Brexit fallout

Time for a New Sort of E.U. Membership

A man walks past a car scrap yard in east London
Could Brexit end up fixing the European Union?
  • Why it matters

    Why it matters

    The author argues that a European Union with a central core of full members and several associate members could solve many of the E.U.’s problems.

  • Facts

    Facts

    • Britain voted to leave the European Union in a vote in June.
    • Several East European members, including Hungary and Poland, have begun voicing concerns about the way the bloc is run.
    • The E.U. has bilateral agreements with several non-member European states, including Norway, Switzerland and Iceland.
  • Audio

    Audio

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Following Britain’s vote in June to exit the European Union, the German media churned out articles about how the decision could be shelved, focusing on British petitions against the vote, demonstrations, technical and legal ways to backtrack – and even a possible second vote.

But why this lack of acceptance? Maybe it is a rejection of this sort of democratic decision. Or maybe it reflects the belief that there should be a higher authority with more power than the citizens. But just a quick survey of the political reality in the British parliament or the ruling Conservative party clearly shows that a reversal would be impossible.

“Brexit means Brexit,” said Theresa May firmly, shortly after she became the new prime minister in July. No one knows what that will actually mean. But one thing is clear: Brexit looms. And in the meantime, a second reality has emerged: “Brexit means hard Brexit.”

Britain won’t end up with a soft affiliation to Europe, such as the special link enjoyed by Norway. If it did, it would have all the E.U.’s disadvantages, including the free movement of citizens and net contributions to the European Union budget, but with no power or influence. It would lose all voting rights and ministers – it would be consulted, but ignored.

The fact is that Britain won't be able to have its cake and eat it: It isn't possible to control borders and retain the full range of trade links to the bloc.

The fact is that Britain won’t be able to have its cake and eat it: It isn’t possible to control borders and retain the full range of trade links to the bloc. The European Union will insist that its four fundamental freedoms do not become fragmented: The free movement of people, goods, services and capital. If the Brits control borders and seek to sink the numbers of eastern European citizens moving to the country, then London’s financial hub will – for better or worse – lose its access to the heart of the European financial market.

In Britain there are still plenty of people who cling to the illusion that this won’t happen. Their thinking is fueled by politicians at home – but also incautious voices from Germany. Norbert Röttgen, who chairs the Foreign Committee of the German Bundestag, co-wrote a study which mooted such a suggestion. But we shouldn’t mislead our British friends – in the European Council, the group of E.U. head of states, there would be no majority support for such a reversal.

The basic parameters of Brexit are clear: The Brits will leave the European Union, likely in the summer of 2019. Their exit will be accompanied by a bilateral trade deal, which also allows Britain to control its borders. The movement of goods will not be subject to import duties and for services the deal will vary from sector to sector. There will likely be an additional contract drawn up regarding scientific collaboration or in the energy sector. But the fact is that British financial firms will no longer form a part of the internal market.

But it will be a while before anything happens, and that represents a chance for the rest of the European Union. One could take the agreement that is being drawn up with Britain as a new form of bilateral partnership. That would mean that as well as full E.U. membership, with all its rights and obligations, there would also be a sort of associated membership.

In this way, there would be a core European Union in the center of the bloc – with the euro currency and all the diverse E.U. policy areas. This would be surrounded by a periphery, which would have the choice to work with the European Union in particular areas. In the long-term this structure would offer a solution to other euro-skeptic countries. Maybe a few countries will want to take up this option.

With the help of this sort of associated membership, one solves the problem of these eternal euro-objectors. The British and the Danes would have an explicitly drawn up rule in their contract, exempting them from using the euro currency. Others would have to qualify for membership – but many would not.

So the best solution to the Brexit vote would be a friendly deal, without compromising the fundamental freedoms. A smaller European Union with three or four ex-member states in the periphery would be cumbersome and unable to strike good agreements. But a well-managed Brexit could end up making a positive contribution to the bloc.

 

To contact the author: gastautor@handelsblatt.com

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