Foreign policy in the European Union

Brexit referendum.

On June 23rd, 2016, the United Kingdom held a referendum to vote on the country’s exit from the European Union. The unexpected result, 51.9% in favor of leaving and 48.1% in favor of remaining in the EU, sent shockwaves across the UK, the EU and the world, causing turmoil in the stock exchanges and casting uncertainty over the future.

This brief article aims to shed some light on the present state of the matter, describing some of the things that ensued in the wake of the referendum. It will then briefly explain what the next steps in this disconnect would be, and finally hazards a guess as to the consequences it will have and what the EU can or should do to protect and improve its future.

The wake of the referendum.

On the evening of the referendum, the polls had predicted that remain would win reasonably comfortably with a difference of about 5%. Those predictions did not hold true and, as a result, the morning after the vote, the markets, just like the people, were in shock.

The value of the pound fell by over 10% and the London Stock Exchange lost over 8% on June 24th, a fall that continued the following day. These drops in the stock exchange repeated themselves around the different European countries and around the rest of the world.

David Cameron, the instigator of the referendum and the most visible face of the remain campaign, announced his resignation the same morning of the 24th. It was however a deferred resignation. He would only leave in October, once the party had chosen his successor. This was met by a certain contestation, both within his party and his country and outside of them, by people who considered that Cameron, Britain and Europe should face the consequences of the result and move forward as swiftly as possible.

Jonathan Hill, the British EU Commissioner for Financial Stability, Financial Services and Capital Markets Union also resigned, arguing it would not be right to continue as if nothing had happened and stating, in a way fitting for a Game of Thrones character, that what has been done cannot be undone .

European politicians meanwhile expressed their surprise and respect for the result of the referendum, such as Luxemburgish Commissioner Viviane Reding, who tweeted “[a] successful divorce is better than a failed marriage. Good luck to this new and future third country![…]”. Many also urged that the Brexit process begin immediately. This desideratum was notably voiced by the EU Council and the Dutch Presidency in a joint statement that read: “We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty.”

What’s going on now?

The Brexit process has yet to be officially kick started. In order to do so, the United Kingdom has to issue a formal notice to the European Council, invoking article 50 of the Treaty of Lisbon and expressing its wish to be excluded from the Union.

Article 50 of the Lisbon Treaty reads as follows:

1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.

2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.

4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it.

A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.

5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

The Brexit process has yet to be officially kick started. In order to do so, the United Kingdom has to issue a formal notice to the European Council, invoking article 50 of the Treaty of Lisbon and expressing its wish to be excluded from the Union.

Once the notice from the UK is received, the European Council draws up guidelines, which will serve as the basis for an agreement on the conditions of withdrawal and the rules which will govern the relationship between the Union and its former member in the future. The specific terms of the agreement are then negotiated by the Council with the retiring Member State, terms which will need to be approved by the European Parliament before the withdrawal agreement can be signed.

In terms of timeline for the effective separation, article 50 states that the EU Treaties will cease to apply to the United Kingdom in a maximum term of two years from the date of the notice (term which may be extended by unanimous decision of the European Council), unless the withdrawal agreement is signed before such term lapses. The problem here is that there is as of yet a high level of uncertainty as to when such a notice will be issued by the UK Government.

David Cameron made it known that his successor will be responsible for drafting and delivering such communication to the European Union, initially targeting the month of October for it to take place. Nevertheless, internal and external pressures have seemingly hastened this schedule, with Theresa May, the former Home Secretary, having already been sworn-in as the new Prime Minister of the United Kingdom in replacement of Mr. Cameron and being expected to lodge the formal notice by September.

Meanwhile, Scotland and Northern Ireland, having voted largely in favor of remaining within the European Union, are weighing their options. Nicola Sturgeon, First Minister of Scotland and member of the Scottish National Party has already begun laying the groundwork for a new referendum aimed at obtaining Scottish independence, with a view to later requesting accession to the EU. However, more unexpected are the voices in Northern Ireland suggesting their emancipation from London and their attachment to Ireland, so as to benefit from their neighbor’s status as a member in order to avoid the accession process.

The British referendum has also had other consequences outside the UK.

On the one hand, several countries are already fighting for the spoils the UK’s exit may leave behind. Spain, Ireland, Italy and others have already embarked on a PR campaign aimed at attracting United States and other international banks needing to relocate to continue benefiting from the EU’s passporting rules, while Madrid is also reportedly looking to attract the European Banking Authority itself, offering the city as its new possible seat.

