Brexit, a dangerous ploy

Wavering between yes and no, the United Kingdom seems to be waiting for a push or a shove from the EU.

Europe has a British problem. For a good year the possibility of a British exit from the EU – dubbed ‘Brexit’ – has been widely discussed in EU capitals and David Cameron has promised to hold a referendum on British membership before 2017. What is driving the debate? How much would it impact on the EU?

And can the rest of the EU do anything about it? There is a widely held belief that the British are strongly against EU membership and can't wait to get out. But the British public is not significantly different from that of other member states: even after a year of intense media coverage of a potential Brexit, a recent poll indicates that only 2% of the British population considers Europe the most important issue facing the UK. The British establishment however reveals a strong anti-EU streak: a third of the MPs of the ruling conservative party want Britain to leave the EU, and have sympathisers in the media and in business backing this stance. Simply put, British Euroscepticism is an elite project. 

The master stroke of the Eurosceptic section of the elite has been to deck out this project in populist attire. That is the signature achievement of Nigel Farage – the charismatic leader of the UK Independence Party (UKIP). He has whittled down the entire European issue to a matter of controlling national borders and migration.

The very success of UKIP in capturing this mood has forced the leaders of mainstream parties to club together in support of pro-EU and pro-reform positions, and now frightened mainstream voters are beginning to reconsider their flirtation with Brexit. Britain’s referendum on Scottish independence, however, highlighted the difficulty that the yes side will have if they run a campaign juxtaposing risks against hope, economic benefits with self-government, and business elites against populist forces.

For Britain, leaving the union could be catastrophic. The exact impact on the British economy is difficult to predict; London, however, is running the risk of losing its status as the European financial hub. In a recent study, Standard & Poor’s warned that major global banks could leave London if Britain votes to leave the EU, heading instead to Paris, Dublin or Frankfurt. Many multinationals, based in London because it offers an English-speaking gateway to the EU, may reconsider that choice – and several have announced they’ve already begun the process.

These are the arguments that the yes campaign will use to scare voters away from voting no. The arguments may carry weight, but there is a danger that scare tactics focused on preserving the status quo will have a hard time confronting a no camp that offers the British public a way of re-establishing its sovereignty and control over its borders, wresting it away from Brussels. As in Scotland, the ‘better together side’ needs to realize that the best way to win is to offer the prospect of reform rather than defending the status quo.

Just how worried should other member states be about the prospect of a Brexit? There is a danger that EU officials are overlooking the potential risks. Many have other things on their minds and may consider a no vote unlikely anyway. Others believe that a British exit from the EU would remove a major obstacle to the political union required to save the euro and are therefore not concerned. But there is no reason to believe that the British government would block the euro-core from integrating further (so long as the integrity of the single market can be protected). Britain seems to have come to terms with the fact that it will remain in the third tier of a multiple speed Europe.

There is however a real danger that the chaos unleashed by a Brexit could trigger a domino effect, causing other member states to opt out as well. Moreover it would create enormous uncertainty for the two and a half million EU citizens from other member states currently living in the UK as well as the European companies that have invested billions in the British economy. An EU without Britain would be poorer and smaller – losing a sixth of its GDP and its budget, and a quarter of its defence spending. At a time when power is shifting from West to East and the US is rebalancing its attentions, Europe’s chances of mattering on the world stage are greatly enhanced if Britain is playing on Europe’s team.

It is ultimately up to Britain’s pro-Europeans to persuade their compatriots to stay in, but politicians from other member states can play a critical role in driving a wedge between the pragmatic British public and the Europhobic elite by encouraging the British government to become a partner in reforming the whole EU rather than seeking special treatment.

Firstly, EU leaders should work to break the connection among the British public between the fight against unchecked migration and Euroscepticism. Even though EU migrants make a net fiscal contribution, there is a mismatch between their tax contributions and pressure on services in specific areas. As well as changing the rules on social benefits, the EU needs to assist national governments in shifting resources to areas of rapid population change. One powerful method would be to set up an EU migration adjustment fund to which local authorities from across the EU could apply for assistance when forced to increase their provision of school places, medical staff and housing.

Secondly, EU member states should engage the UK in the discussions from which it is currently excluded, either wilfully or because it is not part of the single currency. This applies both to the economic sphere, where support for the eurozone strikes at the heart of British fears that it will be elbowed out of decision-making on the single market, and to foreign policy issues, seeing as the UK is understandably not invited to these meetings and thus carries no clout. Anything that suggests that the UK is isolated and embattled lends credence to the Eurosceptic message that Britain is better off out.

The next year will be critical for the European debate in Britain. EU member states should go out of their way to engage the UK in developing constructive suggestions for EU reform. Ultimately, the best way to respond to the British question is to show a new generation of Europeans that the EU is the answer to their problems in the 21st century. 

@markhleonard

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