Does Brexit mean Brexit?

‘Brexit means Brexit’ was one the first declarations of the new British premier Theresa May in July 2016. It lies beyond the limits of this short piece to analyse the bitter referendum campaign, which set city against countryside and small towns, the haves against the have nots, poor white and ethnic communities against east European immigrants and cosmopolitan elites against the losers of globalisation. Though not legally binding (due to the doctrine of parliamentary sovereignty), the role of the referendum as a constitutional instrument in a country with no single written constitution makes it unlikely that any government would openly ignore the result. Respecting the result is a  minimal democratic condition, however flawed and deceitful the Leave campaign.  Accepting, for the sake of argument, that some form of Brexit will take place, this short piece looks to reflect on two key questions:  first, what relationship is likely to exist between the UK and Europe of the 27? Second, will a European Union without the UK be more social and less economically liberal?

The future relations between the UK and the ‘27’ depend on a process of negotiation that cannot be predicted in advance. In the terms of Article 50 of the Lisbon treaty, negotiations must be concluded within a two-year period; there are conflicting signals about the reality of that timetable (is it feasible), about the timescale itself (when, indeed if, Article 50 will be invoked) and about whether informal negotiations will start before Article 50 is invoked. Brexit is not a simple matter of policy implementation.  The process of negotiating the divorce (to be headed on the Commission’s side by former Commissioner Michel Barnier, and by David Davis for the UK) does not involve the same actors as those involved in ratifying any final outcome (a qualified majority of EU member states in the Council, the agreement of 27 member-state parliaments,  plus the European parliament).

Does the UK know what it wants? There are numerous caveats.  Not the least of many ironies is that a referendum designed to ease Tory tension has had a devastating impact on the internal cohesion of the Labour Party, while the – ruthless – Conservatives got their house in order after a couple of weeks of floating. In terms of territorial asymmetry, moreover, the referendum revealed a social and territorial fracture (with England and Wales voting Leave, but Scotland and Northern Ireland [and London] opting for Remain). The UK appears as a challenged, and somewhat fragile Union State, hence premier May’s promise to associate the four nations (England, Wales, Scotland and Northern Ireland) with any settlement. These caveats are important- especially the second – as they influence the nature of the UK interests to be taken into account in any negotiation.

Interpreting (very artificially) the UK debates in terms of the positions adopted in London, tensions centre on the rhythm and nature of Brexit, as well as on the definition of what Brexit actually means. Three recognisable camps are emerging:

The hard-line Brexiters are favourable to invoking Article 50 of the Lisbon Treaty as soon as possible and negotiating a clean break from the European Union. The most prominent Brexiters (Boris Johnson, the Foreign Secretary;Liam Fox, the Secretary of State for International Trade; David Davies, the Secretary of State for Exiting the European Union), were trusted by Theresa May with planning the negotiations. Collectively, these ministers range from talented opportunists, such as former mayor of London turned Foreign Secretary, Boris Johnson, to ideological hard-liners willing, if necessary, to sacrifice membership of the single market in order to control immigration and to accept World Trade Organisation rules as the minimal standards for a trading nation. Discussions vary in relation to the relative merits of the Norwegian and Swiss models 1. There is a fierce struggle for resources between the ministries charged with negotiating Brexit.

Those advocating Brexit-light regret the result, seek to retain full access to the single market and are anxious to demonstrate a willingness for close cooperation with the EU, if necessary providing assurances on the continuing freedom of movement of EU workers. This position is in a majority amongst MPs (only the Conservatives are really divided) and is supported by core business interests – especially, but not only in the City of London. Without adopting a naïve Marxist analysis, core economic interests are powerful and likely to lobby hard for a negotiated arrangement that preserves a maximum of ties and, especially, the single passport for financial services (the City’s core concern). The recent Seminar at Chequers (August 31st, 2016) also demonstrated resistance to Brexit from leading civil servants. In the event that single market access is preserved, the Brexit-light camp recognise that the UK will continue to contribute financially to the EU and will to accept freedom of movement for EU workers.

