Can the EU recover from the Brexit shock, and what are the EU’s best options: more integration, less integration – or better integration?

Brexit was indeed a shock, but we would do better to start seeing it as an opportunity.  We have to live with the reality that the majority of Brits do not want to be a part of the European Union. It is now for the Brits to define what kind of relationship with Europe they want to have. As for the EU, Brexit should be seen as a wake-up call both for a future Europe that is attractive for all its citizens and one that can deliver on what they expect from the EU.

There is an interesting asymmetry between the areas where citizens expect Europe to deliver and where member states have attributed power to the EU. For example: the first and foremost important task citizens would see for Europe is to deliver on security at home and abroad, but this is an area in which governments have not transferred any key competences to the EU.

Accordingly, as we witnessed during the refugee crisis, the EU was rather powerless in protecting European external borders and in managing the influx of the hundreds of thousands seeking shelter in Europe . That stands in sharp contrast to the obsession with details in which, for example, the EU regulates whether or not my baby is more secure in the front or back seat of my car.

So the EU is rather big on small things and small on big things?

That’s the risk and what I see as one of the useful lessons to be drawn from Brexit. Without question, citizens expect a functioning European market that gives them a great choice among all sorts of goods. Furthermore, they are used to freedom of movement and to travelling freely within Europe. But there is also the expectation that Europe defends the economic rights of citizens and companies in a more globalised world. Unfortunately, the European Union is not equipped with the powers needed to truly deliver on these demands.

For example, within trade, we are witnessing an interesting new phenomenon.  Formally, the power to negotiate and conclude trade agreements was given to the European Commission – and I would say that this is not something which the citizens would be against in principle. But this very power was recently questioned in the trade agreement negotiated with Canada. Although CETA is a less controversial agreement than TTIP, EU member states embarked on having their say and their national parliaments approving the deal. In my view, this was a mistake and a decision of which I would say: “Well, there is not enough courage by member states to really give powers to the EU level in the interests of the citizens.”

So it’s a question of leadership, would you say?

Well, I would say it’s maybe an urgent call for showing leadership and courage, in particular in areas where the EU does have a clear mandate. In our eupinions surveys we see a strong mandate from citizens for – and the clear expectation of – more integration and more successful policy-making. There is a strong case for more integration because citizens expect it, and it is the only way that you can deliver on security, but also on jobs and growth.

Let’s turn to Brexit more concretely: How should the EU negotiate with the UK on the terms of the divorce? Should the EU allow access to the internal market, even if the UK does not subscribe fully to freedom of movement as one of the four pillars of the single market?

The EU should negotiate the terms of divorce, first of all, in a transparent way. It is extremely important that the way it is done is trustworthy and can be understood from the outside.

And then, secondly, on content – it is important that the European Union stays close to its core values and interests. Like any other neighbour of the EU, Brits should not be granted any exceptions so no cherry-picking.

Thirdly, I would say, keep one’s eyes open and be pragmatic. Even if the UK is not a member of the EU anymore, we share a lot of history, ideas, and values. Accordingly, if there is a mutual interest and if there can be respectful negotiations – please act accordingly. We, the EU27, should be pragmatic while at the same time not give up on the key pillars that are at the basis of the Europe project.

What role could Germany play in all this?

Germany might be the most important player to realise that Brexit is indeed an opportunity for more integration, and that is because some other players have huge difficulties at home and do not have the same clout or the power.

Germany is a strong believer – has always been a strong believer – in the European idea and European integration always featured high on the German agenda. Concrete steps for making Europe better, delivering better on the expectations of citizens, is something that should now be pursued. Germany should play a leading role in getting us there.

You have already indicated that the EU should deliver better for its citizens, but I want to get back to how you think we should react to the social shifts that are obviously driving populist movements across Europe and the US; those who feel that they are disregarded by the establishment, their future is no longer bright and the EU is not helping them to cope with globalisation?

The fact that populist movements are around in the US as well as in European countries is a good illustration of the fact that it has nothing to do with the European Union as such. So those who say that the EU is the reason for populism, I would say: “Well, look at America – they don’t have Brussels.”

Regarding the US election – as in the case of Brexit – I would say: let’s take it as a wake-up call. First of all, we have to understand what is really happening, and why people are so hugely dissatisfied with the current establishment. It might have to do with growing inequality and with perceived fading opportunities to participate in society as well as in politics. Regarding the latter, we have to question what could and should be done with democracy itself to better include people in the decision-making process.

We are just starting to get useful insights, but one lesson learnt from the recent US results is that the rise of populism there and in Europe cannot be explained simply by Euroscepticism. Indeed, I would say that the UK vote for Brexit is only partly linked to the EU as such.

Can you elaborate on this – on the links between why people voted for Brexit and why people voted for Trump, if there were reasons beyond the obvious?