On the other hand, the result of the referendum has spurred on Eurosceptic movements in several Member-States. Both the French Front National and the Dutch Party for Freedom have called for referendums to take place in their own countries, while Podemos in Spain and the Five Star Movement in Italy have taken the chance to denounce what they consider a flawed European model, paving the way for further instability and uncertainty in Europe.

Where do we go from here?

These are definitely trying times for Europe, times that have all the makings of a full-blown identity crisis. Nevertheless, crisis is just another word for opportunity, and that is precisely what the EU is now facing: the opportunity to find its identity once and for all.

Rid of the shackles cast upon the EU by one of its members most remiss to a political union, we should now strive to create an “ever closer union among the peoples of Europe”, as article 1 of the Treaty of the European Union reads. Indeed, it would not be easily understood by your average European if the exit of one of the most insistent advocates of the emergency brake, leads to further political gridlock and a standstill in the EU’s policies.

Now more than ever, the European Union needs to exude an image of unity and common purpose, working together on the following key matters:

a) Brexit negotiations: It is key that the European Council reach a common position on the guidelines and main conditions that should govern the EU’s position in the negotiations. The outcome of these negotiations and the position the UK and the EU are left in once the withdrawal agreement is signed, will no doubt have an effect on public opinion in the Union. Several countries are already putting forward the idea that the terms of the UK’s withdrawal should be sufficiently penalizing as to weaken the resolve of Eurosceptic parties in other Member-States. Others, conversely, believe that the United Kingdom will already suffer enough by exiting and that the Union should look to make the transition as gentle as possible for everybody. What is clear, after the appointment of Boris Johnson as Secretary of State for Foreign and Commonwealth Affairs and David Davis as Secretary of State for Exiting the European Union, both of them Brexit advocates, is that the negotiations will not be easy and it will be essential that Europeans present a united front.

b) Immigration policies: This has been one of the key issues carrying the leave campaign. Some have felt, whether correctly or incorrectly, that the EU allows immigrants free access to the Union and then does not afford the Member-States effective tools to fight against the problems and tensions it creates. What is more, it has given the impression that once these issues have become too big for them to handle, they have resorted to throwing large sums of money at their neighbors in exchange for an assistance whose methods are oftentimes questionably legal.

c) Social policy and employment: Another one of the key critiques to the European Union by Eurosceptic and/or far left or far right parties has been Brussels’ failure to tackle rampant unemployment and the social emergency this phenomenon, coupled with budgetary restrictions and an already lacking welfare state, has created for many Europeans. It is therefore capital that we transcend the welfare Member-States and work together to create a welfare European Union, enabling us to provide an objective and standardized level of protection to all Europeans that may need it, independently of their origin or present location. It is indeed difficult to understand true freedom of movement without ensuring Europeans have equivalent rights and benefits wherever they may choose to reside. This has been long lacking, but we can only hope that with the withdrawal of the United Kingdom, some of that fear of the ultimate consequences of the freedom of movement that has seemed to grip the EU lately will dissipate and we will be able to move forward.

d) Interior, security and defense: The United Kingdom has one of the most prepared, technologically equipped and effective armies and intelligence services in the world. Their withdrawal from the European Union will no doubt hamper the latter’s military and intelligence capabilities, as well as Europol’s network and resources. It is of paramount importance in these circumstances that the Member-States work together to offset these significant losses and ensure our capabilities are significantly improved, regaining the present levels prior to the British withdrawal, without prejudice to a continued collaboration with the UK on a bilateral level and within the NATO structures.

These four areas of action are fundamental, but should be only the beginning. They should only represent the first wave of a stronger and more ambitious European agenda. One which should tackle institutional reform to ensure a less bureaucratic and more democratic system and increase integration, strengthen the Eurogroup and solve the monetary policy problems deriving from its limited powers and excessive political interference, and start focusing on adopting initiatives of a markedly social nature which will lastingly improve the lives of its citizens, thereby making the effects of European policies on their lives more visible. All of these measures should serve to defuse Eurosceptic initiatives across the continent and send out the clear message that Brexit has not weakened the resolve of the Europeans, but actually caused them to be more ambitious in their pursuit of a united Europe.

The result of the British referendum has unquestionably sent shocks through the system all over the world, but it is obvious that the biggest after-shocks (whose magnitude have yet to be determined) have and will continue to be felt primordially in Europe and the United Kingdom. Presently in the eye of the hurricane as we await for the new British Prime Minister, Theresa May to formally notify the country’s wish to withdraw from the Union, the EU is bracing itself for a tumultuous few years -2 at the very least of negotiations and however many are necessary to adapt to the new situation. Much like in the famous joke, however, the storm in the English Channel has not (only) stranded Europe. The United Kingdom runs the risk of facing multiple independence pushes from Scotland and Northern Ireland, while in turn Gibraltar’s future is less than certain, effectively imperiling its united character. It will also have to carve a space for itself in the international community and earn others respect, both for itself, its citizens and its economic interests, away from the protective umbrella –and leverage- of the European Union.

