Lessons from Brexit that can strengthen the EU

With the Brexit referendum Britain, Europe’s second-largest economy and still a significant military power, has committed to leaving the European Union. Politicians and opinion-makers across the continent are now scrambling to answer difficult questions: How did this happen? What does this mean for Europe? And how can the EU recover its popularity and prosperity, and thus resilience?

Lesson I: The EU was scapegoated for British immigration policy

One should not exaggerate the state of the EU’s plight. As shown by the latest edition of the Bertelsmann Stiftung’s Sustainable Governance Indicators (SGI) project, individual EU countries continue to be world-leaders when it comes to making a good society. EU countries make up seven out of the top ten countries ranked in both in terms of the quality of economic policies and of political democracy.

Of course, EU countries are very uneven in their performance, but the European average for many socio-economic and governance indicators is by no means bad compared to other developed countries, such as the United States and Japan. Even after Brexit, the relative success of Northern Europe and “Core Europe,” led by Germany, will continue to be an attractive pole for countries in the region who seek to achieve similar levels of prosperity and good government.

Britain is one of Europe’s most successful countries. It was not a member of the Eurozone and had a relatively positive economic recovery. A lack of growth was then not the driver of anti-EU sentiment. The Brexit vote has been interpreted as largely a vote surrounding national identity in England and Wales in a context of rising economic inequality, social fragmentation, and popular estrangement from the ruling establishment in Westminster. The United Kingdom Independence Party (UKIP) openly appealed to identitarian fears with its notorious “Breaking Point” poster, blaming the EU for excessive immigration.

It is true that, so long as Britain remained in the EU, all European citizens had the right to move to the UK, and a significant number took advantage of that right. But the fact is that Britain was and is not part of the Schengen Area of free movement and that immigration to the UK of non-EU migrants is overwhelmingly not determined by the EU. Indeed, while two thirds of immigration to the UK in recent years has come from outside the EU, this immigration is overwhelmingly a matter of British policy, not European policy.

What’s more, and this is a sign in favour of the EU’s future, the fact is that Britons and Europeans generally are much more warmly disposed towards immigration of fellow EU citizens, rather than towards non-Europeans. The latter, with their greater religious and cultural differences, have in the past often found it more difficult to successfully integrate into European societies.

A recent Eurobarometer poll found that “Almost six Europeans out of ten (58%) are positive about migration of people from other EU Member States. However, the same proportion is negative about immigration of people from outside the EU.” The figures are similar in the UK: 49% of Britons said they felt “fairly or very positive” about immigration from the EU, as opposed to 53% who felt “fairly or very negative” about immigration from outside the EU.

These two facts – that most immigration to the UK has not been from the EU and that Britons are more positive about EU immigration than about non-EU immigration – suggest a strange conclusion: the EU was the victim of collateral damage, or was even scapegoated, for the frustrations of the British public with British policy regarding non-EU immigration.

II: Brexit is a sign of the EU’s waning attractiveness

Another reality is that if the British elite was willing to gamble on EU membership with a referendum, this was because they did not consider the EU such an attractive partner that all had to be done to remain. Indeed, the EU’s share of global GDP has been steadily declining for decades.
Between 1999 and 2014, the EU’s share of British exports declined from 54.8% to 44.6%. Put simply, the British elite believed the UK could get on fine by cultivating ties with a growing, often booming non-European world.

All this is a sobering statement for Europeans: without decisive change in policies and social outlook, they will continue to decline relatively and eventually absolutely, growing more marginal in world affairs and unable to master their own destiny.

At a minimum, the EU will need to restore its economic attractiveness by finding a lasting solution to the Eurozone crisis. True, daily instability is no longer a feature of life in the Eurozone and major gains have been made. Cyprus, Slovenia, Ireland, Portugal, Spain, and Italy have all seen improvements in their economic policies as the SGI shows, reflecting both domestic economic reforms and improvement in Eurozone governance as a whole.

For now however, all this still risks being too little, too late. The recovery has been weak and fragile, and may yet prove unsustainable. Time is of the essence as Europe faces, economically, not just one lost decade since 2008 but perhaps lost decades as the workforce shrinks with childless boomers going into retirement.

Furthermore, while the new Eurozone governance – essentially strengthening rules against deficit spending and empowering the European Central Bank (ECB) – has led to significant improvements in the economic situation, they have deepened the currency bloc’s democratic deficit. Elected politicians at national level have less say over their country’s budget and observers have long complained about the lack of legally-binding democratic oversight of the ECB.

Some sort of grand compromise in the Eurozone – notably between north and south – is necessary if the currency union is to address these challenges. The economist Thomas Piketty has proposed the creation of a Eurozone Parliament which could decide by democratic majority on economic policy issues such as labour market reform and deficit levels. This, tied with a Eurozone Treasury and guarantees against pro-cyclical deficit spending, would ensure cheap refinancing of governments and steady reduction of debt. Achieving this, which would no doubt require Treaty change, is of course easier said than done.

Lesson III: Brexit is an opportunity for European defence

Britain’s departure will significantly change the nature of the Union. The economic hit will be significant. But there will also be advantages.
London had traditionally hoped to reduce Europe to a vast free trade area. To that end, British governments had sought to limit political integration and push for maximal extension of membership to new countries.

Without Britain, it should be easier to progress in various policy areas, notably defence. European leaders have not been slow in making bold proposals in this area. Italy has recently suggested the creation of a “multinational European force” as part of a “Schengen of defence” to fight terrorism and stabilise crisis areas. In Central Europe too, leaders have called for a European army, although there the emphasis is different, reflecting regional concerns.

In truth, since the failure of the European Defence Community in 1954, European military initiatives have been as numerous as they have been inconsequential. The problem is one of sovereignty: no one proposes the creation of a European commander-in-chief, akin to the U.S. president, to decide on the use of force. As a result, any deployment then becomes dependent on the agreement of all concerned and on national decisions to delegate national forces, which brings us back to square one.

Nonetheless, a European army could conceivably be created for particularly consensual missions. Europeans today consider immigration and terrorism to be the most pressing issues facing the Union.

The Italian and Greek coast guards and immigration services are overwhelmed. They need European assistance. This is something which, perhaps, could find consensus and reconcile Europeans, both north and south, and east and west. No doubt, the sight of the European flag attached to military and coast guard forces, made up of soldiers and sailors from various nations working to protect Europeans, would contribute enormously to reconciling citizens with their Union.

The challenges faced by Europe are of course too great to be achieved merely by such measures. Europeans will need to ask themselves, more deeply, whether they are willing to take the decisions necessary to stem their decline and make their societies prosperous. The EU’s leaders, for their part, will need to reflect on how to reconcile the Union with its citizens.