The EU must reform, with or without the British

18 Jun 2016 - 14:02
Source: Rareclass/flickr

Why is it that so many Britons (and others) want to leave the EU? Because the EU has changed. The British are holding up a mirror to us. The tale of the economic benefits is no longer enough to substantiate ever greater integration. 

Have the British gone mad? It seems unthinkable that the United Kingdom wants to leave the great European market, with its half a billion discerning consumers. Their EU debate is as complex as the average episode of Monty Python, with actors that overflow with typical British eccentricity and with subjects that are linked by nothing more than their absurdity. Caricatures such as Boris Johnson are playing with fire: there is a real possibility of the UK falling apart (the Scots want to remain in Europe), the possibility of conflicts flaring up in Northern Ireland and the possible loss of access to world markets; still they continue to spew nonsense about banana curvature, the EU budget and so forth. World leaders, experts, business and journalists present the populace with fully-fledged scenarios of doom: Russia and China will be the geo-political winners, the divided EU will lag behind, the US will turn away from the EU, the United Kingdom will fall apart and the EU will sink into protectionist isolation. It seems that the British people are happy to gamble with world history and with their own continued existence as a country.

And yet we, the rest of the EU, will have to make an effort to understand the motivation behind the referendum. It would be easy to dismiss their referendum as just the latest example of British eccentricity that has nothing to do with us at all. In terms of EU policy, the UK often wasn't all that crazy. So let us think about it from their perspective of dissatisfaction with Europe in order to prevent exasperation for ourselves and for the EU. Remember, whether the vote is to remain or to leave, the UK will still be a major partner.

Understanding is the last thing the Britons can expect. If the vote is to leave, the UK will be punished for its actions. A retrograde step in the process of European integration is incompatible with the paradigms of world leaders. European Commission president Juncker has threatened that he will regard the UK as deserters. The other EU leaders are scared stiff of similar democratic Leave debates in other member states. President Obama explained to the British that they would be at the back of the queue when it came to negotiating trade deals. The US would rather make trade deals with a bloc of 500 million consumers within the EU than individually, with the 65 million Britons. The US wants to see a strong Europe, not one that is hopelessly divided.

Threatening talk is all very well as far as the referendum is concerned. But it is in the interests of both the Netherlands and Europe as a whole to discourage secession from the EU. Yet, following the vote either to leave or remain on 23 June, European fury must yield to pragmatism and understanding.

The first thing we have to do is to acknowledge that EU-related referendums are increasingly becoming part of the democratic landscape. The results are often a brake on European integration. In April, the Netherlands held a referendum on trade with Ukraine, in which the result was 'against', the Danes opted in a referendum in December to oppose closer integration of police services. European integration needs broad-based support and referendums, no matter how controversial they may be, are one element in determining the borders of public support. And that support is open to question in even the most enthusiastic European federalist countries, Italy and Belgium. 50% of Italians would currently vote to leave if a referendum were held there. In Belgium, the largest parliamentary party is the eurosceptic  Nieuw Vlaamse Alliantie. And the powers that be in Berlin are also worried about support for the EU among Germans, while Marine Le Pen, in France, is waiting behind the scenes in the hope of an EU referendum. Part of the indignation among the leaders of governments reflects their anxiety on the danger of cross-contamination, precisely because the EU gets a mixed reception in their own countries. But castigating the results of EU referendums is the mark of bad losers. The answer should be learning lessons instead of punishing.

The second step, understanding the British dissatisfaction, must move on from the stage of saying over and over again that the British are different. Nonetheless, understanding begins with recognition of typical British peculiarities in their EU debates. In the aftermath of the Second World War the continent was in ruins and the elite – composed of  resistance fighters and exiled politicians - in countries such as the Netherlands, France, Germany and Italy was convinced that the borders were both economically and politically vulnerable. Britain, one of the victors, does not really share our deep-seated sense of ‘the EU of peace’. It was continental Europe that had to get its house in order.