It is nevertheless a time of opportunity. In the face of the many challenges before us, we have the chance to renew our commitment to the dream of a united Europe, a Europe that goes well beyond just a common market, tackling pressing political and social issues that affect its citizens and whose resolution will bring a noticeable improvement to their daily life. The absence of the UK should entail less push-back to these initiatives which necessarily imply a certain transfer of sovereignty from the Member States to the EU, thereby paving the way for a more active and integrated Union. The path ahead may be tempestuous, but if we stand united and face the threats with renewed energy, I am sure that when the storm lifts, the view will be beautiful on both sides of the English Channel.

References

Statement by the EU leaders and the Netherlands Presidency on the outcome of the UK referéndum, taken from the webpage of the EU Council (http://www.consilium.europa.eu/en/press/press-releases/2016/06/24-joint-statement-uk-referendum/)

Statement – Lord Hill – 25.06.2016, taken from the webpage of the EU Commission (https://ec.europa.eu/commission/2014-2019/hill/announcements/statement-lord-hill-25062016_en)

Comment on the deal EU-UK on Brexit

Yesterday, the 19th of February, the EU and the UK reached an agreement with a view to accommodate Britain in the EU and so to enable its government to plead for the “Yes” in the campaign leading to the referendum to be celebrated on the 23rd of June. The agreement has been brokered after long and hard negotiations which threatened to collapse at any moment due to the big divergences present between the negotiating parties involved.

The main question here is: is this a good agreement for the EU? And did Mr. Cameron obtain a good deal to take home?

From our point of view, any agreement which weakens the European project and makes differences between nationals and EU citizens is a bad agreement. Nevertheless, and if we take into account the demands Mr. Cameron has voiced during the months leading to this agreement, it must be said that he did not achieve any substantial successes apart from formalizing some aspects which were already accepted by everybody in the EU but not yet written in a any agreement. What did Britain want before the summit and what did it really get?

1. Immigration and benefits:

a. Demand: EU migrants who want to claim tax credits and child benefit must live in the UK and contribute for a minimum of four years

b. Result: a member state will be able to apply to the Commission for permission to suspend in-work benefit payments (emergency brake) if it considers these payments pose a big burden to its social welfare system. Initially the UK was seeking a time period of 13 years in which the emergency break could be applied, but the negotiations finally reached an agreement at 7 years. Nevertheless it must be said that this instrument will be available to any Member State (not only the UK), and that the Commission has already confirmed that the UK is eligible to apply for the application of this instrument.

In what regards child benefits Mr. Cameron was less successful as before the summit he was pleading for a total ban and that payments should be indexed to what immigrants would get in their home countries. The final deal establishes that indexation will only apply to new claimants and only from 2020.

2. Further integration:

a. Demand: Britain should be excluded from any plans leading to further integration.

b. Result: Mr. Cameron achieved want he wanted and it has been agreed that the UK is not committed to further political integration.

a. Demand: Britain was demanding to agree on rules protecting non Eurozone countries from decisions taken by the group of 17 which may affect them.

b. Result: apparently Mr. Cameron got what he wanted as it has been agreed that it will suffice that just one non Eurozone Member does not agree with a decision taken at Eurozone level to force further discussions at EU level in the Council. Furthermore, and regarding the Euro, it has been acknowledged that the EU is block where several currencies live together, although this was already the case before the summit and therefore this point does not have substantial practical effects.

From our point of view Britain did not achieve to obtain any groundbreaking results in this summit, as the deals mainly acknowledges formally that Britain is not committed to further integration and that the country will not adopt the Euro as its currency, aspects which were already clear before this summit. In what regards immigration and benefits Mr. Cameron did not manage to get what he wanted and will have to content himself with the emergency break which will also be available to other countries, whilst he was more successful regarding protection from Eurozone decisions although we need to see how the mechanism works in practice and if it does not just trigger unsubstantial discussions in the Council leading to no practical effects.

It is now important to see how British people react to this agreement and what the result from the referendum is, as the No campaigners are going to try to minimize the gains of the agreement brokered in Brussels yesterday. We are in favour of Britain staying in the EU as we think it has contributed decisively to some of the main achievements of the Union (e.g. completion of the Internal Market), although we want the country to be more committed to integration or at least not to put hurdles to the rest of Member States which want to advance towards the dream of a European federal state. If this is not the case, we think it is better for both parties that the UK departs for good.

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