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Montag, 06. November 2017

Brexit: What consequences for the European project?

General de Gaulle has vetoed twice the United Kingdom's entry into the common market, in 1963 and 1967. Following the general’s departure, the United Kingdom entered the EU in 1973 and has since then continued to put the brakes on European integration: by demanding a "British cheque" on the European budget in 1984, by refusing to join Europe's more integrated policies (the Social Charter, the monetary union, the Schengen area), by accepting the start of a European security and defence policy (1998) while slowing down its deepening. At the same time, the United Kingdom has continued to push for EU enlargement, as it has been a great supporter of the internal market, so much as to accept both the very federal practice of qualified majority voting and the case-law of the Court of Justice.

Having largely contributed to shaping Europe in its image - an enlarged, free trade, politically unintegrated Europe - it would have been logical for the United Kingdom to remain in the Union. The British voters have decided otherwise. And this will not be without consequences for the future of the European project.

Geopolitics

The first and most important consequence of Brexit is geopolitical. It is a posthumous victory for General de Gaulle. He wanted a continental union and it will indeed be continental, extending farther to the east than he could have ever imagined (as far as Poland, the Baltic countries, Finland and Romania). 

The European Union will, it is true, suffer a relative weakening with the withdrawal of the UK: its nominal GDP will fall by 16% (and will soon be caught up with China's GDP) and its population by 13% (it will fall below the 500 million population threshold). As we can already see, instead of being an important part of a united whole, the United Kingdom will absorb a significant part of the EU's political energy, which is being used to regulate economic and trade relations, budgetary issues, free movement of persons, diplomatic and military cooperation, etc. This is already the case of the EU's relationship with Switzerland, but the relationship with the United Kingdom will be more systemic and certainly more conflictual.

At the same time, the EU should become more coherent after Brexit, and refocus on France and Germany. The two driving countries of the European project will now together account for 33% instead of 28% of the European population, almost a blocking minority on their own (35% of the population and at least 4 countries are needed to form a blocking minority when voting by qualified majority). Even if the Germans are reluctant to lock themselves in an exclusive bilateralism with the French, the fact is that the relationship between the two countries will be more central than ever in the European game.
There will also be more coherence as the EU (27 countries without the United Kingdom) will be better aligned with monetary union (19 countries today) and the Schengen area (26 countries, 22 of which are in the EU).

A related consequence is the foreseeable end of enlargement. This is nothing new, as President Juncker had already announced that there would be no further enlargement of the EU under his Commission's mandate (2014-2019). The enlargement to the Western Balkans (6 countries in total) will remain on schedule but will be slow and complicated (see the Kosovo issue).

Beyond that, the prospects are blocked. Turkey's accession is becoming less and less relevant, not only because of the country's political evolution, but also because Brexit reduces the likelihood of a two-circle Europe, a "hard core" centred on the euro area and a wider circle. As for the countries further east, such as Moldova and Ukraine, the new eastern Member States have never succeeded, for the last fifteen years or so, in opening up a prospect of enlargement for them, and the United Kingdom’s withdrawal will not change the balance of power in their favour.

Another related geopolitical consequence is greater diplomatic and military integration of the European Union. While extending to the United Kingdom and other countries, the common market had also been complemented by diplomatic cooperation (the 1970s), a common foreign policy (Maastricht Treaty, 1992) and a common defence policy (from 1999 onwards). But these policies had largely remained intergovernmental. The announcement of the Brexit has already brought about major advances that were blocked by London in the defence field: progress towards military operations planning capability, the draft budget for military research and joint armaments programmes, and an eventual "permanent structured cooperation" on defence (between a few more ambitious countries) - which has yet to be defined. This does not mean that NATO and the American alliance will lose their geopolitical importance. 

The EU will be destined to become a European pillar of the West, with which the United Kingdom can be fully involved (support for EU diplomatic positions, ad hoc participation in EU military operations and programmes), and coordinate with NATO (see the Warsaw Declaration on EU-NATO cooperation in July 2016). But despite the traditional reluctance of Germans (and other European partners) to engage in military combat operations, the EU should make progress towards its "strategic autonomy" (a goal expressed in the "global strategy" adopted in 2016 under the aegis of Mrs Mogherini, High Representative for Foreign Affairs and Security Policy) and take more responsibility for security, which is after all a necessary consequence of the US strategic retreat.

Economy

From an economic point of view, the UK's withdrawal will first have budgetary consequences. Despite the “check”, the UK's “net contribution” (the difference between what the UK pays to the EU budget and what it receives from it under common policies) has fluctuated in recent years between EUR 5 and 10 billion per year: this is the real budgetary “gap” to be filled after the UK leaves. The negotiations for the 2021-2027 financial perspective, which will begin in 2018, will be complicated and will start with the dilemma of reducing the aid to Eastern European countries ("net beneficiaries") or increasing the net contribution of rich countries (to which France belongs). This contributes to explain why some Eastern European countries have softened their stance in the debate on the revision of the rules on the posting of workers.

Another economic consequence concerns trade relations with third countries. The United Kingdom was one of the "free trade" countries, which is why the northern countries (Germany, the Netherlands) have always wanted them to enter the common market. Logically, the balance of power in the Union should tend towards a more protective agenda, as backed by France (environmental, fiscal and social reciprocity in trade). But northern and eastern countries will also continue to exert pressure in favour of a competitive Europe which is open to the world.

Political integration

The third consequence remains an open question for the moment: will Brexit foster a deepening of European integration on the continent, or, on the contrary, presage a disintegration movement? Elected on his European commitment, President Emmanuel Macron has made a number of proposals for "European sovereignty", in favour of a democratic deepening, a budget for the eurozone, and other initiatives for Europe, while advocating that those who want to go further can do so (principle of differentiated integration). 

On issues such as defence, things are moving that were barely imaginable a few years ago. The budget negotiation that will start in 2018 will be decisive in bringing this new European momentum, and it will coincide with the 2019 European elections. Much will depend on the provisions of the new coalition in formation in Berlin, but also on the other partners of the Franco-German "couple". It is not clear that progress must be achieved through a further unbundling of the European Union and the monetary union, which would create a two-speed Europe.

However, two things seem certain. On the one hand, a monetary union cannot be sustainable without a minimum of transfers, without joint public investment, without a common economic and democratic management of the euro zone (see Michel Aglietta - Nicolas Leron, La double démocratie, 2016) - and on these subjects it is difficult to persuade Germany, and other northern and eastern countries which share its "ordoliberal" orientation. On the other hand, it is the responsibility of European leaders to listen to and reassure the people, to produce "results" rather than sing the European credo, to correct the effects of globalisation (inequality, the excesses of finance, environmental damage, rising insecurity, "losers of globalisation", migratory pressure, etc.). The agenda of “a Europe that protects" has therefore become central in recent months.

Brexit is first and foremost an economic and political challenge for the United Kingdom itself. On this side of the Channel, it must be seen as an opportunity to rebuild or at least consolidate the Union, and the road ahead is as difficult as it is promising.


Maxime Lefebvre is an ambassador, co-director of the International and European Institute at ESCP Europe, professor at ESCP Europe and Sciences Po Paris, author of La construction de l' Europe et l' avenir des nations (Armand Colin, 2013) and La politique étrangères européenne (PUF "quoi sais-je?", 2nd ed., 2016). The statements made in this article are personal.

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