Another factor is that the UK is not as comfortable with the culture of consensus that typifies the EU. Their two-party system and the tooth-and-nail debating that goes with it, set the political tone. At European negotiating tables, the British are not interested in 'package deals'. They would rather negotiate on individual sectors. For them it is about issues that directly affect people, not about shaping the EU. For that reason, the British have often disappointed the Dutch. We hoped that the UK, one of the larger member states, could keep Franco-German ambitions in check. However, the UK would rather take the easy way out, steering clear of ambitious European projects such as the euro, which they do not see as being in their own interest.

The belief in parliamentary sovereignty is one more of those British peculiarities. We on the European mainland are more nonchalant about 'sovereignty' than the British. Their parliament dates back to the middle ages so, in their eyes, it should not be subservient to some European Parliament or European Court of Justice. The UK is also very attached to its free-market values, and that is at odds with how it views 'protectionist' Europe. The fact that the British are often not so broad-minded, in contrast to the countries of the EU, particularly on sensitive questions like labour migration, does nothing to diminish the image they have of themselves. They cherish their traditions of pretending to be broad-minded and of parliamentary self-determination.

Many Britons also have the sort of world view that Churchill had, with three separate spheres of influence: the British Empire, the special relationship with the United States and, lastly, Europe. Half of the UK's trade is with the EU and its stagnating markets. The other half of its trade goes to the more dynamic world market. Those in the 'Leave' camp would thus still rather look to the rest of the world than to the EU; after all, that is where the growth is. The fact that the European markets are a springboard to the rest of the world is still not compatible with their world view.

It would be unjust to leave the British EU debate on the thought that dissatisfaction with the EU is something typically British. Increasing disillusion in the EUis not just a trend in the UK, where 67 per cent voted to remain in the Common Market in 1975. Frustration with the EU is on the rise everywhere, and it is no surprise that the referendum should coincide with the eurocrisis and the migration crisis. The undertow can be explained by the mirage of trust in the economic benefits of integration. The heated debates in the UK underline the extent to which the European narrative has dwindled to its current state. The British are not convinced of the positive effects of integration. It is precisely this point that is the eye-opener in the UK referendum: it is the free-market loving British who do not believe in the European economic narrative.

The narrative of the EU as the engine of growth has lost traction in other EU countries, too. Either it is the economic benefits are disappointing, citizens fail to see them or, alternatively, the benefits fail to outweigh the disadvantages. The cornerstone of European integration is the single European market. It has four pillars: free movement of goods, services, people and capital. And since 2002 the euro has formed part of the European economy. The European Commission has presented rose-tinted forecasts on more than one occasion on the internal market and the euro. The CPB (Bureau for Economic Policy Analysis) in the Netherlands also made economic forecasts that were, as former managing director of the CPB, Koen Teulings conceded, too optimistic. The British debate exposes the extent to which the economic justification of integration is disputed. Belief in the economic benefits is the Achilles' heel of European integration.

It was for economic reasons that the UK became a member of what was then the Common Market, despite much soul searching. That attraction is now the subject of debate. Both camps are exaggerating the economic scenarios. Leave supporters overestimate the costs of European market regulation and calculate that Brexit would lead to GBP 33bn in savings. The pro-EU camp, by contrast, highlights economic benefits of GBP 59bn. Experts generally fear the economic consequences of Brexit, but the wider public is not convinced by their arguments.

Of the four freedoms guaranteed by the single market, labour migration is the most sensitive. Cameron promised that the total burden of labour migration would remain under 100,000, yet 333,000 migrants came to the UK in 2015. Large numbers of labour migrants come from Eastern Europe, but most come from other parts of the world. Notwithstanding studies on their economic contribution, members of the Leave camp primarily want to make decisions themselves on who is allowed to enter the country. And the influx from the EU is seen as proof that European markets do not create jobs themselves. Free movement of workers is a sensitive subject in many EU countries. In the Netherlands, Minister Asscher is also trying to tighten up the EU rules on this point so that Dutch workers get a little more protection.

