, for­mer deputy gov­er­nor at the Bank of Eng­land. This is the nub of its ar­gu­ment:

“We pro­pose a new form of col­lab­o­ra­tion, a con­ti­nen­tal part­ner­ship. The UK will want to have some con­trol over labour mo­bil­ity, as well as leav­ing be­hind the EU’s supra­na­tional de­ci­sion-mak­ing. The pro­posed con­ti­nen­tal part­ner­ship would con­sist in par­tic­i­pat­ing in goods, ser­vices, cap­i­tal mo­bil­ity and some tem­po­rary labour mo­bil­ity as well as in a new sys­tem of in­ter-govern­men­tal de­ci­sion-mak­ing and en­force­ment of com­mon rules to pro­tect the ho­mo­gene­ity of the deeply in­te­grated mar­ket,” the pa­per said.

“The UK would have a say on EU poli­cies, but ul­ti­mate for­mal author­ity would re­main with the EU. This re­sults in a Europe with an in­ner cir­cle, the EU, with deep and po­lit­i­cal in­te­gra­tion, and an outer cir­cle with less in­te­gra­tion.”

Not warmly re­ceived

Now I have to ac­knowl­edge that this ap­proach has not been warmly re­ceived in Brus­sels, but then you would not ex­pect it to be. All bu­reau­cra­cies seek to re­tain their power, and any coun­try leav­ing the EU re­duces that. It also cuts their bud­get, for the UK has been the sec­ond-largest net con­trib­u­tor to the EU after Ger­many. More than one-third of the net con­tri­bu­tions to the bud­get come from the UK.

But as a vi­sion it should surely be ap­peal­ing, be­cause it ac­cepts that the in­ner core can carry on in­te­grat­ing if it wants to, while the outer ring should have some say in how Europe as a whole de­vel­ops.

Yet it may be that there has to be a rup­ture be­fore things can be put to­gether again. But noth­ing is for­ever, and Europe’s present model will in­evitably change.

The big strate­gic is­sue for Europe must surely be how to bind Rus­sia into the fold, rather than have it as an an­gry, dis­rup­tive neigh­bour threat­en­ing the EU’s eastern flanks.

The idea of an outer cir­cle could be a model not just for the UK but also for Rus­sia, how­ever un­likely that ap­pears un­der its present lead­er­ship. Giv­ing Rus­sia a say in EU poli­cies might seem un­think­able, but then to most peo­ple a year ago the idea of the UK leav­ing the EU was un­think­able.

The Bruegel pa­per doesn’t go quite that far, merely sug­gest­ing that this could be a model for Turkey and the Ukraine. But think of the prize: a Rus­sia with which Europe could co-op­er­ate, in­stead of one growl­ing on its bor­der. – The In­de­pen­dent

Europe should sign a free trade agree­ment with Bri­tain that is as com­pre­hen­sive as pos­si­ble and that also main­tains close eco­nomic in­te­gra­tion.

PHOTO:AP

UK Prime Min­is­ter Theresa May as she de­liv­ers a speech on leav­ing the EU at Lan­caster House in London on Tues­day. For the EU, what she says car­ries no voice.

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