Taking The Initiative: How Europe Should Respond To Brexit

The week after the UK voted to leave the European Union, Nigel Farage went to the European Parliament and boasted that this was the beginning of the end for the European project. Most MEPs didn’t believe him. Government leaders and EU Commissioners trotted out well-worn clichés about Europe’s resilience. They didn’t sense the danger. They do now.

Donald Trump’s entry into the US Presidential office has shaken that complacency. Europe’s political leaders are starting to acknowledge that this nationalist and authoritarian upsurge wants to destroy both the trans-national structures of post-war Europe and the values that have underpinned them. Two decades ago, the most hard-line neo-Conservatives organised a key influential think-tank, the Project for the New American Century. Their goal was to create a unipolar world revolving around US global leadership. Their supporters dominated the first George W. Bush administration but their hopes for American hegemony foundered in the killing fields of Iraq. Trump offers an even more aggressive, nationalistic version of that dream. The official slogan is ‘Make America Great Again’ but the reality is that he intends to Make America Supreme Again. An effective EU with a Europeanised Germany at its heart is one of several obstacles standing in his way. A fragmented Europe of small nation states is his strategic goal. Farage and Brexit have paved the way; he hopes that Wilders, Le Pen and Grillo will follow. He envisages a crumbling EU where pliant European politicians will then journey to the White House pleading for favours. Theresa May is the template. None of this is inevitable. However, to avoid this doomsday scenario Europe has to change – and fast. The immediate challenge is how to respond to Brexit.

Trump and the nationalists want the hardest, sharpest possible Brexit. They have succeeded in taking May’s government down that path with Labour following timidly in tow. It need not be that way. But that requires flexibility and imagination from Europe’s political leadership.

Take the political initiative

Firstly, the EU needs to take the political initiative. There are four simple things to do.

It should publish its negotiating stance in a proper White Paper. This should clearly declare that for reasons of economics, geography, history and culture a close working partnership between the UK and the Continent is in the interests of both. In the 21^st century, economics has leapt the boundaries of the nation state. Our economic, financial and commercial lives are inextricably intertwined. This is true not just in classic engineering industries such as cars and aircraft with their lengthy, cross-European supply chains but also in areas such as processed food, banking and tourism. The removal of the UK from Europe’s Single Market would seriously weaken both partners. A participation agreement such as occurs with Norway and Switzerland would help to retain Europe’s overall cohesion and economic effectiveness. At the same time the White Paper should stress the importance of on-going collaboration in the fields of science, technology and research so that there is no fracturing of the European-wide research community.

First, discard the wooden clichés and negative rhetoric that keeps recurring in the statements of Donald Tusk, Jean-Claude Juncker and co. Drop the argument that the UK must get a worse deal than it had before. The fact is that the very act of political exclusion puts the UK in a much worse position, since in any Single Market access deal, it would be signing up to a set of rules which from now on it will have no role in setting.

Secondly, take the democratic initiative. May desperately wants this to be a negotiation behind closed doors. The EU should do the opposite. Having set out its negotiating objectives, the EU negotiating team should report monthly to the European Parliament and give that Parliament the opportunity for debate. In this way it would act as the vehicle for scrutiny and accountability of the whole process, thereby wresting control away from the UK government. Regular Parliamentary discussions would be precisely ‘the running commentary’ that the UK government and Brexit press is so scared of.

Furthermore, the EU should unilaterally indicate that it will extend the negotiating period beyond the stated two years. That power lies with the Council of Ministers under Article 50. This will give the time necessary for a complex set of negotiations to be completed. But it also means that the EU’s offer to the UK remains on the table until after the next UK General Election. In this way, the ‘soft Brexit’ option would be a viable proposition for all opposition parties to campaign for. It would take off the agenda the unrealistic call for a second referendum and instead give the UK electorate a real choice. They would have to decide whether to pursue the current government’s proposed abrupt rupture from Europe or adopt the less economically disruptive ‘soft Brexit’ option. The UK government and Brexit press will be furious. But this offer would provide the best conditions for Europe to retain cohesive working relations with the UK.

Offer a Deal on Migration

These steps would give the EU the political initiative and force May and the Brexiteers onto the back foot. But they will only have real impact if the White Paper tackles the main issue that swung the referendum – migration. Here, the EU should be absolutely up-front and argue for a managed deal on migration. The Treaty of Rome is not a neoliberal free for all. This will surprise many readers since the regular refrain from both EU and UK politicians is that access to the Single Market depends on the wholesale application of the four freedoms. But the key treaty Articles show that freedom of movement is specifically tied to agreed, contracted employment and recognises the need to balance labour supply and demand. Article 48 of the original Treaty of Rome states that “freedom of movement for workers shall entail the right (a) to accept offers of employment actually made; (b) to move freely within the territory of member states for this purpose…” Article 49 calls for “the achievement of a balance between supply and demand in the employment market in such a way as to avoid serious threats to the standard of living and level of employment in the various regions and industries.” These clauses were transposed word for word into the Treaty of Lisbon, Articles 45 and 46. Too many politicians have conflated the freedom to travel without restriction across the EU with the right to work when they are distinct and recognised as such.

Here is the basis for a serious negotiation between the UK and the EU-27. These Articles show that it is perfectly possible on the basis of the EU’s existing treaties for the UK government to negotiate a managed migration policy. Returning to the original (social market) principles of the Treaties of Rome and Lisbon would be in the interests of all. It is not just in the UK that there is a need to balance labour supply and demand. Setting out its preparedness to apply the Articles set out in its Treaties would indicate that the EU is ditching the neoliberal economic direction it has taken in the last decade. This would be welcomed by many working class and low income households across Europe. But crucially with regard to the UK’s future relations with the EU it would break the political log-jam and put the hard Brexiteers on the defensive.

The Strong EU Hand

The European project is facing a dire crisis. The steps outlined here would give a serious chance for a British departure from the EU to occur with the least damage to both partners. And it would show that the EU has the strategic nous and imagination to address issues such as migration and to put the nationalist forces advocating Europe’s break-up onto the back foot.

In this negotiation Europe has a number of strong cards to play. Just to suggest two. Firstly, if the British government does not play ball, then the exclusion of vast swathes of the service economy from the Single Market will be profoundly harmful to the UK. The absence of ‘passporting’ facilities for banking, financial, accountancy, legal and other services will have severely detrimental impacts. Secondly, the EU should signal publicly that if the UK leaves the Single Market, then Europe would unreservedly welcome Scotland as an immediate full member. The EU needs to say clearly to the Spanish government that there is no comparison with the situation with Catalonia. Spain is neither proposing to leave the EU nor the Single Market. The EU project is being undermined. Its politicians need to show that it is prepared to defend itself and welcome those such as Scotland which would want to remain a member, should the UK pursue a hard Brexit. The May government needs to understand that the price of a hard Brexit would be the break-up of the United Kingdom.

While there are strong cards to play, the EU should avoid raising the stakes in areas which would be mutually harmful, as May did in threatening to withdraw security co-operation. The White Paper should offer a proper cooperative relationship with the UK and help to avoid the conditions where Britain’s relations with Europe ‘fall off a cliff’ with disastrous results all round. The steps suggested here would regain both the political and democratic initiative for the EU. Are there European politicians with the flexibility and capacity to address the challenge? And UK politicians able to respond to them?