A Bespoke agreement?  Theresa May publicly favours a ‘bespoke agreement’, that is one that is tailored to meet the specific needs of the UK. May’s position – whereby the UK would retain access  to the single market, yet control EU immigration - appears difficult to square with any interpretation of EU rules (except arguably the agreement reached by Cameron in February 2016, which was then rejected by British electors). Premier May has resources: notably the commitment to determine the pace on Brexit (the UK alone has the power to determine when Article 50 to be invoked, in spite of pressures of Hollande, Renzi, and others).  But it takes (more than) two to tango. 

Meeting immediately after the Brexit referendum the leaders of the original six EU nations (Germany, France, Benelux, Italy) implicitly claimed an enhanced legitimacy based on the time of entry into the European club, an initiative that sparked a reaction from the Visegrad group of States, Poland in particular. Is it the time for a federal leap? There is an argument that European integration progresses through crises: for some, the time has come to renew faith in the European project. Surveys across Europe have suggested an ebbing of the euro-critical tide post-Brexit referendum, but no real appetite for a federal leap 2. Neither is there much evidence – yet – of the alternative unravelling domino effect, with Eastern European countries or sceptical Scandinavians peeling off the onion layer. By contrast, there has been intense activity to attempt to divert UK inward investment to other European centres, especially financial services and the City.

But the UK is only one part of the debate, and probably not the most important. As Menon  points out, the UK a useful scape-goat, a smokescreen for the inability of European leaders to agree on the core issues facing a more integrated Europe 3. The key decisions taken in the Single European Act of 1986 (the single market and its associated directives and shift to majority voting) and Maastricht treaty of the 1992 (and the unprecedented leap into pooled monetary sovereignty with the adoption of the single currency) continue to frame disputes and lines of cleavage. The absence of the UK will force a tighter confrontation on these issues, such as: what does federalism mean? What degree of political integration is acceptable to Europe’s populations and political elites? What measures are necessarily to ensure the long term survival of the Eurozone (common fiscal policies? a transfer Union? Creation of a European Treasury?)  In relation to whether the EU will become more social and less liberal, it should be noted that the harshest social regressions have been linked to the European Union’s reaction to the economic crisis after 2008, especially in terms of the banking and sovereign debt crises and the tough conditionality that accompanied European rescues in Greece, Spain, Ireland, Portugal and Cyprus 4. Though Anglo-Saxon neoliberalism is a useful scapegoat, the real clash between is between German-inspired ordo-liberalism, with its emphasis on fighting moral hazard and resisting fiscal transfers to reward the profligate financial behaviour of the  eurozone’s periphery; and arguments based on need and social solidarity,  by Europe’s Mediterranean periphery in particular. The key questions (whether or not the UK is present) concern relations within the Eurozone and the long-term financial architecture of the euro.  What does economic governance really mean?  Should the European parliament be a stronger chamber with veto powers? Are ordo-liberal doctrines (of regulated and disciplined markets) compatible with the social Europe? As the battle over the EU-US trade agreement shows, the UK’s future exit has removed one obstacle to ending the TAFTA negotiations, a position publicly espoused by France in particular. This episode provides one example of how the UK’s departure, if this is what eventually occurs, might weaken the hand of Mrs Merkel.

 

1. The Norwegian model allows access to the single market, but with Norway paying into the EU budget and accepting all single market regulations, without having an input into decision- making. The Swiss model is more flexible, based on bilateral agreements – but Swiss financial centres do not have access to the EU financial passport which is a key City demand. 
2. Bruce Stokes « Euroskepticism Beyond Brexit: Significant opposition in key European countries to an ever closer EU» Last consulted 4th September 2016 at: http://www.pewglobal.org/2016/06/07/euroskepticism-beyond-brexit/ 
3. A. Menon « Le « Brexit », chance ou menace ? » Le Monde 09/06/2016 
4. See: Cole, A., Harguindéguy, J.-B. Pasquier, R., Stafford I. and de Visscher C. (2015) ‘The States of Convergence of Territorial Governance’ Publius: the Journal of Federalism 45:2, 297-321; Harguindeguy, J-B., Pasquier, R., & Cole, A. (2015) ‘La gouvernance territoriale espagnole à l’épreuve de la crise économique : vers la recentralisation ?’ Critique Internationale 67 :2 , 103 – 122.

 

 

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