Of course, the UK wants to retain its access to the European markets for capital, services and goods. However, the anti-EU camp wants to be able to decide itself on the regulation or deregulation of their markets. Of course, the European banks are in a bad way at the moment and the liberalisation of the European service sector is lagging way behind EU guarantees on this. Voters are unreceptive to both the optimistic narrative on what the EU still has to offer in these markets and all the threats about what the UK will lose if it votes to leave: they've heard it all before.

And many in the Leave camp do not believe that the EU will punish the UK in any way if it withdraws. Why would the EU, which aims to break down barriers to trade want to keep the UK at a distance? So those campaigning for Brexit assume that a Leave result would mean nothing more than a new round of negotiations. The Vote Leave campaign certainly has some optimistic members.

In British political circles, the euro is seen as something that the UK has nothing to do with. Nonetheless, even the euro has an important role to play in the British debate. In the first instance, the EU has a reputation for being permanently in crisis, from disappointing growth figures in member states, to untrustworthy banks, to disputes about refugees, and European institutions that acquire power without public support. Above all, the euro crisis has given European integration a bad name, even in the UK.

The euro crisis has exposed significant flaws. European leaders, such as the Commission presidents Barroso and Juncker, have sketched the steps required to stabilise the euro, including a European finance minister. The inevitable consequence of a European finance minister is that the European Parliament would have a greater role to play. The UK government regards further federalisation of the eurozone as the ‘remorseless logic’. In British eyes, the euro crisis has made it clear that the euro demands closer ties, because they are victim of the slow economic growth on the continent. This is the 'Ever closer union' that the UK believes is a priority for the eurozone, but which it does not want for itself.

Now that the ever closer union is tangible, resistance can be felt among Dutch politicians and elsewhere. As Foreign Minister, Frans Timmermans said that '...the time for 'Ever closer union' in every conceivable area is behind us'. His successor, Bert Koenders, wants strong individual member states to be the basis of the EU. The economic rationale behind the euro was always dubious. We are all, not just in the UK, now facing up to the reality of the political consequences of the euro.

And the British economy is also suffering from the euro crisis. The crisis on the continent reduced demand for British products. To make matters worse, German and Dutch products are actually too cheap within the eurozone, which explains the UK's sizeable trade balance deficit with the Netherlands. The figurehead of the Leave camp, Boris Johnson, thus calls the euro an instrument of unfair competition. The euro has certainly not promoted love between eurozone states.

In 2005, the Netherlands voted against the European constitution plus European flag, anthem and president. The UK is showing that the situation is now more serious: even the narrative of Europe as an economic success is wearing thin. Many will breathe a sigh of relief if the UK votes to remain in the EU, as the process of European integration would then be proved not to be irreversible. However, if the British vote to leave there will be inevitable debates on how to punish the UK as a preventative measure to ward off expressions of displeasure in other member states.

But punishment is bad in terms of the economy, both for the Netherlands and for the EU as a whole. It would also be a mistake to think that Marine le Pen, Geert Wilders or Viktor Orban need the British example to demand a referendum. Citizens do not want to hear yet again how marvellous the EU is; they want to learn what the EU is actually turning into: are we actually going to have 'Ever closer union'? Will the EU become a sort of state? Will there be a European Finance Minister, levying Europe-wide taxes? Many citizens don't those kinds of narrative for the EU. In many EU countries, debates focus on fields such as subsidiarity, acknowledgement of differences between countries and retention of a sense of identity, including the ways in which states configure their markets. The old character of the EU as a single market has lost its lustre.

It is time to move the goalposts and, where possible, to take several steps back. For instance, in the last elections to the European Parliament the main issue was the election of the 'president' of the Commission, Jean-Claude Juncker. This gave the Commission the legitimacy of government, with a greater role for the European Parliament. These sort of steps towards European unification can no longer be sold with slogans like 'Europe is good for you'. People want their own identity, even if that means that there is a financial risk attached. Perhaps citizens also want an end to the continuous harmonisation of legislation. Where South European member states ask for more policy harmonisation, in North Europe member states believe that there should be more competition between states.

The UK referendum is less typically British than the traditional European federalists hope. For many, the EU is more of a gamble than the prospect of leaving it.