Well, drawing upon the findings of our most recent eupinions survey on the rise of populism, there is a not very well understood but widely observed fear of globalisation. It seems that many people are very afraid of a rapidly changing world.

What we observe in many countries – and this is the common denominator between Brexit and the US elections – is that people seek refuge in a reduction of complexity, even a reduction of reality. In this sense, policies that revert to the national level, rather than to the global level, or that go back to the past rather than to the future, seem to gain a lot of traction.

Therefore, I would say that Brexit has much more to do with a fear of globalisation than with the European Union.

What are the repercussions of the US election for the EU’s future? Will it become – as you have just spelled out – the latest wake-up call for the EU to get its act together? Thus far, those cheering after the Trump election were the Brexiteers, but also other populist movements in Europe which now hope to govern in future.

It is too early to say if there will be a kind of domino effect or an anti-domino effect. What we saw in our eupinions survey is that after the Brits voted for Brexit, and the chaos that emerged in Britain alongside this decision, support for membership of the EU soared in almost all member states and even also in the United Kingdom – so that is like an anti-effect. But it’s too early to say if the US election will create a comparable kind of impact.

Some people say that populism gained new energy, new perspectives from the US elections, but it may also be the other way around. We don’t know yet. I will not speculate on whether or not populism will grow in Europe, or whether there will be less or more of it as a result of the US elections. What we can say already though is that US foreign policy will change, and if the signals are understood rightly, we will see a much more self-interested US than beforehand and one that will pay less attention to global common goods.

In consequence, the partnership with Europe will be more directly interest-driven – which doesn’t mean that there will be no partnership, but there will be another kind of partnership. Under all these circumstances, Europe will face two huge challenges. Number one is: do we want to fill the vacuum that the US may leave when it comes to the global common good? Will Europe step in and play a role in things like climate change? Will it punch its weight on issues like the Sustainable Development Goals and the reduction of poverty worldwide? Will it grant support uprisings in autocratic countries and defend freedom and pluralism?

The second is: how can we reinforce our own policy-making, and also our capacity to act, in areas where America was a strong supporter but will now retreat? It may be too early to say, but we may witness a severe security problem. America has been a strong partner in security, and has always been committed to defending freedom in the western World, including Europe. If America loses interest in defending Europe any more, then Europe has to do that – we have to do that ourselves, or with new partners.

So there are these two sides: the challenge of “Do we Europeans want to play a more active and even leading role in defending global common goods?” And secondly, what to do in areas where the US is, and always has been, a strong partner, but where there is a risk that the US will not act as a strong partner or a strong supporter any more.

Would you say that, in the light of Brexit and in the light of Trump, that’s the end of international cooperation as we know it?

Well, I’m not a big fan of talking in these kinds of paradigm shifts, or if it’s the end of this order, or if it’s the end of that order. What we have seen in history is that, although we think that this is the biggest change of the year, and maybe of several decades, only history will tell us if that is true or not. In my view, it is much more important for us to concentrate on Europe and accept what there is for us to do. And what we should do is make Europe better and ask ourselves the question: “What role does Europe want to play in the global order?” Thereby, we have to take serious account of the fear of globalisation among our citizens. I’m not so much inclined to see these developments as the end of (a particular) history…

In addition, what might be more important than the level of self-interest of the United States is what other global players are up to. Let’s be frank, even with a very, very empathetic leader like Barack Obama, US policy had some elements of very, very strong self-interest, and was not always oriented towards the global common good. So how big the change turns out to be in practice, we will have to wait and see.

For me, a key question is whether or not China steps up within a global order in which, out of self-interest, it takes part in forging common policies on open markets, inequality, climate change, etc. – this might be even more important than the role the US will play.

Going back to the original question on Brexit –if the world develops in such a direction, how do you see the role of Europe minus the UK in such a 21st^t century? Are we weakened severely on a global scale by Brexit?

I would say we are weakened, yes, but we still have the potential to be a very important player in the world. The fact that the US also seems to be retreating to a more nationally-oriented role, or national interest-driven policy, creates a vacuum in which it doesn’t make much of a difference whether we have the UK on board or not – so the European Union is indeed important.

But I still see it as a loss, because the Brits have a very, very strong diplomatic tradition based on values like free trade and democracy. The UK remains thus a natural partner of the EU. Of course, if it is their choice not to cooperate, then that is indeed their choice. But for the long term I would see it as follows: after Brexit it is just a question of time before a bid by Britain to re-join the EU emerges, and this is something that the next generation will want and demand.

This is the latest contribution to a new Social Europe Project on ‘Europe after Brexit’ organised in cooperation with the Macroeconomic Policy Institute of the Hans Böckler Stiftung and the Bertelsmann Stiftung.